Registration No. 33-58499
424(b)
SUGARLAND BANCSHARES, INC.
1527 W. Main Street
Jeanerette, Louisiana 70544
June 20, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting
of Shareholders of Sugarland Bancshares, Inc. ("Sugarland") to be
held on July 19, 1995 at 2:00 p.m., local time at Sugarland's
main office, 1527 W. Main Street, Jeanerette, Louisiana.
At the meeting, you will be asked to consider and vote
upon a proposal to approve an Agreement and Plan of Merger and
related merger agreement (collectively, the "Plan") pursuant to
which, among other things, Sugarland State Bank (the "Bank"), the
banking subsidiary of Sugarland, will be merged into MidSouth
National Bank ("MidSouth Bank"), the wholly-owned subsidiary of
MidSouth Bancorp, Inc. ("MidSouth"), and Sugarland will merge
into MidSouth (the "Holding Company Merger"). The terms of the
Plan provide that, on the effective date of the Holding Company
Merger, each outstanding share of common stock of Sugarland will
be converted into one share of MidSouth preferred stock as more
fully described in the attached Joint Proxy Statement and
Prospectus. You are urged carefully to read the Joint Proxy
Statement and Prospectus in its entirety for a more complete
description of the terms of the Plan and the proposed Mergers.
The Plan has been approved by your Board of Directors.
The Board believes, based on its own analysis and the opinion of
Sugarland's financial advisor (all of which are described in the
accompanying Joint Proxy Statement and Prospectus), that the
proposed mergers are in the best interest of Sugarland's
shareholders. After consummation of the proposed mergers, you,
as a new shareholder of MidSouth, will own convertible preferred
stock in MidSouth, which is intended to be publicly traded on the
American Stock Exchange Emerging Company Marketplace. As a
result of the mergers, the combined entities, through MidSouth,
will be better able to offer a broad range of banking services to
its customers and to compete more effectively with holding
companies and other financial institutions in the changing
economic and legal environment facing all financial institutions.
The Board of Directors recommends that you vote FOR the
Plan and urges you to execute the enclosed proxy and return it
promptly in the accompanying envelope.
Very truly yours,
D. J. Tranchina
President
<PAGE>
SUGARLAND BANCSHARES, INC.
1527 W. Main Street
Jeanerette, Louisiana 70544
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 19, 1995
Jeanerette, Louisiana
June 20, 1995
A Special Meeting of Shareholders of Sugarland
Bancshares, Inc. ("Sugarland") will be held on July 19, 1995 at
2:00 p.m. local time at Sugarland's main office, 1527 W. Main
Street, Jeanerette, Louisiana, to vote upon the following
matters:
1.A proposal to approve an Agreement and Plan of Merger and
related merger agreement (collectively, the "Plan") pursuant to
which, among other things: (a) Sugarland State Bank, the
subsidiary of Sugarland, will be merged into MidSouth National
Bank, the wholly-owned subsidiary of MidSouth Bancorp, Inc.
("MidSouth"), (b) Sugarland will be merged into MidSouth and (c)
on the effective date of the merger of MidSouth and Sugarland,
each outstanding share of common stock of Sugarland will be
converted into one share of MidSouth Series A Cumulative
Convertible Preferred Stock as determined in accordance with the
terms of the Plan.
2.Such other matters as may properly come before the Special
Meeting and any adjournment thereof.
Only shareholders of record at the close of business on
June 7, 1995 are entitled to notice of and to vote at the Special
Meeting.
Dissenting shareholders who comply with the procedural
requirements of the Business Corporation Law of Louisiana will be
entitled to receive payment of the fair cash value of their
shares if the merger of MidSouth and Sugarland is effected upon
approval by less than eighty percent (80%) of the total voting
power of Sugarland.
Your vote is important regardless of the number of
shares you own. Whether or not you plan to attend the special
meeting, please mark, date and sign the enclosed proxy and return
it promptly in the enclosed stamped envelope. Your proxy may be
revoked by appropriate notice to Sugarland's Secretary, or by
execution and delivery of a later-dated proxy, at any time prior
to the voting thereof. If you attend the Special Meeting, you
may withdraw your proxy and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
__________________________________
Ronald R. Hebert, Sr., Secretary
<PAGE>
PROSPECTUS
MIDSOUTH BANCORP, INC.
Series A Cumulative Convertible Preferred Stock
JOINT PROXY STATEMENT
MidSouth Bancorp, Inc. and Sugarland Bancshare, Inc.
Meetings of Shareholders to be held July 19, 1995
MidSouth Bancorp, Inc. ("MidSouth") has filed a
Registration Statement pursuant to the Securities Act of 1933
(the "Securities Act") covering up to 187,286 shares of
Cumulative, Convertible Preferred Stock, Series A, of MidSouth
(the "Preferred Stock") which may be issued in connection with a
proposed merger of Sugarland Bancshares, Inc. ("Sugarland") into
MidSouth, pursuant to which shareholders of Sugarland will
be entitled to receive one share of Preferred Stock for each
share of common stock held prior to the Merger. This document
constitutes the Joint Proxy Statement of MidSouth and Sugarland
in connection with the transactions described herein and a
Prospectus of MidSouth with respect to the shares of MidSouth
Preferred Stock to be issued if the merger is consummated.
MidSouth has agreed to use its best efforts to list
the Preferred Stock on the American Stock Exchange Emergining
Companies Market. The American Stock Exchange recently
announced that it was discontinuing its Emergining Companies
Market but would continue quotations thereon for MidSouth
common stock. MidSouth intends to apply for listing of the
Perferred Stock on the regular American Stock Exchange and
believes that such listing application will be approved. There
can be no assurance that such listing will be accomplished or
that an active trading market in the Perferred Stock will occur.
The listing of the Perferred Stock is not a condition to
consummation of the merger, and in the absence of listing, the
ability of holders of perferred Stock to dispose of their shares
will be significately curtailed. See "Summary - Market Prices
and Dividends."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT AND
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE MIDSOUTH PREFERRED STOCK DESCRIBED IN THIS JOINT PROXY
STATEMENT AND PROSPECTUS IS NOT A SAVINGS ACCOUNT OR DEPOSIT
ACCOUNT AND IS NOT THE OBLIGATION OF ANY BANK OR SAVINGS
ASSOCIATION. AN INVESTMENT IN THE PREFERRED STOCK IS NOT
FEDERALLY INSURED.
No person has been authorized to give any information
or to make any representations other than those contained in this
Joint Proxy Statement and Prospectus, and, if given or made, such
information or representations must not be relied upon as having
been authorized by MidSouth or Sugarland. This Joint Proxy
Statement and Prospectus shall not constitute an offer by
MidSouth to sell or the solicitation of an offer by MidSouth to
buy, nor shall there be any sale of the securities offered by
this Joint Proxy Statement and Prospectus in any state in which,
or to any person to whom, it would be unlawful prior to
registration or qualification under the laws of such state for
MidSouth to make such an offer or solicitation. Neither the
delivery of this Joint Proxy Statement and Prospectus nor any
sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of
MidSouth or Sugarland since the date hereof.
This Joint Proxy Statement and Prospectus is dated June
20, 1995. This Joint Proxy Statement and Prospectus was mailed
to shareholders of Sugarland on approximately June 21, 1995,
and to shareholders of MidSouth on approximately June 21, 1995.
<PAGE>
AVAILABLE INFORMATION
MidSouth is subject to the informational requirements
of the Securities Exchange Act of 1934 and in accordance
therewith is required to file reports and other information with
the Securities and Exchange Commission (the "Commission"). Such
reports, together with proxy statements and other information
filed by MidSouth, can be inspected at and copies thereof may be
obtained at prescribed rates from, the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and from the Commission's
Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.
MidSouth has filed with the Commission a Registration
Statement on Form S-4 ("Registration Statement") under the
Securities Act with respect to the Preferred Stock offered by
this Joint Proxy Statement and Prospectus. This Joint Proxy
Statement and Prospectus summarizes all of the material
information set forth in the Registration Statement. Statements
contained in this Joint Proxy Statement and Prospectus as to the
contents of any documents are necessarily summaries of the
documents, and reference is made to the copy of the applicable
document filed with the Commission for a more complete
understanding. For further information with respect to MidSouth,
reference is made to the Registration Statement, including the
exhibits thereto.
As more fully set forth under the heading captioned
"Documents Incorporated by Reference" and "Information about
MidSouth" elsewhere herein, certain information with respect to
MidSouth has been incorporated by reference into this Joint Proxy
Statement and Prospectus. In addition, the Agreement and Plan of
Merger and related merger agreement described in this Joint Proxy
Statement and Prospectus have been incorporated herein by
reference. MidSouth hereby undertakes to provide without charge
to each person to whom a copy of this Joint Proxy Statement and
Prospectus has been delivered, upon the written or oral request
of such person, a copy of any or all of the information or
documents which have been incorporated by reference herein, other
than exhibits to such documents. Requests for such copies should
be directed to C.R. Cloutier, President, MidSouth Bancorp, Inc.,
102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana
70501, telephone (318) 237-8343. In order to ensure timely
delivery of the documents, any request should be made by July 12,
1995.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by
reference: MidSouth's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1994, Commission File No. 1-11826,
dated March 23, 1995, received by the Commission on March 24,
1995, as amended by Form 10-KSB/A, Commission File No. 1-11826,
dated April 28, 1995, received by the Commission on April 28,
1995; MidSouth's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1995, Commission File No. 1-11826,
dated May 15, 1995, received by the Commission on May 15,
1995; the following sections of MidSouth's Annual Report to
Shareholders, delivered with this Joint Proxy Statement and
Prospectus: page 30, "Market Prices"; inside back cover,
"Stock Trading Information" and information on dividends;
page 1, "Financial Statements"; pages 30-31, "Selected Quarterly
Financial Data"; pages 2-11, "Management's Discussion and
Analysis"; and MidSouth's Quarterly Report to Shareholders
"Financial Statements and Management's Discussion and Analysis."
<PAGE>
TABLE OF CONTENTS
SUMMARY Page
The Companies..................................... i
The Banks......................................... i
The Meetings...................................... i
Purpose of the Meetings; Vote Required............ ii
Reasons for the Plan; Recommendation of
the Companies' Boards of Directors.............. iii
Opinion of Chaffe & Associates, Inc............... iv
Conversion of Sugarland Common Stock.............. iv
Description of MidSouth Preferred Stock........... iv
Exchange of Certificates.......................... vi
Conditions to Consummation of the Mergers......... vii
Waiver, Amendment and Termination................. vii
Interests of Certain Persons in the Mergers....... viii
Voting and Other Agreements of Sugarland's
Directors, Executive Officers and Five-
Percent Shareholders............................ ix
Employee Benefits................................. ix
Certain Federal Income Tax Consequences........... x
Accounting Treatment.............................. x
Dissenters' Rights................................ x
Selected Financial Data of Sugarland.............. xi
Selected Financial Data of MidSouth............... xii
Comparative Per Share Data (Unaudited)............ xiii
Market Prices and Dividends....................... xiv
INTRODUCTORY STATEMENT...................................... 1
General........................................... 1
Purpose of the Meetings........................... 1
Shares Entitled to Vote; Quorum; Vote Required.... 1
Solicitation, Voting and Revocation of Proxies.... 3
THE PLAN.................................................... 4
General........................................... 4
Background of and Reasons for the Plan............ 4
Opinion of Chaffe & Associates, Inc............... 6
Conversion of Sugarland Common Stock.............. 11
Effective Date.................................... 12
Exchange of Certificates.......................... 12
Regulatory Approvals and Other Conditions
of the Mergers.................................. 13
Conduct of Business Prior to the Effective
Date............................................ 14
Waiver, Amendment and Termination................. 15
Interests of Certain Persons in the Mergers....... 16
Voting and Other Agreements of Sugarland's
Directors, Executive Officers and Five-
Percent Shareholders............................ 17
Employee Benefits................................. 18
Expenses.......................................... 18
Status Under Federal Securities Laws; Certain
Restrictions on Resales......................... 19
Accounting Treatment.............................. 19
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 19
DISSENTERS' RIGHTS.......................................... 22
INFORMATION ABOUT SUGARLAND................................. 24
Description of the Business....................... 24
Competition....................................... 25
Property.......................................... 25
Employees......................................... 26
Market Prices and Dividends....................... 26
Legal Proceedings................................. 26
Security Ownership of Principal
Shareholders and Management..................... 27
SUGARLAND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 29
INFORMATION ABOUT MIDSOUTH.................................. 44
COMPARATIVE RIGHTS OF SHAREHOLDERS.......................... 44
Preferred Stock................................... 45
Directors......................................... 45
Business Combinations............................. 46
Special Meetings of Shareholders.................. 46
Bylaws............................................ 46
Vote Required for Shareholder Action.............. 47
Limitation of Personal Liability and
Indemnification of Directors and
Officers........................................ 47
RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK.......... 48
Dividend Rights................................... 48
Redemption Rights................................. 50
Conversion Rights................................. 50
Voting Rights..................................... 51
Liquidation Rights................................ 52
Preemptive Rights................................. 52
PRO FORMA FINANCIAL STATEMENTS.............................. 52
ELECTION OF DIRECTORS OF MIDSOUTH........................... 60
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS OF MIDSOUTH....................... 63
Security Ownership of Management.................. 63
Security Ownership of Certain Beneficial
Owners.......................................... 65
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS............. 65
Summary Compensation Table........................ 65
Option Exercises and Holdings..................... 66
Employment and Severance Contracts................ 67
Certain Transactions.............................. 67
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS............ 67
SHAREHOLDER PROPOSALS....................................... 67
LEGAL MATTERS............................................... 67
EXPERTS..................................................... 68
OTHER MATTERS............................................... 68
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF SUGARLAND................................................ F-1
SUGARLAND BANCSHARES, INC. CONSOLIDATED FINANCIAL
STATEMENTS.................................................. F-2
Appendix A - Fairness Opinion of Chaffe &
Associates, Inc
Appendix B - Form of Provisions of Articles
of Incorporation of MidSouth Relating to the
Preferred Stock
<PAGE>
SUMMARY
The following summarizes the more detailed information
appearing elsewhere herein and in the appendices hereto.
Shareholders are urged to read carefully all such material,
together with the accompanying documents and the documents
incorporated herein by reference.
The Companies
MidSouth Bancorp, Inc., a Louisiana corporation
("MidSouth") is a one bank holding company that owns all of the
outstanding stock of MidSouth National Bank ("MidSouth Bank").
At March 31, 1995, MidSouth had total consolidated assets of
approximately $107.7 million and shareholders' equity of
approximately $6.2 million. MidSouth's principal executive
offices are at 102 Versailles Boulevard, Versailles Centre,
Lafayette, Louisiana 70501, and its telephone number is (318)
237-8343. See "Information About MidSouth."
Sugarland Bancshares, Inc., a Louisiana corporation
("Sugarland"), is a one bank holding company that owns all of the
outstanding stock of Sugarland State Bank (the "Bank"). At March
31, 1995, Sugarland had total consolidated assets of
approximately $17.8 million and shareholders' equity of
approximately $2.2 million. Sugarland's principal executive
offices are at 1527 W. Main Street, Jeanerette, Louisiana 70544,
and its telephone number is (318) 276-6307. See "Information
About Sugarland."
MidSouth and Sugarland are collectively referred to
herein as the "Companies."
The Banks
MidSouth Bank is a full service commercial bank
offering consumer and commercial banking services in Lafayette,
Iberia, Jefferson Davis and St. Martin Parishes. At March 31,
1995, MidSouth Bank had total assets of approximately $107.7
million and total deposits of approximately $98.7 million. In
addition to its main banking facility in Lafayette, Louisiana,
MidSouth Bank operates full service branches in Breaux Bridge,
Opelousa, Cecilia and Jennings, Louisiana, and also operates four
ATM machines, three in Lafayette and one in Breaux Bridge.
The Bank, a Louisiana state chartered bank, is a full
service commercial bank offering consumer and commercial banking
services in Iberia Parish. At March 31, 1995, the Bank had total
assets of approximately $17.8 million and total deposits of
approximately $15.5 million. In addition to its main banking
facility in Jeanerette, Louisiana, the Bank operates a full
service branch in New Iberia, Louisiana.
MidSouth Bank and the Bank are collectively referred to
herein as the "Banks."
The Meetings
The annual meeting of the shareholders of MidSouth and
a special meeting of the shareholders of Sugarland will be held
on July 19, 1995, at the time and place set forth in the
accompanying Notice of Annual Meeting of Shareholders of MidSouth
(the "Annual Meeting") and Notice of Special Meeting of
Shareholders of Sugarland (the "Special Meeting") (the Annual
Meeting and the Special Meeting are collectively referred to
herein as the "Meetings"). Only record holders of the common
stock (the "MidSouth Common Stock") of MidSouth at the close of
business on June 7, 1995 are entitled to notice of and to vote at
the Annual Meeting. Only record holders of the common stock (the
"Sugarland Common Stock") of Sugarland at the close of business
on June 7, 1995 are entitled to notice of and to vote at the
Special Meeting. On the respective record dates, there were
717,753 shares of MidSouth Common Stock outstanding and 187,286
shares of Sugarland Common Stock outstanding, each of which is
entitled to one vote on each matter properly to come before the
Meeting of the respective Company.
Purpose of the Meetings; Vote Required
The purpose of the Special Meeting is to vote upon a
proposal to approve an Agreement and Plan of Merger and related
merger agreement (collectively, the "Plan"), pursuant to which
the Bank will be merged into MidSouth Bank (the "Bank Merger"),
and Sugarland will be merged into MidSouth (the "Holding Company
Merger" which, together with the Bank Merger, are collectively
called the "Mergers"), and on the effective date of the Holding
Company Merger, each outstanding share of Sugarland Common Stock
will be converted into one share of Cumulative Convertible
Preferred Stock, Series A, of MidSouth (the "Preferred Stock"),
in accordance with the terms of the Plan. As a result of the
Mergers the business and properties of the Bank will become the
business and properties of MidSouth Bank, the business and
properties of Sugarland will become the business and properties
of MidSouth, and shareholders of Sugarland will receive the
consideration described below under "Conversion of Sugarland
Common Stock." See "Introductory Statement - Purpose of the
Meetings."
The purpose of the Annual Meeting is to vote upon a
proposal to approve the issuance up to 187,286 shares of the
Preferred Stock of MidSouth to be issued to shareholders of
Sugarland in exchange for their Sugarland Common Stock in
connection with the Mergers. Shareholders of MidSouth, in
addition to voting on the Plan, will also elect directors. See
"Introductory Statement - Purpose of the Meetings."
The Plan must be approved by the shareholders of
Sugarland by the affirmative vote of two-thirds of the voting
power present, in person or by proxy, at the Special Meeting.
Directors, executive officers and certain principal shareholders
of Sugarland beneficially owning an aggregate of 89,956 shares,
or approximately 48.03% of the outstanding Sugarland Common
Stock, have executed agreements pursuant to which, among other
things, they agreed, subject to certain conditions described
under "Voting and Other Agreements of Sugarland's Directors,
Executive Officers and Five-Percent Shareholders" to vote in
favor of approval of the Plan and, accordingly, management of
Sugarland believes that Sugarland will obtain the vote required
for approval of the Plan.
Approval of the Plan by the shareholders of MidSouth is
not required under either the Louisiana Business Corporation Law
(the "LBCL") or the Articles of Incorporation of MidSouth.
However, under the rules of the American Stock Exchange Emerging
Company Market (the "AMEX") on which the MidSouth Common Stock is
listed, shareholders of MidSouth are required to approve the
issuance of the Preferred Stock to be exchanged for the Sugarland
Common Stock in connection with the Mergers. The proposal to
issue the Preferred Stock must be approved by the affirmative
vote of a majority of the votes cast at the Annual Meeting. The
directors and executive officers of MidSouth having voting power
with respect to an aggregate of 292,924 shares, or approximately
39.65% of the outstanding MidSouth Common Stock, have informed
MidSouth that they intend to vote their shares in favor of
issuance of the Preferred Stock, and, accordingly, management of
MidSouth believes that MidSouth will obtain the vote required for
approval of the issuance of the Preferred Stock.
See "Introductory Statement - Shares Entitled to Vote;
Quorum; Vote Required."
Reasons for the Plan; Recommendation of the Companies' Boards of
Directors
The Board of Directors of Sugarland believes that
approval of the Plan is in the best interest of Sugarland and its
shareholders and recommends that its shareholders vote "FOR" the
approval of the Plan. The Board of Directors of Sugarland
believes that the terms of the Plan will provide significant
value to all Sugarland shareholders and enable them to
participate in opportunities for growth that Sugarland's Board of
Directors believes the Mergers make possible. In recommending
the Plan to Sugarland's shareholders, Sugarland's Board of
Directors considered, among other factors, the financial terms of
the Plan; the likelihood and potential adverse impact of
increased competition for Sugarland in its market area if
Sugarland remains independent; the ability of the combined
Companies and Banks to compete in the relevant banking markets;
the market price of MidSouth Common Stock; the business,
financial condition, results of operation and prospects of
MidSouth, MidSouth Bank, Sugarland and the Bank; the dividends to
which Sugarland's shareholders would be entitled under the terms
of the Preferred Stock; and the federal income tax consequences
of the Plan to Sugarland's shareholders, to the extent MidSouth
Preferred Stock is received in the Holding Company Merger.
The Board of Directors of MidSouth believes that
approval of the issuance of the Preferred Stock is in the best
interest of MidSouth and its shareholders. In addition to the
financial terms, among the factors considered by the Board in
recommending the issuance of the Preferred Stock were (i) the
increased competitive advantages available to MidSouth and
MidSouth Bank through the combined capital of the Banks and the
economies of scale created as a result of the Mergers, and (ii)
the increased market share and additional markets available to
MidSouth and MidSouth Bank as a result of the Mergers.
The financial and other terms of the Plan were arrived
at through arm's length negotiations between representatives of
the Companies. Determination of the consideration to be received
by Sugarland's shareholders was based upon various factors
considered by the Boards of Directors of MidSouth and Sugarland,
including primarily the comparative financial condition,
historical results of operations, current business and future
prospects of the Companies and the Banks, and the desirability of
combining the financial and managerial resources of the Banks to
pursue available consumer and commercial banking business in
Lafayette, Jefferson Davis, Iberia and St. Martin parishes.
The Boards of Directors of the Companies have approved
the Plan. The Board of Directors of Sugarland recommends that
its shareholders vote FOR approval of the Plan, and the Board of
Directors of MidSouth recommends that its shareholders vote FOR
the issuance of the Preferred Stock. See "The Plan - Background
of and Reasons for the Plan."
Opinion of Chaffe & Associates, Inc.
Chaffe & Associates, Inc. ("Chaffe") was engaged as an
independent financial expert to render an opinion as to the
fairness to Sugarland and its shareholders from a financial point
of view of the consideration to be received by Sugarland's
shareholders pursuant to the provisions of the Plan. Chaffe was
selected because of its experience, reputation and expertise in
the financial services industry. A copy of the opinion delivered
by Chaffe dated December 30, 1994 is attached as Appendix A and
should be read in its entirety. The opinion concludes that, as
of December 30, l994, and based on and subject to the assumptions
made, the factors considered, the review undertaken and the
limitations stated, the proposed Exchange Ratio (as defined in
the opinion) is fair to Sugarland and its shareholders from a
financial point of view. The opinion does not constitute a
recommendation to any shareholder on how to vote at the Special
Meeting. See "The Plan - Opinion of Chaffe & Associates, Inc."
for further information regarding, among other things, the
selection of Chaffe and its compensation arrangement in
connection with the Plan.
Conversion of Sugarland Common Stock
Under the terms of the Plan, on the date the Holding
Company Merger becomes effective (the "Effective Date"), and
assuming no Sugarland shareholders perfect dissenters' rights,
each outstanding share of Sugarland Common Stock will be
converted into one share of MidSouth Preferred Stock. Pursuant
to resolutions adopted by the Board of Directors of MidSouth and
Sugarland, the deadline for consummating the Mergers has been
extended until July 31, 1995, and if the Mergers are not
consummated by that date, the Companies may terminate the Plan or
waive their right to do so and consummate the Mergers at a later
date. However, the Companies intend for the Mergers to be
effected as soon as possible after the Annual Meeting and Special
Meeting. See "The Plan - Conversion of Sugarland Common Stock."
In lieu of the issuance of any fractional share of Preferred
Stock to which a holder of Sugarland Common Stock may be
entitled, each shareholder of Sugarland, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented Sugarland Common Stock held by such
shareholder, will be entitled to receive a cash payment (without
interest) equal to such fractional share multiplied by $14.25.
See "The Plan-Conversion of Sugarland Common Stock."
Description of MidSouth Preferred Stock
Dividend Rights. Cash dividends on shares of MidSouth
Preferred Stock are cumulative from the date of issuance of such
shares and are payable when, as and if declared by the MidSouth
Board of Directors, at an annual rate in 1995 of 8.28%, and
thereafter at an annual rate fixed on December 31 of each year
for the ensuing calendar year, and equal to the yield for
Government Bonds and Notes maturing in December of the following
year, as published in the Treasury Bonds, Notes and Bills Section
of the last issue of the Wall Street Journal published each year,
plus 1% per annum; provided that the annual dividend rate will in
no case be greater than 10% nor less than 6%; and provided
further that the annual dividend rate will be fixed at 10% from
and after the tenth anniversary of the date of issuance of the
Preferred Stock. If more than one yield is shown for December
maturities, the average will be applied, and if no yield is
quoted for December maturities, the yield for the next earlier
available month will be applied.
Dividends payable on the Preferred Stock will be paid
on the first day of January, April, July and October of each
year, provided that the initial dividend will be payable on the
first day of January, April, July or October that is at least 91
days from the date of original issuance of the Preferred Stock
and will be in an amount, at the applicable dividend rate, based
on the number of days between the date of original issuance and
the dividend payment date minus 90 days. Accordingly, assuming
an Effective Date of July 20, 1995, the first dividend payment
date would be January 1, 1996 for the 74 day period from October
19 through December 31.
The aggregate amount of the initial dividend payable to
holders of Preferred Stock will be reduced by the amount by which
certain expenses of Sugarland related to the Plan exceed $110,000
(the "Subtracted Amount"). In any case in which the Subtracted
Amount is greater than the initial dividend, such excess will be
deducted from the amount otherwise payable on the next succeeding
dividend payment date.
As of the date hereof, it is estimated that the
Subtracted Amount will be $25,000. Accordingly, assuming an
initial dividend payment date of January 1, 1996, the dividend of
$45,423.42 that would otherwise be payable on that date will be
reduced by $25,000. To the extent the Subtracted Amount exceeds
$25,000 it would further reduce or eliminate the dividend
otherwise payable on January 1, 1996, and could also reduce or
eliminate the dividend otherwise payable on April 1, 1996. See
"Rights and Preferences of MidSouth Preferred Stock - Dividend
Rights" for information concerning timing and amounts of
dividends payable under certain assumptions related to the
Subtracted Amount.
Dividends are payable only out of funds legally
available therefor, as defined in MidSouth's Articles of
Incorporation. Under the LBCL, MidSouth may pay dividends
only out of "surplus," as defined in the LBCL. At March 31,
1995 MidSouth had "surplus" of approximately $6,100,000.
Statutory surplus does not represent actual funds, which MidSouth
expects to obtain from dividends from MidSouth Bank, and
funds "legally available therefor" is defined to mean only funds
that may be obtained from MidSouth Bank. The payment of
dividends by a national bank is restricted by various provisions
of the national banking laws and regulations thereunder, but
under the most restrictive of these provisions, at March 31, 1995
MidSouth Bank could pay up to $1,400,000 in dividends to
MidSouth without regulatory approval. There can be no assurance,
however, that in future periods, the Bank will be able to provide
funds for the payment of dividends or that MidSouth will have
statutory surplus sufficient to permit the payment of dividends
by it.
No dividends may be paid on MidSouth Common Stock until
all accrued quarterly dividends on the Preferred Stock have been
paid. Under MidSouth's Articles of Incorporation, MidSouth may
not, without approval of the MidSouth Preferred Stock, issue
other shares of Preferred Stock ranking in priority to or on a
parity with the Preferred Stock.
If any quarterly dividend is not paid when due, the
unpaid amount will bear interest at a rate of 10% per annum until
paid. If MidSouth is in arrears for two consecutive quarterly
dividends, holders of Preferred Stock will have the right to
elect two directors of MidSouth.
See "Rights and Preferences of MidSouth Preferred
Stock-Dividend Rights."
Redemption. On or after the fifth anniversary of the
date of issuance of the Preferred Stock, MidSouth may, at its
option, redeem the whole, or from time to time, any part of the
Preferred Stock at a redemption price per share payable in cash
in an amount equal to the sum of (i) $14.25, (ii) all accrued and
unpaid dividends on the Preferred Stock to the date fixed for
redemption, whether or not earned or declared and (iii) interest
accrued to the date of redemption on all accrued and unpaid
dividends on the Preferred Stock, if any. See "Rights and
Preferences of MidSouth Preferred Stock-Redemption Rights."
Conversion. At their option, holders of the shares of
MidSouth Preferred Stock may convert such stock into shares of
MidSouth Common Stock at a conversion rate of one share of common
stock for each share of Preferred Stock converted at any time
prior to redemption of the Preferred Stock. The conversion rate
is subject to adjustment from time to time in the event of a
dividend or distribution to the holders of MidSouth Common Stock,
in shares of MidSouth Common Stock, a stock split or reverse
stock split of the MidSouth Common Stock, a reclassification of
the MidSouth Common Stock, or certain business combination
transactions involving MidSouth, as provided in MidSouth's
Articles of Incorporation. See "Rights and Preferences of
MidSouth Preferred Stock-Conversion Rights."
Voting Rights. Except as otherwise required by law or
in MidSouth's Articles of Incorporation, holders of MidSouth
Preferred Stock are not entitled to any vote on any matter,
including but not limited to any merger, consolidation or
transfer of assets, or statutory share exchange, and to notice of
any meeting of shareholders of MidSouth. If at any time MidSouth
falls in arrears in the payment of dividends on the Preferred
Stock for two consecutive quarterly dividend periods, the number
of directors constituting the full Board of Directors of MidSouth
shall be automatically increased by two, and the holders of the
Preferred Stock, voting separately as a single class, will be
entitled to elect two directors of MidSouth to fill the two
created directorships, at a special meeting called for the
purpose, and thereafter at each shareholders meeting held for the
purpose of electing directors of MidSouth, so long as there
continues to be any arrearage in the payment of dividends on the
Preferred Stock for any past quarterly dividend period or of
interest on such accumulated and unpaid dividends. When all
accumulated and unpaid dividends on the Preferred Stock for all
past quarterly dividend periods, and the interest thereon, have
been paid in full, the right of the holders of the Preferred
Stock to elect directors will cease, the number of the directors
of MidSouth shall automatically be reduced by two, and the term
of office of all directors elected by the shareholders of the
Preferred Stock will immediately terminate. Holders of Preferred
Stock must approve any issuance by MidSouth of any Preferred
Stock ranking senior to or on a parity with the Preferred Stock
as to dividends or rights upon liquidation.
See "Rights and Preferences of MidSouth Preferred
Stock-Voting Rights."
Liquidation Preference. The liquidation preference of
the Preferred Stock will be $14.25 per share, plus an amount
equal to accrued and unpaid dividends and accrued interest
thereon. See "Rights and Preferences of MidSouth Preferred Stock
- Liquidation Rights."
Exchange of Certificates
Upon consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of
certificates representing shares of Sugarland Common Stock for
certificates representing shares of MidSouth Preferred Stock,
will be mailed to each person who was a shareholder of record of
Sugarland on the Effective Date. Shareholders are requested not
to send in their Sugarland Common Stock certificates until they
have received a letter of transmittal and further written
instructions.
Sugarland shareholders who cannot locate their
certificates are urged to contact promptly Ronald R. Hebert, Sr.,
Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette,
Louisiana 70544, telephone number (318) 276-6307. A new
certificate will be issued to replace the lost certificate(s)
only upon execution by the shareholder of an affidavit certifying
that his certificate(s) cannot be located and an agreement to
indemnify Sugarland and MidSouth, as its successor, against any
claim that may be made against Sugarland or MidSouth, as its
successor, by the owner of the certificate(s) alleged to have
been lost or destroyed. Sugarland or MidSouth, as its successor,
may also require the shareholder to post a bond in such sum as is
sufficient to support the shareholder's agreement to indemnify
Sugarland and MidSouth. See "The Plan - Exchange of
Certificates."
Conditions to Consummation of the Mergers
In addition to approval by the shareholders of MidSouth
and Sugarland, consummation of the Mergers is conditioned upon
(i) the accuracy on the date of closing of the representations
and warranties and the compliance with covenants made in the Plan
by each party, and the absence of any material adverse change in
the financial condition, results of operations, business or
prospects of the other party's consolidated group; (ii) the
receipt of required regulatory approvals; (iii) the receipt of
assurances from the Board of Governors of the Federal Reserve
System ("FRB") or delegated authority satisfactory to MidSouth,
that the Preferred Stock will be treated as Tier 1 Capital of
MidSouth for the purpose of capital adequacy guidelines of the
FRB and (iv) certain other conditions. The Plan further provides
that if MidSouth does not receive assurance from the FRB that the
Preferred Stock will be treated as Tier 1 Capital due to any term
or provision of the Preferred Stock, MidSouth shall propose a
revision of such form or provision so as to cause the Preferred
Stock to be treated as Tier 1 Capital, and Sugarland shall have
15 days from the receipt of such proposal to accept it and permit
this condition to be met. As of the date of the Joint Proxy
Statement and Prospectus, MidSouth had received such assurances.
The Companies intend to consummate the Mergers as soon as
practicable after all of the conditions to the Mergers have been
met or waived. See "The Plan - Regulatory Approvals and Other
Conditions of the Mergers."
On January 25, 1995, MidSouth filed an application
seeking prior approval of the Bank Merger from the Office of the
Comptroller of the Currency (the "OCC") and by letter dated
January 30, 1995 requested a waiver of approval of the Holding
Company Merger from the FRB. MidSouth received the approval from
the OCC on March 22, 1995 and the waiver from the FRB on March
17, 1995; however, there is no assurance that the other
conditions to consummation of the Mergers will be satisfied. See
"The Plan - Regulatory Approvals and Other Conditions of the
Mergers."
Waiver, Amendment and Termination
The Plan provides that each of the parties thereto may
waive any of the conditions to its obligation to consummate the
Mergers other than approval by shareholders, the receipt of all
necessary regulatory approvals and the satisfaction of all
requirements prescribed by law for consummation of the Mergers.
Neither MidSouth nor Sugarland intend to waive a condition if
such waiver would have a material adverse effect on its own
shareholders.
