<PAGE> 1
As filed with the Securities and Exchange Commission on November 4, 1996
Registration Number: 333-14223
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
Amendment No. 1 to
Form S-4
Registration Statement Under
The Securities Act of 1933
------------------------------
Hancock Holding Company
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MISSISSIPPI 6022 64-0693170
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
ONE HANCOCK PLAZA, 2510 14TH STREET
GULFPORT, MISSISSIPPI 39501
(601) 868-4000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CHARLES A. WEBB, JR.
ONE HANCOCK PLAZA, 2510 14TH STREET
GULFPORT, MISSISSIPPI 39501
(601) 868-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copy to:
CARL J. CHANEY, ESQ.
WATKINS LUDLAM & STENNIS, P.A.
POST OFFICE BOX 427
633 NORTH STATE STREET
JACKSON, MISSISSIPPI 39202
(601) 949-4974
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFERING: As soon as
practicable after the effective date of this Registration Statement.
If securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
-------------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE> 2
HANCOCK HOLDING COMPANY
CROSS-REFERENCE SHEET SHOWING THE LOCATION IN THE PROSPECTUS/PROXY STATEMENT
OF INFORMATION REQUIRED BY PART I OF FORM S-4 PURSUANT TO
ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
Item Prospectus/Proxy Statement Heading or Location
---- ----------------------------------------------
<S> <C> <C>
1. Forepart of Registration Statement and Forepart of Registration Statement; Outside Front
Outside Front Cover Page of Prospectus Cover Page of Prospectus/Proxy Statement
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page of Prospectus/Proxy Statement;
Prospectus Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Summary
Charges and Other Information
4. Terms of the Transaction Summary; General Information; Information
Concerning the Merger; Description of HHC Capital Stock;
Comparative Rights of Shareholders
5. Pro Forma Financial Information Unaudited Pro Forma Combined Financial Statements
6. Material Contacts with the Company Being Summary; Information Concerning the Merger
Acquired
7. Additional Information Required for Reoffering Not Applicable
by Persons and Parties Deemed to be
Underwriters
8. Interest of Named Experts and Counsel Not Applicable
9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities
10. Information with Respect to S-3 Registrants Available Information; Documents Incorporated by Reference;
Summary; Certain Information
Concerning HHC
11. Incorporation of Certain Information by Available Information; Documents Incorporated by
Reference Reference
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants
13. Incorporation of Certain Information by Not Applicable
Reference
14. Information with Respect to Registrants Other Not Applicable
than S-2 or S-3 Registrants
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or S-3 Not Applicable
Companies
17. Information with Respect to Companies Other Summary; Selected Financial Data of SNB; Stock
than S-2 or S-3 Companies Prices and Dividends of SNB; Certain Information Concerning
SNB; Index to Financial Statements
18. Information if Proxies, Consents, or Notice of Special Meeting of Shareholders;
Authorizations are to be Solicited Summary; Purpose of the Special Meeting;
Solicitation, Voting and Revocation of Proxies;
Shares Entitled to Vote; Quorum; Vote Required;
Information Concerning the Merger; Certain
Information Concerning SNB; Documents Incorporated
by Reference
19. Information if Proxies, Consents, or Not Applicable
Authorizations are not to be Solicited or
in an Exchange Offer
</TABLE>
<PAGE> 4
[SOUTHEAST LETTERHEAD]
November 8, 1996
Dear Shareholders:
You are cordially invited to attend a Special Meeting of Shareholders
of Southeast National Bank, a national banking association, ("SNB") to be held
at SNB, 1855 S. Morrison Blvd., Hammond, Louisiana, on Tuesday, January 7,
1997, at 1:00 p.m., local time.