The Plan may be amended at any time before or after its
approval by Sugarland's shareholders by the mutual agreement of
the Boards of Directors of the parties to the Plan; provided
that, under the LBCL, any amendment made subsequent to such
shareholder approval may not alter the amount or type of shares
into which Sugarland Common Stock will be converted, or alter any
term or condition of the Plan in a manner that would adversely
affect any Sugarland shareholder. Any such amendment after the
Plan has been approved by Sugarland's shareholders will require
Sugarland to obtain additional shareholder approval, and to hold
another meeting of its shareholders and solicit additional
proxies. While MidSouth is entitled to amend the Plan in any
respect without approval of its shareholders other than to
increase the amount of shares of Preferred Stock issuable
thereunder, it does not intend to enter into any material
amendment.
The Plan may be terminated at any time prior to the
Effective Date by (i) the mutual consent of the Boards of
Directors of MidSouth and Sugarland; (ii) the Board of Directors
of either MidSouth or Sugarland in the event of a material breach
by the other or its subsidiary of any representation, warranty or
covenant in the Plan which cannot be cured by the earlier of ten
days after written notice of such breach or July 31, 1995; (iii)
the Board of Directors of either MidSouth or Sugarland if by July
31, 1995, all the conditions to closing required by the Plan have
not been met or waived, cannot be met or the Mergers have not
occurred; (iv) the Board of Directors of MidSouth if, at the time
of the closing, the number of shares of Sugarland Common Stock as
to which holders thereof are legally entitled to assert
dissenters' rights exceeds five percent of the total number of
shares of Sugarland Common Stock outstanding on the Closing Date;
(v) the Board of Directors of MidSouth if Sugarland's Board of
Directors (A) withdraws, modifies or changes its recommendation
to its shareholders of the Plan or resolves to do so, (B)
recommends to its shareholders (i) any other merger,
consolidation, share exchange, business combination or other
similar transaction, (ii) any sale, lease, transfer or other
disposition of all or substantially all of the assets of
Sugarland or the Bank or (iii) any acquisition by any person or
group of the beneficial ownership of thirty-three and one-third
percent or more of any class of Sugarland's capital stock or (C)
makes any announcement of an intention or agreement to do any of
the foregoing. See "The Plan - Waiver, Amendment and
Termination."
Interests of Certain Persons in the Mergers
MidSouth and MidSouth Bank have agreed that, subject to
certain conditions, they will indemnify each person who served as
an officer or director of Sugarland or the Bank at any time from
December 31, 1992, and who has executed an agreement described
under "Voting and Other Agreements of Sugarland's Directors,
Executive Officers and Five-Percent Shareholders," from and
against all damages, liabilities, judgments and claims and
related expenses based upon or arising out of such person's
service in such capacity to the same extent as he would have been
indemnified under the applicable Articles of Incorporation or
Bylaws of Sugarland or the Bank, as appropriate, as they were in
effect on December 28, 1994. The aggregate amount of
indemnification payments required to be made by MidSouth and
MidSouth Bank to such persons is $1.2 million and any claim for
such indemnification must be submitted in writing to the Chief
Executive Officer of MidSouth prior to December 28, 1999.
The Plan also provides for indemnification of
Sugarland's and the Bank's officers, directors and controlling
persons from and against any claims arising out of or based on an
untrue statement or omission of a material fact required to be
stated in the Registration Statement of which this Joint Proxy
Statement and Prospectus forms a part. This indemnification does
not apply to statements made in reliance on information furnished
to MidSouth by Sugarland.
MidSouth and MidSouth Bank have agreed to continue the
employment of D. J. Tranchina, the President and a director of
Sugarland and the Bank, for not less than three years at an
annual salary of $66,000, the same salary at which he is
currently employed by Sugarland. MidSouth and MidSouth Bank have
also agreed to continue the employment for not less than two
years of Irving Boudreaux, Executive Vice-President of the Bank,
Gwen Granger, Senior Vice-President and Cashier of the Bank, and
Susan Davis, Assistant Vice-President of the Bank, at their
current salaries of $45,600, $38,400 and $27,000 respectively.
None of the foregoing persons will be directors or executive
officers of MidSouth or MidSouth Bank.
Voting and Other Agreements of Sugarland's
Directors, Executive Officers and Five-Percent Shareholders.
As a condition to the consummation of the Mergers, each
director and executive officer of Sugarland and each shareholder
who beneficially owns 5% or more of the outstanding shares of
Sugarland Common Stock has executed an individual agreement
pursuant to which such shareholder has agreed (i) to vote as a
shareholder in favor of the Plan and against any other proposal
relating to the sale or disposition of the Bank or Sugarland
unless MidSouth or MidSouth Bank is in breach or default, in any
material respect, with regard to any covenant, representation, or
warranty as to it contained in the Plan to an extent that would
permit Sugarland to terminate the Plan pursuant to the terms
thereof; (ii) not to transfer any shares of Sugarland Common
Stock, except under certain conditions and with respect to
transfers by operation of law; (iii) prior to the Effective Date
or until termination of the Plan, and except to the extent
required to discharge properly his fiduciary duties as a director
of Sugarland, not to solicit, encourage, initiate or participate
in any negotiations or discussions concerning the acquisition of
all or a substantial portion of the assets of, or of a
substantial equity interest in, or any business combination with
Sugarland or the Bank without the prior approval of the Chief
Executive Officer of MidSouth or his designee, and to notify
MidSouth immediately if any such proposal or inquiries are
received by him; (iv) to release MidSouth and MidSouth Bank from
any indemnification obligations that either of them may have to
indemnify him in his capacity as an officer, director or employee
of Sugarland or the Bank except as set forth in the Plan; (v) not
to assume a significant proprietary position with or serve as a
director, officer or employee of, or advisor to, a financial
institution that competes in Iberia and Lafayette Parishes with
the business of Bank as continued by MidSouth Bank for a period
of two years following the Effective Date; and (vi) not to trade
in MidSouth Common Stock until the Effective Time of the Holding
Company Merger or until the Plan has been terminated. See "The
Plan - Voting and Other Agreements of Sugarland's Directors,
Executive Officers and Five-Percent Shareholders."
Employee Benefits
Pursuant to the Plan, MidSouth has agreed that, from
and after the Effective Date, MidSouth and MidSouth Bank will
offer to all persons who were employees of Sugarland or the Bank
immediately prior to the Effective Date and who become employees
of MidSouth or MidSouth Bank following the Mergers, the same
employee benefits as are offered by MidSouth or MidSouth Bank, as
the case may be, to its employees, except that there will not be
a waiting period for coverage under any of its plans, and no
employee of Sugarland or the Bank who is an active employee on
the Effective Date will be denied benefits under such plans for a
pre-existing condition. Full credit will be given for prior
service by such employees with Sugarland or the Bank for
eligibility and vesting purposes under all of MidSouth's and
MidSouth Bank's benefit plans and policies. All benefits accrued
through the Effective Date under the benefit plans of Sugarland
or the Bank will be paid by MidSouth or MidSouth Bank as the case
may be to the extent such benefits are not otherwise provided to
such employees through the benefit plans of MidSouth or MidSouth
Bank, as the case may be. MidSouth and MidSouth Bank are not
obligated to continue any employee benefit or ERISA plans
maintained by Sugarland or the Bank prior to the Effective Date.
See "The Plan - Employee Benefits."
Certain Federal Income Tax Consequences
The Companies have received an opinion from Deloitte &
Touche LLP to the effect that, among other things, each of the
Mergers will qualify as a tax-free reorganization under
applicable law, and that each Sugarland shareholder who receives
MidSouth Preferred Stock pursuant to the Holding Company Merger
will not recognize gain or loss except with respect to the
receipt of cash (i) in lieu of fractional shares of MidSouth
Common Stock, or (ii) pursuant to the exercise of dissenters'
rights. It is recommended that each shareholder of Sugarland
consult his tax advisor concerning the applicable state and local
income tax consequences of the Mergers to him. See "Certain
Federal Income Tax Consequences."
Accounting Treatment
It is anticipated that the Mergers will be accounted
for as a "purchase," as that term is used pursuant to generally
accepted accounting principles for accounting and financial
reporting purposes. Under the purchase method of accounting, the
assets and liabilities of Sugarland as of the Effective Date will
be recorded at their estimated respective fair values and added
to those of MidSouth. Financial statements of MidSouth issued
after the Effective Date will reflect such values and will not be
restated retroactively to reflect the historical financial
position or results of operations of Sugarland.
Dissenters' Rights
Under certain conditions, and by complying with the
specific procedures required by statute and described herein,
shareholders of Sugarland will have the right to dissent from the
Holding Company Merger, in which event, if the Holding Company
Merger is consummated, they will be entitled to receive in cash
the fair value of their shares of Sugarland Common Stock. See
"Dissenters' Rights." Shareholders of MidSouth will not have
dissenters' rights.
<PAGE>
Selected Financial Data of Sugarland
The following selected financial data of Sugarland with
respect to each year in the five-year period ended December 31,
1994, has been derived from Sugarland's consolidated financial
statements and should be read in conjunction with Sugarland's
consolidated financial statements, the notes thereto and
"Sugarland Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing elsewhere in this
Joint Proxy Statement and Prospectus.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Average Balance Sheet Data:
Total assets $ 17,188 $ 18,037 $ 17,125 $ 15,967 $ 15,117
Earning assets 14,715 15,625 14,563 13,544 12,862
Loans (net of unearned 8,296 8,221 8,102 8,008 6,872
discount)
Deposits 15,005 15,900 15,093 14,053 13,293
Shareholders' equity 2,120 2,056 1,932 1,840 1,746
Income Statement Data:
Total interest income $ 1,219 $ 1,268 $ 1,295 $ 1,381 $ 1,357
Net interest income 853 860 793 716 638
Provision for possible -- -- -- -- --
loan losses
Net income 162 188 137 121 114
Per Share Data:
Net income $ 0.87 $ 1.01 $ 0.73 $ 0.64 $ 0.61
Cash dividends -- .20 .18 .15 .15
Book value (period end) 11.25 11.30 10.51 10.00 9.51
Selected Ratios:
Net income as a period of 0.94% 1.04% 0.80% 0.76% 0.75%
average total assets
Net income as a percent of 7.64% 9.14% 7.09% 6.58% 6.53%
average equity
Average equity as a percent 12.33% 11.40% 11.28% 11.52% 11.55%
of average assets
</TABLE>
Selected Financial Data of MidSouth
The following selected financial data with respect to each
of the fiscal years in the five-year period ended December 31,
1994, has been derived from MidSouth's consolidated financial
statements and should be read in conjunction with the documents
incorporated by reference in this Joint Proxy Statement and
Prospectus.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Average Balance Sheet
Data:
Total assets $ 101,547 $ 86,482 $ 82,296 $ 82,296 $ 82,456
Earning assets 93,047 78,750 75,432 74,859 74,148
Loans and leases 55,601 45,124 39,951 41,956 44,984
Securities 33,716 28,655 32,112 27,128 25,069
Deposits 94,164 80,466 77,667 78,610 77,659
Long-term debt <FN1> 1,196 786 954 983 1,039
Shareholders' equity 5,443 4,267 2,887 1,973 2,790
Income Statement Data:
Total interest income $ 7,388 $ 6,371 $ 6,683 $ 7,698 $ 8,300
Net interest income 5,412 4,567 4,272 3,958 4,001
Provision for loan losses 210 306 365 518 2,318
Other income (exclusive 1,422 1,161 1,046 1,000 1,012
of securities transactions)
Operating expense 4,882 4,653 4,106 4,103 4,301
Net income 1,142 1,245 905 441 (1,685)
Per Share Data:
Earnings per share<FN2> $ 1.61 $ 1.93 $ 1.46 $ 0.81 $ (3.23)
Cash dividends N/A N/A N/A N/A N/A
Book value 7.53 8.15 5.73 4.21 3.16
(period ended)
High stock price<FN3> 12.50 9.52 N/A N/A N/A
Low stock price<FN3> 8.75 8.81 N/A N/A N/A
Key ratios:
Net income as a percent 1.12% 1.13% 1.10% .54% (2.03%)
of average total assets<FN4>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net income as a percent 20.98% 22.88% 31.33% 22.35% (60.44%)
of average equity<FN4>
Net interest margin 5.81% 5.80% 5.66% 5.30% 5.43%
Allowance for loan losses 1.45% 1.66% 2.09% 2.14% 3.11%
to loans and leases
Leverage ratio 6.45% 5.94% 5.06% 3.84% 2.78%
Dividend payout ratio N/A N/A N/A N/A N/A
____________________
</TABLE>
Notes:
<FN1> Actual figures have been provided for long-term debt
obligations which include an ESOP borrowing and, in 1994, FHLB
borrowings.
<FN2> Earnings per share have been adjusted for a 5% stock
dividend paid by the Company on February 18, 1994.
<FN3> No market price information is available for the years 1992,
1991 and 1990.
<FN4> Exclusive of income taxes, extraordinary item and cumulative
effect of accounting change for the year ended December 31, 1993.
Comparative Per Share Data (Unaudited)
The following table presents certain information for
MidSouth and Sugarland on an 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 the Companies
and adjustments directly attributable to the proposed Holding
Company Merger based on estimates derived from information
currently available. They do not purport to be indicative of the
results that would actually have been obtained if the Holding
Company Merger had been in effect on the date or for the periods
indicated below, or the results that may be obtained in the
future.
<TABLE>
<CAPTION>
Comparative Per Share Data (unaudited)
December 31, 1994 Historical Pro Forma Sugarland
MidSouth Sugarland Combined Equivalent<FN1>
<S> <C> <C> <C> <C>
Primary earnings per
common share diluted $1.61 $0.87 $1.48 $1.48
Fully diluted earnings
per common share NA NA 1.42 1.42
Dividends declared per
common share - - - -
Book value per common share $7.53 $11.25 $8.92<FN2> 8.92<FN2>
March 31, 1994 Historical Pro Forma Sugarland
MidSouth Sugarland Combined Equivalent<FN1>
Primary earnings per
common share $0.42 $0.26 $0.40 $0.40
Fully diluted earnings
per common share NA NA $0.38 $0.38
Dividends declared per
common share - - - -
Book value per common share $8.62 $11.90 $9.79<FN2> $9.79<FN2>
</TABLE>
________________________
<FN1>Pro forma equivalent amounts are calculated by multiplying the
combined pro forma amount by l.0, the number of shares of
MidSouth Preferred Stock that each holder of Sugarland Common
Stock will receive for each share of his Sugarland Common Stock
upon consummation of the Mergers and assuming that each share of
Preferred Stock has been converted into MidSouth Common Stock.
<FN2>Based on common shares outstanding and assuming conversion of
MidSouth Preferred Stock into MidSouth Common Stock.
Market Prices and Dividends
The Plan provides that MidSouth will use its best efforts to
cause the Preferred Stock be listed for trading on the American
Stock Exchange Emerging Companies Market. The American Stock
Exchange recently announced that it was discontinuing its
Emergining Companies Market but would continue quotations thereon
for shares currently listed, including MidSouth Common Stock.
At the time of its announcement, the American Stock Exchange
encouraged companies listed on the Emerging Companies Market to
apply for listing on the American Stock Exchange itself, and
MidSouth intends to do so in time for the Perferred Stock to be
so listed after the consummation of the mergers. There can no
assurance that such listing will be acomplished. Any such
listing will not be effective until the
Preferred Stock is issued, and there can be no assurance as to
what the initial price of the Preferred Stock will be if and
when listed. The listing of the Preferred Stock does not assure
that there will be an active trading market in the Preferred
Stock and, given that the number of initial holders of Preferred
Stock will be relatively small, and the fact that MidSouth's
Common Stock is thinly traded relative to the Common Stock
of other large bank holding companies, it is likely that there
will be limited and sporadic trading in the Preferred Stock.
Moreover, the listing of the Preferred Stock is not a condition
to consummation of the Mergers. While MidSouth believes the
likelihood that the Preferred Stock would not be listed is remote,
if for some reason the Preferred Stock is not listed or, after
listing, the Preferred Stock and Common Stock are delisted, the
ability of holders of Preferred Stock or Common Stock to dispose
of their shares would be significantly curtailed.
The holders of shares of the Preferred Stock have the right
to convert all or any part of the Preferred Stock into shares of
MidSouth Common Stock at the conversion rate of one share of
MidSouth Common Stock for each share of Preferred Stock
converted, subject to adjustment from time to time in the event
of a dividend or distribution paid to the holders of MidSouth
Common Stock in shares of MidSouth Common Stock, a stock split or
reverse stock split of MidSouth Common Stock, a reclassification
of the MidSouth Common Stock, or certain business combination
transactions involving MidSouth, as provided in MidSouth's
Articles of Incorporation. On December 27, 1994, the day
preceding the date that the Companies entered into the Plan, the
closing sales price for a share of MidSouth Common Stock, as
quoted on the AMEX, was $11.25. On June 8, 1995, the closing
sales price for a share of MidSouth Common Stock was $11.50.
No assurance can be given as to the market price of MidSouth
Common Stock on the Effective Date.
Sugarland Common Stock is not actively traded, and there is
no established trading market for the stock. There are no bid or
asked prices available for Sugarland Common Stock.
MidSouth has not paid cash dividends on its common stock in
the past two years. MidSouth intends, however, to consider
paying dividends on its common stock beginning in the latter part
of 1995 or early part of 1996. Sugarland paid a dividend of $.20
per share on its common stock during 1993 but has not paid a
dividend since that time. The Plan does not permit Sugarland to
pay any further dividends without the prior consent of MidSouth.
See "Information About Sugarland - Market Prices and
Dividends."
<PAGE>
INTRODUCTORY STATEMENT
General
This Joint Proxy Statement and Prospectus is furnished to
the shareholders of Sugarland Bancshares, Inc. ("Sugarland") and
MidSouth Bancorp, Inc. ("MidSouth") in connection with the
solicitation of proxies on behalf of the respective Boards of
Directors of Sugarland and MidSouth for use at a special meeting
of the shareholders of Sugarland (the "Special Meeting") and the
annual meeting of the shareholders of MidSouth (the "Annual
Meeting," which collectively with the Special Meeting are
referred to herein as the "Meetings") to be held on the dates and
at the times and places specified in the accompanying Notice of
Special Meeting of Shareholders of Sugarland and Notice of Annual
Meeting of Shareholders of MidSouth, or any adjournments thereof.
No proxy given by any shareholder who voted against the proposals
described herein, however, will be voted in favor of any proposal
to adjourn the Meetings. Sugarland and MidSouth (collectively,
the "Companies") have each supplied all information included
herein with respect to it and its subsidiary.
Purpose of the Meetings
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve an Agreement and Plan of Merger
between MidSouth and Sugarland and a related Agreement of Merger
between MidSouth National Bank ("MidSouth Bank") and the Bank
(the "Bank Merger Agreement," which collectively with the
Agreement and Plan of Merger, is referred to as the "Plan").
Pursuant to the Plan, the Bank will be merged into MidSouth Bank
(the "Bank Merger") and Sugarland will be merged into MidSouth
(the "Holding Company Merger," which, collectively with the Bank
Merger, are referred to as the "Mergers") with the result that
the business and properties of Sugarland will become the business
and properties of MidSouth and, except for shares of Sugarland's
common stock to which dissenters' rights have been perfected,
each outstanding share of Sugarland common stock ("Sugarland
Common Stock") will be converted into one share of Series A
Cumulative Convertible Preferred Stock of MidSouth (the
"Preferred Stock") as described under the caption "The Plan -
Conversion of Sugarland Common Stock."
The purpose of the Annual Meeting is, among other things, to
elect directors of MidSouth and to consider and vote upon a
proposal to approve the issuance of up to 187,286 shares of
Preferred Stock of MidSouth to be issued to shareholders of
Sugarland in exchange for their Sugarland Common Stock in
connection with the Mergers. See "Election of Directors of
MidSouth."
Shares Entitled to Vote; Quorum; Vote Required
Only holders of record of MidSouth's common stock ("MidSouth
Common Stock") at the close of business on June 7, 1995 are
entitled to notice of and to vote at the Annual Meeting. On that
date there were 717,753 shares of MidSouth Common Stock
outstanding, each of which is entitled to one vote on each matter
properly brought before the Annual Meeting. Only holders of
record of Sugarland Common Stock at the close of business on June
7, 1995 are entitled to notice of and to vote at the Special
Meeting. On that date there were 187,286 shares of Sugarland
Common Stock outstanding, each of which is entitled to one vote
on each matter properly brought before the Special Meeting.
With respect to any matter properly brought before the
Meetings, the presence at the Meetings, in person or by proxy, of
the holders of a majority of the outstanding shares of the
respective Companies' common stock is necessary to constitute a
quorum.
The Plan must be approved by the shareholders of Sugarland
by the affirmative vote of two-thirds of the voting power
present, in person or by proxy, at the Special Meeting. An
abstention will have the effect of a vote against the Plan.
However, unless the Plan is approved by the holders of at least
80% of the Sugarland Common Stock, dissenters' rights will apply
and an abstention will cause a shareholder otherwise entitled to
dissenters' rights to forfeit any claim to such rights. See
"Dissenters' Rights." If brokers who do not receive instructions
from beneficial owners as to granting or withholding of proxies
may not or do not exercise discretionary power to grant a proxy
with respect to such shares (a "broker non-vote") on a proposal,
including the proposal to approve the Plan, shares not voted on
such proposal will be counted as not present with respect to the
proposal.
Under the Louisiana Business Corporation Law (the "LBCL")
and the Articles of Incorporation of MidSouth, the shareholders
of MidSouth are not required to approve the Mergers. However,
under the rules of the American Stock Exchange Emerging Company
Market (the "AMEX") on which MidSouth Common Stock is listed,
shareholder approval is required for the issuance of the
Preferred Stock. The issuance of the Preferred Stock must be
approved by the affirmative vote a majority of the votes cast at
the Annual Meeting. Abstentions and broker non-votes will not be
counted in the determination of the total number of votes cast.
Directors, executive officers and certain principal
shareholders of Sugarland beneficially owning an aggregate of
89,956 shares, or approximately 48.03% of the outstanding
Sugarland Common Stock, have executed agreements pursuant to
which they have agreed, among other things, to vote in favor of
the Plan. See "Voting and Other Agreements with Sugarland's
Directors, Executive Officers and Five-Percent Shareholders."
Accordingly, management of Sugarland believes that Sugarland will
obtain the vote required for approval of the Plan. The directors
and executive officers of MidSouth having voting power with
respect to an aggregate of 292,924 shares, or approximately
39.65% of the outstanding MidSouth Common Stock, have informed
MidSouth that they intend to approve the issuance of the
Preferred Stock, and, accordingly, management of MidSouth
believes that MidSouth will obtain the vote required for approval
of the issuance of the Preferred Stock.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail, directors,
officers and employees of the Companies, without receiving
additional compensation therefor, may solicit proxies by
telephone and in person. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares
of the Companies' stock, and the Companies will reimburse such
parties for reasonable out-of-pocket expenses incurred in
connection therewith. The cost to Sugarland of soliciting
proxies is being paid for by Sugarland, and the cost to MidSouth
of soliciting proxies is being paid for by MidSouth.
The proxies that accompany this Joint Proxy Statement and
Prospectus permit each holder of record of the Companies' common
stock on the applicable record date to vote on all matters that
properly come before the Special Meeting or Annual Meeting. When
a shareholder of Sugarland specifies his choice on the proxy with
respect to the proposal to approve the Plan, the shares
represented by the proxy will be voted in accordance with such
specification. If no such specification is made, the shares
represented by an executed proxy will be voted in favor of the
proposal to approve the Plan. If a shareholder of Sugarland does
not sign and return a proxy and specify on the proxy an
instruction to vote against the Plan, he will not be able to
exercise dissenters' rights with respect to the Holding Company
Merger unless he attends the Special Meeting in person and votes
against the Plan, and gives written notice of his dissent from
the Plan at or prior to the Special Meeting. See "Dissenters'
Rights." A shareholder of Sugarland may revoke his proxy by (i)
giving written notice of revocation to Ronald R. Hebert, Sr.,
Secretary, Sugarland Bancshares, Inc., 1527 W. Main Street,
Jeanerette, Louisiana 70544; or (ii) executing and delivering to
Sugarland at any time before its exercise a later dated proxy or
(iii) attending the Special Meeting and voting in person.
Where a shareholder of MidSouth specifies his choice on the
proxy with respect to the approval of the issuance of the
Preferred Stock, the shares represented by proxy will be voted in
accordance with such specification. If no such specification is
made, the shares represented by an executed proxy will be voted
in favor of the issuance of the Preferred Stock and in favor of
the election of the Directors of MidSouth named in the proxy.
An abstention or broker non-vote will not be counted in the
determination of the total number of votes cast. A shareholder
of MidSouth may revoke his proxy by (i) giving written notice of
revocation to Karen L. Hail, Secretary, MidSouth Bancorp, Inc.,
102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana
70501; or (ii) executing and delivering to MidSouth at any time
before its exercise a later dated proxy or (iii) attending the
Annual Meeting and voting in person.
No matters are expected to be considered at the Special
Meeting other than the proposal to approve the Plan, and no
matters are expected to be considered at the Annual Meeting other
than the proposal to approve the issuance of the Preferred Stock
and the election of directors of MidSouth. If any other matters
should properly come before either of the meetings, it is
intended that proxies in the form accompanying this Joint Proxy
Statement and Prospectus will be voted on all such matters in
accordance with the judgment of the person(s) voting such
proxies, except that no proxy given by any shareholder who voted
against the Plan or the issuance of the Preferred Stock will be
voted in favor of a proposal to adjourn the Meetings.
THE PLAN
General
The transactions contemplated by the Plan are to be effected
in accordance with the terms and conditions set forth in the
Plan, which is incorporated herein by reference. The following
brief description does not purport to be complete and is
qualified in its entirety by reference to the Plan. For
information concerning obtaining a copy of the Plan, see
"Available Information."
The ultimate result of the transactions contemplated by the
Plan will be that the business and properties of the Bank will
become the business and properties of MidSouth Bank, the business
and properties of Sugarland will become the business and
properties of MidSouth, and the shareholders of Sugarland will
become shareholders of Preferred Stock of MidSouth. The steps
taken to achieve this result involve the following transactions:
(i) the Bank will be merged into MidSouth Bank and the separate
existence of the Bank will cease; (ii) Sugarland will be merged
into MidSouth and the separate existence of Sugarland will cease;
and (iii) shareholders of Sugarland will receive the
consideration described below under the heading "The Plan -
Conversion of Sugarland Common Stock."
Background of and Reasons for the Plan
Background. In 1987, C.R. Cloutier, President of MidSouth
and MidSouth Bank, and D.J. Tranchina, President of Sugarland and
the Bank, first discussed generally the possibility of a business
combination between the Companies and the Banks. After
preliminary discussions, the Companies and the Banks each
determined not to pursue a business combination at that time. In
September 1993, Messrs. Cloutier and Tranchina again discussed in
general terms the possibility of a business combination between
the Companies and the Banks and expressed interest in exploring
fully such a transaction.
On April 13, 1994, Will G. Charbonnet, Sr., Chairman of the
Board of MidSouth and MidSouth Bank, and Mr. Cloutier presented
to Sugarland's Board of Directors a written proposal to merge the
Companies and the Banks. Representatives of the Companies and
the Banks continued to discuss the terms of a business
combination. On May 26, 1994, Sugarland retained Chaffe &
Associates, Inc. ("Chaffe") as its financial advisor in
connection with a possible business combination with MidSouth,
and on August 19, 1994, the Companies agreed to a confidentiality
agreement and exchanged certain confidential information
concerning their respective companies as a means of exploring
further a business combination between the Companies.
Over the next several months, the Companies exchanged drafts
of a proposed merger agreement and engaged in detailed
negotiations concerning the terms of the proposed Mergers. On
December 8, 1994, the Boards of Directors of Sugarland and the
Bank held a special joint meeting to consider the proposed
Mergers. At the meeting, Sugarland's Board of Directors,
management and legal and financial advisors reviewed the
background of, and rationale for, the proposed Mergers, the terms
of the Plan, the potential risks and benefits of the Mergers and
the financial and evaluation analyses of the transaction. Chaffe
delivered its opinion to Sugarland's Board of Directors,
subsequently confirmed in writing, that the exchange ratio in the
proposed merger of Sugarland and MidSouth was fair to Sugarland's
shareholders, from a financial point of view, as of such date.
On December 14, 1994, MidSouth's Board of Directors met and
approved the proposed Mergers and the Plan.
Reasons for the Plan. The Board of Directors of Sugarland
believes that approval of the Plan is in the best interest of
Sugarland and its shareholders. In reaching its decision to
recommend the Plan, Sugarland's Board of Directors consulted with
its financial and other advisors, as well as with Sugarland's
management, and considered the following material factors:
(a) The business, financial condition, results of
operations and prospects of each of MidSouth and
Sugarland;
(b) The market for the Bank's services and the likelihood
that the Bank would continue to face competitive
pressures in its market area from banks and other
financial institutions with greater financial resources
capable of offering a broad array of financial services
and operating on a narrower profit margin than the
Bank;
(c) The amount and type of consideration to be received by
Sugarland's shareholders pursuant to the Plan;
(d) The market price of MidSouth Common Stock;
(e) The dividends to which Sugarland's shareholders would
be entitled under the terms of the Preferred Stock;
(f) Each of the Mergers is expected to qualify as a tax-
free reorganization so that neither Sugarland nor its
shareholders (except to the extent that cash is
received in respect of their shares) will recognize any
gain in the transaction (see "Certain Federal Income
Tax Consequences"); and
(g) The opinion received from Chaffe that the proposed
Exchange Ratio (as defined in such opinion) is fair to
Sugarland and its shareholders from a financial point
of view (see "Opinion of Chaffe & Associates, Inc.").
Sugarland's Board did not assign any specific or relative
weight to the foregoing factors in its consideration of the Plan.
Sugarland's Board of Directors believes that the Plan provides
significant value to all Sugarland shareholders and will enable
them to participate in opportunities for growth that Sugarland's
Board of Directors believes the Mergers make possible.
The Board of Directors of MidSouth believes that the Mergers
are in the best interests of MidSouth and its shareholders. In
addition to the financial terms, among the factors considered by
the Board in approving the Plan were (i) the increased
competitive advantages available to MidSouth Bank through the
combined capital of the Banks and the economies of scale created
as a result of the Mergers and (ii) the increased market share
and additional markets available to MidSouth as a result of the
Mergers.
The financial and other terms of the Plan were arrived at
through arm's length negotiations between representatives of the
Companies. Determination of the consideration to be received by
Sugarland's shareholders in exchange for their stock was based
upon various factors considered by the Boards of the Companies,
including primarily the comparative financial condition,
historical results of operations, current business and future
prospects of the Companies and the Banks, the market price and
historical earnings per share of the common stock of the
Companies, and the desirability of combining the financial and
managerial resources of MidSouth Bank and the Bank to pursue
available consumer and commercial banking business in Lafayette,
Jefferson, Iberia and St. Martin Parishes and surrounding areas.
The Board of Directors of Sugarland approved the Plan and
recommends that its shareholders vote FOR approval of the Plan.
The Board of Directors of MidSouth unanimously approved the Plan
and recommends that its shareholders approve the issuance of the
Preferred Stock.
Opinion of Chaffe & Associates, Inc.
General.Pursuant to an engagement letter dated as of May 26,
1994 (the "Engagement Letter"), Sugarland retained Chaffe to act
as its financial advisor in connection with its evaluation of a
possible business combination with MidSouth, including providing
certain analyses of the financial terms of the Mergers. 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 recapitalizations
and valuations for estate, corporate and other purposes. It
regularly is retained to perform similar services for other banks
and bank holding companies. Sugarland selected Chaffe as its
financial advisor on the basis of its experience and expertise in
transactions similar to the Mergers and its reputation in the
banking and investment communities.
In connection with its engagement as Sugarland's financial
advisor with respect to the Mergers, Chaffe was instructed to
evaluate the fairness to Sugarland shareholders, from a financial
point of view, of the Exchange Ratio (as defined in Chaffe's
opinion) in the Mergers. Sugarland did not place any limitations
on the scope or manner of Chaffe's investigations and review, and
instructed Chaffe to conduct such investigations as it deemed
appropriate for purposes of its evaluation. Chaffe was also
engaged to provide a valuation of Sugarland Common Stock and to
advise Sugarland in its negotiations with MidSouth concerning the
consideration to be received by Sugarland's shareholders pursuant
to the Plan. Such consideration was determined by Sugarland and
MidSouth in their negotiation of the terms of the Plan.
At July 13 and August 10, 1994 meetings of Sugarland's Board
of Directors, Chaffe made presentations and presented reports to
the Board concerning the proposed Mergers. On December 30, 1994,
Chaffe delivered its written opinion that, based upon and subject
to the assumptions made, the factors considered, the review
undertaken and the limitations stated in such opinion and such
other matters as Chaffe considered relevant, the Exchange Ratio
in the Holding Company Merger was fair to Sugarland and its
shareholders from a financial point of view, as of the date of
such written opinion. The full text of Chaffe's written opinion
to the Sugarland Board of Directors, which sets forth the
assumptions made, matters considered, and limitations of the
review by Chaffe, is attached hereto as Appendix A and is
incorporated herein by reference. The opinion should be read
carefully and in its entirety in connection with this Joint Proxy
Statement and Prospectus. The following summary of Chaffe's
opinion is qualified in its entirety by reference to the full
text of the opinion. Chaffe's opinion does not constitute a
recommendation to any shareholder of Sugarland as to how such
shareholder should vote at the Special Meeting.
In connection with rendering its December 30, 1994 opinion,
Chaffe reviewed materials relating to the Mergers and the
financial and operating condition of the Companies, including,
among other information: (i) the Plan; (ii) Sugarland's audited
financial statements and other data for recent years and interim
periods through September 30, 1994; (iii) the Bank's 1994 budget;
(iv) MidSouth's audited financial statements and other data for
recent years and interim periods through September 30, 1994; and
(v) statistical and financial information for Sugarland and
MidSouth and for comparable companies derived from various
statistical services, as well as certain publicly available
information and analyses relating to them. In addition, Chaffe
reviewed certain historical market information for Sugarland
Common Stock, for which no independent trading market exists, and
certain historical market prices and trading volumes of MidSouth
Common Stock on the AMEX. In reporting such information to
Sugarland's Board of Directors, Chaffe noted that although there
is an independent market for MidSouth Common Stock and there is
expected to be an independent market for the Preferred Stock,
such stocks are or will be, respectively, thinly traded.
Set forth below is a brief summary of selected analyses
performed by Chaffe in connection with its opinion and the
reports presented by Chaffe to the Sugarland Board of Directors
on July 13, 1994 and August 10, 1994 in connection therewith.
The summary set forth below describes the material evaluation
methodologies performed by, and material factors considered by,
Chaffe. Chaffe's opinion was based on economic, market and other
conditions existing as of December 30, 1994, the date of its
opinion, and Chaffe expressed no opinion on the tax consequences
of the Plan or the effect of any tax consequences on the value
received by the holders of Sugarland Common Stock in the Mergers.
Chaffe has not been engaged to reconfirm its opinions.
In connection with rendering its opinion and preparing its
presentations to the Sugarland Board of Directors, Chaffe
performed a variety of financial analyses. Chaffe reviewed the
financial terms of business combinations in the commercial
banking industry considered a number of valuation methodologies,
including, among others, those that incorporate book value,
deposit base premium and capitalization of earnings; and
performed such other studies and analyses as Chaffe deemed
relevant for purposes of its opinion. Chaffe also analyzed the
terms of the MidSouth Preferred Stock.
Analysis of the Companies. Chaffe analyzed the historical
performance of Sugarland and MidSouth, and considered the current
financial condition, results of operations and prospects of each.
Chaffe analyzed information and data provided by the management
of each of Sugarland and MidSouth concerning such company's
respective loans, other real estate owned, securities portfolio,
fixed assets and operations. With respect to all information
reviewed by it relating to the Companies, Chaffe relied, without
independent verification, upon the accuracy and completeness of
such information. Chaffe did not perform an independent review
of the assets or liabilities of Sugarland or MidSouth, and relied
solely on the Companies for information as to the condition of
each company's loan portfolio, the adequacy of its loan loss
reserve and the value of other real estate owned.
In reviewing Sugarland, Chaffe observed that the Bank's
improved earnings in 1993 were primarily the result of a
decreased cost of funds and a low effective tax rate derived
from the availability of a net operating loss carry forward.
This lower funding cost and tax benefit was a key factor in
Sugarland's 1993 profitability. Chaffe noted that Sugarland's
1994 budget projected earnings to be 26.6% less than 1993
earnings, primarily as a result of a shrinking net interest
margin. The tax benefit available to Sugarland as a result
of the net operating loss carry forward was projected to be
unavailable in 1994, making it likely that Sugarland will return
to statutory tax rates. Sugarland is experiencing increased
competition in its marketplace from new entrants paying higher
yields on deposits, and offering lower rates on loans. Chaffe
also noted Sugarland's concentration of agricultural loans and
observed that prospects for the local agricultural industry
were uncertain as a result of the North American Free Trade
Agreement. Finally, Chaffe observe that Sugarland's high level
of overhead expense was likely to continue to place downward
pressure on earnings as Sugarland responded to government
regulation and competitive pressures.
Analysis of Selected Merger Transactions. In connection
with its July 13, 1994 meeting with Sugarland's Board of
Directors, Chaffe analyzed premiums paid in acquisitions of
selected banks and bank holding companies whose asset size,
leverage ratio and return on average assets were comparable to
Sugarland's (the "U.S. Peer Group"). Transactions considered in
this analysis were those throughout the United States between
March 31, 1993 and June 24, 1994, in which the seller's total
assets were between $10 million and $50 million, leverage ratio
was between 9.0% and 15.0%, and return on average assets was
between 0.75% and 1.50%. Chaffe also analyzed premiums paid in
acquisitions of selected banks and bank holding companies located
in 16 states in the southern United States (the "Southern Peer
Group"). Finally, Chaffe analyzed premiums paid in substantially
all acquisitions of Louisiana banks from March 31, 1993 through
July 12, 1994 (the "Louisiana Acquisitions"). For each bank
acquired or to be acquired in such transactions, Chaffe compared
the prices to be received by the shareholders of each institution
being acquired as a multiple of its tangible equity, its earnings
per share for the four quarters prior to such a transaction, its
premium over tangible equity to core deposits, and its total
assets.
The figures for the U.S. Peer Group, Southern Peer Group and
Louisiana Acquisitions produced: (i) median percentages of
premium (purchase price in excess of tangible equity) to core
deposits of 5.44%, 5.72% and 10.73%, respectively; (ii) median
ratios of purchase price to tangible equity of 1.44x, 1.45x and
1.86x, respectively; (iii) median ratios of purchase price to
earnings per share for the four quarters prior to transaction of
15.52x, 16.59x and 13.05x, respectively, and (iv) median
percentages of purchase price to assets of 14.88%, 15.32% and
17.32%, respectively. In comparison, assuming the consideration
to be paid in the Mergers for each share of Sugarland Common
Stock equals that number of shares of MidSouth Preferred Stock
with a stated value of $14.25, Chaffe determined that the
consideration to be received by the holders of Sugarland Common
Stock in the Mergers represented a percentage of premium to core
deposits of 3.46%, a ratio of price to tangible equity of 1.20x,
a ratio of price to Sugarland's earnings for the twelve months
ended March 31, 1994 of 14.12x, a ratio of price to Sugarland's
1994 budgeted earnings of 18.93x, and a percentage of price to
assets of 14.34%. Prior to rendering its opinion, Chaffe updated
the above-referenced analysis through November 25, 1994. With
respect to each of the above-referenced groups of transactions
and the proposed Merger, Chaffe compared the prices to be
received by the peer groups in the manner described above, and
such analysis yielded results substantially similar to those
stated above.
Chaffe observed that the stated value of the MidSouth
Preferred Stock represented percentages of premium to core
deposits and price to assets, and ratios of price to tangible
equity and price to earnings for the twelve months ended March
31, 1994, that were less than many of the median percentages and
ratios produced for the preer group acquisitions. Conclusions
based on the foregoing analysis are not mathematical;
rather, an analysis of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial
and operating characteristics of the companies and other factors
that could affect the public trading value or the acquisition
value of the companies to which Sugarland is being compared.
Chaffe believed that, given Sugarland's earnings profile, the
value to be received by holders of Sugarland Common Stock in the
Mergers was within an acceptable range of value indicated by the
above analysis as a whole. Chaffe noted that Sugarland's 1994
budgeted earnings were generally in line with Sugarland's
actual performance through March 31, 1994 and slightly below
actual performance through November 25, 1994. Chaffe noted
that the consideration to be paid in the Mergers represented a
very high multiple of price to Sugarland's 1994 budgeted
earnings. Chaffe believed Sugarland's 1994 budgeted earnings
more fairly represented Sugarland's future core earnings
capacity than its earnings for the twelve months ended March 31,
1994.
Discounted Earnings Analysis. In connection with its July
13, 1994 meeting with Sugarland's Board of Directors, Chaffe
calculated, using discounted earnings analysis, the present value
of the stream of after-tax cash flows that Sugarland could
produce in the future. Chaffe estimated the earnings stream
through 2000 and a terminal value after 2000 based upon
information provided by Sugarland management, and then discounted
such values, using an estimated required rate of return for
Sugarland of 12.0%. Chaffe determined that the stated value of
the MidSouth Preferred Stock to be received by the holders of
Sugarland Common Stock was substantially in excess of the value
indicated for Sugarland Common Stock by this type of analysis.
Additional earnings analyses were performed at the time of the
December 30, 1994 opinion, applying similar methodology and
discount rates to the above-described earnings analysis and
yielding substantially similar results.
Dilution Analysis. Sugarland earned $0.18 per share for the
three months ended March 31, 1994. MidSouth earned $0.32 per
share for the three months ended March 31, 1994. If the
Mergers had been consummated at January 1, 1994 and all the
Preferred Stock been converted into MidSouth Common Stock
immediately after the consummation of the Mergers, each former
Sugarland share would have earned approximately $0.29 per share
on a pro forma basis for the three months ended March 31, 1994,
giving effect to the immediate conversion of the Preferred
Stock, the applicable exchange ratio and amortization of
goodwill. This represented an increase of 60% over Sugarland's
earnings per share for the three months ended March 31, 1994.
The expected impact of the Mergers on Sugarland's earnings per
share under the foregoing analysis was similar for the three
months ended March 31, 1994 and the nine months ended September
30, 1994.
Sugarland's book value per share was $11.47 at March 31,
1994. The stated value per share of the MidSouth Preferred Stock
is $14.25. This represented an increase of 24% over the book
value per share of Sugarland Common Stock at March 31, 1994. If
the Mergers had been consummated at March 31, 1994 and all the
Preferred Stock been converted into MidSouth Common Stock
immediately after the consummation of the Mergers, each former
Sugarland share would have a book value of $8.81 on a pro forma
basis, giving effect to the immediate conversion of the Preferred
Stock and the applicable exchange ratio. This represented a
decrease of 23% from the book value per share of Sugarland Common
Stock at March 31, 1994. The expected impact of the Mergers on
the book value of Sugarland Common Stock under the foregoing
analysis was similar at March 31, 1994 and September 30, 1994.
Analysis of MidSouth Preferred Stock. In connection with
its August 10, 1994 meeting with Sugarland's Board of Directors,
Chaffe examined the proposed terms of the MidSouth Preferred
Stock. By using discounted cash flow and option valuation
models, Chaffe considered the appropriate market rate for the
Preferred Stock, certain information concerning MidSouth Common
Stock and proposed conversion provisions for the MidSouth
Preferred Stock. Chaffe considered the value of the Preferred
Stock based upon assumptions that the Preferred Stock would be
redeemed after five years and that the Preferred Stock would not
be redeemed. In addition, Chaffe considered the value of the
Preferred Stock by taking into account the fact that the
Preferred Stock is convertible into MidSouth Common Stock and by
excluding any valuation of the convertibility of the Preferred
Stock. Under all circumstances, Chaffe determined that the value
of the Preferred Stock was within an appropriate range of fair
value for the Sugarland Common Stock.
Sugarland declared cash dividends of $.20 per share of
Sugarland Common Stock in 1993. At the time of Chaffe's August
10, 1994 meeting with Sugarland's Board of Directors, under the
proposed terms of the Preferred Stock, each share of Preferred
Stock would have yielded dividends at a rate of 6.58% per annum.
This yield equated to a dividend per each Sugarland share of
$.94, which represented a 370% increase over Sugarland's 1993
Common Stock dividend. In this analysis, Chaffe considered
MidSouth's ability to pay dividends on the Preferred Stock, and
the fact that there were restrictions in a MidSouth debt
instrument on the payment by MidSouth of any dividends, but was
advised by MidSouth that such restrictions had been waived in
writing by the holder of such instrument.
The foregoing summary does not purport to be a complete
description of the analyses performed by Chaffe. The preparation
of an opinion necessarily is not susceptible to partial analysis
or summary description. Chaffe believes that the summary set
forth above and Chaffe's analyses must be considered as a whole
and that selecting only a portion of its analyses, without
considering all of its analyses, creates an incomplete view of
the process underlying Chaffe's opinion.
The analyses performed by Chaffe are not necessarily
indicative of actual values or actual future results, which may
be significantly more or less favorable than suggested by such
analyses. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or
the prices at which any securities may trade at the present time
or any time in the future. Chaffe may have deemed various
assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis
described above should not be taken to be Chaffe's view of the
actual value of Sugarland, MidSouth or the combined Companies.
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.
To date, Sugarland has paid Chaffe $28,581.74 in fees and
out-of-pocket expenses for the financial advisory services
referred to above, including its services in rendering the
opinion. For other services requested of Chaffe by Sugarland,
Sugarland has agreed to pay Chaffe on an hourly basis.
Sugarland's Management estimates that the total fees and costs to
be paid to Chaffe in connection with the Mergers will be
approximately $30,000, including all amounts previously paid.
According to Chaffe, these amounts are insignificant when
compared to Chaffe's total gross revenues. The fees received by
Chaffe in connection with its services to Sugarland are not
dependent upon consummation of the Mergers or any similar
transaction, or shareholder or regulatory approval of the Plan.
Prior to its retention in May 1994 as Sugarland's financial
advisor, Chaffe had provided no services to Sugarland. Chaffe
has not provided any services to MidSouth. Neither Chaffe nor
any of its officers or employees has any interest in Sugarland
Common Stock, MidSouth Common Stock or MidSouth Preferred Stock.
Pursuant to the Engagement Letter, Sugarland has agreed to
indemnify and hold harmless Chaffe, its subsidiaries and
affiliates, the officers, directors, shareholders, employees,
attorneys, agents and representatives of Chaffe and its
subsidiaries and affiliates, and their respective heirs,
legatees, legal representatives, successors and assigns from and
against any and all damage, loss, cost, expense, obligation,
claim or liability, including reasonable attorneys fees and
expenses arising directly or indirectly from, or in any way
related to, the opinion or any other services performed by Chaffe
pursuant to the Engagement Letter, provided that Chaffe and its
officers, directors, employees, agents and representatives have
not been grossly negligent or guilty of reckless or willful
misconduct in connection with the opinion or such other services.
Conversion of Sugarland Common Stock
In consideration of the Mergers, each share of Sugarland
Common Stock outstanding on the date the Holding Company Merger
becomes effective (the "Effective Date") will be converted into
one share of MidSouth Preferred Stock having the rights and
preferences described below under the heading "Rights and
Preferences of MidSouth Preferred Stock." Pursuant to resolutions
adopted by the Board of Directors of MidSouth and Sugarland,
the deadline for consummating the Mergers has been extended
until July 31, 1995, and if the Mergers are not consummated by
that date, the Companies may terminate the Plan or waive their
right to do so and consummate the Mergers at a later date.
However, the Companies intend for the Mergers to be effected
as soon as possible after the Annual Meeting and the Special
Meeting.
Shareholders who perfect dissenters' rights will not receive
MidSouth Preferred Stock but instead will be entitled to receive
the "fair cash value" of their shares as determined under Section
131 of the Louisiana Business Corporation Law (the "LBCL"). See
"Dissenters' Rights."
In lieu of the issuance of any fractional share of MidSouth
Preferred Stock to which a holder of Sugarland Common Stock may
be entitled, each shareholder of Sugarland, upon surrender of the
certificate or certificates which immediately prior to the
Effective Date represented Sugarland Common Stock held by such
shareholder, will be entitled to receive a cash payment (without
interest) equal to such fractional share multiplied by $14.25,
the stated value of a share of Preferred Stock.
For information regarding restrictions on the transfer of
the Preferred Stock by certain Sugarland shareholders, see
"Status under Federal Securities Laws; Certain Restrictions on
Resales."
Effective Date
The Bank Merger Agreement has been filed with the Office of
the United States Comptroller of the Currency (the "OCC"), and
will be filed for recordation with the Louisiana Commissioner of
Financial Institutions (the "Commissioner"), and the Bank Merger
will be effective at the time and date specified in a certificate
or other written record issued by the OCC, or in the Certificate
of Merger issued by the Commissioner, whichever date is later. A
Certificate of Merger with respect to the Holding Company Merger
will be filed for recordation with the Louisiana Secretary of
State as soon as practicable after shareholder approval is
obtained and all other conditions to the consummation of the
Mergers have been satisfied or waived, and the Holding Company
Merger will be effective at the date and time specified in a
certificate issued by the Secretary of State. It is intended
that the Bank Merger will be consummated immediately after
consummation of the Holding Company Merger. The Companies are
not able to predict the Effective Date of the Bank Merger or the
Holding Company Merger, and no assurance can be given that the
transactions contemplated by the Plan will be effected at any
time. See "The Plan - Regulatory Approvals and Other Conditions
of the Mergers."
Exchange of Certificates
On the Effective Date, each Sugarland shareholder will cease
to have any rights as a shareholder of Sugarland, and his sole
rights will pertain to the shares of MidSouth Preferred Stock
into which his shares of Sugarland Common Stock have been
converted pursuant to the Holding Company Merger, except for any
such shareholder who exercises statutory dissenters' rights and
except for the right to receive cash for any fractional share.
See "Dissenters' Rights."
Upon the consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of
certificates representing shares of Sugarland Common Stock for
certificates representing shares of MidSouth Preferred Stock will
be mailed to each person who was a shareholder of record of
Sugarland on the Effective Date of the Mergers. Shareholders are
requested not to send in their Sugarland Common Stock
certificates until they have received a letter of transmittal and
further written instructions.
After the Effective Date and until surrendered, certificates
representing Sugarland Common Stock will be deemed for all
purposes, other than the payment of dividends or other
distributions, if any, in respect of MidSouth Preferred Stock, to
represent the number of whole shares of MidSouth Preferred Stock
into which such shares of Sugarland Common Stock have been
converted. MidSouth, at its option, may decline to pay former
shareholders of Sugarland who become holders of MidSouth
Preferred Stock pursuant to the Holding Company Merger any
dividends or other distributions that may have become payable to
holders of record of MidSouth Preferred Stock following the
Effective Date until they have surrendered their certificates
evidencing ownership of shares of Sugarland Common Stock. Any
dividends not paid after one year from the date that such
dividends were eligible to be paid will revert in ownership to
MidSouth, and MidSouth will have no further obligation to pay
such dividends.
Sugarland shareholders who cannot locate their certificates
are urged to contact promptly Ronald A. Hebert, Sr., Sugarland
Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana
70544, telephone number (318) 276-6307. A new certificate will
be issued to replace the lost certificate(s) only upon execution
by the shareholder of an affidavit certifying that his or her
certificate(s) cannot be located and an agreement to indemnify
Sugarland or MidSouth, as its successor, against any claim that
may be made against them by the owner of the certificate(s)
alleged to have been lost or destroyed. Either of the Companies
may also require the shareholder to post a bond in such sum as is
sufficient to support the shareholder's agreement to indemnify
them.
Regulatory Approvals and Other Conditions of the Mergers
In addition to shareholder approvals, consummation of the
Mergers will require the approval of the OCC, and approval or
waiver of prior approval from the FRB. On January 25, 1995,
MidSouth filed an application seeking the prior approval of the
Bank Merger from the OCC and, by letter dated January 30, 1995,
requested a waiver of prior approval from the FRB. MidSouth
received OCC approval of the Mergers on March 22, 1995, and
confirmation of waiver of prior approval from the FRB on March
17, 1995.
The obligations of the parties to the Plan are also subject
to other conditions set forth in the Plan, including, among
others: (i) that no action or proceeding has been brought before
a court or governmental body to restrain or prohibit the Mergers;
(ii) that prior to the Effective Date there has not been a
material adverse change in the financial condition, results of
operations, business or prospects of the other party or its
subsidiary; (iii) the receipt of customary legal opinions; (iv)
that on the date of closing, the representations and warranties
made in the Plan by each party are true and correct in all
material respects; and (v) the receipt by MidSouth and Sugarland
of an opinion from Deloitte & Touche LLP to the effect that the
Mergers will constitute a reorganization within the meaning of
Section 368(c) of the Internal Revenue Code and that the
shareholders of Sugarland will not recognize gain or loss with
respect to the shares of Preferred Stock received in the Holding
Company Merger. The obligations of MidSouth and MidSouth Bank to
consummate the Mergers are also conditioned upon, among other
things, that MidSouth has received satisfactory assurance from
the FRB or delegated authority that the Preferred Stock will be
treated as Tier 1 Capital for the purpose of the capital adequacy
guidelines of the FRB; and confirmation from the directors,
executive officers and certain principal shareholders of
Sugarland as to representations and covenants previously made by
them as described under "The Plan - Voting and Other Agreements
of Sugarland's Directors, Executive Officers and Five-Percent
Shareholders."
The Companies intend to consummate the Mergers as soon as
practicable after all of the conditions to the Mergers have been
met or waived; however, there can be no assurance that the
conditions to the Mergers will be satisfied.
Conduct of Business Prior to the Effective Date
Sugarland and the Bank have agreed pursuant to the Plan
that, prior to the Effective Date, each will conduct its
business only in the ordinary course and that, without the prior
written consent of the Chief Executive Officer of MidSouth or his
duly authorized designee, and except as otherwise provided in the
Plan, Sugarland and the Bank will not, among other things, (a)
declare or pay any dividend or change the number of outstanding
shares of its capital stock; (b) amend its articles of
incorporation or bylaws or adopt or amend any resolution or
agreement concerning indemnification of its directors and
officers; (c) merge or consolidate with another entity, or sell
or dispose of a substantial part of its assets, or except in the
ordinary course of business, sell any of its assets; (d) acquire
or dispose of investment securities having an aggregate market
value greater than 10% of the aggregate book value of its
investment securities portfolio as of September 30, 1994; or
acquire any investment securities that are less than investment
grade, or acquire or dispose of investment securities except in
the ordinary course of business; (e) charge off (except as may
otherwise be required by law or regulatory authorities or
generally accepted accounting principles consistently applied) or
sell (except for a price not less than the book value thereof)
any of its portfolio of loans, discounts or financing leases; or
sell any asset held as other real estate or other foreclosed
assets for an amount less than 100% of its book value as of
September 30, 1994; or sell any asset held as other real estate
or other foreclosed assets that had a book value at September 30,
1994 in excess of $25,000; (f) enter into or modify any agreement
pertaining to compensation arrangements with its present or
former directors, officers or employees or increase the
compensation of such persons, except for budgeted bonuses or
other incentive payments in amounts previously disclosed to the
Chief Executive Officer of MidSouth; (g) except in the ordinary
course of business consistent with past practices, place or
suffer to exist on any of its assets any mortgage, pledge or
other encumbrance (except as allowed under the Plan) or cancel
any material indebtedness owing to it or any claims which it may
possess, or waive any right of substantial value or discharge or
satisfy any material noncurrent liability; (h) make any extension
of credit which, together with all other extensions of credit to
the borrower and its affiliates, would exceed $100,000, or,
without reasonable prior notice to the Chief Executive Officer of
MidSouth, or his designee, commit to make any extensions of new
credit in excess of $50,000; (i) fail to pay, or make adequate
provision in all material respects for the payment of, all taxes,
interest payments and penalties due and payable, except those
being contested in good faith by appropriate proceedings and for
which sufficient reserves have been established; or (j) enter
into any new line of business.
In addition, Sugarland and the Bank have agreed that,
without the prior approval of the Chief Executive Officer of
MidSouth or his designee, they will not solicit or initiate
inquiries or proposals with respect to, or, except as may be
necessary as advised in writing by their counsel to discharge
properly their fiduciary duties to Sugarland, the Bank and their
Shareholders, furnish any information relating to, or participate
in any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, or any business combination with
Sugarland or the Bank, other than as contemplated by the Plan.
Each of Sugarland and the Bank has also agreed to instruct its
officers, directors, agents and affiliates to refrain from doing
any of the above and to notify MidSouth immediately if any such
inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are
sought to be initiated with, it or any of its officers,
directors, agents and affiliates.
Further, Sugarland has committed that neither Sugarland's
Board of Directors nor any committee thereof will (i) withdraw or
modify or propose to withdraw or modify in a manner adverse to
MidSouth the approval or recommendation to its shareholders of
the Plan and the Mergers, (ii) approve or recommend, or propose
to recommend any takeover proposal with respect to Sugarland or
the Bank, except such action that its counsel advises in writing
is necessary to discharge its fiduciary duties to Sugarland and
its shareholders, or (iii) modify, or waive or release any party
from any material provision of or fail to enforce any material
provision of, if enforcement is requested by MidSouth, any
confidentiality agreement entered into by Sugarland or the Bank
with any prospective acquiror after the date of the Plan or
during the two years prior to such date.
Waiver, Amendment and Termination
The Plan provides that the parties thereto may waive any of
the conditions to their respective obligations to consummate the
Mergers other than the receipt of necessary regulatory approvals,
shareholder approvals of the Plan, the satisfaction of all
conditions prescribed by law for consummation of the Mergers and
certain other conditions that have already been satisfied. A
waiver must be in writing and approved by the Board of Directors
of the waiving party. Neither MidSouth nor Sugarland intend to
waive any condition if such waiver would have a material adverse
effect on its own shareholders.
The Plan, including all related agreements, may be amended
or modified at any time, before or after shareholder approval, by
the mutual agreement in writing of the Boards of Directors of the
parties to the Plan; provided that, under the LBCL any amendment
made subsequent to such shareholder approval may not alter the
amount or type of shares into which Sugarland's Common Stock will
be converted, or alter any term or condition of the Plan in a
manner that would adversely affect any shareholder of Sugarland.
Additionally, the Plan may be amended at any time by the sole
action of the Chief Executive Officers of the respective parties
to the Plan or their designees to correct typographical errors or
other misstatements, or in any other manner, which is not
material to the substance of the transactions contemplated by the
Plan. Any such amendment after the Plan has been approved by
Sugarland's shareholders will require Sugarland to obtain
additional shareholder approval and to hold another meeting of
its shareholders and solicit additional proxies. While MidSouth
is entitled to amend the Plan without approval of its
shareholders in any respect other than to increase the amount of
shares of Preferred Stock issuable thereunder, it does not intend
to enter into any material amendment.
The Plan may be terminated at any time prior to the
Effective Date by (i) the mutual consent of the respective Boards
of Directors of the Companies; (ii) the Board of Directors of
either MidSouth or Sugarland in the event of a material breach by
the other or its subsidiary of any representation, warranty or
covenant contained in the Plan which cannot be cured by the
earlier of 10 days after written notice of such breach or July
31, 1995; (iii) the Board of Directors of either MidSouth or
Sugarland if by July 31, 1995 all conditions to consummating the
Mergers required by the Plan have not been met or waived, cannot
be met, or the Mergers have not occurred; (iv) the Board of
Directors of MidSouth if the number of shares of Sugarland Common
Stock as to which holders thereof are, at the time of the
closing, legally entitled to assert dissenters' rights exceeds 5%
of the total number of issued and outstanding shares of Sugarland
Common Stock on the Effective Date; or (v) the Board of Directors
of MidSouth if the Board of Directors of Sugarland (A) withdraws,
modifies or changes its recommendation to its shareholders
regarding the Plan and the Mergers or shall have resolved to do
any of the foregoing, (B) recommends to its shareholders (1) any
merger, consolidation, share exchange, business combination or
other similar transaction (other than transactions contemplated
by the Plan), (2) any sale, lease, transfer or other disposition
of all or substantially all of the assets of Sugarland or the
Bank, or (3) any acquisition, by any person or group, of
beneficial ownership of one third or more of any class of
Sugarland's capital stock, or (C) makes any announcement of a
proposal, plan or intention to do any of the foregoing or
agreement to engage in any of the foregoing.
Interests of Certain Persons in the Mergers
Pursuant to the Plan, MidSouth and MidSouth Bank have agreed
that, following the Effective Date, they will indemnify each
person who as of the Effective Date served as an officer or
director of Sugarland or the Bank, or who has previously served
as an officer or director of Sugarland or the Bank at any time
since December 31, 1992 (an "Indemnified Person") from and
against all damages, liabilities, judgments and claims, and
related expenses, based upon or arising out of such person's
service as an officer or director of Sugarland or the Bank, to
the same extent as he would have been indemnified under the
Articles or Bylaws of Sugarland or the Bank, as appropriate, as
such Articles or Bylaws were in effect on December 28, 1994. The
aggregate amount of indemnification payments required to be made
by MidSouth and MidSouth Bank pursuant to the Plan is $1.2
million. Indemnification otherwise required to be paid by
MidSouth or MidSouth Bank will be reduced by any amounts that the
Indemnified Person recovers by virtue of the claim for which
indemnification is sought, and no Indemnified Person is entitled
to indemnification for any claim made prior to the closing date
of which the Indemnified Person, Sugarland or the Bank was aware
but did not disclose to MidSouth prior to the execution of the
Plan (if such claim was known at such time) or prior to the
closing date (if such claim became known after execution of the
Plan). Receipt of the indemnification benefits set forth in the
Plan by a director or officer of Sugarland and the Bank is
conditioned upon his execution of an agreement described in more
detail under the heading "Voting and Other Agreements of
Sugarland's Directors, Executive Officers and Five-Percent
Shareholders." Any claim for indemnification pursuant to the
Plan must be submitted in writing to MidSouth's Chief Executive
Officer prior to December 28, 1999.
MidSouth has also agreed to indemnify Sugarland, the Bank,
and each of the directors, officers and controlling persons of
Sugarland against any claim insofar as it arises from, or is
based upon, an untrue statement or omission, or alleged untrue
statement or omission, of a material fact in the Registration
Statement or the Joint Proxy Statement and Prospectus to the
extent that such untrue statement or omission was not made in
reliance on, and in conformance with, information furnished to
MidSouth by Sugarland. The $1.2 million limit on MidSouth's
indemnification obligation discussed above does not apply to
MidSouth's indemnification obligations with respect to the
Registration Statement and Joint Proxy Statement and Prospectus.
Any person making a claim for indemnification for damages arising
from misstatements or omissions in the Registration Statement or
Joint Proxy Statement and Prospectus must promptly notify
MidSouth of any such claim. MidSouth shall have the right to
assume the defense thereof and will not be liable for any
expenses subsequently incurred by such person in connection with
the defense thereof, except that if MidSouth does not assume such
defense, or counsel for the person making a claim is advised in
writing that there are material substantive issues that raise
conflicts of interest between MidSouth and such person, the
person claiming indemnification may retain counsel satisfactory
to him and MidSouth shall pay all reasonable fees and expenses of
such counsel, provided that (i) MidSouth shall be obligated to
pay for only one counsel for all persons making a claim in any
jurisdiction, (ii) all such persons will cooperate in the defense
of their claims, and (iii) MidSouth will not be liable for any
settlement effected without its prior written consent.
MidSouth and MidSouth Bank have agreed to continue the
employment of D. J. Tranchina, the President and a director of
Sugarland and the Bank, for not less than three years at an
annual salary of $66,000, the same salary at which is currently
employed by Sugarland. MidSouth and MidSouth Bank have also
agreed to continue the employment, for not less than two years,
of Irving Boudreaux, Vice-President of the Bank, Gwen Granger,
Senior Vice-President and Cashier of the Bank, and Susan Davis,
Assistant Vice-President of the Bank, at their current salaries
of $45,600, $38,400 and $27,000 respectively. None of the
foregoing persons will be directors or executive officers of
MidSouth or MidSouth Bank.
Voting and Other Agreements of Sugarland's Directors,
Executive Officers and Five-Percent Shareholders
As a condition to consummation of the Mergers, each
Sugarland director and executive officer and each shareholder
owning 5% or more of Sugarland Common Stock has executed an
individual agreement (a "Joinder Agreement") pursuant to which he
has agreed (i) solely in his capacity as a shareholder of
Sugarland, to vote in favor of the Plan and against any other
proposal relating to the sale or disposition of the Bank or
Sugarland, unless MidSouth or MidSouth Bank is in breach or
default in any material respect with regard to any covenant,
representation or warranty as to it contained in the Plan to an
extent that would permit Sugarland to terminate the Plan pursuant
to the terms thereof; (ii) not to transfer any of the shares of
Sugarland Common Stock over which he has dispositive power, or
grant any proxy thereto not approved by MidSouth, until the
earlier of the Effective Date or the date that the Plan has been
terminated, except for transfers by operation of law or transfers
in connection with which the transferee agrees to be bound by the
Joinder Agreement; (iii) not to purchase, sell or otherwise deal
in MidSouth Common Stock until the Effective Date or termination
of the Plan; (iv) to release, as of the Effective Date, MidSouth
and MidSouth Bank from any obligation that either of them may
have to indemnify such shareholder for acts taken as an officer,
director or employee of Sugarland or the Bank, except to the
extent set forth in the Plan; (v) prior to the Effective Date or
until termination of the Plan, and except to the extent required
to discharge properly his fiduciary duties as a director of
Sugarland, not to solicit, encourage, initiate or participate in
any negotiations or discussions concerning the acquisition of all
or a substantial portion of the assets of, or of a substantial
equity interest in, or any business combination with, Sugarland
or the Bank, without the prior approval of the Chief Executive
Officer of MidSouth or his designees, and to notify MidSouth
immediately if any such proposals or inquiries are received by
him; and (vi) for a period of two years following the Effective
Date, not to serve as a director, officer, employee or advisor
of, or have any investment in any financial institution that
competes with the business of Bank as continued by MidSouth Bank
in Iberia and Lafayette Parishes; however, such person may
continue to hold any investment that he held on the date of the
Joinder Agreement and may make an investment in any such
financial institution if the investment does not materially
enhance the ability of such institution to compete with MidSouth
Bank.
Employee Benefits
Pursuant to the Plan, MidSouth has agreed that, from and
after the Effective Date, MidSouth and MidSouth Bank will offer
to all persons who were employees of Sugarland or the Bank
immediately prior to the Effective Date and who become employees
of MidSouth or MidSouth Bank following the Mergers, the same
employee benefits as are offered by MidSouth or MidSouth Bank, as
the case may be, to its employees, except that there will not be
a waiting period for coverage under any of its plans, and no
employee of Sugarland or the Bank who is an active employee on
the Effective Date will be denied such benefits for a pre-
existing condition. Full credit will be given for prior service
by such employees with Sugarland or the Bank for eligibility and
vesting purposes under all of MidSouth's or MidSouth Bank's
benefit plans and policies. In addition, all benefits accrued
through the Effective Date under Sugarland's and the Bank's
benefit plans will be paid by MidSouth or MidSouth Bank to the
extent such benefits are not otherwise provided to such employees
under the benefit plans of MidSouth or MidSouth Bank.
Expenses
The Plan provides that regardless of whether the Mergers are
consummated, expenses incurred in connection with the Plan and
the transactions contemplated thereby shall be borne by the party
that has incurred them. If certain expenses incurred by
Sugarland relating to the Mergers exceed $110,000, the amount of
such expenses in excess of $110,000 will be deducted from the
aggregate initial dividend payment and, if necessary, subsequent
dividend payments due to holders of Preferred Stock, resulting in
a pro rata reduction of the dividend payment due to each holder
of Preferred Stock. See "Rights and Preferences of MidSouth
Preferred Stock - Dividend Rights."
Status Under Federal Securities Laws; Certain Restrictions on
Resales
The shares of Preferred Stock to be issued to shareholders
of Sugarland pursuant to the Plan have been registered under the
Securities Act of 1933 (the "Securities Act") thereby allowing
such shares to be freely transferred without restriction by
persons who will not be "affiliates" of MidSouth or who were not
"affiliates" of Sugarland, as that term is defined in the
Securities Act. In general, affiliates of Sugarland include its
executive officers and directors and any person who controls, is
controlled by or is under common control with Sugarland. Rule
145, among other things, imposes certain restrictions upon the
resale of securities received by affiliates in connection with
certain reclassifications, mergers, consolidations or asset
transfers. MidSouth Preferred Stock received by affiliates of
Sugarland will be subject to the applicable resale limitations of
Rule 145.
Such persons will not be able to resell the Preferred Stock
received by them pursuant to the Holding Company Merger unless
such stock is registered for resale under the Securities Act or
an exemption from the registration requirements of the Securities
Act is available. All such persons should carefully consider the
limitations imposed by Rules 144 and 145 under the Securities Act
prior to effecting any resales of Preferred Stock. Sugarland has
agreed to use its best efforts to cause each of its directors and
executive officers and each person who is a beneficial owner of
5% or more of the outstanding Sugarland Common Stock (each of
whom may be deemed to be an "affiliate" under the Securities Act)
to enter into an agreement not to sell shares of MidSouth
Preferred Stock received by him in violation of the Securities
Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
Accounting Treatment
It is anticipated that the Mergers will be accounted for as
a "purchase," as that term is used pursuant to generally accepted
accounting principles for accounting and financial reporting
purposes. Under the purchase method of accounting, the assets
and liabilities of Sugarland as of the Effective Date will be
recorded at their estimated respective fair values and added to
those of MidSouth. Financial statements of MidSouth issued after
the Effective Date will reflect such values and will not be
restated retroactively to reflect the historical financial
position or results of operations of Sugarland.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Deloitte & Touche has rendered the following opinion on the
material federal income tax consequences of the mergers.