At this meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Reorganization, and
related Bank Merger Agreement (collectively, the "Merger Agreement") pursuant
to which (a) SNB will be merged with and into Hancock Bank of Louisiana (the
"Bank Merger") and (b) each outstanding share of SNB common stock will be
converted into the right to receive 0.2345 shares of Hancock Holding Company
("HHC") common stock and $7.9652 in cash; provided, however, each holder of SNB
common stock who would otherwise receive 25 or fewer shares of HHC common stock
shall not receive HHC common stock but rather shall be entitled to receive
($16.70) for each share of SNB common stock, however, depending on the value of
the HHC common stock at closing, the per share value of the consideration to be
received by the de minimus shareholders ($16.70) may be greater or less than
the per share value payable to the non-de minimus shareholders, in accordance
with the Merger Agreement. Unless you dissent from the Bank Merger, your SNB
common stock will be converted into HHC common stock on a tax deferred basis,
except to the extent you receive cash.
Details of the proposed transaction are set forth in the accompanying
Prospectus/Proxy Statement, which you should read carefully. Only those
shareholders of record at the close of business on November 1, 1996, will be
entitled to notice of and to vote at the Special Meeting.
Your Board of Directors unanimously recommends your approval of the
Bank Merger. Furthermore, SNB's financial advisor, Chaffe & Associates, Inc.
("Chaffe"), has issued its opinion to the effect that, as of the date of such
opinion and based upon the considerations and subject to the limitations
described therein, the terms of the Bank Merger are fair, from a financial point
of view, to the shareholders of SNB. Among the factors considered by your Board
in recommending the Bank Merger were the financial terms of the Merger
Agreement, the liquidity it will afford SNB's shareholders, and the likelihood
and potential adverse impact of increased competition for SNB in their market
area if SNB remains independent. For these reasons, your Board of Directors
believes that the proposed Bank Merger is in the best interests of SNB and its
shareholders, and urges that you vote "FOR" the proposed Bank Merger by
signing, dating and returning the enclosed form of proxy promptly, whether or
not you plan to attend the Special Meeting. The prompt return of your signed
proxy, regardless of the number of shares you hold, will assist SNB in reducing
the expense of additional proxy solicitation. Your proxy may be revoked at any
time prior to the vote at the Special Meeting by notice to the Secretary of SNB
or by execution and delivery of a later dated proxy. If you attend the Special
Meeting you may, if you wish, revoke your proxy and vote in person on all
matters brought before the Special Meeting.
Very truly yours,
Reginald R. Harper
President
<PAGE> 5
SOUTHEAST NATIONAL BANK
1855 S. Morrison Blvd.
Hammond, Louisiana 70403
(504) 542-9700
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting of Shareholders of
Southeast National Bank, a national banking association ("SNB") will be held at
SNB, 1855 S. Morrison Blvd., Hammond, Louisiana, on Tuesday, January 7, 1997,
at 1:00 p.m., local time:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Reorganization, and related Bank Merger Agreement
(collectively, the "Merger Agreement") pursuant to which (a) SNB will be merged
with and into Hancock Bank of Louisiana (the "Bank Merger") and (b) each
outstanding share of SNB common stock will be converted into the right to
receive 0.2345 shares of Hancock Holding Company ("HHC") common stock and
$7.9652 in cash; provided, however, each holder of SNB common stock who would
otherwise receive 25 or fewer shares of HHC common stock shall not receive HHC
common stock but rather shall be entitled to receive $16.70 for each share of
SNB common stock, however, depending on the value of the HHC common stock at
closing, the per share value of the consideration to be received by the de
minimus shareholders ($16.70) may be greater or less than the per share value
payable to the non-de minimus shareholders, in accordance with the Merger
Agreement. Unless you dissent from the Bank Merger, your SNB common stock
will be converted into HHC common stock on a tax-free basis, except to the
extent you receive cash; and
2. To transact such other business as may properly come before
the meeting and any adjournment thereof.
Only those shareholders of record at the close of business on November
1, 1996 will be entitled to notice of and to vote at the special meeting.
DISSENTING SHAREHOLDERS OF SNB WHO COMPLY WITH THE PROCEDURAL
REQUIREMENTS OF THE NATIONAL BANKING ACT WILL BE ENTITLED TO RECEIVE PAYMENT OF
THE FAIR CASH VALUE OF THEIR SHARES OF SNB.
BY ORDER OF THE BOARD OF DIRECTORS
Luther Simon, Cashier
Hammond, Louisiana
November 8, 1996
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN. EVEN
IF YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE. YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTE AT THE
SPECIAL MEETING BY NOTICE TO THE SECRETARY OF SNB OR BY EXECUTION AND DELIVERY
OF A LATER DATED PROXY. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
<PAGE> 6
PROXY STATEMENT OF SOUTHEAST NATIONAL BANK
Special Meeting of Shareholders
to be held on Tuesday, January 7, 1997
-----------------------------------
PROSPECTUS OF HANCOCK HOLDING COMPANY
104,460 Shares of Common Stock
($3.33 Par Value)
Hancock Holding Company, a Mississippi corporation ("HHC"), has filed
a Registration Statement on Form S-4 to register 104,460 shares of HHC's common
stock, $3.33 par value ("HHC Common Stock"), under the Securities Act of 1933
to be issued in connection with a proposed merger of Southeast National Bank, a
national banking association ("SNB") with and into Hancock Bank of Louisiana, a
Louisiana state chartered bank ("Hancock Bank") (the "Bank Merger").
This document constitutes a Proxy Statement of SNB in connection with
the transactions described herein and a Prospectus of HHC with respect to the
shares of HHC Common Stock to be issued if the Bank Merger is consummated.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HHC OR
SNB. THIS PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE NOR SHALL THERE BE ANY SALE OF THE
SECURITIES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT IN ANY JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION, OR SALE. NEITHER THE DELIVERY OF THIS PROSPECTUS/PROXY STATEMENT
NOR ANY OFFER OR SALE MADE HEREUNDER NOR ANY DISTRIBUTION OF THE SECURITIES TO
WHICH THIS PROSPECTUS/PROXY STATEMENT RELATES SHALL, UNDER ANY CIRCUMSTANCES,
IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HHC OR SNB SINCE THE DATE
HEREOF.
-----------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR
OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
The date of this Prospectus/Proxy Statement is November 8, 1996.
<PAGE> 7
AVAILABLE INFORMATION
HHC is subject to the reporting requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Copies of such reports, proxy statements and other information can be obtained,
at prescribed rates, from the SEC by addressing written requests for such
copies to the Public Reference Section of the SEC at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such
reports, proxy statements and other information can be inspected at the public
reference facilities referred to above and at the regional offices of the SEC
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 300 West Madison Street, Suite 1400, Chicago, Illinois 60661. The SEC
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically, including HHC, with the Commission at http://www.sec.gov.
This Prospectus/Proxy Statement constitutes part of the Registration
Statement on Form S-4 of HHC (including any exhibits and amendments thereto,
the "Registration Statement") filed with the SEC under the Securities Act of
1933 as amended (the "Securities Act"), relating to the shares of HHC common
stock offered hereby. This Prospectus/Joint Proxy Statement does not include
all of the information and undertakings in the Registration Statement and
exhibits thereto. For further information about HHC and the shares of common
stock offered hereby, reference is made to the Registration Statement and
exhibits thereto. Statements contained in this Prospectus/Joint Proxy
Statement as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to a copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement may be inspected and copied, at
prescribed rates, at the SEC's public reference facilities at the addresses set
forth above.
Except for the historical information contained herein, the matters
discussed in this Prospectus/Proxy Statement are forward-looking statements
which involve risks and uncertainties, including but not limited to economic,
competitive, regulatory and technological factors affecting HHC's operations,
markets, services, products and prices, and other factors discussed in HHC's
filings with the SEC.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST, WITHOUT CHARGE FROM CHARLES A. WEBB, JR., CORPORATE
SECRETARY, HANCOCK HOLDING COMPANY, ONE HANCOCK PLAZA, GULFPORT, MISSISSIPPI
39501 (601) 868-4000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY DECEMBER 27, 1996. SEE "DOCUMENTS INCORPORATED BY
REFERENCE."