Based on certain facts presented to Deloitte & Touche by the
Companies and in the Plan, the Joint Proxy Statement and
Prospectus contained in the Registration Statement filed with
the Securities and Exchange Commission on April 7, 1995, the
representations of facts as set forth in MidSouth's and
Sugarland's letters of representations dated May 30, 1995,
it is our opinion that the federal income tax consequences of
the proposed merger of Sugarland with and into MidSouth, with
MidSouth surviving, and the proposed merger of the Bank with
and into MidSouth Bank, with MidSouth Bank surviving, are as
follows:
Holding Company Merger
(1)The merger of Sugarland with and into MidSouth, with
MidSouth surviving, and with the Sugarland shareholders
exchanging their stock for the Preferred Stock, the
transaction will qualify as a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986 (the
"Code"). MidSouth and Sugarland will both be "a party to a
reorganization" within the meaning of Section 368(b).
(2)No gain or loss will be recognized by Sugarland upon the
transfer of its assets to MidSouth in exchange for the
Preferred Stock and the assumption by MidSouth of the
liabilities of Sugarland, by reason of the application of
Sections 361(a) and 357(a) of the Code.
(3)No gain or loss will be recognized by MidSouth on the
receipt of Sugarland's assets in exchange for the Preferred
Stock and the assumption by MidSouth of Sugarland's
liabilities, by reason of the application of Section 1032(a)
of the Code.
(4)The basis of the assets of Sugarland in the hands of
MidSouth will be the same as the basis of such assets in
the hands of Sugarland immediately prior to the
reorganization, by reason of the application of Section
362(b) of the Code.
(5)The holding period of the property acquired by MidSouth
from Sugarland will include the holding period of such
property in the hands of Sugarland immediately prior to the
reorganization, by reason of the application of Section
1223(2) of the Code.
(6)No gain or loss will be recognized by Sugarland
shareholders upon the exchange of their Sugarland Common
Stock (including fractional share interests that they might
otherwise be entitled to receive) solely for the Preferred
Stock, by reason of the application of Section 354(a)(1) of
the Code.
(7)The basis of the Preferred Stock (including fractional
share interests that the Sugarland shareholders might
otherwise be entitled to receive) to be received by the
Sugarland shareholders will be the same as the basis of the
Sugarland Common Stock to be exchanged therefor, by reason
of the application of Section 358(a)(1) of the Code.
(8)The holding period of the Preferred Stock (including
fractional interests that the Sugarland shareholders might
otherwise be entitled to receive) to be received by the
Sugarland shareholders will include the holding period of
the Sugarland Common Stock to be surrendered in the
exchange, provided the Sugarland Common Stock is held as a
capital asset on the Effective Date, by reason of the
application of Section 1223(1) of the Code.
(9)As provided in Section 381(a)(2) of the Code and Section
1.381(a)-1(a) of the regulations of the Internal Revenue
Service under the Code ("Regulations"), MidSouth will
succeed to and take into account as of the Effective Date
the items of the Bank described in Section 381(c) subject
to the conditions and limitations specified in Sections
381(b) and 381(c).
(10)As provided in Section 381(c)(2) of the Code and Section
1.381(c)(2)-1 of the Regulations, MidSouth will succeed to
and take into account the earnings and profits, or deficit
in earnings and profits, of Sugarland as of the Effective
Date. Any deficit in earnings and profits of either
MidSouth or Sugarland can be used only to offset earnings
and profits accumulated after the Effective Date.
(11)Cash received by a shareholder otherwise entitled to
receive a fractional share of the Preferred Stock in
exchange for Sugarland Common Stock will be treated as if
the fractional shares were distributed as part of the
exchange and then were redeemed by MidSouth. These cash
payments will be treated as having been received as
distributions in full payment in exchange for the Sugarland
Common Stock redeemed, as provided in Section 302(a) of the
Code. This receipt of cash will result in gain or loss
measured by the difference between the basis of such
fractional share interest and the cash received. Such gain
or loss will be capital gain or loss to the Sugarland
shareholder, provided the Sugarland Common Stock was a
capital asset in such shareholder's hands and as such, will
be subject to the provisions and limitations of Subchapter P
of Chapter 1 of the Code (Rev. Rul. 66-365 and Rev. Proc.
77-41).
(12)Where cash is received by a dissenting Sugarland
shareholder, such cash will be treated as received by the
Sugarland shareholder as a distribution in redemption of his
Sugarland Common Stock, subject to the provisions and
limitations of Section 302 of the Code.
(13)Section 305(b)(4) and (c) will not apply to the
Preferred Stock.
(14)Based on Section 4 of Rev. Proc. 77-37, the Preferred
Stock will not be "Section 306 stock" in the hands of the
former shareholders of Sugarland. However, since an
advanced ruling was not obtained from the IRS on this
issue, each shareholder should consult his own tax advisor.
Bank Merger:
(1)The merger of the Bank with and into MidSouth Bank, with
MidSouth Bank surviving, will qualify as a reorganization
under Section 368 (a)(1)(A) of the Code. MidSouth Bank and
the Bank will both be "a party to a reorganization" within
the meaning of Section 368(b).
(2)No gain or loss will be recognized by the Bank upon the
transfer of its assets to MidSouth Bank in accordance with
the Plan and the assumption by MidSouth Bank of the
liabilities of the Bank, by reason of the application of
Sections 361(a) and 357(a) and (c) of the Code.
(3)No gain or loss will be recognized by MidSouth Bank on
the receipt of the Bank's assets in constructive exchange
for stock and the assumption by MidSouth Bank of the Bank's
liabilities, by reason of the application of Section
1032(a).
(4)The basis of the assets of the Bank in the hands of
MidSouth Bank will be the same as the basis of such assets
in the hands of the Bank immediately prior to the
reorganization, by reason of the application of Section
362(b) of the Code.
(5)The holding period of the property acquired by MidSouth
Bank from the Bank will include the holding period of such
property in the hands of the Bank immediately prior to the
reorganization, by reason of the application of Section
1223(2) of the Code.
(6)No gain or loss will be recognized by MidSouth upon
the constructive exchange of MidSouth Bank common stock for
the Bank's common stock, by reason of the application of
Section 354(a)(1) of the Code.
(7)The basis of the MidSouth Bank common stock held by
MidSouth after the Bank Merger will be the same as the
basis in the stock immediately before the Bank Merger, plus
its basis in the Bank common stock canceled in the Bank
Merger by reason of Section 358(a).
(8)The holding period of the MidSouth Bank common stock
constructively received by MidSouth in the transaction will
include the period in which the Bank stock was held by
MidSouth provided the Bank stock was held as a capital asset
on the Effective Date by reason of Section 1223(1).
(9)As provided in Section 381(a)(2) of the Code and Section
1.381(a)-1(a) of the Regulations, MidSouth Bank will succeed
to and take into account as of the Effective Date the items
of the Bank described in Section 381(c), subject to the
conditions and limitations specified in Section 381(b) and
381(c).
(10)As provided in Section 381(c)(2) of the Code and Section
1.381(c)(2)-1 of the Regulations, MidSouth Bank, as the
deemed survivor, will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of
the Bank as of the date or dates of transfer. Any deficit
in earnings and profits of either MidSouth Bank or the Bank
can be used only to offset earnings and profits
accumulated after the Effective date.
As a result of the complexity of the tax laws, and because
the tax consequences to any particular shareholder may be
affected by matters not discussed herein, it is recommended that
each shareholder of Sugarland consult his personal tax advisor
concerning the applicable state and local income tax consequences
of the Mergers to him.
DISSENTERS' RIGHTS
Unless the Plan is approved by the shareholders of Sugarland
holding at least 80% of its total voting power, Section 131 of
the LBCL allows a shareholder of Sugarland who objects to the
Holding Company Merger and who complies with the provisions of
that section to dissent from the Holding Company Merger and to
have paid to him in cash the fair cash value of his shares of
Sugarland Common Stock as of the day before the Special Meeting,
as determined in each case by agreement between the shareholder
and MidSouth or by the state district court for the Parish of
Lafayette if the shareholder and MidSouth are unable to agree
upon the fair cash value. MidSouth has the right to terminate
the Plan if, at the time of closing, the number of shares of
Sugarland Common Stock as to which the holders thereof are
legally entitled to assert dissenters' rights exceeds 5% of the
total number of outstanding shares of Sugarland Common Stock on
the Effective Date.
To exercise the right of dissent, a shareholder must (i)
file with Sugarland, a written objection to the Plan prior to or
at the Special Meeting and also (ii) vote his shares (in person
or by proxy) against the Plan. Neither a vote against the Plan,
nor a specification in a proxy to vote against the Plan, will, in
and of itself, constitute the necessary written objection to the
Plan. Moreover, by voting in favor of, or abstaining from voting
on, the Plan, or by returning the enclosed proxy without
instructing the proxy holders to vote against the Plan, a
shareholder waives his rights under Section 131. The right to
dissent may be exercised only by the record owners of the shares
and not by persons who hold shares only beneficially. Beneficial
owners who wish to dissent from the Holding Company Merger should
have the record ownership of the shares transferred to their
names or instruct the record owner to follow the Section 131
procedure on their behalf.
If the Plan is approved by less than 80% of the total number
of shares of Sugarland Common Stock outstanding, then promptly
after the Effective Date written notice of the consummation of
the Holding Company Merger will be given by MidSouth by regis-
tered mail to each shareholder of Sugarland who filed a written
objection to the Plan and voted against it at such shareholder's
last address on Sugarland's records. Within 20 days after the
mailing of such notice, the shareholder must file with MidSouth a
written demand for payment for his shares at their fair cash
value as of the day before the Special Meeting and must state the
amount demanded and a post office address to which MidSouth may
reply. He must also deposit the certificate(s) formerly
representing his shares of Sugarland Common Stock in escrow with
a bank or trust company located in Lafayette Parish, Louisiana.
The certificates must be duly endorsed and transferred to
MidSouth upon the sole condition that they be delivered to
MidSouth upon payment of the value of the shares in accordance
with Section 131. With the above-mentioned demand, the share-
holder must also deliver to MidSouth the written acknowledgment
of such bank or trust company that it holds the certificate(s),
duly endorsed as described above.
Unless the shareholder objects to and votes against the
Holding Company Merger, demands payment, endorses and deposits
his certificates and delivers the required acknowledgment in
accordance with the 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 MidSouth does not agree to the amount demanded by the
shareholder, or does not agree that payment is due, it will,
within 20 days after receipt of such demand and acknowledgment,
notify such shareholder in writing at the designated post office
address of either (i) the value it will agree to pay or (ii) its
belief that no payment is due. If the shareholder does not agree
to accept the offered amount, or disagrees with MidSouth's
assertion that no payment is due, he must, within 60 days after
receipt of such notice, file suit against MidSouth in the 15th
Judicial District Court for the Parish of Lafayette for a
judicial determination of the fair cash value of the shares. Any
shareholder of Sugarland entitled to file such suit may, within
such 60-day period but not thereafter, intervene as a plaintiff
in any suit filed against MidSouth by another former shareholder
of Sugarland for a judicial determination of the fair cash value
of such other shareholder's shares. If a shareholder of
Sugarland fails to bring or to intervene in such a suit against
MidSouth within the applicable 60-day period, he will be deemed
to have consented to accept MidSouth's statement that no payment
is due or, if MidSouth does not contend that no payment is due,
to accept the amount specified by MidSouth in its notice of
disagreement.
If upon the filing of any such suit or intervention,
MidSouth deposits with the court the amount, if any, which it
specified in its notice of disagreement, and if in that notice
MidSouth offered to pay such amount to the shareholder on demand,
then the costs (not including legal fees) of the suit or inter-
vention will be taxed against the shareholder if the amount fi-
nally awarded to him, exclusive of interest and costs, is equal
to or less than the amount so deposited; otherwise, the costs
(not including legal fees) will be taxed against MidSouth.
Upon filing a demand for the value of his shares, a share-
holder ceases to have any rights of a shareholder except the
rights created by Section 131. The shareholder's demand may be
withdrawn voluntarily at any time before MidSouth gives its no-
tice of disagreement, but thereafter only with the written con-
sent of MidSouth. If his demand is properly withdrawn, or if the
shareholder otherwise loses his dissenters' rights, he will be
restored to his rights as a shareholder as of the time of filing
of his demand for fair cash value.
Prior to the Effective Date, shareholders of Sugarland who
dissent from the Mergers should send any communications regarding
their rights to Ronald R. Hebert, Sr., Secretary, Sugarland
Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana
70544. On or after the Effective Date, dissenting shareholders
of Sugarland should send any communications regarding their
rights to Karen L. Hail, MidSouth Bancorp, Inc., 102 Versailles
Boulevard, Versailles Centre, Lafayette, Louisiana 70501. 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 Sugarland.
Shareholders of MidSouth are not entitled to vote on the
Mergers under the LBCL or MidSouth's Articles and do not have
dissenters' rights, although such shareholders must approve the
issuance of the Preferred Stock. See "Introductory Statement -
Shares Entitled to Vote; Quorum; Vote Required."
INFORMATION ABOUT SUGARLAND
Description of the Business
Sugarland Bancshares, Inc., a business corporation organized
under the laws of Louisiana and a registered bank holding company
under the Bank Holding Company Act of 1956, was incorporated in
1981 to acquire the outstanding stock of the Bank. Sugarland
owns all of the outstanding stock of the Bank and has no other
subsidiaries. At March 31, 1995, Sugarland had total
consolidated assets of approximately $17.8 million and
shareholders' equity of approximately $2.2 million. Sugarland's
principal executive office is located at 1527 West Main Street,
Jeanerette, Louisiana, and its telephone number is (318) 276-
6307.
Sugarland State Bank, a Louisiana state bank organized in
1967, provides full-service consumer and commercial banking
services in Jeanerette, Louisiana and surrounding areas of Iberia
Parish, Louisiana, through its main banking office at 1527 West
Main Street, Jeanerette, Louisiana, and a full service branch
located in New Iberia, Louisiana. Deposits of the Bank are
insured by the Federal Deposit Insurance Corporation ("FDIC") up
to applicable legal limits. The Bank offers an array of deposit
services, including demand accounts, NOW accounts, certificates
of deposit, and money market accounts, and provides safe deposit
boxes, night depository, individual retirement accounts, and
drive-in banking services. The Bank's lending activities consist
principally of real estate, consumer, and commercial loans. At
March 31, 1995, the Bank had total deposits of approximately
$15.5 million and total assets of approximately $17.8 million.
The Bank's deposits represent a cross-section of the area's
economy and there is no material concentration of deposits from
any single customer or group of customers. Sugarland's loan
portfolio contains a concentration of loans to the Iberia Parish
farming industry. At March 31, 1995, Sugarland had approximately
$2.5 million of loans outstanding to borrowers in the local
farming industry, which represented approximately 108% of the
Bank's Tier 1 Capital and 31% of the Bank's total outstanding
loans on such date.
Competition
The Bank's general market area consists of Iberia Parish,
which has an approximate population of 70,000 and in which there
are numerous banks and other financial institutions.
Competition among banks for loan customers is generally
governed by such factors as loan terms, including interest
charges, restrictions on borrowers and compensating balances, and
other services offered by such banks. The Bank competes with
numerous other commercial banks, savings and loan associations
and credit unions for customer deposits, as well as with a broad
range of financial institutions in consumer and commercial
lending activities. In addition to thrift institutions, other
businesses in the financial services industry compete with the
Bank for retail and commercial deposit funds and for retail and
commercial loan business. Competition for loans and deposits is
intense among the financial institutions in the area.
At present, Sugarland is experiencing competitive pressure
on interest rates from other businesses in the financial services
industry, including larger institutions whose size permits them
to operate on a narrower profit margin than would be appropriate
for Sugarland. Management expects such competitive pressure
will continue in the Bank's market area. See "Sugarland
Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Property
The executive office of Sugarland and the Bank, located at
1527 W. Main Street, Jeanerette, Louisiana, is owned by the Bank.
The Bank also owns the building and land where its New Iberia
branch is located. None of the properties owned by the Bank is
subject to a mortgage.
Employees
Sugarland and the Bank have, in the aggregate, approximately
15 full-time employees and one part-time employee and considers
its relationship with its employees to be good. None of
Sugarland's or the Bank's employees are subject to a collective
bargaining agreement.
Market Prices and Dividends
Market Prices. Sugarland Common Stock is not traded on any
exchange or in any other established public trading market.
There are no bid or asked prices available for Sugarland Common
Stock.
At June 7, 1995, there were 298 shareholders of record of
Sugarland.
Cash Dividends. Sugarland declared cash dividends on
Sugarland Common Stock of $.20 per share during the fiscal year
ended December 31, 1993 and did not declare a dividend during the
fiscal year ended December 31, 1994 or the three months ended
March 31, 1995. Sugarland has agreed in the Plan that it will
not make, declare, set aside or pay any dividend prior to the
Effective Date of the Mergers without the written consent of
MidSouth.
Substantially all of the funds available to Sugarland to pay
dividends to its shareholders are derived from dividends paid to
it by the Bank. The Bank's payment of dividends is subject to
certain legal restrictions applicable to all Louisiana state
banks. The prior approval of the Louisiana Commissioner of
Financial Institutions (the "Commissioner") is required if the
total of all dividends declared in any one year will exceed the
sum of the Bank's net profits of that year and net profits of the
immediately preceding year. Additionally, dividends may not be
declared or paid by a Louisiana state bank unless the bank has
unimpaired surplus equal to 50% of the outstanding capital stock
of the bank, and no dividend payment may reduce the bank's
unimpaired surplus below 50%. At March 31, 1995, the Bank had
approximately $211,000 available for the payment of dividends
without prior approval of the Commissioner.
Legal Proceedings
Sugarland and the Bank normally are parties to and have
pending routine litigation arising from their regular business
activities of furnishing financial services, including providing
credit and collecting secured and unsecured indebtedness. In
some instances, such litigation involves claims or counterclaims
against Sugarland and the Bank, or either of them. As of the
date of this Joint Proxy Statement and Prospectus, neither
Sugarland nor the Bank had any litigation pending.
Security Ownership of Principal Shareholders and Management
Ownership of Principal Shareholders. Except for Sugarland
Common Stock, Sugarland has no other class of voting securities
issued or outstanding. The following table provides information
concerning all persons known to Sugarland to be beneficial
owners, directly or indirectly, of more than 5% of the
outstanding shares of Sugarland Common Stock, as of the Record
Date. Unless otherwise noted, the named persons own the shares
directly and have sole voting and investment power with respect
to the shares indicated, subject to applicable community property
laws.
<TABLE>
<CAPTION>
Number of
Name and Address Shares Owned Percentage
of Beneficial Owner Beneficially of
Class
____________________ ________________ _____________
<S> <C> <C>
J. Bryan Allain 9,516 <FN1> 5.08%
1519 Church Street
Jeanerette, LA 70544
Ronald R. Hebert, Sr. 17,252 9.21%
3009 D'Albor Street
Jeanerette, LA 70544
Adolphe A. Larroque 10,000 5.34%
P.O. Box 111
Jeanerette, LA 70544
Pierre L. Larroque 11,864 <FN2> 6.33%
200 N. Druilhet Street
Jeanerette, LA 70544
Herman J. Louviere 12,024 <FN3> 6.42%
2210 Hubertville Rd.
Jeanerette, LA 70544
Lawrence L. Lewis, III 20,000 10.74%
and Reverend H. Alexander
Larroque, Trustees for The
Larroque Family Trust
102 Versailles Blvd., Suite 600
Lafayette, LA 70502
</TABLE>
__________________________
<FN1> Includes 1,000 shares held of record by Mr. Allain and 8,516
shares held of record by Insurance Trust Number Two of Mr.
Allain and Suzanne Pole Allain, Mr. Allain's wife.
<FN2> Includes 2,000 shares held of record by Mr. Larroque, 4,000
shares held of record in two equal lots by Aqua-Kleen, Inc.
and Dyna-Tec, Inc., corporations of which Mr. Larroque is a
majority shareholder, President and director, and 5,864
shares held of record by Superior Fabricators, Inc., a
corporation of which Mr. Larroque is a majority shareholder,
President and director.
<FN3> Includes 5,212 shares held of record by Mr. Louviere and
5,212 shares held of record by Mr. Louviere, as usufructuary
with respect to shares the naked ownership of which is held
by Ronald, Eldridge and Farrell Louviere and Carolyn L.
Clement. Also includes 1,600 shares held of record by Herman
J. Louviere & Sons, Inc., a corporation of which Mr. Louviere
is a principal shareholder, officer and director.
____________________________
Ownership of Directors and Executive Officers of Sugarland.
The following table provides information concerning the shares of
Sugarland Common Stock beneficially owned, directly or
indirectly, by each director and executive officer of Sugarland,
and all directors and executive officers as a group, as of the
Record Date. Unless otherwise noted, the named persons have sole
voting and investment power with respect to the shares indicated,
subject to applicable community property laws.
<TABLE>
<CAPTION>
Number of
Shares Owned Percentage
Name of Beneficial Owner Beneficially of Class
________________________ ____________ __________
<S> <C> <C>
J. Bryan Allain 9,516<FN1> 5.08%
Alton G. Barbin 4,500 2.40%
Ronald R. Hebert, Sr. 17,252 9.21%
Pierre L. Larroque 11,864<FN2> 6.33%
Herman J. Louviere 12,024<FN3> 6.42%
J.B. Pecot, M.D. 4,000 2.14%
D.J. Tranchina 800 *
All Directors and 59,956 32.01%
Executive Officers as a
Group (7 persons)
_______________________
</TABLE>
* Less than one percent of class
<FN1> Includes 1,000 shares held of record by Mr. Allain and 8,516
shares held of record by Insurance Trust Number Two of Mr.
Allain and Suzanne Pole Allain, Mr. Allain's wife.
<FN2> Includes 2,000 shares held of record by Mr. Larroque, 4,000
shares held of record in two equal lots by Aqua-Kleen, Inc.
and Dyna-Tec, Inc., corporations of which Mr. Larroque is a
majority shareholder, President and director, and 5,864
shares held of record by Superior Fabricators, Inc., a
corporation of which Mr. Larroque is a majority shareholder,
President and director.
<FN3> Includes 5,212 shares held of record by Mr. Louviere and
5,212 shares held of record by Mr. Louviere, as usufructuary
with respect to shares the naked ownership of which is held
by Ronald, Eldridge and Farrell Louviere and Carolyn L.
Clement. Also includes 1,600 shares held of record by Herman
J. Louviere & Sons, Inc., a corporation of which Mr. Louviere
is a principal shareholder, officer and director.
_____________________________
SUGARLAND MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
Sugarland reported net income of $48,000 for the three
months ended March 31, 1995, which represents a 41.2% increase
from net income of $34,000 for the comparable period in 1994.
Net income per share was $0.26 for the first three months of 1995
and $0.18 for the same period in 1994. Sugarland's net income
was $162,000 for 1994, which represents a 13.83% decrease from
the net income of $188,000 for 1993. Net income per share was
$0.87 for 1994 and $1.01 for 1993.
The increase in net income during the three months ended
March 31, 1995 over the same period last year was principally
attributable to a slight increase in interest income and
decreased operating expenses. The primary reason for the decline
in net income during 1994 over 1993 was an increase in income tax
expense. Income tax expense for 1994 was $56,000, compared to
$24,000 for 1993. The 133% increase in income tax expense for
1994 resulted from the use in 1993 of a net operating loss
carryover, which resulted in a tax benefit of $44,000 in 1993.
Pre-tax income in 1994 was $218,000, an increase of $6,000 over
1993 pre-tax income of $212,000. The slight increase in pre-tax
income during 1994 was principally attributable to decreases in
expenses.
Improving loan quality resulted in no provision for loan
losses during the three months ended March 31, 1995 and the years
ended December 31, 1994 or 1993. Net interest income for the
three months ended March 31, 1995 was $213,000, which represents
a 3.9% increase over the $205,000 reported for the same period
last year. The increase is principally attributable to increases
in the interest rate on Federal funds sold. Net interest income
for 1994 decreased $7,000 to $853,000, which represents a .81%
decrease over 1993. The primary reason for the decrease was a
slight overall average interest rate reduction in the loan
portfolio.
At March 31, 1995, Sugarland had total assets and deposits
of $17,814,000 and $15,536,000, respectively, reflecting
increases of 1.95% and 1.4%, respectively, from amounts reported
at December 31, 1994. Loans, net of the reserve for possible
loan losses, were $7,842,000 at March 31, 1995, a decrease of
4.7% from December 31, 1994. The decreases in the amount of
Sugarland's outstanding loans and increases in assets and
deposits between March 31, 1995 and year-end 1994 reflect
seasonal changes related to Sugarland's agricultural lending.
Sugarland's agricultural loan demand generally declines during
the first three months of each year. Funds available to
Sugarland as a result of decreases in outstanding loans at March
31, 1995 were placed predominantly into Federal funds sold,
thereby increasing Sugarland's assets at the end of the quarter.
At December 31, 1994, Sugarland had total assets and
deposits of $17,473,000 and $15,320,000, respectively, which
represented decreases of 4.15% and 4.68%, respectively, from
amounts reported at December 31, 1993. Loans, net of the reserve
for possible loan losses, were $8,226,000 at December 31, 1994,
an increase of 2.21% from the amount reported at the end of 1993.
The decrease in assets as of December 31, 1994 when compared to
December 31, 1993 is principally due to a decrease in interest-
bearing deposits, resulting in a decrease in funds available for
investment and federal funds sold, partially offset by an
increase in loan demand. Management attributes the decrease to
increased competition from other businesses in the financial
services industry, including larger institutions whose size
permits them to pay higher interest rates and operate on a
narrower profit margin than would be appropriate for Sugarland.
Management expects such competitive pressures will continue in
its market area, which may result in further decreases in
interest-bearing deposits. See "Information about Sugarland -
Competition."
The following table sets forth certain information regarding
Sugarland's results of operations for the periods indicated.
Return on average assets and return on average equity for the
three months ended March 31, 1995 and 1994 are presented on an
annualized basis.
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, December 31,
_________ ____________
1995 1994 1994 1993
____ ____ ____ ____
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Net income $ 48 $ 34 $ 162 $ 188
Net income per share* $ 0.26 $ 0.18 $ 0.87 $ 1.01
Return on average assets 1.12% 0.75% 0.94% 1.04%
Return on average equity 9.25% 6.30% 7.64% 9.14%
Average equity to average 12.08% 11.85% 12.33% 11.40%
assets
Dividend pay-out ratio -- -- -- 19.80%
</TABLE>
* Per share data are based upon a weighted average number of
shares outstanding of 187,286.
A more detailed review of Sugarland's financial condition
and results of operations for the years ended December 31, 1994
and 1993 and the three months ended March 31, 1995 and 1994
follows. This discussion and analysis should be read in
conjunction with Sugarland's financial statements and the notes
thereto appearing elsewhere in this Joint Proxy Statement and
Prospectus.
Results of Operations
Net Interest Income.
The principal component of Sugarland's net earnings is net
interest income, which is the difference between interest and
fees earned on interest-earning assets and interest paid on
deposits and borrowed funds. Net interest income, when expressed
as a percentage of total average interest-earning assets, is
referred to as net interest margin. Net interest income for the
three months ended March 31, 1995 increased to $213,000 from
$205,000 recorded for the comparable period in 1994, an increase
of 3.9%. 1994 net interest income of $853,000 represents a
decrease of $7,000, or .81%, from net interest income of $860,000
reported for 1993. The increase in net income during the three
months ended March 31, 1995 over the same period last year was
principally attributable to a slight increase in interest income
and decreased operating expenses. The slight decline in 1994 was
primarily the result of decreases in overall average interest
rates.
Average interest-earning assets were $14,732,000 for the
three months ended March 31, 1995, $14,715,000 for 1994 and
$15,625,000 for 1993. Average loans, the Company's highest
yielding assets, rose 1.15% from 1993 to 1994 and decreased 5.09%
from 1994 to March 31, 1995. Net interest margin decreased two
basis points to 5.78% for the three months ended March 31, 1995
from 5.80% for the year ended December 31, 1994. 1994 net
interest margin represented a 30 basis point increase from 5.50%
recorded for 1993.
Sugarland's net interest income is affected by the change in
the amount and mix of interest-earning assets and interest-
bearing liabilities, and by changes in yields earned on assets
and rates paid on deposits and other borrowed funds. The
following table sets forth certain information concerning average
interest-earning assets and interest-bearing liabilities and the
yields and rates thereon for the periods presented. Average
balances are computed using daily average balances.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995 Year Ended December 31, 1994 Year Ended December 31, 1993
______________ ________________________________ ___________________________
Interest Average Interest Average Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
_______ _______ ________ _______ ________ _______ _______ ________ _______
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans $ 7,744 $ 201 10.38% $ 8,159 $ 868 10.64% $ 8,066 $ 885 10.97%
Investment
securities 3,943 60 6.09% 4,240 263 6.20% 4,575 295 6.45%
Federal funds
sold 3,045 44 5.78% 2,316 88 3.80% 2,984 88 2.95%
Total
interest-
earning
assets $ 14,732 $ 305 8.28% $ 14,715 $ 1,219 8.28% $ 15,625 $ 1,268 8.12%
Interest-Bearing
Liabilities:
Deposits:
Money market
demand $ 2,284 $ 16 2.80% $ 2,565 $ 71 2.77% $ 2,439 $ 70 2.87%
Savings
and other
interest-
bearing
demand 3,183 21 2.64% 2,911 78 2.68% 2,931 85 2.90%
Time deposits $ 5,408 55 4.14% 5,838 217 3.72% 6,611 253 3.83%
Total
interest-
bearing
liabilities $ 10,875 $ 92 3.42% $ 11,314 $ 366 3.23% $ 11,981 $ 408 3.41%
Net interest
income $ 213 $ 853 $ 860
Net interest
</TABLE>
The following table sets forth changes in interest income
and interest expense for each major category of interest-earning
assets and interest-bearing liabilities and the amount of
change attributable to volume change and rate change for the periods
indicated.
<TABLE>
<CAPTION>
1994 OVER 1993 1993 OVER 1992
_____________________________________________________ ___________________________________________
Total Change Change Change Total Change Change Change
Increase in in in Increase in in in
(Decrease) Volume Rate Rate/Vol (Decrease) Volume Rate Rate/Vol
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans $ (17) $ 10 $ 27 $ -- $ (43) $ 12 $ (53) $ (2)
Investment (32) (22) (10) -- 31 77 (35) (11)
securities
Federal funds sold -- (19) 25 (6) (15) (1) (14) --
Total $ (49) $ (31) $ (12) $ (6) $ (27) $ 88 $ (102) $ (13)
Interest-Bearing
Liabilities:
Interest bearing $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2)
deposits
Total $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2)
Net interest $ (7) $ (8) $ 10 $ (9) $ 67 $ 71 $ 7 $ (11)
income before
allocation of
rate/volume
Allocation of -- (17) 8 9 -- (10) (1) 11
rate/volume
Changes in net $ (7) $ (25) $ 18 $ -- $ 67 $ 61 $ 6 $ --
interest income
</TABLE>
Provision for Loan Losses.
The provision for loan losses is the periodic charge to
earnings for potential losses in the loan portfolio. The amounts
provided for loan losses are determined by management after
evaluations of the loan portfolio. This evaluation process
requires that management apply various judgments, assumptions and
estimates concerning the impact certain factors may have on
amounts provided. Factors considered by management in its
evaluation process include known and inherent losses in the loan
portfolio, the current economic environment, the composition of
and risk in the loan portfolio, prior loss experience and
underlying collateral values. While management considers the
amounts provided through March 31, 1995 to be adequate,
subsequent changes in these factors and related assumptions may
warrant significant adjustments in amounts provided, based on
conditions prevailing at the time. In addition, various
regulatory agencies, as an integral part of the examination
process, review Sugarland's allowance for loan losses. Such
agencies may require Sugarland to make additions to the allowance
based on their judgments of information available to them at the
time of their examinations.
No provision for loan losses was made for the three months
ended March 31, 1995 or the years ended December 31, 1994 and
1993.
Non-interest Income.
Non-interest income was $45,000 for the three months ended
March 31, 1995, compared to $47,000 for the same period of 1994.
Non-interest income was $180,000 for the year ended
December 31, 1994, compared to $199,000 for 1993. The slight
decline in non-interest income from the three months ended March
31, 1994 to 1995 resulted from decreased commissions from the
sale of credit life insurance. The decrease in non-interest
income from 1993 to 1994 was due principally to a decrease in
income from sales of other real estate owned.
Non-interest Expense.
Non-interest expense for the three months ended March 31, 1995
was $196,000, a decrease of approximately $6,000, or 2.97%, from
the comparable period of 1994. Non-interest expense for the year
ended December 31, 1994 and December 31, 1993 was $815,000 and
$846,000, respectively, a 3.66% decrease. The decrease in non-
interest expense during these periods was attributable
principally to decreased general and administrative expenses,
salaries and occupancy expenses.
Income Taxes.
Sugarland's provision for income taxes was $13,350 for the
three months ended March 31, 1995, compared to $15,200 for the
same period last year. Such provision was $56,000 for the year
ended December 31, 1994, compared to $24,000 for 1993. The
moderate decrease in Sugarland's provision for income taxes
during the three months ended March 31, 1995, compared to the
same period last year, was due to Sugarland's charge-off of loans
during the first quarter of 1995, partially offset by Sugarland's
increased interest income during the period. The 133% increase
in income tax expense for 1994 resulted from the use in 1993 of a
net operating loss carryover, which resulted in a tax benefit of
$44,000 in 1993.
Sugarland adopted a new standard for accounting for income
taxes effective January 1, 1993. Under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), deferred income taxes
are provided for by the liability method. The adoption of SFAS
109 did not have a material effect on Sugarland's results of
operations or financial condition.
Financial Condition
The following table sets forth Sugarland's average assets,
liabilities and shareholders' equity and the percentage
distribution of these items for the periods indicated.
<TABLE>
<CAPTION>
Years Ended December 31,
________________________
Three Months Ended
March 31, 1995 1994 1993
______________ ____ ____
Average Average Average
Balance Percent Balance Percent Balance Percent
_______ _______ _______ _______ _______ _______
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 1,670 9.72% $ 1,685 9.80% $ 1,552 8.60%
Investment securities 3,943 22.95% 4,240 24.67% 4,575 25.36%
Federal funds sold 3,045 17.72% 2,316 13.47% 2,984 16.54%
Loans (net of allowance
for credit losses) 7,744 45.08% 8,159 8,066 44.73%
Other assets 779 4.53% 788 4.58% 860 4.77%
Total assets $ 17,181 100.00% $ 17,188 100.00% $ 18,037 100.00%
Liabilities and
Shareholders' Equity:
Demand deposits $ 4,182 24.34% $ 3,691 21.47% $ 3,919 21.73%
Interest-bearing deposits 10,875 63.29% 11,314 65.83% 11,981 66.42%
Other liabilities 49 .29% 63 .37% 81 .45%
Total liabilities 15,106 87.92% 15,068 87.67% 15,981 88.60%
Shareholders' equity 2,075 12.08% 2,120 12.33% 2,056 11.40%
Total liabilities $ 17,181 100.00% $ 17,188 100.00% $ 18,037 100.00%
and shareholders'
equity
Total Assets.
</TABLE>
At March 31, 1995, total assets were approximately
$17,814,000, compared to $17,473,000 at December 31, 1994 and
$18,230,000 at December 31, 1993. Total average assets for the
three months ended March 31, 1995 were $17,181,000, a slight
decrease of 4.71% from the $18,037,000 average for 1993. The
decrease in assets as of December 31, 1994 when compared to
December 31, 1993 is principally due to a decrease in interes-
bearing deposits, resulting in a decrease in funds available for
investment and federal funds sold, partially offset by an increase
in loan demand. Management attributes the decrease to increased
competition from other businesses in the finanical services
industry, including larger institutions whose size permits them
to pay higher interest rates and operate on a narrower profit
margin than would be appropriate for Sugarland. Management
expects such competitive pressures will continue in its market
area, which may result in further decreases in interest-bearing
deposits. See "Information about Sugarland - Competition."
Investment Securities.
At March 31, 1995, Sugarland's investment securities
portfolio aggregated $4,198,000, a decrease of $54,000 from
the $4,252,000 reported at December 31, 1994, which reflects
an increase of $332,000 from the $3,920,000 reported at
December 31, 1993.
The following table sets forth the composition of Sugland's
investment portfolio at the end of each period presented.
<TABLE>
<CAPTION>
March 31, December 31,
_________ ____________
1995 1994 1993
____ ____ ____
Amortized Fair Amortized Fair Book Market
Cost Value Cost Value Value Value
____ _____ ____ _____ _____ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
U.S. government agencies $ 1,900 $ 1,819 $ 1,901 $ 1,787 $ 1,407 $ 1,416
Government guaranteed mortgage
backed securities 1,613 1,579 1,647 1,555 1,978 2,029
Government guaranteed & private
issue CMO's & REMIC's 385 365 404 371 289 291
Mutual funds 200 134 200 132 146 146
Other equity securities 100 100 100 100 100 100
Total $ 4,198 $ 3,997 $ 4,252 $ 3,945 $ 3,920 $ 3,982
</TABLE>
Effective January 1, 1994, Sugarland adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"), which
requires the classification of securities into one of three
categories: Trading, Available-for-sale, or Held-to-maturity.
Management determines the appropriate classification of debt
securities at the time of purchase and re-evaluates this
classificaiton periodically. Trading account securities are held
for resale in anticipation of short-term market movements.
Sugarland has not engaged in trading activities related to any of
its investment securities and has no securities classified as
Trading. Debt securities are classified as held-to-maturity when
Sugarland has the postivie intent and ability to hold the
securities to maturity. Held-to-maturity securities are stated
at amortized cost. Securitiesnot classified as trading or held-
to-maturity are classified as available-for-sale. All of the
securities in Sugarland's portfolio at March 31, 1995 and
December 31, 1994 were classified as available-for sale.
Available-for-sale securities are stated at fair value, with
unrealized gains and losses, net of tax, reported in a
separate component of shareholders' equity. Sugarland may sell
these securities in response to liquidity demands. Available-
for-sale securities also may be used as a means of adjusting
the interest rate sensitivity of Sugarland's balance sheet
through sale and reinvesment.
The following table presents selected contractual maturity
data for the investment securities in Sugarland's portfolio at
March 31, 1995. Dollar values are based upon the amortized
cost of such securities at March 31, 1995.
<TABLE>
<CAPTION>
After One Year After Five Years
One Year or Less Through Five Years Through 10 Years After 10 Years
_______________________ _______________________ ____________________ ________________
Amount Yield Amount Yield Amount Yield Amount Yield
______ ______ ______ _____ ______ _____ ______ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government agencies $ -- $ 1,900 4.86% $ -- $ --
Government guaranteed mortgage
backed securities -- 559 6.30% -- 1,054 7.52%
Government guaranteed & private
issue CMO's & REMIC's -- -- -- 385 5.58%
Total $ -- $ 2,459 $ -- $ 1,439
</TABLE>
The following table presents selected contractual maturity data
for the investment securities in Sugarland's portfolio at
December 31, 1994. Dollar values are based upon the amortized
cost of such securities at December 31, 1994.
<TABLE>
<CAPTION>
After One Year After Five Years
One Year or Less Through Five Years Through 10 Years After 10 Years
_______________________ _______________________ ____________________ ____________________
Amount Yield Amount Yield Amount Yield Amount Yield
______ ______ ______ _____ ______ _____ ______ _____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government agencies $ -- $ 1,900 5.15% $ -- $ --
Government guaranteed -- 92 8.00% 476 6.00% 1,080 7.52%
mortgage backed
securities
Government guaranteed & -- -- -- 404 5.58%
private issue
CMO's & REMIC's
Total $ -- $ 1,992 $ 476 $ 1,484
</TABLE>
See Note 2 to Sugarland's Financial Statements appearing
elsewhere in this Joint Proxy Statement and Prospectus for
information concerning the amortized cost and estimated
fair values of Sugarland's investment securities at
December 31, 1994 and 1993.
Loans.
Sugarland engages in real estate lending through real
estate construction and mortgage loans, and commercial and
consumer lending. The lending activities of Sugarland are
guided by the basic lending policy established by its Board of
Directors. Each loan is evaluated based on, among other
things, character and leverage capacity of the borrower,
capital and investment in a particular property, if
applicable, cash flow, collateral, market conditions
for the borrower's business or project and
prevailing economic trends and conditions.
The following table sets forth the type and amount of loans
outstanding as of the dates indicated:
<TABLE>
<CAPTION>
March 31, December 31,
_________ ____________
1995 1994 1993
(Dollars in thousands)
<S> <C> <C> <C>
Commercial/Industrial/Agricultural $ 3,940 $ 4,274 $ 4,127
Commercial Real Estate 912 852 1,056
Residential Real Estate 1,381 1,423 1,432
Consumer/Installment 1,811 1,907 1,676
Other 5 4 4
_____ _____ _____
Total loans $ 8,049 $ 8,460 $ 8,295
===== ===== =====
</TABLE>
In addition to the matters set forth in the table above, as
of March 31, 1995, Sugarland's loan portfolio contained a
concentration of loans to borrowers engaged in the Iberia Parish
agriculture industry. A concentration is defined as amounts
loaned to a multiple number of borrowers engaged in similar
activities, which would cause them to be similarly impacted by
economic or other conditions, where the amount exceeds 10% of
total outstanding loans. At March 31, 1995, Sugarland had
approximately $2.5 million of loans outstanding to borrowers in
the local farming industry, which represented approximately 31%
of Sugarland's total outstanding loans.
At March 31, 1995, loans, net of unearned discount and the
allowance for possible loan losses, were $7,842,000, as compared
to $8,226,000 and $8,048,000 at December 31, 1994 and 1993,
respectively. Average loans increased from $8,066,000 to
$8,159,000, respectively, for 1993 and 1994, but decreased to
$7,744,000 for the three months ended March 31, 1995. The 1994
increases in the amount of outstanding loans are attributable
principally to increased loan demand in the market served by
Sugarland as the local economy strengthened. The decreases in
average and total loans during the first quarter of 1995 reflect
seasonal changes in the level of Sugarland's agricultural
lending. Sugarland's average loan to deposit ratio was 51.4% for
the first three months of 1995, compared to 54.4% for 1994 and
50.7% for 1993. The 1995 first quarter decrease is due
principally to the decreased loan demand, partially offset by
increased deposits at March 31, 1995 over year-end 1994, and the
1994 increase over 1993 is primarily the product of increased
loan demand and decreased deposit base.
At March 31, 1995, residential real estate, commercial real
estate and commercial/industrial/agricultural loans comprised
approximately 17%, 11% and 49%, respectively, of total
outstanding loans. This compares to 17%, 10% and 51% categorized
as residential real estate, commercial real estate and
commercial/industrial/agricultural loans, respectively, at
December 31, 1994 and 17%, 13% and 50% categorized as residential
real estate, commercial real estate and
commercial/industrial/agricultural loans, respectively, at
December 31, 1993.
The following table provides information concerning loan
portfolio maturity as of December 31, 1994. Loan portfolio
maturity by type of loan as presented in the table above is not
readily available.
(Dollars in thousands)
One year or less
Floating interest rate $ 593
Fixed interest rate 2,762
After one year through five
years:
Floating interest rate 1,574
Fixed interest rate 1,494
After five years:
Floating interest rate 1,199
Fixed interest rate 939
______
Total $ 8,460
======
Nonaccrual, Past Due and Modified Loans.
The performance of Sugarland's loan portfolio is evaluated
regularly by Senior Management and the Board of Directors.
Interest on loans is accrued daily as earned. A loan is
generally placed on nonaccrual status when principal or interest
is past due 90 days or more, except when management determines
the loan remains likely to be fully collectible. Upon being
placed on nonaccrual status, the accrual of income from a loan is
discontinued and previously accrued but unpaid interest is
reversed against income. Each loan that is 90 days or more past
due is evaluated to determine its collectibility and the adequacy
of its collateral.
The following table sets forth the amount of Sugarland's
nonperforming loans (nonaccrual loans and loans past due 90 days
or more and still accruing interest) and loans with modified
terms as of the dates indicated:
<TABLE>
<CAPTION>
March 31, December 31,
_________ ____________
1995 1994 1993
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ -- $26 $72
Loans past due 90 days or more and
still accruing interest 72 16 62
Renegotiated debt, still accruing
interest -- -- --
</TABLE>
As a percent of total loans, loans past due 90 days or more
and not on nonaccrual status were .89% of total loans at
March 31, 1995, compared to .19% at December 31, 1994 and .75% at
December 31, 1993. There were no nonaccrual loans at March 31,
1995. Nonaccrual loans were .31% of total loans at December 31,
1994, and .87% at year-end 1993. There were no loans with
modified terms at March 31, 1995 or year-end 1994 or 1993.
As of March 31, 1995, Sugarland was not aware of any other
loans where known information about possible credit problems of
the borrower caused management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment
terms. Sugarland's primary regulators and external auditors
review the loan portfolio as part of their regular examinations
and their assessment of specific credits, based on information
available to them at the time of their examination, may affect
the level of Sugarland's non-performing loans. Additionally, the
loan portfolio is regularly monitored by Senior Management and
the Board. Accordingly, there can be no assurance that other
loans will not be placed on nonaccrual, become 90 days or more
past due, or have terms modified in the future.
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan" ("SFAS 114"). This
standard requires the measurement of certain impaired loans based
on the present value of expected future cash flows discounted at
the loan's effective interest rate. Adoption of this new
standard is required for fiscal years beginning after
December 15, 1994. Sugarland adopted this statement beginning
January 1, 1995. The effect of adopting SFAS 114 on Sugarland's
financial statements is not expected to be material.
Allowance for Loan Losses.
A certain degree of risk is inherent in the extension of
credit. Management has credit policies in place to monitor and
attempt to control the level of loan losses and nonperforming
loans. One product of Sugarland's credit risk management is the
maintenance of the allowance for loan losses at a level
considered by management to be adequate to absorb estimated known
and inherent losses in the existing portfolio, including
commitments and standby letters of credit. The allowance for
loan losses is established through charges to operations in the
form of provisions for loan losses.
The allowance is based upon a regular review of current
economic conditions, which might affect a borrower's ability to
pay, underlying collateral values, risk in and the composition of
the loan portfolio, prior loss experience and industry averages.
In addition, Sugarland's primary regulators, as an integral part
of their examination process, periodically review Sugarland's
allowance for loan losses and may recommend additions to the
allowance based on their assessment of information available to
them at the time of their examination. Loans that are deemed to
be uncollectible are charged-off and deducted from the allowance.
The provision for loan losses and recoveries on loans previously
charged-off are added to the allowance.
The following table sets forth Sugarland's loan loss
experience and certain information relating to its allowance for
loan losses as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
Three Months
Ended Years Ended
March 31, December 31,
_________ ____________
1995 1994 1993
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Average net loans outstanding $ 7,744 $8,159 $8,066
Balance of allowance for credit
losses at beginning of period 134 145 135
Charge offs:
Commercial loans (15) (15) --
Consumer loans (4) (1) (6)
Recoveries -- 5 16
______ _____ _____
Net recoveries (charge-offs) (19) (11) 10
______ _____ _____
Provisions charged to expense -- -- --
______ _____ _____
Balance of allowance for credit
losses at end of period $ 115 $134 $145
======= ===== =====
Ratio of net charge-offs to
average loans outstanding 0.25% 0.13% (0.12%)
</TABLE>
The allowance for loan losses was $115,000 or 1.49% of
average loans, $134,000 or 1.64% of average loans, and $145,000
or 1.80% of average loans at March 31, 1995, December 31, 1994
and December 31, 1993, respectively. Net charged-off loans
during this period were $19,000 for the three months ended
March 31, 1995 as compared to $11,000 for the year ended December
31, 1994 and ($10,000) in 1993. The allowance for loan losses
should not be interpreted as an indication of future charge-off
trends.
Management believes that the allowance for loan losses at
March 31, 1995 was adequate to absorb the known and inherent
risks in the loan portfolio at that time. However, no assurance
can be given that future changes in economic conditions that
might adversely affect Sugarland's principal market area,
borrowers or collateral values, and other circumstances will not
result in increased losses in Sugarland's loan portfolio in the
future.
The following table sets forth the approximate dollar amount
of the allowance for loan losses allocable to the stated loan
categories, and the percent of total loans in each such category
for the periods presented.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Years Ended December 31,
_________ ________________________
1995 1994 1993
____ ____ ____
Allow. Loan Allow. Loan Allow. Loan
_____ ____ _____ ____ _____ ____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial/Industrial/Agricultural $ 90 48.95% $ 94 50.53% $ 110 49.75%
Real Estate -- 28.49% 15 26.89% 10 30.00%
Consumer/Installment/Other 25 22.56% 25 22.58% 25 20.25%
______ ______ ______ ______ _______ ______
$ 115 100.00% $ 134 100.00% $ 145 100.00%
====== ====== ====== ====== ======= ======
</TABLE>
The allocation of the allowance for loan losses should not
be interpreted as an indication of future credit trends or that
losses will occur in these amounts or proportions. Furthermore,
the portion allocated to each loan category is not the total
amount available for future losses that might occur within such
categories, since the total allowance is a general allowance
applicable to the entire portfolio.
In determining the adequacy of the allowance for credit
losses, management considers such factors as known problem loans,
evaluations made by bank regulatory agencies and external
auditors, individual loan reviews for loans in excess of
$40,000, collateral, assessment of economic and market
conditions, concentrations and other appropriate data in order to
identify the risks in the portfolio. The Loan Review Committee
reviews on a quarterly basis the loan loss reserve of the Bank
and makes recommendations to the Board of Directors of the Bank
concerning the adequacy of the allowance. Additionally, the
Bank's policy is to maintain a loan loss reserve equal to at
least 1.0% of the total loans outstanding or an amount sufficient
to cover all reasonably anticipated loan losses. If, following a
review of the allowance, the allowance is determined to be
inadequate or excessive, the amount of the allowance is adjusted
accordingly.
Deposits.
Deposits are the primary source of funding for Sugarland's
earning assets. Total deposits at March 31, 1995 and at the end
of 1994 and 1993 were approximately $15,536,000, $15,320,000 and
$16,072,000, respectively. Time certificates of deposit of
$100,000 or more, which were approximately $508,000 at March 31,
1995, $501,000 at the end of 1994 and $703,000 at the end of
1993, had remaining maturities as follows:
<TABLE>
<CAPTION>
March 31, December 31,
_________ ____________
1995 1994 1993
____ ____ ____
Maturing within: (Dollars in thousands)
<S> <C> <C> <C>
Three months or less $ 102 $ 301 $ 503
Over three months to six
months 406 -- --
Over six months to twelve
months -- 200 200
Over twelve months -- -- --
______ ______ ______
Total $ 508 $ 501 $ 703
====== ====== ======
</TABLE>
Average deposit balances are summarized for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended
March 31, Years Ended December 31,
_________ ________________________
Average Average Average
1995 Rate 1994 Rate 1993 Rate
____ ____ ____ ____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 4,182 0.00% $ 3,691 0.00% $ 3,919 0.00%
Money market demand 2,284 2.80% 2,565 2.77% 2,439 2.87%
Savings and other
interest-bearing 3,183 2.64% 2,911 2.68% 2,931 2.90%
demand deposits
Time deposits 5,408 4.14% 5,838 3.72% 6,611 3.83%
______ ______ ______
Total $ 15,057 3.42% $ 15,005 3.23% $ 15,900 3.41%
====== ====== ======
</TABLE>
At March 31, 1995, December 31, 1994 and December 31, 1993,
Sugarland had no brokered deposits.
Interest Rate Sensitivity.
Interest rate risk is the potential impact of changes in
interest rates on net interest income and results from
disparities in repricing opportunities of assets and liabilities
over a period of time. Management estimates the effects of
changing interest rates and various balance sheet strategies on
the level of net interest income. Management may alter the mix
of floating- and fixed-rate assets and liabilities, change
pricing schedules, and adjust maturities through sales and
purchases of securities available for sale as a means of limiting
interest rate risk.
The degree of interest rate sensitivity is not equal for all
types of assets and liabilities. Sugarland's experience has
indicated that the repricing of interest-bearing demand, savings
and money market accounts does not move with the same magnitude
as general market rates. Additionally, these deposit categories,
along with noninterest-bearing demand, have historically been
stable sources of funds to Sugarland, which indicates a much
longer implicit maturity than their contractual availability.
Sugarland's cumulative behavioral gap to total assets at
December 31, 1994 was a positive 11.36% in the 0-1 year
cumulative range. A positive gap implies that earnings would
increase in a rising interest rate environment and decrease in a
falling interest rate environment.
Liquidity.
Sugarland seeks to manage its liquidity position to attempt
to ensure that sufficient funds are available to meet customers'
needs for borrowing and deposit withdrawals. Liquidity is
derived from both the asset and liability sides of the balance
sheet. Asset liquidity arises from the ability to convert assets
to cash and self-liquidation or maturity of assets. Liquid asset
balances include cash, interest-bearing deposits with financial
institutions, short-term investments and federal funds sold.
Liability liquidity arises from a diversity of funding sources as
well as from the ability of Sugarland to attract deposits of
varying maturities. If Sugarland were limited to only one source
of funding or all its deposits had the same maturity, its
liquidity position would be adversely impacted.
Sugarland's funding source is primarily its deposit base
which is comprised of interest-bearing and noninterest-bearing
accounts. Sugarland's noninterest-bearing demand deposits are,
by their very nature, subject to withdrawal upon demand.
Declines in one form of funding source require Sugarland to
obtain funds from another source. If Sugarland were to
experience a decline in noninterest-bearing demand deposits and
was to have a significant increase in loan volume without a
commensurate increase in such deposits, it would utilize
alternative sources of funds, probably at higher cost, to
maintain its liquidity and to meet its loan funding needs. This
would place downward pressure on Sugarland's net interest margin
and might have a negative impact on Sugarland's liquidity
position.
Sugarland's liquidity expressed as a percentage of net
liquid assets to net liabilities was 33.2%, 28.6% and 33.6% at
March 31, 1995, December 31, 1994 and December 31, 1993,
respectively. The decreased percentage at December 31, 1994
compared to year-end 1993 was due principally to a decrease in
deposits.
Capital Adequacy.
Sugarland's total shareholders' equity was $2,228,000 at
March 31, 1995, which represents a 5.7% increase from year-end
1994. At December 31, 1994, Sugarland's total shareholders'
equity was $2,107,000, a decrease of .43% from $2,116,000 at
December 31, 1993. The decrease from 1993 to 1994 was due
principally to Sugarland's adoption of SFAS 115, which resulted
in Sugarland's investment securities being stated at fair value
and unrealized losses therein causing a reduction in
shareholders' equity. The increase from year-end 1994 to March
31, 1995 reflects earnings for the period and a decline in
Sugarland's unrealized losses on investment securities. Book
value per common share is presented in the table below.
<TABLE>
<CAPTION>
March 31, December 31,
_________ ____________
1995 1994 1993
____ ____ ____
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Shares outstanding 187,286 187,286 187,286
Shareholders' equity $ 2,228 $ 2,107 $ 2,116
Book value per common share $ 11.90 $ 11.25 $ 11.30
</TABLE>
Adequate levels of capital are necessary over time to
sustain growth and absorb losses. In the case of banks and bank
holding companies, capital levels must also meet minimum
regulatory requirements. All risk-based and other capital ratios
improved from year-end 1993 to 1994, and from year-end 1994 to
March 31, 1995, and remain well above regulatory minimums. At
March 31, 1995, the Bank's Tier 1 capital was 25.96% of
risk-weighted assets and its total capital was 27.25% of
risk-weighted assets, compared to the regulatory minimums of 4.0%
and 8.0%, respectively. At December 31, 1994, the Bank's Tier 1
capital was 24.39% of risk-weighted assets and its total capital
was 25.83% of risk-weighted assets. The Bank's regulatory
leverage ratio, which compares Tier 1 capital to adjusted total
assets, was 13.33% and 13.42% at March 31, 1995 and December 31,
1994, respectively, compared to the regulatory minimum of 4.0%.
Under present regulations, the Bank was classified as "well-
capitalized" based upon its capital ratios at March 31, 1995 and
December 31, 1994 and 1993. The following table sets forth the
Bank's risk based capital and capital ratios at March 31, 1995
and at year-end 1994 and 1993.
<TABLE>
<CAPTION>
Regulatory
March 31, December 31, Minimum
_________ ____________ _______
1995 1994 1993
____ ____ ____
(Dollars in thousands)
<S> <C> <C> <C>
Capital:
Tier 1 $ 2,318 $ 2,264 $ 2,176
Tier 2 115 134 145
Total capital $ 2,433 $ 2,398 $ 2,321
Risk-weighted assets $ 8,928 $ 9,284 $ 9,594
Ratios:
Tier 1 capital to risk-weighted
assets 25.96% 24.39% 22.68% 4.0%
Tier 2 capital to risk-weighted
assets 1.29% 1.44% 1.51% --
Total capital to risk-weighted
assets 27.25% 25.83% 24.19% 8.0%
Leverage Ratio 13.33% 13.42% 12.13% 4.0%
</TABLE>
INFORMATION ABOUT MIDSOUTH
A copy of MidSouth's Annual Report to Shareholders for the
year ended December 31, 1994, and its Quarterly Report to
Shareholders for the quarter ended March 31, 1995, is being
delivered to the shareholders of MidSouth and Sugarland along
with this Joint Proxy Statement and Prospectus. The following
documents are incorporated herein by reference: MidSouth's
Annual Report on Form 10-KSB for the fiscal year ended December
31, 1994, Commission File No. 1-11826 dated March 23, 1995,
received by the Commission on March 24, 1995, as amended by Form
10-KSB/A, Commission File No. 1-11826, dated April 28, 1995,
received by the Commission on April 28, 1995; MidSouth's
Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1995; Commission File No. 1-11826, dated May 15, 1995,
received by the Commission on May 15, 1995. The following
sections of MidSouth's Annual Report to Shareholders: page 30,
"Market Prices"; inside back cover, "Stock Trading Information"
and information on dividends; page 1, "Financial Statements";
pages 30-31, "Selected Quarterly Financial Data"; pages 2-11,
"Management's Discussion and Analysis"; and MidSouth's Quarterly
Report to Shareholders "Financial Statements." See "Available
Information" for information with respect to obtaining copies
of documents incorporated by reference in this Joint Proxy
Statement and Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the Mergers are subsequently consummated, all
shareholders of Sugarland, other than those perfecting
dissenters' rights, will become shareholders of MidSouth and
their rights will be governed by and be subject to the Articles
of Incorporation and Bylaws of MidSouth rather than the Articles
of Incorporation and Bylaws of Sugarland. The following is a
brief summary of certain of the principal differences between the
rights of holders of MidSouth Preferred Stock and Sugarland
Common Stock not described elsewhere herein.
Preferred Stock
The Board of Directors of MidSouth is authorized by the
Company's Articles of Incorporation, without action of its
shareholders, to issue preferred stock from time to time and to
establish the designations, preferences and relative, optional or
other special rights and qualifications, limitations and
restrictions thereof, as well as to establish and fix variations
in the relative rights as between holders of any one or more
series of such preferred stock, except that any issuance of
preferred stock ranking senior to or on a parity with the
Preferred Stock must be approved by a vote of holders of the
Preferred Stock. The authority of the Board of Directors
includes but is not limited to the determination or fixing of the
following with respect to each series of preferred stock which
may be issued: (i) the designation of such series; (ii) the
number of shares initially constituting such series; (iii) the
dividend rate and conditions, and the dividend preferences, if
any, in respect of the preferred stock and among the series of
preferred stock; (iv) whether, and upon what terms, the preferred
stock would be convertible into or exchanged for shares of any
other class or other series of the same class; (v) whether, and
to what extent, holders of one or more shares of a series of
preferred stock will have voting rights; and (vi) the
restrictions, if any, that are to apply on the issue or reissue
of any additional preferred stock. Shares of preferred stock
that are authorized would be available for issuance in connection
with the acquisition of other businesses, infusion of capital, or
for other lawful corporate purposes, at the discretion of the
Board of Directors. The Board of Directors could issue preferred
stock to a person or persons who would support management in
connection with a proxy contest to replace an incumbent director
or in opposition to an unsolicited tender offer. As a result
such proposals or tender offers could be defeated even though
favored by the holders of a majority of MidSouth Common Stock.
The Articles of Incorporation of Sugarland do not authorize
the issuance of preferred stock.
Directors
The Articles of Incorporation of MidSouth provide that the
Board of Directors shall be divided into three equal classes,
with directors in each class holding office for a staggered term
of three years. Accordingly, only one-third of the directors are
subject to election each year. The Articles further provide that
the affirmative vote of not less than 80% of the "Total Voting
Power" is required to remove a director from office during his
term of service, and that a director may only be removed for
cause. The Articles define Total Voting Power as the total
number of votes that shareholders and holders of any bonds,
debentures or other obligations granted voting rights by the
Corporation pursuant to La. R.S. 12:75(H) are entitled to cast
with respect to the election of directors or, if such term is
used in reference to any other particular matter properly brought
before the shareholders for a vote, means the total number of
such votes that are entitled to be cast with respect to such
matter.
Nominations for directors must comply with the nominating
procedures set forth in Article IV(H), which requires, among
other things, that a written notice of nomination be delivered to
the Board prior to the shareholders' meeting at which the
nomination will be considered, and that such notice must contain
certain specific information about the candidate and the
shareholder making the nomination, as required under the
Securities Exchange Act of 1934.
MidSouth's Articles also permit directors to vote by proxy.
Provisions governing the election and powers of Sugarland's
directors are contained in its Bylaws rather than its Articles,
and the Bylaws do not contain any of the special provisions
discussed above.
Business Combinations
With respect to a tender offer or offer to merge or
consolidate, MidSouth's Articles permit its directors to
consider: (i) the consideration offered in relation to the
current market price of the stock versus the estimated future
market price of the stock that could be achieved over several
years; (ii) the social and economic effects of the transaction on
the corporation, its subsidiaries, or their employees, customers,
creditors and the communities in which the corporation and its
subsidiaries do business; (iii) the business and financial
condition and earning prospects of the acquiring party; and (iv)
the competence, experience and integrity of the acquiring party
and its management. These provisions are intended to give
MidSouth's directors substantial discretion in evaluating an
offer to merge or consolidate. Sugarland's Articles do not
contain provisions on business combinations.
Special Meetings of Shareholders
MidSouth's Articles require that at least 80% of the total
voting power of MidSouth is necessary for the shareholders to
call a special meeting. Sugarland's Articles and Bylaws do not
address the call of a special meeting by shareholders, so under
the LBCL shareholders of Sugarland would be entitled to call a
special meeting upon the written request of 20% of the
outstanding stock of Sugarland.
Bylaws
Bylaws of MidSouth may be adopted only by a majority vote of
all of the Continuing Directors. "Continuing Directors" is
defined in the Articles as the persons who (1) are members of the
Board of Directors of the Corporation on March 3, 1993 or (2)
become members of the Board of Directors after March 3, 1993 upon
the nomination of the Board of Directors at a time when a
Majority of the Members are Continuing Directors. The Bylaws may
be amended or repealed only by a majority vote of all of the
Continuing Directors or by the affirmative vote of the holders of
at least 80% of the Total Voting Power at any annual or special
meeting of shareholders, the notice of which expressly states
that the proposed amendment or repeal is to be considered at the
meeting. Any purported amendment to the Bylaws which would add
thereto a matter not covered in the Bylaws prior to such
purported amendment shall be deemed to constitute the adoption of
a Bylaw provision and not an amendment to the Bylaws.
Sugarland's Articles provide that its Bylaws may be adopted,
amended or repealed concurrently by the Board or the
shareholders, and that the shareholders may provide that any
alterations, amendments or repeal of a provision of the Bylaws by
the shareholders may not be altered, amended, repealed or
reinstated by the Board.
Vote Required for Shareholder Action
MidSouth's Articles provide that any proposal to approve a
merger, consolidation, share exchange, disposition of all the
corporation's assets, dissolution or an amendment to the Articles
which has the recommendation and approval of a majority of the
Continuing Directors need only be approved by the shareholders by
a majority of the voting power present at a meeting to consider
such matters. All other proposals submitted to the shareholders
upon the recommendation and approval of a majority of the
Continuing Directors need only be approved by a majority of the
votes cast at any meeting to consider the proposal. Any matter
submitted to the shareholders other than with the recommendation
and approval of a majority of the Continuing Directors must be
approved by the affirmative vote of 80% of the Total Voting
Power.
Sugarland's Articles provide that shareholder approval of
any matter properly brought before the shareholders is effected
by a majority of the votes actually cast, with the exception of
directors, who are elected by a plurality vote.
Limitation of Personal Liability and Indemnification of Directors
and Officers
The Articles of Incorporation of MidSouth contain a
provision limiting the personal liability of MidSouth's directors
and officers under certain circumstances (the "Limitation of
Liability Provision"). Pursuant to the Limitation of Liability
Provision, the officers and directors of MidSouth have no
personal liability to MidSouth or its shareholders for monetary
damages for breach of their fiduciary duty as directors or
officers of MidSouth except for (a) any breach of the director's
or officer's duty of loyalty to MidSouth or its shareholders, (b)
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) liability
pertaining to acts related to an unlawful stock repurchase or
payment of a dividend, or (d) any transaction from which the
director or officer derived an improper personal benefit. The
Articles also permit the Board to cause the Company to enter into
contracts with its directors and officers to further limit an
individual's liability to the fullest extent permitted by law,
and to adopt similar limitation of liability and indemnification
provisions with respect to the Company's subsidiaries.
Sugarland's Articles contain indemnification provisions
which provide indemnification to its directors and officers to
the fullest extent permitted by the LBCL. Neither Sugarland's
Articles nor its Bylaws contain provisions limiting the liability
of its directors and officers.
RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK
Shareholders of Sugarland who receive MidSouth Preferred
Stock in exchange for their shares of Sugarland Common Stock will
have the rights and preferences set forth in the Form of Articles
of Amendment of MidSouth attached hereto as Appendix B and
summarized below. Shareholders of Sugarland are urged to review
the Form of Articles of Amendment of MidSouth at Appendix B.
Dividend Rights
Holders of record of the MidSouth Preferred Stock are
entitled to receive, but only when as and if declared by the
MidSouth Board of Directors, and out of the funds of MidSouth
legally available for that purpose, cumulative cash dividends at
an annual rate of 8.28% for 1995 and thereafter at an annual rate
fixed on December 31 of each year for the ensuing calendar year,
equal to the yield for Government Bonds and Notes maturing in
December of the following year, as published in the Treasury
Bonds, Notes and Bills Section of the last issue of the Wall
Street Journal published each year, plus 1% per annum, and no
more; provided that the annual dividend rate shall in no case be
greater than 10% nor less than 6%, and that, from and after the
tenth anniversary of the date of issuance of the Preferred Stock
the annual dividend rate will be fixed at 10%. If more than one
yield is shown for December maturities, the average will be
applied. If no yield is quoted for December maturities, the
yield for the next earlier available month will be applied. If
any quarterly dividend is not paid when due, the unpaid amount
will bear interest at a rate of 10% per annum until paid.
Dividends on the Preferred Stock are payable only from
legally available funds, defined in MidSouth's Articles of
Incorporation to mean such amount of the surplus of MidSouth as
may be paid under the LBCL as may be provided in cash by MidSouth
Bank to MidSouth as a dividend under applicable statutes and
regulations of the U.S. Comptroller of the Currency and that
would not result in MidSouth or MidSouth Bank having capital
ratios of less than the required minimum regulatory capital
ratios or failing to be "adequately capitalized" within the
meaning of applicable law and regulations or being in violation
of any law, regulation or regulatory directive, agreement or
order. At March 31, 1995, the amount of legally available funds
under this definition was approximately $1,400,000.
Dividends payable on the Preferred Stock will be paid on the
first day of April, July, October or January of each year or on
such earlier dates as the MidSouth Board of Directors may from
time to time fix as the dates for payment of quarterly dividends
on MidSouth Common Stock. The initial dividend on the Preferred
Stock will be payable on the first day of April, July, October,
or January that is at least 91 days from the date of original
issuance of the Preferred Stock and will be in an amount, at the
applicable dividend rate, based on the number of days between the
date of original issuance and the dividend payment date minus 90
days, provided that the aggregate amount payable will be reduced
by the amount by which certain expenses of Sugarland exceed
$110,000 (the "Subtracted Amount"). Such expenses include
Sugarland's actual legal, accounting and financial advisory fees
and expenses of printing and mailing this Joint Proxy Statement
and Prospectus and holding the Special Meeting, and any other
expenses in connection with the negotiation, execution,
implementation and consummation of the Plan. In any case in
which the Subtracted Amount is greater than the amount of the
initial dividend otherwise payable, such excess will be deducted
from the amount otherwise payable on the next succeeding dividend
payment date.
Sugarland's estimated expenses in connection with the Plan
are approximately $135,000. Accordingly, it is estimated that
there will be a Subtracted Amount of $25,000. The Mergers will
not be consummated until after June 30, 1995 and, accordingly,
the earliest date by which the initial dividend will be paid is
January 1, 1996. The table below provides examples of the timing
and amount of the initial dividend, assuming a consummation date
of July 20, 1995, that the annual dividend rate in 1996 will
continue to be 8.28% and that the Subtracted Amount will be
either $25,000, $50,000 or $75,000.