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by HHC pursuant
to the Exchange Act are hereby incorporated by reference:
1. HHC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
2. The Proxy Statement of HHC for its Annual Meeting of
Shareholders held on February 22, 1996;
3. HHC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
4. HHC's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996; and
5. All other reports filed by HHC pursuant to Section 13(a) or
15(d) of the Exchange Act, since December 31, 1995.
<PAGE> 8
All documents filed by HHC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus/Proxy Statement and
prior to final adjournment of the Special Meeting, shall be deemed to be
incorporated by reference into this Prospectus/Proxy Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in
any document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus/Proxy Statement to the extent that a statement contained herein or
in any subsequently filed document which also is, or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus/Proxy Statement, except as so modified or superseded. The
audited financial statements of HHC incorporated herein by reference should
only be read in conjunction with the discussion of consummated and pending
acquisitions set forth under the caption "CERTAIN INFORMATION CONCERNING HHC."
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Special Meeting . . . . . . . . . . . . . . . . . . . . . . . 2
Purpose of the Special Meeting . . . . . . . . . . . . . . . . . . 2
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recommendation of Boards of Directors . . . . . . . . . . . . . . 2
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 2
Basis for the Terms of the Bank Merger . . . . . . . . . . . . . . 3
Conversion of SNB Stock . . . . . . . . . . . . . . . . . . . . . 3
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . 3
Regulatory Approvals and Other Conditions to the Bank Merger . . . 4
Waiver, Amendment and Termination . . . . . . . . . . . . . . . . 4
Interests of Certain Persons in the Bank Merger . . . . . . . . . 4
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . 5
Material Federal Income Tax Consequences . . . . . . . . . . . . . 5
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 5
Comparative Per Share Data (Unaudited) . . . . . . . . . . . . . . 7
Recent Stock Prices . . . . . . . . . . . . . . . . . . . . . . . 8
Effect of the Bank Merger on Rights of Shareholders . . . . . . . 9
Resales of HHC Common Stock by Affiliates . . . . . . . . . . . . 9
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 9
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purpose of the Special Meeting . . . . . . . . . . . . . . . . . . 9
Solicitation, Voting and Revocation of Proxies . . . . . . . . . . 10
Shares Entitled to Vote; Quorum; Vote Required . . . . . . . . . . 10
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . 10
INFORMATION CONCERNING THE BANK MERGER . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Background of and Reasons for the Bank Merger . . . . . . . . . . 11
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . 11
Conversion of SNB Common Stock . . . . . . . . . . . . . . . . . . 12
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . 13
Regulatory Approvals and Other Conditions to the Bank Merger . . . 14
Conduct of Business Prior to the Effective Date . . . . . . . . . 16
Waiver, Amendment and Termination . . . . . . . . . . . . . . . . 17
Agreement Not to Compete . . . . . . . . . . . . . . . . . . . . . 17
Interests of Certain Persons in the Bank Merger . . . . . . . . . 18
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . 18
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Status Under Federal Securities Laws; Certain Restrictions
on Resales of Securities . . . . . . . . . . . . . . . . . . . . 18
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 19
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BANK MERGER . . . . . . . . 19
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CERTAIN INFORMATION CONCERNING SNB . . . . . . . . . . . . . . . . . . . . 26
Principal Business . . . . . . . . . . . . . . . . . . . . . . . . 26
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Seasonality of Business and Customers . . . . . . . . . . . . . . 26
</TABLE>
i
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<TABLE>
<S> <C>
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 27
Stock Prices and Dividends . . . . . . . . . . . . . . . . . . . . 27
Security Ownership of Principal Shareholders and Management . . . 28
SNB MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
CERTAIN STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 43
MANAGEMENT OF SNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 46
Executive Officers of SNB . . . . . . . . . . . . . . . . . . . . 46
Compensation Pursuant to Plans . . . . . . . . . . . . . . . . . . 46
Transactions with Management . . . . . . . . . . . . . . . . . . . 47
CERTAIN INFORMATION CONCERNING HHC . . . . . . . . . . . . . . . . . . . . 47
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Merger and Acquisition History . . . . . . . . . . . . . . . . . . 47
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 48
Changes in Control . . . . . . . . . . . . . . . . . . . . . . . . 48
Additional Information . . . . . . . . . . . . . . . . . . . . . . 50
DESCRIPTION OF HHC CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . 50
Authorized and Outstanding Stock . . . . . . . . . . . . . . . . . 50
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Dividend Rights . . . . . . . . . . . . . . . . . . . . . . . . . 50
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . 51
Fully Paid and Nonassessable . . . . . . . . . . . . . . . . . . . 51
Liquidation Rights . . . . . . . . . . . . . . . . . . . . . . . . 51
Limitation of Liability of Directors . . . . . . . . . . . . . . . 51
Indemnification of Directors, Officers and Employees . . . . . . . 51
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Changes in Control . . . . . . . . . . . . . . . . . . . . . . . . 51
COMPARISON RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 52
Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . 52
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 52
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . 53
Vacancies in the Board of Directors . . . . . . . . . . . . . . . 53
Amendment of the Articles of Incorporation . . . . . . . . . . . . 53
Amendment of Bylaws . . . . . . . . . . . . . . . . . . . . . . . 53
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . 54
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . 54
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . 54
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Redemption and Retirement . . . . . . . . . . . . . . . . . . . . 55
Stockholders' Inspection Rights . . . . . . . . . . . . . . . . . 55
Limitation of Liability of Directors . . . . . . . . . . . . . . . 55
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 56
Super Majority Voting Requirements; Business Combinations . . . . 56
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
ii
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<TABLE>
<S> <C>
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
INDEX TO SNB FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A -- Agreement and Plan of Reorganization . . . . . . . . . . . A-1
APPENDIX B -- Fairness Opinion of Chaffee & Associates, Inc. . . . . . . B-1
APPENDIX C -- Excerpts from 12 USC Section 214a . . . . . . . . . . . . . C-1
</TABLE>
iii
<PAGE> 12
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Prospectus/Proxy Statement. The summary is necessarily
incomplete and is qualified in its entirety by reference to detailed
information contained elsewhere herein, the appendices hereto and the documents
incorporated herein by reference. Shareholders are urged to read carefully all
such material.
THE COMPANY
Hancock Holding Company. HHC is a bank holding company chartered,
organized and existing under and pursuant to the laws of the State of
Mississippi with its principal executive office located at One Hancock Plaza,
Gulfport, Mississippi 39501. The telephone number of HHC's principal
executive office is (601) 868-4000. HHC owns all of the issued and outstanding
common stock of Hancock Bank of Louisiana ("Hancock Bank"), a state bank
chartered, organized and existing under and pursuant to the laws of the State
of Louisiana and maintaining its principal place of business in Baton Rouge,
Louisiana. HHC also owns all of the issued and outstanding common stock of
Hancock Bank ("Hancock Bank MS"), a state bank chartered, organized and
existing under and pursuant to the laws of the State of Mississippi and
maintaining its principal place of business in Gulfport, Mississippi. HHC was
organized on April 6, 1984, for the purpose of becoming a bank holding company
under the Bank Holding Company Act of 1956, as amended, and acquiring all the
stock of Hancock Bank MS. At June 30, 1996, HHC had total consolidated assets
of approximately $2.3 billion and shareholders' equity of approximately $234.4
million. Of HHC's $2.3 billion in assets as of June 30, 1996, approximately
$0.8 billion were in Louisiana and approximately $1.5 billion were in
Mississippi. See "CERTAIN INFORMATION CONCERNING HHC."