<TABLE>
<CAPTION>
Subtracted Amount First Dividend Payment Amount Per Share<FN2>
_________________ ______________________ ________________
<S> <C> <C>
$25,000 January 1, 1996 $.11
$50,000 April 1, 1996<FN1> $.27
$75,000 April 1, 1996<FN1> $.14
________________________
</TABLE>
<FN1> No dividend would be paid on January 1, 1996
<FN2> Quarterly dividends after the indicated date, at the assumed
annual rate of 8.28%, would be approximately $.295 per share.
As long as any shares of MidSouth Preferred Stock are
outstanding, MidSouth may not declare, pay or set apart for
payment any dividend on any shares of its Common Stock or other
capital stock ranking junior to the Preferred Stock as to
dividends or liquidation rights (collectively, "Junior
Securities") or make any payment on account of, or set apart for
payment money for a sinking or other similar fund, for the
purchase, redemption or other retirement of, any of the Junior
Securities or any warrants, rights, calls or options exercisable
for or convertible into any of the Junior Securities, or make any
distribution in respect thereof, either directly or indirectly,
whether in cash, other property, obligations or shares of
MidSouth (other than distributions or dividends in Junior
Securities to the holders of Junior Securities), and may not
permit any corporation or other entity directly or indirectly
controlled by MidSouth to purchase or redeem any of the Junior
Securities or any warrants, rights, calls or options exercisable
for or convertible into any of the Junior Securities, unless
prior to or concurrently with the payment or setting apart for
payment of any dividend on any of the Junior Securities, all
accumulated and unpaid dividends on shares of Preferred Stock,
and interest thereon, if any, have been or will be paid in full.
No shares of preferred stock ranking senior to or on a parity
with the Preferred Stock may be issued without the approval of
holders of Preferred Stock.
Holders of Sugarland Common Stock are not entitled to any
dividend preference.
Redemption Rights
On or after the fifth anniversary of the date of issuance of
the Preferred Stock, MidSouth may, at its option, redeem the
whole, or from time to time, any part of the Preferred Stock at a
redemption price per share payable in cash in an amount equal to
the sum of (i) $14.25, (ii) all accrued and unpaid dividends on
the Preferred Stock to the date fixed for redemption, whether or
not earned or declared and (iii) interest accrued to the date of
redemption on all accrued and unpaid dividends on the Preferred
Stock, if any.
Conversion Rights
At their option, the holders of the shares of MidSouth
Preferred Stock may convert such stock into shares of MidSouth
Common Stock at the conversion rate of one share of MidSouth
Common Stock for each share of Preferred Stock converted at any
time prior to the redemption of the Preferred Stock. The
conversion rate is subject to adjustment from time to time as
follows:
If MidSouth at any time (i) pays a dividend or makes a
distribution to all holders of its Common Stock in shares of
Common Stock, and does not concurrently issue shares of Common
Stock to the holders of the Preferred Stock in an amount
equivalent to what holders of the Preferred Stock would have
received if they had exercised their conversion rights prior to
the dividend or distribution; or (ii) effects a stock split or
reverse stock split of its Common Stock, then, in each such case,
the conversion rate as in effect immediately before one of these
events will be proportionately decreased or increased, as the
case may be, so that the holders of any shares of the Preferred
Stock thereafter surrendered for conversion will be entitled to
receive the number of whole shares of Common Stock that they
would have owned or been entitled to receive immediately
following such event if their shares of Preferred Stock had been
converted into Common Stock prior thereto.
In the event of (i) any reclassification of the Common Stock
(other than in a stock split or reverse stock split), (ii) a
consolidation or merger of MidSouth in which MidSouth will not be
the surviving entity, (iii) a sale by MidSouth of substantially
all of its property or assets or (iv) a statutory share exchange,
each share of Preferred Stock will be convertible into or
represent the right to receive the number of shares of Common
Stock, or other securities or property, equivalent to what the
holder of the Preferred Stock would have received if he had
exercised his conversion rights prior to such an event.
No adjustment in the conversion rate shall be required
unless the adjustment would require an increase or decrease in
the conversion rate by more than one percent, but any adjustments
which would fall below one percent will be carried forward
cumulatively and taken into account in any subsequent
adjustments.
Voting Rights
Except as otherwise required by law or the MidSouth Articles
of Incorporation, holders of MidSouth Preferred Stock are not
entitled to any vote on any matter, including but not limited to
any merger, consolidation or transfer of assets, or statutory
share exchange, and to notice of any meeting of shareholders of
MidSouth. If at any time MidSouth falls in arrears in the
payment of dividends on the Preferred Stock for two consecutive
quarterly dividend periods, the number of directors constituting
the full Board of Directors of MidSouth will be automatically
increased by two, and the holders of the Preferred Stock, voting
separately as a single class, will be entitled to elect two
directors of MidSouth to fill the two created directorships, at a
special meeting called for the purpose, and thereafter at each
shareholders meeting held for the purpose of electing directors
of MidSouth, so long as there continues to be any arrearage in
the payment of dividends on the Preferred Stock for any past
quarterly dividend period or of interest on such accumulated and
unpaid dividends. When all accumulated and unpaid dividends on
the Preferred Stock for all past quarterly dividend periods, and
the interest thereon, have been paid in full, the right of the
holders of the Preferred Stock to elect directors will cease, the
number of directors of MidSouth will automatically be reduced by
two, and the term of office of all directors elected by the
holders of the Preferred Stock will immediately terminate.
Holders of the Preferred Stock must approve any issuance by
MidSouth of preferred stock ranking senior to or on a parity with
the Preferred Stock.
Liquidation Rights
Upon the dissolution, liquidation or winding up of MidSouth,
the holders of the shares of Preferred Stock will be entitled to
receive upon liquidation, and to be paid out of the assets of
MidSouth available for distribution to its shareholders before
any payment or distribution may be made on the MidSouth Common
Stock or on any other junior securities, the amount of $14.25 per
share, plus a sum equal to all accrued and unpaid dividends,
whether or not earned or declared on such shares, and accrued
interest thereon, if any, to the date of final distribution.
Neither the sale of all or substantially all of the property or
business of MidSouth, nor the merger or consolidation of MidSouth
into or with any other entity, or the merger or consolidation of
any other entity into MidSouth will be considered a dissolution,
liquidation or winding up, voluntary or involuntary, of MidSouth.
Preemptive Rights
Holders of shares of MidSouth Preferred Stock do not have
preemptive rights.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial
statements are presented assuming the Mergers will be accounted
for as a purchase, and, subject to the purchase adjustments noted
below regarding the Companies, reflect the combination of the
historical consolidated financial statements of the Companies for
the following periods. The unaudited pro forma combined balance
sheet assumes the Mergers were consummated on March 31, 1995.
The unaudited pro forma statements of earnings are computed
assuming the Mergers were consummated on January 1, 1994 and give
effect to (1) the issuance of 187,286 shares of Preferred Stock
at $14.25 per share (2) the payment of preferred dividends at the
rate effective March 31, 1995, (3) the amortization of restated
goodwill and (4) the adjustment of certain assets of Sugarland to
fair market value.
The unaudited pro forma information does not purport to
represent what the Companies' combined results of operations
actually would have been if the Mergers had occurred as of the
dates indicated or will be for any future period. The unaudited
pro forma combined financial statements should be read in
conjunction with the historical financial statements and notes
thereto of MidSouth and Sugarland contained elsewhere or
incorporated by reference herein.
<PAGE>
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Balance Sheet
March 31, 1995
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and Due
From Banks 6,261,908 $ 2,193,058 8,454,966 200,000(A) 8,254,966
Federal
Funds Sold 7,100,000 2,975,000 10,075,000 10,075,000
Total Cash
and Cash
Equivalents 13,361,908 5,168,058 18,529,966 18,329,966
Interest-
Bearing
Deposits in
Banks 98,385 98,385 98,385
Securities
Available
for Sale 28,875,336 3,997,494 32,872,830 32,872,830
Investment
Securities 931,404 931,404 931,404
Loans, Gross 61,440,380 7,957,334 69,397,714 69,397,714
Allowance
for Possible
Loan Losses (905,175) (115,445) (1,020,620) (1,020,620)
Unearned
Discounts 0 0
Loans, Net 60,535,205 7,841,889 68,377,094 68,377,094
Bank
Premises and
Equipment,
Net 2,203,510 478,356 2,681,866 287,000(B) 2,968,866
Other Real
Estate
Owned, Net 193,350 193,350 193,350
Accrued
Interest
Receivable
and Other
Assets 1,309,296 327,954 1,637,250 97,580(C) 1,734,830
Goodwill,
Net 185,508 185,508 440,614(D) 287,000(B) 441,542
200,000(A) 97,580(C)
TOTAL
ASSETS $107,693,902 17,813,751 125,507,653 $125,948,267
</TABLE>
(See accompanying notes at end of financial statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Balance Sheet
March 31, 1995
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
Deposits:
Non-Interest
Bearing 30,085,357 4,547,723 34,633,080 34,633,080
Interest 68,621,837 10,988,154 79,609,991 79,609,991
Bearing
Total 98,707,194 15,535,877 114,243,071 114,243,071
Deposits
Securities
Sold Under
Repurchase 315,479 315,479 315,479
Agreements
Accrued
Interest 234,055 19,854 253,909 253,909
Payable
Notes 2,154,366 2,154,366 2,154,366
Payable
Other 112,752 29,809 142,561 142,561
Liabilities
Total 101,523,846 15,585,540 117,109,386 117,109,386
Liabilities
Stockholders'
Equity
Preferred 0 2,668,825(D) 2,668,825
Stock
Common Stock 71,596 1,161,430 1,233,026 1,161,430(D) 71,596
Capital 6,167,103 1,452,364 7,619,467 1,452,364(D) 6,167,103
Surplus
Unearned (67,926) (67,926) (67,926)
ESOP Shares
Unrealized
(Losses)
Gains on
Securities
Available- (592,500) (103,542) (696,042) 103,542(D) (592,500)
For-Sale,
Net of Tax
Retained 591,783 231,569 823,352 231,569(D) 591,783
Earnings
Treasury (513,610) (513,610) 513,610(D) 0
Stock
Total
Shareholders'
Equity 6,170,056 2,228,211 8,398,267 8,838,881
Total
Liabilities
and
Shareholders'
Equity $107,693,902 17,813,751 125,507,653 125,948,267
</TABLE>
(See accompanying notes at end of finanical statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
INTEREST
INCOME:
Interest
and Fees
on Loans $5,463,501 868,282 6,331,783 6,331,783
Interest on
Investment
Securities 1,782,504 262,604 2,045,108 2,045,108
Interest
on Federal
Funds Sold 142,473 88,030 230,503 230,503
TOTAL
INTEREST
INCOME 7,388,478 1,218,916 8,607,394 8,607,394
INTEREST
EXPENSE
Interest on
Deposits 1,924,906 365,679 2,290,585 2,290,585
Interest
on Notes
Payable 51,195 51,195 51,195
Total
Interest
Expense 1,976,101 365,679 2,341,780 2,341,780
NET
INTEREST
INCOME 5,412,377 853,237 6,265,614 6,265,614
</TABLE>
(See accompanying notes at end of finanical statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
PROVISION
FOR
POSSIBLE
LOAN
LOSSES 210,000 210,000 210,000
NET
INTEREST
INCOME
AFTER
PROVISION
FOR
POSSIBLE
LOAN
LOSSES 5,202,377 853,237 6,055,614 6,055,614
NON-INTEREST
INCOME
Service
Charges
on
Deposits 1,015,529 154,173 1,169,702 1,169,702
Other
Service
Charges
and Fees 406,187 25,980 432,167 432,167
Securities
Gains, Net 1,178 1,178 1,178
TOTAL NON-
INTEREST
INCOME 1,422,894 180,153 1,603,047 1,603,047
NON-INTEREST
EXPENSE
Salaries and
Employee
Benefits 2,242,892 436,220 2,679,112 2,679,112
Occupancy
and
Equipment
Expenses 822,615 205,824 1,028,439 1,028,439
Other
Operating
Expenses 1,816,623 173,118 1,989,741 32,000(E) 2,021,741
TOTAL NON-
INTEREST
EXPENSE 4,882,130 815,162 5,697,292 5,729,292
INCOME
BEFORE
INCOME
TAXES 1,743,141 218,228 1,961,369 1,929,369
PROVISION
FOR
INCOME
TAXES 601,500 55,685 657,185 657,185
NET INCOME 1,141,641 162,543 1,304,184 1,272,184
</TABLE>
(See accompanying notes at end of financial statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
December 31, 1994
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
PREFERRED
DIVIDEND
REQUIREMENT 220,979(F) 220,979
INCOME
AVAILABLE
TO
COMMON
SHARE-
HOLDERS $1,141,641 162,543 1,304,184 1,051,205
PRIMARY
EARNINGS
PER
COMMON
SHARE $ 1.61 0.87 1.48
FULLY
DILUTED
EARNINGS
PER
COMMON
SHARE $ 1.42
</TABLE>
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
Three Months Ended March 31, 1995
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest
and
Fees on
Loans $1,546,455 201,445 1,747,900 $ 1,747,900
Interest on
Investment
Securities 439,900 59,746 499,646 499,646
Interest
on
Federal
Funds
Sold 43,782 44,168 87,950 87,950
TOTAL
INTEREST
INCOME 2,030,137 305,359 2,335,496 2,335,496
</TABLE>
(See accompanying notes at end of financial statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
Three Monts Ended March 31, 1995
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
INTEREST
EXPENSE:
Interest on
Deposits 568,873 92,831 661,704 661,704
Interest
on Notes
Payable 29,139 29,139 29,139
TOTAL
INTEREST
EXPENSE 598,012 92,831 690,843 690,843
NET
INTEREST
INCOME 1,432,125 212,528 1,644,653 1,644,653
PROVISION
FOR
POSSIBLE
LOAN
LOSSES 55,000 0 55,000 55,000
NET
INTEREST
INCOME
AFTER
PROVISION
FOR
POSSIBLE
LOAN
LOSSES 1,377,125 212,528 1,589,653 1,589,653
NONINTEREST
INCOME:
Service
Charges
on Deposits 249,211 37,383 286,594 286,594
Other
Service
Charges
and Fees 108,569 7,848 116,417 116,417
Securities
Gains,
Net 0 0 0 0
TOTAL
NONINTEREST
INCOME 357,780 45,231 403,011 403,011
NONINTEREST
EXPENSE:
Salaries
and
Employee
Benefits 587,802 101,185 688,987 688,987
Occupancy
and
Equipment
Expenses 218,935 49,257 268,192 268,192
</TABLE>
(See accompanying notes at end of financial statements)
MidSouth Bancorp, Inc.
Unaudited Pro Forma Combined Statement of Earnings
Three Months Ended March 31, 1995
<TABLE>
<CAPTION>
Sugarland Pro Forma
MidSouth Bancshares, MidSouth
Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc.
DEBITS CREDITS
<S> <C> <C> <C> <C> <C> <C>
Other
Operating
Expenses 468,826 45,676 514,502 5,000(E) 519,502
TOTAL
NONINTEREST
EXPENSE 1,275,563 196,118 1,471,681 1,476,681
INCOME
BEFORE
INCOME
TAXES 459,342 61,641 520,983 515,983
PROVISION
FOR
INCOME
TAXES 161,257 13,350 174,607 174,607
NET
INCOME 298,085 48,291 346,376 341,376
PREFERRED
DIVIDEND
REQUIREMENT 0 55,245(F) 55,245
INCOME
AVAILABLE
TO COMMON
SHAREHOLDERS $298,085 48,291 346,376 $286,131
PRIMARY
EARNINGS
PER
COMMON
SHARE $ 0.42 0.26 0.40
FULLY
DILUTED
EARNINGS
PER
COMMON
SHARE $ 0.38
</TABLE>
_________________________________
(A) To record estimated expenses relating to the Mergers as a
purchase price adjustment.
(B) To adjust Bank Premises and Equipment to market.
(C) To record deferred taxes for write-up of Bank Premises and
Equipment.
(D) To record preferred stock (187,286 shares @ $14.25/share)
and eliminate equity of Sugarland.
(E) To amortize adjusted goodwill on a straight line
basis over 15 years.
(F) To record payment on Preferred Stock dividends.
____________________________
(See accompanying notes at end of financial statements)
ELECTION OF DIRECTORS OF MIDSOUTH
MidSouth's Articles provide that the
number of directors will be set by the By-
Laws, and the By-Laws currently provide for a
Board of Directors of eight directors. The
Articles also provide for three classes of
directors, with one class to be elected at
each annual meeting for a three-year term. At
the Annual Meeting, Class II Directors will be
elected to serve until the third succeeding
annual meeting of shareholders and until their
successors have been duly elected and
qualified.
Unless authority is withheld, the persons
named in the enclosed proxy will vote the
shares represented by the proxies they receive
for the election of the two Class II director
nominees named below. In the unanticipated
event that one or more nominees cannot be a
candidate at the Annual Meeting, the shares
represented by the proxies will be voted in
favor of such other nominees as may be
designated by the Board. Directors will be
elected by plurality vote, and, as a result,
abstentions and broker non-votes will be
ineffective.
MidSouth's Articles provide that only
persons who are nominated in accordance with
the procedures set forth in Article IV(H) of
the Articles are eligible for election as
directors. Other than the Board of Directors,
only shareholders of MidSouth entitled to vote
at a meeting for the election of directors who
have complied with the notice procedures set
forth in the Articles may nominate a person
for director. In order for such shareholder
to timely nominate a person for election at
the Annual Meeting, the shareholder must have
provided written notice to MidSouth by January
15, 1995. The shareholders' notice must set
forth the following: (1) as to each person
whom the shareholder proposes to nominate for
election or reelection as director, (a) the
name, age, business address and residential
address of such person, (b) the principal
occupation or employment of such person, (c)
the class and number of shares of capital
stock of MidSouth of which such person is the
beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934
("Rule 13d-3") and (d) any other information
relating to such person that would be required
to be disclosed in solicitations of proxies
for the election of directors pursuant to
Regulation 14A promulgated under the
Securities Exchange Act of 1934; and (2) as to
the shareholder of record giving the notice,
(a) the name and address of such shareholder,
(b) the class and number of shares of capital
stock of MidSouth of which such shareholder is
the beneficial owner (as defined in Rule 13d-
3) and (c) a description of any agreements,
arrangements or relationships between the
shareholder giving the notice and each person
the shareholder proposes to nominate. Two
inspectors, not affiliated with MidSouth,
appointed by MidSouth's secretary, will
determine whether the notice provisions were
met. If the inspectors determine that the
Shareholder has not complied with Article
IV(H), the defective nomination shall be
disregarded.
The following table sets forth certain
information as of February 28, 1995 with
respect to each director nominee and each
director whose term as a director will
continue after the Meeting. Unless otherwise
indicated, each person has been engaged in the
principal occupation shown for the past five
years. The Board recommends a vote FOR each
of the two nominees named below.
Director Nominees for terms expiring in 1998 (Class II Directors)
<TABLE>
<CAPTION>
Year First Became
Name Age Principal Occupation Director of MidSouth
____ ___ ____________________ ____________________
<S> <C> <C> <C>
Will G. Charbonnet, Sr. 47 President, Acadiana Fast 1985
Foods Inc. (owner/operator
fast food stores); Chairman
of the Board, MidSouth and
MidSouth Bank
Clayton Paul 69 President, Badger Oil 1992(1)
Hilliard(1) Corporation
Directors whose terms expire in 1996 (Class III Directors)
Year First Became
Name Age Principal Occupation Director of MidSouth
____ ___ ____________________ ____________________
James R. Davis, Jr. 42 Owner, Safe-America 1991
Security System (1994-
present); Director of Gas
Supply for Louisiana,
Victoria Gas Corporation
(October 1992 - 1993);
President, Elsbury
Production, Inc. (oil and
gas exploration and
production) (June 1982 -
September 1992)
Karen L. Hail 41 Chief Financial Officer and 1988
Secretary, MidSouth
Milton B. Kidd, Jr. 75 Optometrist, Kidd Vision 1984
Centers
Directors whose terms expire in 1997 (Class I Directors)
Name Age Principal Occupation Year First Became
Director of MidSouth
____ ___ ____________________ ____________________
C. R. Cloutier 48 President and C.E.O., 1984
MidSouth and MidSouth Bank
J. B. Hargroder, M.D. 64 Physician, retired 1984
William M. Simmons 61 Private Investments 1984
</TABLE>
_________________________________
<FN1> Mr. Hilliard also was a director of MidSouth and MidSouth Bank
from 1985 to 1987.
During 1994 the Board held 17 meetings.
Each incumbent director attended at least 75%
of the aggregate number of meetings held
during 1994 of the Board and committees of
which he or she was a member, except Robert
Burke Keaty and James R. Davis, who attended
41% and 74% respectively.
The Board has an Executive Committee, an
Audit and Loan Review Committee and a
Personnel Committee. The members of the
Executive Committee are Will G. Charbonnet,
Sr., C. R. Cloutier, J. B. Hargroder, M.D. and
Robert Burke Keaty. The Executive Committee's
duties include nominations, shareholder
relations, bank examination and Securities and
Exchange Commission ("SEC") reporting. The
Executive Committee will consider nominees
that are proposed by shareholders in
accordance with the procedures, described
below, set forth in MidSouth's Articles. The
Executive Committee did not meet in 1994 as
such matters usually taken up by this
Committee were brought to the full Board.
The current members of the Audit and Loan
Review Committee are James R. Davis, Jr.,
Milton B. Kidd, III, and Clayton Paul
Hilliard. The Committee, which held 12
meetings in 1994, is responsible for
maintaining a program of internal accounting
controls and monitoring all loans and lines of
credit for consistency with MidSouth Bank's
loan policy.
The current members of the Personnel
Committee are Will G. Charbonnet, Sr., James
R. Davis, Jr., J. B. Hargroder, Clayton Paul
Hilliard and William M. Simmons. The
Personnel Committee, which met one time in
1994, is responsible for evaluating the
performance and setting the compensation of
MidSouth's executive officers.
Directors of MidSouth are also members of
the Board of Directors of MidSouth Bank, with
the exception that Milton B. Kidd, III, is a
director of MidSouth Bank only and Milton B.
Kidd, Jr., is a director of MidSouth and
director emeritus of MidSouth Bank. Directors
were entitled to fees of $200 per month for
service on both boards, except for the
Chairman of the Board of MidSouth and MidSouth
Bank who receives an additional $400 per month.
In addition to the monthly fee, each director
receives $250 for each regular meeting, and
$125 for each special meeting of the Board of
MidSouth Bank and $75 for the first hour, and
$25 per hour for each additional hour, of each
committee meeting. Directors received fees
only for meetings they attended.
Section 16(a) of the Securities and
Exchange Act of 1934 requires MidSouth's
directors and executive officers and persons
who own more than ten percent of a registered
class of MidSouth's equity securities to file
with the SEC initial reports of ownership,
reports of changes in ownership, annual
reports regarding certain transactions in
common stock and other equity securities of
MidSouth. Executive officers, directors and
greater than ten-percent shareholders are
required to furnish MidSouth with copies of
all Section 16(a) reports they file. To
MidSouth's knowledge, all such Section 16(a)
filings with respect to changes in ownership
in 1994 were filed on a timely basis.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS OF MIDSOUTH
Security Ownership of Management
The following table sets forth certain
information as of May 31, 1995, concerning the
beneficial ownership of MidSouth's Common
Stock by each director and nominee of
MidSouth, by MidSouth's Chief Executive
Officer, C. R. Cloutier (who is also a
director) and by all directors and executive
officers of MidSouth as a group, determined in
accordance with Rule 13d-3 of the SEC. Unless
otherwise indicated, the Common Stock is held
with sole voting and investment power.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership<FN1> Percent
Name and Address of Class
<S> <C> <C>
Will G. Charbonnet, Sr. 41,045<FN2> 5.7%
1003 Hugh Wallis Road,
South, Suite F
Lafayette, LA 70508
C. R. Cloutier 49,555<FN3> 6.8%
P. O. Box 3745
Lafayette, LA 70502
15,618(4) 2.2%
James R. Davis, Jr.
9151 Interline Ave.,
Ste. 1-B
Lafayette, LA 70503
Karen L. Hail 22,200<FN5> 3.1%
P. O. Box 3745
Lafayette, LA 70502
J. B. Hargroder, M.D. 70,209<FN6> 9.8%
P. O. Box 1049
Jennings, LA 70546
Clayton Paul Hilliard 34,195<FN7> 4.8%
P. O. Box 52745
Lafayette, LA 70505
Robert Burke Keaty 4,710<FN8> 0.9%
345 Doucet Road
Suite 104
Lafayette, LA 70503
Milton B. Kidd, Jr., O.D. 17,221<FN9> 2.4%
1500 N.W. Blvd.
P. O. Box 1071
Franklin, LA 70538
William M. Simmons 24,599<FN10> 3.4%
P. O. Box 111
Avery Island, LA 70513
All directors and 292,924 39.65%
executive officers as a
group (13 persons)
</TABLE>
<FN1> MidSouth Common Stock held by MidSouth's
Directors' Deferred Compensation Trust
(the "Trust") is beneficially owned by
the Plan Administrator, which has sole
voting and investment power. Because the
Plan Administrator is the Executive
Committee of the Board of MidSouth, all
directors of MidSouth could be deemed to
share voting and investment power with
respect to all MidSouth Common Stock held
in the Trust (52,260 shares or 7.3% as of
May 31, 1995). For each individual
director, the table reflects the number
of shares held for his or her account
only. The group figure reflects all
shares held in the Trust on May 31, 1995.
MidSouth Common Stock held by MidSouth's
Employee Stock Ownership Plan (the
"ESOP") is not included in the table,
except that shares allocated to an
individual's account are included as
beneficially owned by that individual.
Beneficial ownership of shares held in
the ESOP is attributed to the ESOP, ESOP
Trustees and ESOP Administrative
Committee, as reflected in the table
below. The Board has the power to
appoint and remove the ESOP Trustees and
Administrative Committee. Shares subject
to options are deemed outstanding for
purposes of computing the percentage of
outstanding Common Stock owned by persons
beneficially owning such shares and by
all directors and executive officers as a
group but are not deemed to be
outstanding for the purpose of computing
the ownership percentage of any other
person.
<FN2> Includes 8,883 shares as to which he
shares voting and investment power and
6,938 held for his account in the Trust.
<FN3> Includes 7,362 shares held by the ESOP
for his account as to which he shares
voting power, 20,488 shares as to which
he shares voting and investment power,
7,106 shares held for his account in the
Trust and 10,500 shares underlying stock
options.
<FN4> Includes 10,131 shares as to which he
shares voting and investment power and
5,487 shares held for his account in the
Trust.
<FN5> Includes 5,234 shares held for her
account in the ESOP as to which she
shares voting power, 210 shares as to
which she shares voting and investment
power, 5,416 shares held for her account
in the Trust and 10,500 shares underlying
stock options.
<FN6> Includes 63,435 shares as to which he
shares voting and investment power, and
6,069 shares held for his account in the
Trust.
<FN7> Includes 30,992 shares as to which he
shares voting and investment power and
2,347 shares held for his account in the
Trust.
<FN8> Includes 4,710 shares held for his
account in the Trust.
<FN9> Includes 5,250 shares as to which he
shares voting and investment power, and
4,713 shares held for his account in the
Trust.
<FN10> Includes 570 shares as to which he shares
voting and investment power and 5,764
shares held for his account in the Trust.
Security Ownership of Certain Beneficial
Owners
The following table sets forth certain
information as of May 31, 1995 concerning
persons or groups, other than the directors
listed in the table above, known to MidSouth
to be the beneficial owner of more than five
percent of MidSouth's Common Stock, determined
in accordance with Rule 13d-3 of the SEC.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
___________________ _______________________ ________
<S> <C> <C>
Robert C. Schumacher, M.D. 36,411 5.1%
16134 N. Gallaugher
Jennings, LA 70546
Hilton B. Watson 36,855 5.1%
102 S. Cutting Avenue
Jennings, LA 70546
MidSouth Bancorp, Inc. 68,204 <FN1> 9.5%
Employee Stock Ownership
Plan, ESOP
Trustees and ESOP
Administrative Committee
P. O. Box 3745
Lafayette, LA 70502
</TABLE>
<FN1> The ESOP Administrative Committee directs
the ESOP Trustees how to vote the
approximately 6,065 unallocated shares of
Common Stock held in the ESOP as of May
31, 1995. Voting rights of the shares
allocated to ESOP participants' accounts
are passed through to the participants.
The ESOP Trustees have investment power
with respect to the ESOP's assets, but
must exercise this power in accordance
with an investment policy established by
the ESOP Administrative Committee. Thus,
the ESOP Trustees share investment power
with the ESOP Administrative Committee
for all shares held pursuant to the ESOP.
The ESOP Trustees are Donald R. Landry,
an executive officer of MidSouth, and
Russell Henson and Kim Cormier, MidSouth
Bank employees. The ESOP Administrative
Committee consists of Teri S. Stelly and
Todd Kidder, executive officers of
MidSouth, and Dailene Melancon, a
MidSouth Bank employee.
___________________________
EXECUTIVE COMPENSATION AND CERTAIN
TRANSACTIONS
Summary of Executive Compensation
The following table shows all
compensation awarded to, earned by or paid to
MidSouth's Chief Executive Officer, C. R.
Cloutier, for all services rendered by him in
all capacities to MidSouth and its
subsidiaries for the year ended December 31,
1994. No other executive officer of MidSouth
had total annual salary and bonus exceeding
$100,000 for the year ended December 31, 1994.
<TABLE>
<CAPTION>
Long Term Compensation
____________________________________________________________________________________________________
Annual Compensation Awards Payouts Other
____________________________________________________________________________________________________
Other Securities All
Annual Restricted Under- Other
Name Compen- Stock lying LTIP Compen-
and Year Salary($) Bonus($) sation Awards(s) Options/ Payouts sation
Principal <FN1> <FN2> ($) ($) SARs(#) ($) ($)
Position
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. R. 1994 $111,517 1,507 0 0 0 0 9,165<FN3)
Cloutier, 1993 $110,267 4,956 0 0 10,114
Chief 1992 $ 99,155 0 0 0 5,955
Executive
Officer
_____________________________________________________________________________________________________
</TABLE>
<FN1> Includes $11,900 in directors fees for
1994, $100,650 in directors for 1993, and
$8,750 in directors fees for 1992.
<FN2> Awarded pursuant to the Incentive
Compensation Plan of MidSouth Bank.
<FN3> Consists of an estimated $8,338
contributed by MidSouth to the ESOP for
the account of Mr. Cloutier and $827 paid
by MidSouth in insurance premiums for
term life insurance for the benefit of Mr.
Cloutier.
Option Exercises and Holdings
The following table sets forth
information with respect to MidSouth's Chief
Executive Officer, C. R. Cloutier, concerning
his exercise of options during 1994 and
unexercised options held as of December 31,
1994. As of December 31, 1994, as adjusted
for a stock dividend paid February 18, 1994,
other executive officers of MidSouth held
options to purchase an aggregate of 10,500
shares of common stock exercisable at $9.52
per share and expiring on December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1994 AND
OPTION VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
_________________________________________________________________________________________
No. of
Shares
Acquired
on Value Number of Securities Value of Unexercised
Name Exercise Realized Underlying Unexercised In-the-Money Options/SARs
Options/SARs at at
December 31, 1994<FN1> December 31,1994
______________________________________________________
Exercisable Unexercisable Exercisable Unexercisable
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
C. R. Cloutier 0 $0 10,500 0 $20,790 N.A.
__________________________________________________________________________________________
</TABLE>
<FN1> As adjusted for a stock dividend paid
February 18, 1994, Mr. Cloutier's options
are exercisable at an exercise price of
$9.52 per share and expire on December
31, 1996.
Employment and Severance Contract
Mr. Cloutier has a written employment
agreement with MidSouth Bank for a term of one
year, commencing February 15th of each year.
The employment agreement is automatically
extended for a period of one year every year
thereafter commencing on the termination date,
unless written notice of termination is given
by any party to the agreement not later than
60 days before the termination date. Pursuant
to the contract, Mr. Cloutier receives term
life insurance equal to four times his annual
salary payable to a beneficiary of his choice
and disability insurance of not less than two-
thirds of his annual salary. Mr. Cloutier's
contract has a severance provision which
entitles him to one year's salary if the
agreement is terminated by MidSouth Bank,
unless he is removed by a regulatory body.
Certain Transactions
Directors, nominees and executive
officers of MidSouth and their associates have
been customers of, and have had loan
transactions with, MidSouth Bank in the
ordinary course of business, and such
transactions are expected to continue in the
future. In the opinion of MidSouth's
management, such transactions have been on
substantially the same terms, including
interest rates and collateral, as those
prevailing at the time for comparable
transactions with other persons and did not
involve more than the normal risk of
collectibility or present other unfavorable
features.
___________________________
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
MidSouth's consolidated financial
statements for the year ended December 31,
1994 were audited by the firm of Deloitte &
Touche LLP and the Board has appointed such
firm to audit MidSouth's financial statements
for the year ending December 31, 1995.
Representatives of Deloitte & Touche LLP are
not expected to be present at the Annual
Meeting.
SHAREHOLDER PROPOSALS
Eligible shareholders who desire to
present a proposal qualified for inclusion in
the proxy materials relating to the 1996
annual meeting of MidSouth must forward such
proposals to the Secretary of MidSouth at the
address listed on the first page of this Proxy
Statement in time to arrive at MidSouth prior
to February 21, 1996.
LEGAL MATTERS
Correro, Fishman & Casteix, L.L.P., New
Orleans, Louisiana, has rendered its opinion
that the shares of MidSouth Preferred Stock to
be issued in connection with the Holding
Company Merger have been duly authorized and,
if and when issued pursuant to the terms of
the Plan, will be validly issued, fully paid
and non-assessable.
EXPERTS
The audited consolidated financial
statements of Sugarland and its subsidiary as
of and for each of the years in the two year
period ended December 31, 1994 and 1993 have
been audited by Mixon, Roy, Metz & Mixon,
independent public accountants, as indicated
in their report with respect thereto, and have
been included herein in reliance upon the
authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of
MidSouth incorporated in this Joint Proxy
Statement and Prospectus by reference from the
MidSouth Annual Report on Form 10-KSB have
been audited by Deloitte & Touche LLP,
independent auditors, as stated in their
report which is incorporated herein by
reference and has been so incorporated in
reliance upon the report of such firm given
upon authority as experts in accounting and
auditing.
OTHER MATTERS
With respect to the Companies, at the
time of the preparation of this Joint Proxy
Statement and Prospectus, neither of them had
been informed of any matters to be presented
by or on behalf of the Companies or the
management thereof for action at the Meetings
other than those listed in the Notice of
Special Meeting of Shareholders of Sugarland
and Notice of Annual Meeting of Shareholders
of MidSouth 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 Sugarland or MidSouth,
and return it at once in the enclosed
envelope.