THE BANKS
Hancock Bank of Louisiana. Hancock Bank, a Louisiana state chartered
bank organized in August 1990, is a wholly-owned subsidiary of HHC. Hancock
Bank is community oriented and focuses primarily on offering commercial,
consumer and mortgage loans and deposit services to individuals and small to
middle market businesses in its market area. Hancock Bank's operating strategy
is to provide its customers with the financial sophistication and breadth of
products of a regional bank while successfully retaining the local appeal and
level of service of a community bank. At June 30, 1996, Hancock Bank's
services were delivered through a network of 23 full-service locations,
including a main office in Baton Rouge and 22 branches located throughout East
Baton Rouge and Washington Parishes. At June 30, 1996, Hancock Bank had total
assets of approximately $685.9 million and total deposits of approximately
$576.2 million. Hancock Bank's principal executive offices are located at One
American Place, 301 Main Street, Baton Rouge, Louisiana, and its telephone
number is (504) 292-0336. See "CERTAIN INFORMATION CONCERNING HHC."
HHC and Hancock Bank have entered into an Agreement and Plan of
Reorganization dated June 19, 1996 with Community Bancshares, Inc. ("CBI") and
Community State Bank, Independence, Louisiana ("Community"). Under the
proposed transaction, CBI would be merged with and into HHC and Community would
be merged with and into Hancock Bank with the four (4) offices of Community
becoming branches of Hancock Bank. The proposed merger is expected to be
consummated in the fourth quarter of 1996. At June 30, 1996, Community had
approximately $91.1 million in total assets and $79.4 million in total
deposits.
Southeast National Bank. SNB is a national banking association
chartered on July 23, 1984. SNB provides traditional consumer and commercial
deposit and loan services to the individuals, families and businesses in
Tangipahoa Parish, Louisiana. SNB's services are delivered through a network
of 2 full-service locations, including a main office in Hammond and 1 branch in
Ponchatoula. In addition to traditional bank services, SNB offers
VISA/Mastercard through its correspondent relationship with First National Bank
of Commerce, New Orleans, Louisiana. At June 30, 1996, Bank had total assets
of approximately $37.1 million and total deposits of
1
<PAGE> 13
approximately $33.0 million. SNB's principal executive office is located at
1855 S. Morrison Blvd., Hammond, Louisiana, and its telephone number is (504)
542-9700. See "CERTAIN INFORMATION CONCERNING SNB."
THE SPECIAL MEETING
A special meeting of the shareholders of SNB will be held at the
offices of SNB, 1855 S. Morrison Blvd., Hammond, Louisiana, on Tuesday, January
7, 1997 at 1:00 p.m., local time (the "Special Meeting"). Only record holders
of common stock, $5.00 par value, of SNB ("SNB Common Stock") on November 1,
1996 (the "Record Date") are entitled to notice of and to vote at the Special
Meeting. On the Record Date, there were 456,518 shares of SNB Common Stock
outstanding.
PURPOSE OF THE SPECIAL MEETING
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Reorganization, and
related Bank Merger Agreement (collectively, the "Merger Agreement"), pursuant
to which (a) SNB will be merged with and into Hancock Bank (the "Bank Merger")
and (b) each outstanding share of SNB Common Stock will be converted into the
right to receive 0.2345 shares of HHC common stock, $3.33 par value ("HHC
Common Stock") and $7.9652 in cash; provided, however, each holder of SNB
Common Stock who would otherwise receive 25 or fewer shares of HHC Common Stock
shall not be entitled to receive HHC Common Stock but rather shall be entitled
to receive $16.70 for each share of SNB Common Stock, however, depending on the
value of the HHC Common Stock at closing, the par share value of the
consideration to be received by the de minimus shareholders ($16.70) may be
greater or less than the per share value payable to the non-de minimus
shareholders; provided further, in the event the aggregate amount of cash to be
paid, including cash in lieu of fractional shares, cash paid to those SNB
shareholders who would otherwise receive 25 or fewer shares of HHC Common
Stock, and cash paid to dissenting shareholders who perfect their rights,
exceeds 49% of the aggregate consideration, the exchange ratio shall be
adjusted proportionately to ensure that the maximum aggregate amount of cash to
be paid does not exceed $3,735,760 (49% of the aggregate consideration), all in
accordance with the Merger Agreement. See "GENERAL INFORMATION -- Purpose of
the Special Meeting."
VOTE REQUIRED
Approval of the Merger Agreement will require the affirmative vote of
the holders of at least two-thirds of the outstanding shares of SNB Common
Sock, in person or by proxy, at the Special Meeting. Each shareholder of SNB
Common Stock is entitled to one vote for each share owned by him. As of the
Record Date, directors and executive officers of SNB and its affiliates were
the beneficial owners of approximately 20.35% of the outstanding SNB Common
Stock entitled to vote at the Special Meeting. As a condition to consummation
of the Bank Merger, certain directors and shareholders of SNB have executed
agreements ("Joinder Agreements") with HHC, which, among other things,
obligates each such director or shareholder to vote his shares of SNB Common
Stock in favor of the approval and adoption of the Merger Agreement. As of the
Record Date, the 10 persons who have executed Joinder Agreements beneficially
owned an aggregate of 20.35% of the outstanding SNB Common Stock. Under
Mississippi law, shareholders of HHC are not required to approve the Merger
Agreement. See "GENERAL INFORMATION -- Shares Entitled to Vote; Quorum; Vote
Required."
RECOMMENDATION OF BOARDS OF DIRECTORS
The Board of Directors of SNB believes that the Merger Agreement is in
the best interests of the shareholders and recommends that the shareholders
vote "FOR" the approval and adoption of the Merger Agreement. SNB's Board of
Directors believes that the terms of the Merger Agreement will provide
significant value to all SNB shareholders and will enable them to participate
in opportunities for growth that SNB's Board of Directors believes the Bank
Merger makes possible. In recommending the Merger Agreement to the
shareholders, SNB's Board of Directors considered, among other factors, the
financial terms of the Merger Agreement, the liquidity it will afford SNB's
shareholders, and the likelihood and potential adverse impact of increased
competition for SNB in its market area if SNB remains independent. See
"INFORMATION CONCERNING THE BANK MERGER -- Background of and Reasons for the
Bank Merger."
FAIRNESS OPINION
The Board of Directors of SNB has received the written opinion of
Chaffe, SNB' financial advisor, that based upon and subject to the procedures,
matters and limitations described in its opinion and such other matters as it
considers relevant as of the date of its opinion, the Exchange Ratio is fair,
from a financial point of view, to SNB's shareholders. The opinion of Chaffe
is attached hereto as Appendix B and should be read in its entirety. See
"INFORMATION CONCERNING THE BANK MERGER -- Opinion of Financial Advisor."
2
<PAGE> 14
BASIS FOR THE TERMS OF THE BANK MERGER
A number of factors in addition to those stated above were considered
by the Board of Directors of SNB in approving the terms of the Merger
Agreement, including, without limitation, information concerning the business,
financial condition, results of operations and prospects of SNB, HHC and
Hancock Bank; the ability of the combined entity to compete in the relevant
banking markets; the proposed treatment of the SNB Common Stock in the Bank
Merger; the market price of HHC Common Stock; the absence of an active trading
market for SNB Common Stock; the federal tax consequences of the Merger
Agreement to SNB's shareholders, to the extent HHC Common Stock is received,
for federal income tax purposes; the financial terms of other business
combinations in the banking industry; and certain non- monetary factors. See
"INFORMATION CONCERNING THE BANK MERGER -- Background of and Reasons for the
Bank Merger."
CONVERSION OF SNB STOCK
On the Effective Date, as defined in "SUMMARY - Regulatory Approvals
and Other Conditions to the Bank Merger," each share of HHC Common Stock issued
and outstanding immediately prior to the Effective Date will remain outstanding
and will continue to represent one share of HHC Common Stock, $3.33 par value.