ANY SHAREHOLDER MAY BY WRITTEN REQUEST OBTAIN
WITHOUT CHARGE A COPY OF MIDSOUTH'S ANNUAL
REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1994, WITHOUT EXHIBITS. REQUESTS
SHOULD BE ADDRESSED TO SALLY D. GARY, INVESTOR
RELATIONS, MIDSOUTH BANCORP, INC., P. O. BOX
3745, LAFAYETTE, LOUISIANA 70502.
BY ORDER OF THE BOARD OF DIRECTORS
OF SUGARLAND
Jeanerette, Louisiana __________________________
June 20, 1995 RONALD R. HEBERT, SR., SECRETARY
BY ORDER OF THE BOARD OF DIRECTORS
OF MIDSOUTH
Lafayette, Louisiana ___________________________
June 20, 1995 KAREN L. HAIL, SECRETARY
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF
SUGARLAND BANCSHARES, INC.
Page
Independent Auditors' Report..................................F-2
Consolidated Balance Sheets as of
December 31, 1994 and 1993
and March 31, 1995.......................................F-3
Consolidated Statements of Income for
the Years Ended December 31, 1994
and 1993 and the Three Months
ended March 31, 1995 and 1994............................F-4
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended
December 31, 1994 and 1993
and the Three Months ended
March 31, 1995...........................................F-5
Consolidated Statements of Cash Flows for
the Years Ended December 31, 1994
and 1993 and the Three Months
ended March 31, 1995 and 1994............................F-6
Notes to Consolidated Financial Statements....................F-7
F-1
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Sugarland Bancshares, Inc.
P.O. Box 71
Jeanerette, LA 70544
We have audited the accompanying consolidated balance sheets of
Sugarland Bancshares, Inc. and Sugarland State Bank as of
December 31, 1994 and 1993, and the related consolidated
statements of income, changes in shareholders' equity and cash
flows for each of the years then ended. These financial
statements are the responsibility of the Corporations'
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 audits 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 financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Sugarland Bancshares, Inc. and Sugarland
State Bank at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the
years then ended, in conformity with generally accepted
accounting principles.
MIXON, ROY, METZ & MIXON
CERTIFIED PUBLIC ACCOUNTANTS
New Iberia, Louisiana
March 1, 1995
F-2
<PAGE>
Sugarland Bancshares, Inc.
Consolidated Balance Sheets
December 31, 1994 and 1993
and March 31, 1995
<TABLE>
<CAPTION>
(Unaudited)
March 31,
1995 1994 1993
__________ __________ __________
<S> <C> <C> <C>
Assets:
Cash and Due From Banks $2,193,058 $2,323,694 $2,364,404
Federal Funds Sold 2,975,000 2,075,000 3,050,000
Securities Available for Sale 3,997,494 3,944,856 3,919,566
Loans, Net of Unearned Discount
and Allowance for Possible
Loan Losses 7,841,889 8,225,775 8,048,063
Bank Premises and Equipment,
Net of Accumulated
Depreciation 478,356 493,338 551,978
Accrued Income and Other Assets 327,954 409,896 295,698
__________ __________ __________
Total Assets: $17,813,751 $17,472,559 $18,229,709
========== ========== ==========
Liabilities and Shareholders'
Equity:
Liabilites:
Deposits
Demand $4,547,723 $4,821,975 $4,614,157
Savings and NOW Deposits 5,802,279 5,090,390 5,324,182
Other Time Deposits 5,185,875 5,407,579 6,133,173
__________ __________ __________
Total Deposits $15,535,877 $15,319,944 $16,071,512
Accrued Interest on Deposits 19,854 17,194 15,805
Other Liabilities 29,809 28,083 25,927
__________ __________ __________
Total Liabilities: $15,585,540 $15,365,221 $16,113,244
__________ __________ __________
Shareholders' Equity:
Common Stock, Par Value $5,
400,000 Shares Authorized,
232,286 Issued and
187,286 Shares Outstanding $1,161,430 $1,161,430 $1,161,430
Capital Surplus 1,452,364 1,452,364 1,452,364
Retained Earnings 231,569 181,602 19,373
Net Unrealized Losses on
Securities Available For
Sale, Net of Tax (103,542) (174,448) (3,092)
Treasury Stock, 45,000 Shares (513,610) (513,610) (513,610)
__________ __________ __________
Total Shareholders' Equity: $2,228,211 $2,107,338 $2,116,465
__________ __________ __________
Total Liabilities and
Shareholders' Equity: $17,813,751 $17,472,559 $18,229,709
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
Sugarland Bancshares, Inc.
Consolidated Statements of Income
For The Years Ended December 31, 1994 and 1993
And The Three Months Ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
(Unaudited)
Three Months
Ended March 31, Year Ended December 31,
__________________________ __________________________
1995 1994 1994 1993
__________ ___________ __________ ___________
<S> <C> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $ 201,445 $ 197,411 $ 868,282 $ 885,008
Interest on Securities
Available for Sale 59,746 68,443 262,604 295,127
Interest on Federal Funds
Sold 44,168 31,139 88,030 87,614
__________ __________ __________ __________
Total Interest Income: $ 305,359 $ 296,993 $ 1,218,916 $ 1,267,749
Interest Expense:
Interest on Deposits 92,831 92,418 365,679 408,049
__________ __________ __________ __________
Net Interest Income: $ 212,528 $ 204,575 $ 853,237 $ 859,700
Provision for Possible
Loan Losses -0- -0- -0- -0-
__________ __________ __________ __________
Net Interest Income After
Provisions for Credit
Losses: $ 212,528 $ 204,575 $ 853,237 $ 859,700
__________ __________ __________ __________
Other Income:
Customer Service Charges $ 37,383 $ 37,123 $ 154,173 $ 153,034
Ohter Income 7,848 10,291 25,980 37,375
Net Investment Securities
Gains -0- -0- -0- 8,297
__________ __________ __________ __________
Total Other Income: $ 45,231 $ 47,414 $ 180,153 $ 198,706
__________ __________ __________ __________
Other Expenses:
Salaries and Exmployee
Benefits $ 101,185 $ 103,673 $ 436,220 $ 444,628
Occupancy Expenses 34,194 38,626 148,649 153,133
Equipment Expenses 15,063 15,427 57,175 59,178
Other Expesnes 45,676 44,726 173,118 189,324
__________ __________ __________ __________
Total Other Expenses: $ 196,118 $ 202,452 $ 815,162 $ 846,263
__________ __________ __________ __________
Income Before Income Taxes: $ 61,641 $ 49,537 $ 218,228 $ 212,143
Income Tax Expense: 13,453 15,270 55,685 23,826
__________ __________ __________ __________
Net Income: $ 48,188 $ 34,267 $ 162,543 $ 188,317
========== ========== ========== ==========
Net Income Per Share of
Common Stock $ .26 $ .18 $ .87 $ 1.01
========== ========== ========== ==========
Average Shares Outstanding 187,286 187,286 187,286 187,286
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
Sugarland Banchsares, Inc.
Consolidated Statements of Changes in Shareholders' Equity
For The Years Ended December 31, 1994 and 1993
And The Three Months Ended March 31, 1995
<TABLE>
<CAPTION>
Unrealized
Loss on
Securities
Common Capital Retained Available Treasury
Stock Surplus Earnings For Sale Stock
__________ __________ __________ ___________ ____________
<S> <C> <C> <C> <C> <C>
Balances at
December 31, 1992
as previously reported: $ 1,161,430 $ 1,452,364 $ (80,271) $ (50,912) $ (513,610)
Prior Period Adjustment (50,912) 50,912
__________ __________ __________ __________ ___________
Balances at
December 31, 1992
as restated: 1,161,430 1,452,364 (131,183) -0- (513,610)
Net Income For Year 188,317
Unrealized Loss on Securities
Available For Sale (3,092)
Dividends (37,457)
Minority Interest in Income
of Subsidiary (304)
__________ __________ __________ __________ ___________
Balances at
December 31, 1993: $ 1,161,430 $ 1,452,364 $ 19,373 $ (3,092) $ (513,610)
Net Income For Year 162,543
Net Change in Unrealized
Loss on Securities
Available For Sale, Net
Taxes of $81,131 (171,356)
Minority Interest in Income
of Subsidiary (314)
__________ __________ __________ __________ ___________
Balances at
December 31, 1994: $ 1,161,430 $ 1,452,364 $ 181,602 $ (174,448) $ (513,610)
__________ __________ __________ __________ ___________
Net Income through March 31,
1995 * 48,188
Over-accrual of Prior-year
Taxes * 1,779
Net Change in Unrealized
Loss on Securities
Available For Sale* 70,906
__________ __________ __________ __________ ___________
Balances at
March 31, 1995: * $ 1,161,430 $ 1,452,364 $ 231,569 $ (103,542) $ (513,610)
========== ========== ========== ========== ===========
___________________________
* Unaudited information
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
Sugarland Bancshares, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 1994 and 1993
And The Three Months Ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
(Unaudited)
Three Months
Ended March 31, Year Ended Dember 31,
_________________________ __________________________
1995 1994 1994 1993
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 48,188 $ 34,267 $ 162,543 $ 188,317
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation 14,982 15,750 60,145 62,298
Increase in Accrued Income and
Other Assets 83,719 51,394 (14,932) (26,943)
Increase/(Decrease) in Interest
Payable 2,660 2,158 1,389 (7,378)
Increase/(Decrease) in Other
Liabilities 1,726 5,852 2,298 (10,008)
Loss/(Gain) on Sale of Other
Real Estate Owned -0- -0- 2,527 (12,500)
__________ __________ __________ __________
Net Cash Provided by Operating
Activities: $ 151,275 $ 109,421 $ 213,970 $ 193,786
__________ __________ __________ __________
Cash Flows From Investing Activities:
Proceeds From Maturities of
Securities Available for Sale $ 500,000 $ 1,000,000 $ 520,923 $ 917,697
Purchases of Securities Available
for Sale (481,730) (1,558,539) (799,156) (1,450,227)
Net Decrease in Federal Funds Sold (900,000) (1,100,000) 975,000 2,600,000
Net Income in Loans 383,886 751,853 (177,712) (454,319)
Purchase of Equipment -0- -0- (1,505) (21,022)
Acquisition of Other Real Estate
Owned -0- -0- (55,000) -0-
Proceeds From Sale of Other Real
Estate Owned -0- -0- 34,338 67,500
__________ __________ __________ __________
Net Cash Provided by Investing
Activities: $ 497,844 $ 906,686 $ 496,888 $ 1,659,629
__________ __________ __________ __________
Cash Flows From Financing Activities:
Net Decrease in Demand Deposits,
NOW and Savings Accounts $ 437,637 $ 309,139 $ (25,974) $ (792,775)
Net Decrease in Time Deposits (221,704) (29,408) (725,594) (570,226)
Dividends Paid -0- -0- -0- (37,457)
__________ __________ __________ __________
Net Cash Used in Financing Activites: $ 215,933 $ 279,731 $ (751,568) $ 1,400,458
__________ __________ __________ __________
Net (Decrease)/Increase in Cash
and Cash Equivalents $ (130,636) $ (517,534) $ (40,710) $ 452,957
__________ __________ __________ __________
Cash and Due from Banks at January 1 2,323,694 2,364,404 2,364,404 1,911,447
__________ __________ __________ __________
Cash and Due from Banks at End
of Period $ 2,193,058 $ 1,846,870 $ 2,323,694 $ 2,364,404
========== ========== ========== ==========
</TABLE>
Supplemental Disclosures:
1. The Corporation paid interest costs of $364,290 and
$415,427 in the years ended December 31, 1994 and 1993,
respectively.
2. The Corporation made income tax payments of $49,894 and
$26,653 for the years ended December 31, 1994 and 1993,
respectively.
The accompanying notes are an integral part of these
consolidated financial statements.
F-6
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies:
___________________________________________________
The Corporation
_______________
Sugarland Bancshares, Inc., a Louisiana corporation
(the Corporation), is a bank holding company.
Sugarland State Bank (the Bank) is a state non-member
banking institution and a 99.8% owned subsidiary of the
Corporation. The Bank is located in Jeanerette, LA
with a branch in New Iberia, LA and its customers are
primarily from that area.
Principles of Consolidation
___________________________
The consolidated financial statements include the
accounts of Sugarland Bancshares, Inc. and its 99.8%
owned subsidiary, Sugarland State Bank. Intercompany
transactions and balances have been eliminated in
consolidation.
Cash and Cash Equivalents
_________________________
For purposes of reporting cash flows, cash and cash
equivalents are defined as those amounts included in
the balance sheet caption "Cash and Due From Banks".
Investments in Securities
_________________________
For 1993, investments in securities are stated at cost,
adjusted for amortization of premium and accretion of
discount, which are recognized as adjustments to
interest income. Gain or losses on the sale of
investment securities are based upon the adjusted cost
of the specific security sold and the net proceeds.
The investment marketable equity security is carried at
the lower of cost or market value. Generally, the
Corporation sells these securities only to meet
liquidity needs. For 1994, the Corporation adopted
SFAS No. 115 and classified all its U.S. Government
Agency Bonds and Notes as securities available for
sale. These securities are reflected at fair value,
and unrealized holding gains and losses, net of tax on
securities available for sale, are reported as a net
amount in a separate component of shareholders' equity
until realized.
Loans
_____
Loans are stated at the amount of unpaid principal,
reduced by unearned discounts and an allowance for
possible loan losses. Interest income on installment
loans is recognized using the sum-of-the-digits method
which is similar to the interest method. Income on
other loans is credited to operations based on the
principal amount outstanding using the simple interest
method. Based upon the evaluation of individual loans,
the Corporation does not recognize interest income
where collection of interest is not expected.
Allowance for Possible Loan Losses
__________________________________
The allowance for possible loan losses is established
through a provision for loan losses charged to
F-7
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
expenses. Loans are charged against the allowance for
possible loan losses when management believes that the
collectability of the principal is unlikely.
The allowance is an amount that management believes
will be adequate to absorb possible loan losses on
existing loans that may become uncollectible, based on
evaluation of the collectability of loans and prior
loan loss experience.
Off Balance Sheet Financial Instruments
_______________________________________
In the ordinary course of business, the Bank has
entered into off balance sheet financial instruments
consisting of commitments to extend credit and standby
letters of credit. Such financial instruments are
recorded in the financial statements when they become
payable.
Net Income Per Share of Common Stock
____________________________________
Net income per share of common stock is computed by
dividing net income by the weighted average number of
shares of common stock outstanding during the period.
Premises and Equipment
______________________
The premises and equipment are carried at cost less
accumulated depreciation. Depreciation of premises and
equipment is provided over the estimated useful lives
of the respective assets on the straight-line basis for
financial reporting purposes and accelerated methods
for income tax reporting purposes.
Other Real Estate Owned
_______________________
Other real estate owned is comprised of properties
acquired through partial or total satisfaction of
loans. These properties are carried at the lower of
cost or market value. Loan losses arising from the
acquisition of such properties are charged against the
allowance for possible loan losses. Other expenses
incurred are charged directly to operations.
Income Taxes
____________
Provisions for income taxes are based on amounts
reported in the statement of income (after exclusion of
non-taxable income such as interest on state and
municipal securities) and include deferred income taxes
on temporary differences in the recognition of income
and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are included in the
financial statements at currently enacted income tax
rates applicable to the period in which the deferred
tax assets and liabilities are expected to be realized
or settled as prescribed in SFAS No. 109, Accounting
for Income Taxes. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.
F-8
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
The Corporation does not consider the allowance for
possible loan losses as a timing difference since it
believes the allowance will not reverse in the future.
Compensated Absences
____________________
Employees of the Bank are entitled to paid vacation
days and sick days depending on length of service. The
amount of compensation for future absences is
immaterial and, accordingly, no liability has been
recorded in the financial statements. The Bank's
policy is to recognize the costs of compensated
absences when actually paid to employees.
Post Retirement Benefits
________________________
The Bank presently offers no post retirement benefits
which would be required to be recorded in the financial
statements. The Bank has a nonqualified deferred
compensation plan in which some of its directors
participate. These fees were deducted in the financial
statements but were not deducted for tax purposes. No
deferrals have been made for a number of years. The
economic liability is reflected in the financial
statements.
Prior Period Adjustment
_______________________
Retained earnings at the beginning of 1993 has been
adjusted to correct the inappropriate treatment of the
decline in market value of a mutual fund in 1992 and
prior years. The error had no effect on net income for
1994 or 1993.
F-9
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 2 - Investments in Securities:
__________________________________
The carrying amounts of securities available for sale as
shown in the consolidated balance sheets and their
approximate fair values at December 31 were as follows:
<TABLE>
<CAPTION>
Gross Gross Gross
Amortized Unrealized Unrealized Realized Fair
Cost Gains Losses Losses Value
__________ ___________ ___________ __________ __________
<S> <C> <C> <C> <C> <C>
December 31, 1994:
Mutual Fund $ 200,000 $ -0- $ 17,415 $ 50,912 $ 131,673
U. S. Government
and Agency Securities 3,951,803 930 239,550 -0- 3,713,183
Other Securities 100,000 -0- -0- -0- 100,000
____________ __________ __________ __________ ___________
$ 4,251,803 $ 930 $ 256,965 $ 50,912 $ 3,944,856
============ ========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Book Unrealized Unrealized Market
Value Gains Losses Value
____________ __________ __________ __________
<S> <C> <C> <C> <C>
December 31, 1993:
Mutual Fund $ 145,996 $ -0- $ -0- $ 145,996
U. S. Government
and Agency Securities 3,673,570 63,888 1,454 3,736,004
Other Securities 100,000 -0- -0- 100,000
____________ __________ __________ __________
$ 3,919,566 $ 63,888 $ 1,454 $ 3,982,000
============ ========== ========== ==========
</TABLE>
Securities carried at approximately $1,000,000 at
December 31, 1994 and $800,000 at December 31, 1993, were
pledged to secure public deposits and for other purposes
required by law. "Mutual fund" is a marketable equity
security with an original cost of $200,000 and market values
of $131,673 at December 31, 1994 and $145,996 at December
31, 1993. "Other Securities" is stock in a nonpublicly
traded corresponding bank.
The maturities of securities available for sale at December
31, were as follows:
<TABLE>
<CAPTION>
1994 1993
____________ ____________
<S> <C> <C>
Due from one to five years $ 3,509,439 $ 3,193,512
Due over five years 442,364 480,058
____________ ____________
$ 3,951,803 $ 3,673,570
============ ============
</TABLE>
F-10
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 3 - Loans and Allowance for Possible Loan Losses:
The components of loans outstanding at December 31 were as
follows:
<TABLE>
<CAPTION>
1994 1993
____________ ____________
<S> <C> <C>
Commercial/Industrial/Agricultural $ 4,273,896 $ 4,127,427
Commercial Real Estate 851,826 1,056,279
Residential Real Estate 1,423,072 1,431,247
Consumer/Installment 1,906,974 1,676,411
Other 3,490 4,343
____________ ____________
Gross Loans $ 8,459,258 $ 8,295,707
Less:
Unearned Discounts (99,630) (102,252)
Allowance for Possible Loan Losses (133,853) (145,392)
____________ ____________
Total Loans $ 8,225,775 $ 8,048,063
</TABLE>
Nonperforming loans, which include loans contractually past
due 90 days or more and those on nonaccrual, were $26,000
and $72,000 at December 31, 1994 and 1993, respectively.
Approximately 30% of the Bank's loans were related to the
farming industry of the Jeanerette, LA area.
The maturities and repricing frequencies of loans
outstanding at December 31 were as follows:
<TABLE>
<CAPTION>
1994 1993
___________ ___________
<S> <C> <C>
One year or less:
Floating interest rate $ 592,605 $ 1,162,187
Fixed interest rate 2,762,203 2,686,380
After one year through five years:
Floating interest rate 1,574,759 1,601,168
Fixed interest rate 1,493,846 1,243,622
After five years:
Floating interest rate 1,198,208 869,852
Fixed interest rate 837,637 732,498
___________ ___________
$ 8,459,258 $ 8,295,707
=========== ===========
</TABLE>
Changes in the Allowance for Possible Loan Losses for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
1994 1993
_________ _________
<S> <C> <C>
Balance at January 1 $ 145,392 $ 134,763
Provisions Charged to Operations -0- -0-
Recoveries of Loans Previously Charged Off 4,646 16,582
Loans Charged Off (16,003) (5,953)
_________ _________
Balance at December 31 $ 133,853 $ 145,392
========= =========
</TABLE>
F-11
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 4 - Bank Premises and Equipment:
Components of properties and equipment were
as follows:
<TABLE>
<CAPTION>
1994 1993
_________ _________
<S> <C> <C>
Building - Main Office $ 469,788 $ 469,788
Furniture, Fixtures and Vehicles 713,760 712,255
Land - Jeanerette, LA 50,238 50,238
Land - New Iberia, LA 87,563 87,563
_________ _________
Total $1,321,349 $1,319,844
Less Accumulated Depreciation (828,011) (767,866)
_________ _________
Fixed Assets (Net) $ 493,338 $ 551,978
========= =========
</TABLE>
Depreciation expense for the years ended December 31, 1994
and 1993 was $60,145 and $62,298, respectively.
Note 5 - Treasury Stock:
Treasury stock is shown at cost.
Note 6 - Commitments and Contingent Liabilities:
In the normal course of business there are outstanding
various commitments and contingent liabilities, such as
guarantees and commitments to extend credit, which are not
reflected in the accompanying financial statements until
they become payable. In the opinion of management, these do
not represent unusual risks.
At December 31, 1994 and 1993 unused lines of credit totaled
$1,565,000 and $2,104,000, respectively.
At December 31, 1994 and 1993 letters of credit totaled
$33,000 and $51,000, respectively.
The Corporation and the Bank are also subject to claims and
lawsuits which arise primarily in the ordinary course of
business. Based on information presently available it is
the opinion of management that such claims and lawsuits, if
any, will not have a material adverse effect on the
consolidated financial position of the Corporation.
F-12
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 7 - Income Taxes:
The provision for income taxes at December 31 consisted of
the following:
<TABLE>
<CAPTION>
1994 1993
_________ _________
<S> <C> <C>
Currently Payable
Federal $ 52,623 $ 22,173
State 3,062 1,653
_________ _________
$ 55,685 $ 23,826
========= =========
</TABLE>
As discussed in Note 1, no deferred taxes have been
recorded in the financial statements for the components of
allowance for possible loan losses. Writedowns of other
real estate owned of $15,124 creates a benefit of $5,142,
and the use of accelerated depreciation creates a liability
of $1,905. Due to the immaterial benefit, no deferred
asset or liability was recorded.
The provision for federal income taxes is less than that
computed by applying the federal statutory rate of 34% in
1994 and 1993, as indicated in the following analysis.
<TABLE>
<CAPTION>
1994 1993
________ ________
<S> <C> <C>
Tax based on statutory rate $ 74,198 $ 72,129
Effect on tax-exempt income -0- (3,844)
Effect of net loan recoveries (losses) (3,923) 3,614
Deferred compensation paid (10,499) -0-
Non deductible expenses 509 554
Contribution carryover -0- (481)
Net operating loss carryover -0- (43,895)
Depreciation 2,346 (4,251)
Other (Net) (6,946) -0-
________ ________
$ 55,685 $ 23,826
======== ========
</TABLE>
Note 8 - Related Parties:
Some of the directors and executive officers of Sugarland
State Bank and companies with which they are associated had
banking transactions with the Bank in the ordinary course of
business. Loans and commitments for loans to those
individuals and their related companies were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more
than a normal risk of collectability or present any other
unfavorable features to the Bank. The aggregate in
indebtedness of those individuals and their related
companies to the Bank at December 31, 1994 and 1993 was
$1,388,000 and $1,100,000, respectively. During 1994, new
loans to such related parties amounted to $1,000,000 and
repayments amounted to $712,000.
F-13
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 9 - Concentrations of Credit:
_________________________________
All the Bank's loans, commitments, and standby letters of
credit have been granted to customers in the Bank's market
area. All such customers are depositors of the Bank. The
concentrations of credit by type of loans are set forth in
Note 3. The distribution of commitments to extend credit
approximates the distribution of loans outstanding. Standby
letters of credit were granted primarily to commercial
borrowers. The Bank, as a matter of policy, does not extend
credit to any single borrower or group of related borrowers
in excess of $500,000.
Note 10 - Regulatory Matters:
____________________________
The Bank is subject to various regulatory capital
requirements administered by the state and federal banking
agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional
discretionary actions by regulators that, in those
circumstances, could have a direct material effect on the
institution's financial statements. The regulations require
the Bank to meet specific capital adequacy guidelines that
involve qualitative measures of the Bank's assets and
liabilities as calculated under regulatory accounting
principles. The regulations also require agencies to make
qualitative judgments about the Bank. Those qualitative
judgments could also effect the Bank's capital structure.
Management believes that, as of December 31, 1994, the
institution meets all such capital requirements to which it
is subject.
Note 11 - Subsequent Events:
___________________________
On December 28, 1994, MidSouth Bancorp, Inc. (MidSouth) and
Sugarland Bancshares, Inc. issued a joint news release
announcing an agreement under which Sugarland Bancshares,
Inc. and its 99.8% owned subsidiary, Sugarland State Bank,
would be acquired by MidSouth. This transaction is
structured to qualify as a tax-free reorganization and will
result in 187,286 shares of convertible preferred stock of
Midsouth being issued to shareholders of the Corporation.
The transaction is subject to receipt of federal and state
regulatory approvals, the approval of the shareholders of
MidSouth and the Corporation, and the satisfaction of
certain other conditions. The transaction is expected to be
consummated in the summer of 1995.
F-14
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 12 - Sugarland Bancshares, Inc. (Parent Only) Condensed
Financial Statements:
____________________
The following condensed financial statements summarize the
financial position and results of operations of Sugarland
Bancshares, Inc. (parent company only) as of December 31,
1994 and 1993 and for the years then ended.
<TABLE>
<CAPTION>
(Parent Only)
Sugarland Bancshares, Inc.
Condensed Balance Sheets
December 31, 1994 and 1993
Assets: 1994 1993
_________ _________
<S> <C> <C>
Current Assets:
Cash on Hand and in Banks $ 12,566 $ 6,046
Investments:
Stock - Sugarland State Bank
(Equity Basis) 2,102,549 2,172,028
Other Assets:
Due From Sugarland State Bank 2,333 1,827
Merger Costs 54,739 -0-
_________ _________
Total Assets: $2,172,187 $2,179,901
========= =========
Liabilities and Shareholders' Equity:
Current Liabilities:
Income Taxes Payable $ 1,414 $ -0-
________ _________
Shareholders' Equity:
Common Stock, par value $5; 400,000
Shares Authorized, 232,286 Issued
and 187,286 Shares Outstanding $1,161,430 $1,161,430
Capital Surplus 1,452,363 1,452,363
Retained Earnings 245,141 82,804
Unrealized Losses on Available-for-
Sale Securities (174,551) (3,086)
Treasury Stock, 45,000 Shares at Cost (513,610) (513,610)
_________ _________
Total Shareholders' Equity: $2,170,773 $2,179,901
_________ _________
Total Liabilities and Shareholders'
Equity: $2,172,187 $2,179,901
========= =========
</TABLE>
F-15
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
(Parent Only)
Sugarland Bancshares, Inc.
Condensed Statements of Income and Retained Earnings
For The Years Ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
________ ________
<S> <C> <C>
Revenues:
Dividends $ 64,000 $ 37,457
________ ________
Expenses:
Legal and Accounting $ 2,500 $ 2,500
Taxes and Assessments 375 885
Miscellaneous 45 302
________ ________
Total Expenses: $ 2,920 $ 3,687
________ ________
Income Before Taxes and
Equity in Undistributed
Income of Sugarland State
Bank: $ 61,080 $ 33,770
Income Taxes (729) 174
Equity in Earnings of
Sugarland State Bank 102,193 154,372
________ ________
Net Income: $ 162,544 $ 188,316
Retained Earnings, Beginning: 82,804 (67,743)
Dividends -0- (37,457)
Minority Interest in Income
of Subsidiary (207) (312)
________ ________
Retained Earnings, Ending: $ 245,141 $ 82,804
======== ========
</TABLE>
F-16
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
(Parent Only)
Sugarland Bancshares, Inc.
Condensed Statements of Cash Flows
For The Years Ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
_________ _______
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 162,544 $ 188,316
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Net Increase/(Decrease) in Due
From Subsidiary (506) 3,895
Merger Costs (54,739) -0-
Increase in Taxes Payable 1,414 -0-
_________ _________
Net Cash Provided by Operating Activities: $ 108,713 $ 192,211
_________ _________
Cash Flows From Investing Activities:
Equity in Earnings of Subsidiary (102,193) (154,372)
Net Cash Provided by Operationg Activities: $ 6,520 $ 37,839
_________ _________
Cash Flows from Financing Activities:
Dividends Paid -0- (37,458)
_________ _________
Net Increase in Cash 6,520 381
Cash at Janaury 1 $ 6,046 $ 5,665
_________ _________
Cash at December 31 $ 12,566 $ 6,046
========= =========
</TABLE>
F-17
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 13 - Sugarland State Bank (Subsidiary Only) Condensed
Financial Statements:
_____________________
The following condensed financial statements summarize the
financial position and results of operations of Sugarland
State Bank (subsidiary only) as of December 31, 1994 and
1993 and for the years then ended.
<TABLE>
<CAPTION>
(Subsidiary Only)
Sugarland State Bank
Condensed Balance Sheets
December 31, 1994 and 1993
1994 1993
__________ _________
<S> <C> <C>
Assets:
Cash and Due From Banks $ 2,311,128 $ 2,358,358
Federal Funds Sold 2,075,000 3,050,000
Investment Securities 3,944,856 3,919,566
Loans, Net 8,225,775 8,048,063
Bank Premises, Net 556,775 615,415
Other Real Estate Owned 60,000 41,865
Accrued Interest and Other Assets 295,175 253,832
__________ __________
Total Assets: $17,468,691 $18,287,099
========== ==========
Liabilities and Stockholders'
Equity:
Liabilities:
Deposits $15,319,944 16,071,512
Accrued Interest and Other
Liabilities 41,942 39,163
__________ __________
Total Liabilities: $15,361,886 $16,110,675
__________ __________
Stockholders' Equity:
Common Stock ($5 par Value;
50,000 Shares Issued and
Outstanding) $ 250,000 $ 250,000
Capital Surplus 750,000 750,000
Unrealized Loss on Available
for Sale Securities (157,489) -0-
Unrealized Loss on Equity
Securities (17,416) (3,093)
Retained Earnings 1,281,710 1,179,517
__________ __________
Total Stockholders' Equity: $ 2,106,805 $ 2,176,424
__________ __________
Total Liabilities and
Stockholders' Equity: $17,468,691 $18,287,099
========== ==========
</TABLE>
F-18
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>
(Subsidiary Only)
Sugarland State Bank
Condensed Statements of Income and Retained Earnings
For The Years Ended December 31, 1994 and 1993
1994 1993
_______ _______
<S> <C> <C>
Interest Income:
Interest and Fees on Loans $ 868,282 $ 885,008
Interest on Investment Securities 262,604 295,127
Interest on Federal Funds Sold 88,030 87,614
_________ _________
Total Interest Income: $1,218,916 $1,267,749
Interest Expense:
Interest on Deposits 365,679 408,049
_________ _________
Net Interest Income: $ 853,237 $ 859,700
Provision for Possible Loan Losses -0- -0-
_________ _________
Net Interest Income After Provision
for Credit Losses: $ 853,237 $ 859,700
_________ _________
Other Income:
Customer Service Chares $ 154,173 $ 153,034
Other 25,980 45,671
_________ _________
Total Other Income: $ 180,153 $ 198,705
_________ _________
Other Expense:
Salaries $ 355,656 $ 362,101
Employee Benefits 80,564 82,527
Occupancy Expenses 148,649 153,123
Other Expenses 227,372 244,824
_________ _________
Total Other Expense: $ 812,241 $ 842,575
_________ _________
Income Before Income Taxes: $ 221,149 $ 215,830
Income Taxes 54,956 24,000
_________ _________
Net Income: $ 166,193 $ 191,830
Retained Earnings, Beginning: 1,179,517 1,025,144
Dividends (64,000) (37,457)
_________ _________
Retained Earnings, Ending: $1,281,710 $1,179,517
========= =========
</TABLE>
F-19
<PAGE>
Sugarland Bancshares, Inc.
Notes to the Consolidated Financial Statements (Continued)
Note 14 - Unaudited Consolidated Financial Statements:
_____________________________________________________
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly Sugarland Bancshares, Inc.'s
financial position as of March 31, 1995, the results of
operations for the three month periods ended March 31, 1995
and 1994, the consolidated statements of changes in
shareholders' equity for the years ended December 31, 1994,
1993, and for the three months ended March 31, 1995, and the
cash flows for the three month periods ended March 31, 1995
and 1994, respectively.
F-20
<PAGE>
APPENDIX A
Letterhead of Chaffe & Associates, Inc.
Investment Bankers
December 30, 1994
The Board of Directors
Sugarland Bancshares, Inc.
1527 West Main Street
Jeanerette, LA 70544-3527
Gentlemen:
You have requested our opinion as to the fairness, from a
financial point of view, to Sugarland Bancshares, Inc.
("Sugarland") and its shareholders, of the proposed acquisition
of its common stock, $5.00 par value per share (the "Common
Stock" or "Shares"), by MidSouth Bancorp, Inc. ("MidSouth"). The
terms of the transaction contemplated are set forth in a
Agreement and Plan of Merger dated December 29, 1994 (the
"Agreement") and the related merger agreement (collectively, the
"Plan"); and provide that Sugarland will merge into MidSouth
(the "Company Merger"), and Sugarland State Bank ("Bank"),
Sugarland's majority-owned subsidiary, will merge into MidSouth
National Bank, MidSouth's wholly-owned subsidiary (together with
the Company Merger, collectively called the "Mergers"). Under
the terms of the Plan, on the date the holding company merger
becomes effective, the shareholders of Sugarland will become
preferred stock shareholders of MidSouth, as follows:
Sugarland, except for the Shares as to which dissenters' rights
of appraisal have been perfected and not withdrawn or forfeited
in accordance with applicable law, shall be converted into a
number of shares of Series A cumulative convertible preferred
stock (the "Preferred Stock") of MidSouth, having the terms set
forth in the form of Articles of Amendment attached as Exhibit C
to the Agreement, equal to the quotient of (i) 187,286, divided
by (ii) the number of outstanding Shares of Sugarland on the date
the merger becomes effective (the "Exchange Ratio"). In lieu of
the issuance of any fractional share of Preferred Stock to which
a holder of Sugarland Common Stock may be entitled, each such
shareholder of Sugarland shall be entitled to receive a cash
payment (without interest) equal to such fractional share
multiplied by the state value of a share of Preferred Stock.
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 transaction contemplated herein. Neither Chaffe nor any of
its officers or employees has an interest in the common stocks of
Sugarland or MidSouth. During the past year, Chaffe has provided
financial advisory services to Sugarland, including assistance in
negotiating the proposed transaction ("Advisory Services"). The
fee received for the preparation of this report is not, and fees
received for Advisory Services were not, dependent or contingent
upon any transaction.
The Board of Directors December 30, 1994
Sugarland Bancshares, Inc. Page 2
In connection with this opinion, we have reviewed materials
bearing upon the transaction and upon the financial and operating
information: a) the Plan; b) Sugarland's audited financial
statements with examination and opinion by Mixon, Roy & Romero,
Certified Public Accountants, for the years 1988 through 1990;
c) Sugarland's audited financial statements with examination and
opinion by Mixon, Roy, Metz & Mixon, Certified Public
Accountants, for the years 1991 through 1993; d) Sugarland's
Federal Reserve Forms FR-Y6 dated December 31, 1992 and 1993, and
Form FRY9-SP dated June 30, 1994; e) Sugarland's Income Tax
Returns for the years 1992 and 1993, prepared by Mixon, Roy, Metz
& Mixon, Certified Public Accountants; f) Bank CALL Reports for
each quarter ended December 31, 1992 through September 30, 1994;
g) Bank's Uniform Bank Performance Reports dated December 31,
1992 and 1993; h) Bank's 1994 Budget; i) Articles of
Incorporation and By-Laws of both Sugarland and Bank; and j)
various Sugarland and Bank reports, unaudited financial
statements, information, documents and regulatory correspondence.
In addition, we have reviewed materials bearing upon the
financial and operating condition of MidSouth, including: a)
MidSouth's audited financial statements for the years 1989
through 1993, with examination and opinion by Deloitte & Touche,
and for the year 1988, with examination and opinion by Deloitte,
Haskins & Sells; b) MidSouth's Proxy Statements for Annual
Shareholders Meetings held in 1993 and 1994; c) MidSouth's Annual
Reports on Form 10-K for the years 1988 through 1993 and
quarterly reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1993, and March 31, June 30, and
September 30, 1994; d) MidSouth's Registration Statements on
Form S-2 dated April 16, 1993, June 4, 1993, and March 31,
1994; and S.E.C. Forms 8-A dated March 23, 1993 and April 7,
1993; e) Articles of Incorporation and By-Laws of both
MidSouth and MidSouth National Bank; f) MidSouth National Bank's
CALL reports for each quarter ended March 31, 1993 through
September 30, 1994; g) MidSouth National Bank's Uniform Bank
Performance Reports dated December 31, 1993, and June 30, 1994;
and, h) various MidSouth information and correspondence. We have
also reviewed statistical and financial information derived from
various statistical services for Sugarland, MidSouth, and
information and analysis relating to them.
We have reviewed certain historical market information for the
Common Stock of Sugarland and note that no independent market
exists for the Shares. We note that, at present, Sugarland has
authorized 400,000 Shares, of which 232,286 Shares are issued,
187,286 Shares are outstanding and 45,000 Shares are held in its
treasury. In addition, we have reviewed certain historical
market information for the common stock of MidSouth. We note
that at September 30, 1994, MidSouth had authorized 5,000,000
shares of MidSouth common stock, par value $0.10 per share, of
which at such date 711,869 shares were issued and outstanding,
and no shares were held as treasury stock. In addition, MidSouth
had authorized 5,000,000 shares of preferred stock , no par
value, of which none were issued and outstanding. We note that
MidSouth's common stock is traded on the American Stock Exchange
Emerging Company Marketplace, and we have been informed by the
management of MidSouth that a market will be made in the
Preferred Stock also. Further, we note that although there is an
independent market for MidSouth's common stock, this stock is
thinly traded and this condition will likely exist for the
Preferred Stock as well.
The Board of Directors December 30, 1994
Sugarland Bancshares, Inc. Page 3
We have analyzed the historical performance of Sugarland and
MidSouth and have considered the current financial condition,
operations and prospects for both companies. We have held
discussions with the managements of both companies about these
matters. We analyzed information and data provided by the
management of Sugarland and MidSouth concerning the loans
(including non-performing loans), other real estate, securities
perform an independent review of Sugarland's or MidSouth's assets
or liabilities. We have relied solely on Sugarland and MidSouth
for information as to the condition of the loan portfolio, the
adequacy of the loan loss reserve and the value of other real
estate held.
Also, we compared certain financial and stock market data for a
peer group of bank holding companies, composed primarily of
institutions with market share in Louisiana, whose securities are
publicly traded; reviewed the financial terms of business
combinations in the commercial banking industry specifically,
using national, southern and Louisiana peer groups and other
industries generally; considered a number of valuation
methodologies, including among others, those that incorporate
book value, deposit base premium and capitalization of earnings;
and performed such other studies and analyses as we deemed
appropriate to this analysis. This opinion is necessarily based
upon market, economic and other conditions as they exist on, and
can be evaluated as of, the date of this letter.
We note that Chaffe was retained by Sugarland to assist the Board
of Directors and senior management of Sugarland in its
negotiations of this transaction with MidSouth. Chaffe was not
asked to and did not participate in any efforts by Sugarland to
market itself for sale; nor did Chaffe evaluate potential
alternative transactions. The senior management of Sugarland has
informed Chaffe that it is unaware of any transaction more
favorable than the one contemplated by the Plan and that no other
transaction has been proposed to Sugarland at this time.
Management of Sugarland has instructed Chaffe to provide this
opinion on that basis.
In our review, we have relied, without independent verification,
upon the accuracy and completeness of the historical and
projected financial information and other information reviewed by
us for purposes of this opinion, and we are relying on the tax
opinion issued in connection with the transaction contemplated.
We express no opinion on the tax consequences of the proposed
received by the holders of Sugarland Common Stock.
Based upon and subject to the foregoing and based upon such other
matters as we considered relevant, it is our opinion that the
proposed Exchange Ratio is fair to Sugarland Bancshares, Inc.,
and its shareholders, from a financial point of view.
Very truly yours,
/s/ CHAFFE & ASSOCIATES, INC.
CHAFFE & ASSOCIATES, INC.
GFGL:mr
<PAGE>
APPENDIX B
ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MIDSOUTH BANCORP, INC.
MidSouth Bancorp, Inc., a Louisiana corporation (the
"Corporation"), through its undersigned President and Secretary,
hereby certifies that:
1. On March 8, 1995, the Board of Directors of the Corporation
adopted, pursuant to Section 33A of the Louisiana Business
Corporation Law (the "LBCL"), the following amendment to Article
III of its Amended and Restated Articles of Incorporation (the
preferences, limitations and relative rights of a series of
preferred stock, and authorized the delivery of these Articles of
Amendment to the Secretary of State for filing pursuant to
Section 32B of the LBCL.
2. Article III of the Articles of Incorporation is amended to
add a new Section E to read in its entirety as follows:
"E.Of the 5,000,000 shares of authorized no par value per
share Preferred Stock, [187,286] shares shall constitute a
separate series of Preferred Stock with the voting powers and
the preferences and rights hereinafter set forth.
(1)Designation. The series of Preferred Stock created
hereunder is designated "Cumulative Convertible Preferred
Stock, Series A" (the "Series A Preferred Stock").
(2)Stated Value. The stated value of each share of Series
A Preferred Stock is $14.25.
(3)Dividend Rights.
(a)Except as provided in Subparagraph (ii),
(i)the holders of record of the shares of Series A
Preferred Stock are entitled to receive, but only when,
as and if declared by the Board of Directors, and out
of the funds of the Corporation legally available for
that purpose, cumulative cash dividends at an annual
rate, fixed on December 31 of each year for the ensuing
calendar year, equal to the yield for Government Bonds
and Notes maturing in December of the following year,
as published in the Treasury Bonds, Notes and Bills
Section of the last issue of the Wall Street Journal
published each year, plus 1% per annum, and no more;
provided that, the annual dividend rate shall in no
case be greater than 10% nor less than 6%; provided
further that, from and after the tenth anniversary of
the annual dividend rate shall be fixed at 10%. If
more than one yield is shown for December maturities,
the average shall be applied. If no yield is quoted
for December maturities, the yeild for the next earlier
available month shall be applied. From the date of
issuance of the Series A Preferred Stock through
December 31, 1995, the annual dividend rate shall be
8.28%. The Corporation by resolution of its Board
of Directors shall, to the extent of Legally Available
Funds, as defined below, declare a dividend on the
Series A Preferred Stock payable quarterly on the first
day of April, July, October, and January in each year,
or on such earlier dates as the Board of Directors may
from time to time fix as the dates for payment of
quarterly dividends on the Common Stock, except that
any dividend payable on a payment date that is a legal
holiday shall be paid on the next succeeding business
day. Dividends on each share of Series A Preferred
Stock shall be cumulative from the date of original
issuance thereof whether or not there shall be funds
legally available for the payment of such dividends.
Dividends payable on the Series A Preferred Stock (i)
for any period other than a full year shall be computed
on the basis of a 360-day year consisting of twelve 30-
day months and (ii) for each full dividend period shall
be computed by dividing the annual dividend rate by
four. If any quarterly dividend is not paid when due,
the unpaid amount shall bear interest at a rate of 10%
per annum until paid.
(ii)The first dividend payable on the Series A
Preferred Stock shall be paid on the first day of
April, July, October or January that is at least 91
days from the date of original issuance of the Series A
Preferred Stock and will be in an amount, at the
applicable dividend rate, based on the number of days
between the date of original issuance and the dividend
payment date minus 90 days, provided that the aggregate
which Expenses, as defined below, are less than
$110,000 (the "Additional Amount"), or (B) will be
reduced by the amount by which Expenses exceed $110,000
("The Subtracted Amount"). In any case in which (A)
the Additional Amount is greater than the dividend that
would have been paid for the 90 excluded days set forth
above, such excess will be payable on the next
succeeding dividend payment date, or (B) the Subtracted
Amount is greater than the amount otherwise payable
under this paragraph, such excess will be deducted from
the amount otherwise payable on the next succeeding
dividend payment date.
(iii) The term "Expenses" means the actual expenses
of Sugarland Bancshares, Inc. ("Sugarland") in
connection with the negotiation, execution,
implementation and consummation of that certain
agreement between Sugarland and the Corporation dated
December 28, 1994 (the "Agreement"), including,
without limitation, legal, accounting and financial
advisory fees and expenses and expenses of printing and
mailing Sugarland's proxy statement and holding its
shareholders meeting to consider the Agreement.
(iv) The term "Legally Available Funds" means such
amount of the surplus of the Corporation that may be
paid as dividends under the Business Corporation Law of
Louisiana as may be provided in cash by MidSouth Bank
to the Corporation as a dividend under applicable
statutes and regulations of the U. S. Comptroller of
the Currency and that would not result in the
Corporation or MidSouth Bank having capital ratios, of
less than the required regulatory minimum capital
ratios, or failing to be "adequately-capitalized"
within the meaning of applicable law and regulations or
being in violation of any law, regulation or regulatory
directive, agreement or order.
Stock are outstanding, the Corporation shall not declare,
pay or set apart for payment any dividend on any shares of
capital stock of the Corporation ranking junior to the
Series A Preferred Stock as to dividends or liquidation
rights (collectively, "Junior Securities") or make any
payment on account of, or set apart for payment money for
a sinking or other similar fund, for the purchase,
redemption or other retirement of, any of the Junior
Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior
Securities, or make any distribution in respect thereof,
either directly or indirectly, whether in cash, other
property, obligations or shares of the Corporation (other
than distributions or dividends in Junior Securities to
the holders of Junior Securities), and shall not permit
any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of
the Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the
Junior Securities, unless prior to or concurrently with
the payment or setting apart for payment of any dividend
on any of the Junior Securities, all accumulated and
unpaid dividends on shares of Series A Preferred Stock,
and interest thereon, if any, shall have been or shall be
paid.
(c)If dividends are paid in part and not in full upon
the shares of Series A Preferred Stock and on any other
Preferred Stock ranking on a parity, as to dividends, with
the Series A Preferred Stock, such dividends must be
divided pro rata among such parity shares in proportion to
the respective dividends accrued and unpaid thereon as of
the dividend payment date.
(d)Except as otherwise expressly provided in this
Section E, holders of shares of the Series A Preferred
Stock are not entitled to any dividend, whether payable in
cash, property or stock, or any interest, or sum of money
A Preferred Stock which may be in arrears.
(4)Redemption.
(a)On or after the fifth anniversary of the date of
issuance of the Series A Preferred Stock, the Corporation
may, at its option, and subject to appropriate approval by
the Board of Governors of the Federal Reserve System or
delegated authority, redeem the whole or, from time to
time, any part of the Series A Preferred Stock at a
redemption price per share payable in cash in an amount
equal to the sum of (i) $14.25, (ii) all accrued and
unpaid dividends on the Series A Preferred Stock to the
date fixed for redemption, whether or not earned or
declared, and (iii) interest accrued to the date of
redemption on all accrued and unpaid dividends on the
Series A Preferred Stock, if any.
(b)If the Corporation redeems fewer than all of the
outstanding shares of Series A Preferred Stock, it must
select the shares to be redeemed by lot or pro rata, in
such manner as the Board of Directors may determine to be
fair and appropriate. The Board of Directors has full
power and authority, subject to the limitations and
provisions herein contained, to prescribe the manner in
which shares of the Series A Preferred Stock are to be
redeemed.
(c)Notice of redemption must be given by first class
mail, postage prepaid, mailed not fewer than 30 nor more
than 90 days before the redemption date, to each holder of
record of shares to be redeemed, at the holder's address
as it appears on the stock register of the Corporation.
Each notice must state: (i) the redemption date; (ii) the
total number of shares of Series A Preferred Stock to be
redeemed and, if fewer than all the shares held by the
holder are to be redeemed, the number of shares to be
redeemed from the holder; (iii) the redemption price;
are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease
to accrue on the redemption date; and (vi) that the holder
has the right to convert the shares into Common Stock
until the close of business on the fifth day preceding the
redemption date at the Conversion Price then in effect and
the place where certificates for the shares of the Series
A Preferred Stock may be surrendered for conversion.
(d)Unless the Corporation fails to pay the redemption
price, the right to convert shares of the Series A
Preferred Stock called for redemption shall expire at the
close of business on the fifth day preceding the date
fixed for redemption of such shares, and, from and after
the redemption date, dividends on the shares of Series A
Preferred Stock called for redemption shall cease to
accrue, and such shares shall no longer be deemed to be
outstanding, and all rights of the holders of such shares
as shareholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall
cease. Upon surrender of the certificates for any shares
so redeemed in accordance with the requirements of the
notice of redemption (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation so
requires and the notice so states), such shares shall be
redeemed by the Corporation at the redemption price. If
fewer than all the shares represented by any such
certificates are redeemed, the Corporation is obligated to
issue without cost to the holder a new certificate
representing the shares not redeemed.
(e)Any shares of Series A Preferred Stock converted
under Subsection (5), or redeemed or otherwise acquired by
the Corporation, shall have the status of authorized but
unissued shares of Preferred Stock, without designation as
to series, preferences, limitations or relative rights
until the shares are once more designated as part of a
particular series by the Board of Directors of the
(f)The Corporation may, before the redemption date
specified in the notice of redemption, deposit in trust
for the account of the holders of shares of the Series A
Preferred Stock to be redeemed, with a bank or trust
company organized under the laws of the United States of
America or of the State of Louisiana and having capital,
surplus and undivided profits aggregating at least
$20,000,000, designated in the notice of redemption, all
funds necessary for the redemption, together with
irrevocable written instructions authorizing the bank or
trust company, on behalf and at the expense of the
Corporation, to have the notice of redemption mailed as
provided in Paragraph (c) and to include in the notice of
redemption a statement that all funds necessary for the
redemption have been so deposited in trust and are
immediately available. Immediately upon the mailing of
such notice, notwithstanding that any certificate for
shares of Series A Preferred Stock so called for
redemption has not been surrendered for cancellation, all
shares of Series A Preferred Stock with respect to which
the deposit has been made shall cease to be outstanding
and all rights with respect to such shares of Series A
Preferred Stock shall terminate other than the right of
the holders thereof to receive from the bank or trust
company, at any time after the time of the deposit, the
redemption price of the shares so to be redeemed, and the
right, if any, to convert the shares into Common Stock
until the close of business on the fifth day preceding the
redemption date.
(g)If the holder of any shares of the Series A
Preferred Stock called for redemption does not, within one
year after the redemption date, claim the redemption price
thereof, the unclaimed amount shall then escheat and
revert in full ownership to the Corporation in accordance
with Article VII of these Articles of Incorporation, and
if the funds to pay the redemption price have been
shall, upon the request of the Corporation expressed in a
resolution of its Board of Directors, pay over to the
Corporation the unclaimed amount.
(h)Notwithstanding the foregoing provisions of this
Subsection (4), so long as any dividends on the Series A
Preferred Stock, or interest thereon, are in arrears, the
Corporation may not redeem any shares of the Series A
Preferred Stock unless all outstanding shares of the
Series A Preferred Stock are simultaneously redeemed and
may not purchase or otherwise acquire any shares of Series
A Preferred Stock. The foregoing shall not, however,
prevent the purchase or acquisition of shares of Series A
Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding
shares of Series A Preferred Stock.
(5)Conversion. The holders of shares of the Series A
Preferred Stock have the right, at their option, to convert
all or any part of such shares into shares of Common Stock
of the Corporation at any time before the close of business
on the fifth day preceding the date, if any, fixed for
redemption of those shares, subject to the following terms
and conditions:
(a)The shares of Series A Preferred Stock shall be
convertible into shares of Common Stock at the Conversion
Rate of one share of Common Stock for each share of Series
A Preferred Stock converted. Such Conversion Rate shall
be subject to adjustment from time to time as provided in
Paragraph (e). The Corporation shall pay all accrued but
unpaid dividends, and interest thereon, on any shares of
Series A Preferred Stock surrendered for conversion. If
any shares of Series A Preferred Stock are called for
redemption, the right of conversion shall expire as to the
shares designated for redemption at the close of business
on the fifth day immediately preceding the date fixed for
redemption, unless default is made in the payment of the
(b)To convert any shares of Series A Preferred Stock
into Common Stock, the holder must surrender the cer-
tificate or certificates therefor, duly endorsed to the
Corporation or in blank, at the principal office of the
Corporation or at such other place or places as the Board
of Directors may designate and must give written notice to
the Corporation at that office or place that the holder
elects to convert all or a part of such shares, setting
forth the name or names (with the address or addresses) in
which the shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter,
cause to be issued and delivered at that office or place
to the holder, or the holder's designee or designees, a
certificate or certificates for the number of whole shares
of Common Stock to which such holder is entitled, together
with a certificate or certificates representing any shares
of Series A Preferred Stock which are not to be converted
but constitute part of the shares of Series A Preferred
Stock represented by the certificate or certificates
surrendered and cash in lieu of the issuance of a
fractional share. A conversion shall be effective as of
the close of business on the date of the due surrender of
the certificates for the shares to be converted, and the
rights of the holder of such shares shall, to the extent
of such conversion, cease at such time, and the person or
persons entitled to receive shares of the Common Stock
upon conversion of such shares of Series A Preferred Stock
shall be treated for all purposes as having become the
record holder or holders of the Common Stock at that time.
(c)No fractional shares of Common Stock shall be issued
on conversion. If any fractional interest in a share of
Common Stock would, except for the provisions of this
Paragraph (c), be deliverable upon conversion hereunder,
the Corporation, in lieu of such fractional share shall
pay cash to the converting shareholder in an amount equal
to the product derived by multiplying such fraction of a
on the day next preceding the date of conversion.
(d)In the case of any shares of Series A Preferred
Stock converted after any record date for payment of a
dividend on the Series A Preferred Stock but on or before
the date for payment of the dividend, the dividend
declared and payable on the dividend payment date shall
continue to be payable on the dividend payment date to the
holder of record of the shares as of such preceding record
date notwithstanding their conversion. Shares of the
Series A Preferred Stock surrendered for conversion during
the period from the close of business on any such record
date to the opening of business on the dividend payment
date shall be accompanied by payment in full of an amount
equal to the dividend payable on the dividend payment date
on the shares of the Series A Preferred Stock surrendered
for conversion. Except as provided in this Paragraph, no
payment or adjustment shall be made upon any conversion on
account of any dividends on shares of the Series A
Preferred Stock surrendered for conversion or on account
of any dividends on the shares of Common Stock issued upon
conversion.
(e)The Conversion Rate shall be adjusted from time to
time as follows:
(i)If the Corporation at any time (A) pays a
dividend or makes a distribution to all holders of its
Common Stock in shares of its Common Stock, (B)
subdivides its outstanding shares of Common Stock into
a larger number of shares of Common Stock, or (C)
combines its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then in each
such case the Conversion Rate in effect immediately
before that event shall be proportionately decreased or
increased, as the case may be, so that the holder of
any shares of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive
holder would have owned or been entitled to receive
immediately following such event if those shares of
Series A Preferred Stock had been converted into Common
Stock immediately before that event. An adjustment
made under this Subparagraph (i) becomes effective
immediately after the payment date in the case of a
dividend or distribution and immediately after the
effective date in the case of a subdivision or
combination. No adjustment in the Conversion Rate
shall be made if, at the same time the Corporation
issues shares of Common Stock as a dividend or
distribution on the outstanding shares of Common Stock
which, as provided in this Subparagraph (i), would
otherwise call for an adjustment in the Conversion
Rate, the Corporation issues shares of Common Stock as
a dividend or distribution on the outstanding shares of
Series A Preferred Stock equivalent to the number of
shares distributable on the shares of Common Stock into
which the shares of Series A Preferred Stock is then
convertible.
(ii)No adjustment in the Conversion Rate shall be
required unless the adjustment would require an
increase or decrease in the Conversion Rate by more
than one percent, but any adjustments not required to
be made by reason of this Subparagraph shall be carried
forward cumulatively and taken into account in any
subsequent adjustments. All calculations under this
Paragraph (e) shall be made to the nearest one-tenth of
one percent.
(iii)In case of any reclassification of the Common
Stock (other than a subdivision or combination of
outstanding shares of Common Stock for which adjustment
is provided in Subparagraph (i) above), or a
consolidation or merger of the Corporation with or into
any other corporation (other than a consolidation or a
merger in which the Corporation is the continuing
Corporation's Common Stock are not changed into or
exchanged for stock or other securities of any other
person or cash or any other property as a result of or
in connection with such consolidation or merger) or a
sale of the properties and assets of the Corporation
as, or substantially as, an entirety to any other
business organization, or a statutory share exchange in
which all shares of Common Stock or any series or class
of Common Stock are exchanged for shares of another
corporation or other entity, each share of Series A
Preferred Stock shall, after such reclassification,
consolidation, merger, sale or exchange and upon the
terms and conditions specified in this Subsection (5),
be convertible into or represent the right to receive
the number of shares of stock or other securities or
property (including cash) to which the shares of Common
Stock deliverable (at the time of such reclassifi-
cation, consolidation, merger, sale or exchange) upon
conversion thereof would have been entitled upon such
reclassification, consolidation, merger, sale or
exchange, if the conversion of the Series A Preferred
Stock into Common Stock had taken place immediately
before that event; and in any case, if necessary, the
provisions set forth in this Subparagraph (iii) with
respect to the rights and interests thereafter of the
holders of the shares of Series A Preferred Stock shall
be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or
other securities or property (including cash)
thereafter deliverable upon conversion of shares of
Series A Preferred Stock.
(iv)Whenever the Conversion Rate is adjusted as
provided in this Paragraph (e):
(A) The Corporation shall compute the adjusted
Conversion Rate in accordance with this Paragraph (e)
and shall prepare a certificate signed by the
setting forth the adjusted Conversion Rate and
showing in reasonable detail the facts upon which
such adjustment is based, and the certificate shall
promptly be filed with the transfer agent for the
Series A Preferred Stock, but such transfer agent
shall have no duty with respect to any such
certificate filed with it except to keep the same on
file and available for inspection during reasonable
hours; and
(B)The Corporation shall cause to be mailed to
each holder of shares of Series A Preferred Stock at
his then registered address by first-class mail,
postage prepaid, a notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted
Conversion Rate.
(v) Without limiting the obligation of the
Corporation to give the notices provided in Sub-
paragraph (iv), the failure of the Corporation to give
such notice shall not invalidate any corporate action
by the Corporation.
(f)The Corporation shall at all times reserve and keep
available, free from preemptive rights for the purpose of
effecting the conversion of the shares of Series A
Preferred Stock, the full number of shares of Common Stock
then deliverable upon the conversion of all shares of
Series A Preferred Stock then outstanding.
(g)The Corporation is not obligated to pay any tax
payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other
than that in which the shares of Series A Preferred Stock
so converted were registered, and the Corporation is not
obligated to make any such issue or delivery unless and
until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has
such tax has been paid.
(h) In the event that:
(i)the Corporation declares a dividend or any other
distribution on its Common Stock, payable otherwise
than in cash out of surplus; or
(ii)the Corporation grants to all the holders of its
Common Stock rights to subscribe for or purchase any
shares of capital stock of any class or any other
rights; or
(iii)any reclassification, consolidation, merger,
sale or exchange of the type described in Subparagraph
(iii) of Paragraph (e) occurs; or
(iv)the voluntary or involuntary dissolution,
exchange, liquidation or winding up of the Corporation
occurs;
the Corporation shall cause to be mailed to the holders of
record of the Series A Preferred Stock at least 20 days
before the applicable date hereinafter specified a notice
stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or,
if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such
dividend, distribution or rights are to be determined or
(y) the date on which such reclassification,
consolidation, merger, sale, exchange, dissolution,
liquidation or winding up is expected to take place, and
the date, if any is to be fixed, as of which holders of
Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation,
merger, sale, exchange, dissolution, liquidation or
winding up. Failure to give such notice, or any defect
dividend, distribution, reclassification, consolidation,
merger, sale, exchange, dissolution, liquidation or
winding up.
(6)Voting.
(a)Except as otherwise expressly required by applicable
law or by the terms of this Section E, the holders of shares
of the Series A Preferred Stock are not entitled to any vote
on any matter, including but not limited to any merger,
consolidation or transfer of assets, or statutory share
exchange, and to no notice of any meeting of shareholders of
the Corporation.
(b)Except as otherwise provided herein, whenever the vote,
approval or other action of holders of shares of the Series
A Preferred Stock is required or permitted by applicable law
or by the terms of this Section E, each share is entitled to
one vote and the affirmative vote of a majority of shares of
Series A Preferred Stock present or represented at the
meeting at which a quorum is present is sufficient to
constitute such vote, approval or other action.
(c)If, at any time, the Corporation falls in arrears in
the payment of dividends on the Series A Preferred Stock for
two consecutive quarterly dividend periods, the number of
directors constituting the full board of directors of the
Corporation shall be automatically increased by two and the
holders of Series A Preferred Stock, voting separately as a
single class, shall be entitled to elect two directors of
the Corporation to fill the two newly created directorships,
at a special meeting called for that purpose in accordance
with Paragraph (f) and thereafter at each meeting of the
shareholders held for the purpose of electing directors, so
long as there continues to be any arrearage in the payment
of dividends on the Series A Preferred Stock for any past
quarterly dividend period or of interest on such accumulated
and unpaid dividends.
A Preferred Stock for all past quarterly dividend periods,
and interest thereon, have been paid in full, the right of
the holders of Series A Preferred Stock to elect directors
shall cease (subject to revesting from time to time as
provided in Paragraph (c)), the number of directors of the
Corporation shall be automatically reduced by two and the
term of office of all directors elected by the holders of
the Series A Preferred Stock shall immediately terminate.
(e)A director elected by the holders of Series A Preferred
Stock shall hold office until the annual meeting next
succeeding his election or until his successor, if any, is
elected by such holders. A director so elected may be
removed at any time with or without cause but only by the
vote of holders of the Series A Preferred Stock at a meeting
duly called for that purpose. So long as the holders of the
Series A Preferred Stock have the right to elect two
directors, any vacancy in the office of a director elected
by those holders may be filled by the remaining director so
elected or by the vote of the holders of Series A Preferred
Stock at any annual meeting or any special meeting called
for the purpose.
(f)At any time when the power to elect directors vests in
the holders of the Series A Preferred Stock, a proper
officer of the Corporation shall, on the written request of
record holders of at least 20 percent of the number of
shares of Series A Preferred Stock then outstanding,
addressed to the secretary of the Corporation at its
principal office, call a special meeting of the holders of
the Series A Preferred Stock for the purpose of electing
directors. The meeting must be held at the earliest
practicable date, not later than 45 days after receipt of
the written request (subject to compliance with applicable
proxy rules and rules of the American Stock Exchange), in
the city in which the last preceding annual meeting of the
shareholders of the Corporation was held, but may be held at
the time and place of the annual meeting if the annual
elect directors first vests in the holders of the Series A
Preferred Stock. If the proper officer of the Corporation
does not call the meeting within the required time, then the
holders of record of 20 percent of the number of shares of
Series A Preferred Stock then outstanding may, by written
notice to the secretary of the Corporation at its principal
office, designate any person to call such meeting, and the
person so designated may call such meeting in the city above
provided upon not fewer than 30 nor more than 45 days notice
and for that purpose shall have access to the stock books of
the Corporation. At any meeting so called for the election
of directors by holders of the Series A Preferred Stock or
at any annual meeting held while the holders of Series A
Preferred Stock have the right to elect directors, holders
of a majority of the shares of Series A Preferred Stock then
outstanding is sufficient to constitute a quorum for the
purpose of electing directors at such a meeting. If at any
such meeting a quorum of the Series A Preferred Stock is not
present, the election of directors shall not take place, and
the meeting shall be adjourned from time to time for periods
not exceeding 30 days until a quorum is obtained.
(g)Approval of the holders of the Series A Preferred
Stock, voting separately as a single class by a favorable
vote of at least two-thirds of the number of shares of
Series A Preferred Stock then outstanding, is required to
adopt any proposed amendment to these Articles of
Incorporation (including but not limited to any amendment
adopted by resolution of the Board of Directors pursuant to
Article III of these Articles of Incorporation) if the
proposed amendment would affect shares of the Series A
Preferred Stock in any one or more of the following ways:
(i)Create or authorize any class or series of stock
ranking senior to or on a parity with the Series A
Preferred Stock in respect of dividends or distribution of
assets on liquidation or otherwise alter or abolish the
liquidation preferences or any other preferential right of
(ii)Reduce the redemption price or otherwise alter or
abolish any right with respect to redemption of the Series
A Preferred Stock expressly provided by this Section E.
(iii)Alter or abolish any right of such shares
expressly provided by this Section E to receive dividends
or interest thereon except as such right may be affected
by dividend rights of new shares being authorized of
another class or series of shares ranking on a parity with
or junior to the Series A Preferred Stock.
(iv)Alter or abolish any right of holders of shares of
the Series A Preferred Stock under this Section E to
convert such shares into shares of Common Stock.
(v)Exclude, change or limit any voting rights of the
Series A Preferred Stock conferred by this Section E.
(h)Approval of the holders of the Series A Preferred
Stock, voting separately as a single class by a favorable
vote of at least two-thirds of the number of shares of
Series A Preferred Stock then outstanding, is required to
adopt any merger, consolidation, statutory share exchange or
sale of all, or substantially all, of the assets of the
Corporation or any of its banking subsidiaries unless either
(i) the holders of the Series A Preferred Stock will receive
in exchange for the Series A Preferred Stock a security with
terms substantially identical to the terms of the Series A
Preferred Stock, or (ii) provision is made for the complete
redemption in cash of the Series A Preferred Stock on the
date of consummation of such transaction and the Series A
Preferred Stock may be redeemed at such time under these
Articles of Incorporation.
(7)Liquidation Rights.
(a)Upon the dissolution, liquidation or winding up of the
Stock shall be entitled to receive upon liquidation and to
be paid out of the assets of the Corporation available for
distribution to its shareholders, before any payment or
distribution may be made on the Common Stock or on any other
Junior Securities, the amount of $14.25 per share, plus a
sum equal to all accrued and unpaid dividends (whether or
not earned or declared) on such shares, and accrued interest
thereon, if any, to the date of final distribution.
(b)Neither the sale of all or substantially all the
property or business of the Corporation, nor the merger or
consolidation of the Corporation into or with any other
corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to
be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Subsection (7).
(c)Upon payment to the holders of the shares of Series A
Preferred Stock of the full preferential amounts provided
for in this Subsection (7), the holders of Series A
Preferred Stock shall have no right or claim to any of the
remaining assets of the Corporation.
(d)If the assets of the Corporation available for
distribution to the holders of shares of Series A Preferred
Stock upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, are
insufficient to pay in full all amounts to which such
holders are entitled under Paragraph (a) of this Subsection
(7), no such distribution may be made on account of any
shares of any other class or series of Preferred Stock
ranking on a parity with the shares of Series A Preferred
Stock upon such dissolution, liquidation or winding up
unless proportionate distributive amounts are paid on
account of the shares of Series A Preferred Stock, ratably,
in proportion to the full distributable amounts for which
holders of all such parity shares are respectively entitled
upon dissolution, liquidation or winding up.
class or classes of the Corporation shall be deemed to rank:
(a)prior to the shares of Series A Preferred Stock,
either as to dividends or upon liquidation, if the holders
of such class or classes are entitled under these Articles
of Incorporation to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of
the Corporation, as the case may be, in preference or
priority to the holders of shares of Series A Preferred
Stock;
(b)on a parity with shares of Series A Preferred Stock,
either as to dividends or upon liquidation, whether or not
the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if
any, are different from those of Series A Preferred Stock,
if the holders of such class or classes are entitled under
these Articles of Incorporation to the receipt of dividends
or of amounts distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may be, in
proportion to their respective liquidation preferences,
without preference or priority, one over the other, as
between the holders of such class or classes and the holders
of shares of Series A Preferred Stock; and
(c)junior to shares of Series A Preferred Stock, either
as to dividends or upon liquidation, if such class or
classes are Common Stock or if the holders of shares of
Series A Preferred Stock are entitled under these Articles
of Incorporation to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of
the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
(9)No Preemptive Rights. Holders of shares of Series A
Preferred Stock have no preemptive rights.
3. Except as amended by these Articles of Amendment, the
force and effect.
IN WITNESS WHEREOF, the undersigned President and Secretary
have executed these Articles of Amendment on ________, 1995 at
Lafayette, Louisiana.
MidSouth Bancorp, Inc.
By:
C. R. Cloutier, President
By:
Karen L. Hail, Secretary
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF LAFAYETTE
BEFORE ME, the undersigned authority personally came
and appeared C. R. Cloutier and Karen L. Hail to me known to be
the persons who signed the foregoing instrument as President and
Secretary, respectively, of MidSouth Bancorp, Inc. and who,
having been duly sworn, acknowledged and declared, in the
presence of the witnesses whose names are subscribed below, that
they signed that instrument as their free act and deed for the
purposes mentioned therein.
IN WITNESS WHEREOF, the
appearers and witnesses and I have signed below on this ______
day of ________, 1995.
WITNESSES:
______________________________ _____________________________
C. R. Cloutier, President
______________________________
______________________________ ____________________________
Karen L. Hail, Secretary
______________________________
________________________________________
NOTARY PUBLIC