Each share of $5.00 par value SNB Common Stock, issued and outstanding
immediately prior to the Effective Date will be converted into the right to
receive 0.2345 shares of HHC common stock, $3.33 par value and $7.9652 in cash;
provided, however, each holder of SNB Common Stock who would otherwise receive
25 or fewer shares of HHC Common Stock shall not be entitled to receive HHC
Common Stock but rather shall be entitled to receive $16.70 for each share of
SNB Common Stock, however, depending on the value of the HHC Common Stock at
closing, the par share value of the consideration to be received by the de
minimus shareholders ($16.70) may be greater or less than the per share value
payable to the non-de minimus shareholders; provided further, in the event the
aggregate amount of cash to be paid, including cash in lieu of fractional
shares, cash paid to those SNB shareholders who would otherwise receive 25 or
fewer shares of HHC Common Stock, and cash paid to dissenting shareholders who
perfect their rights, exceeds 49% of the aggregate consideration, the exchange
ratio shall be adjusted proportionately to ensure that the maximum aggregate
amount of cash to be paid does not exceed $3,735,760 (49% of the aggregate
consideration), all in accordance with the Merger Agreement. See "GENERAL
INFORMATION -- Purpose of the Special Meeting."
As a result of the Bank Merger, all shares of SNB Common Stock will be
canceled and each holder of a certificate (a "Certificate") representing any
share(s) of SNB Common Stock will thereafter cease to have any rights with
respect to such shares, except the right to receive, without interest, the HHC
Common Stock and/or the cash as described above, and cash for fractional shares
of HHC Common Stock upon the surrender of such Certificate. No fractional
shares of HHC Common Stock will be issued in connection with the Bank Merger.
In lieu of the issuance of any fractional share of HHC Common Stock, cash
adjustments will be paid to holders in respect of any fractional share of HHC
Common Stock that would otherwise be issuable, and the amount of such cash
adjustment will be equal to such fractional proportion of $37.25.
EXCHANGE OF CERTIFICATES
HHC will deposit with Hancock Bank MS Trust Department, as exchange
agent (the "Exchange Agent"), certificates representing the shares of HHC
Common Stock and cash to be issued and paid, respectively, pursuant to the
Merger Agreement in exchange for outstanding shares of SNB Common Stock. HHC
will cause the Exchange Agent to mail to each holder of SNB Common Stock a
letter of transmittal which will specify terms of the delivery of the SNB
certificates to the Exchange Agent along with instructions for effecting the
surrender of the certificates in exchange for certificates representing shares
of HHC Common Stock and/or cash, and cash in lieu of fractional shares.
3
<PAGE> 15
No dividends on HHC Common Stock will be paid with respect to any
shares of SNB Common Stock represented by a certificate until such certificate
is surrendered for exchange.
On or after the Effective Date, there will be no transfers on the
stock transfer books of SNB of the shares of SNB Common Stock which were
outstanding immediately prior to the Effective Date.
REGULATORY APPROVALS AND OTHER CONDITIONS TO THE BANK MERGER
The Bank Merger is subject to approval by the Federal Deposit
Insurance Corporation ("FDIC") and the Office of Financial Institutions, State
of Louisiana ("OFI"). There can be no assurance whether such approvals will be
given, or will be given without unacceptable conditions and, if given, the
timing of such approvals. After approval by the SNB shareholders, consummation
of the Bank Merger is also subject to a number of conditions included in the
Merger Agreement. See "INFORMATION CONCERNING THE BANK MERGER -- Regulatory
Approvals and Other Conditions to the Bank Merger."
The Bank Merger will become effective on the date the OFI issues a
Certificate of Merger and following the satisfaction or waiver of all
conditions set forth in the Merger Agreement (the "Effective Date").
WAIVER, AMENDMENT AND TERMINATION
SNB and HHC may waive their respective rights, power or privileges
under the Merger Agreement subject to certain conditions specified in the
Merger Agreement. The Merger Agreement cannot be amended or modified except
pursuant to a written agreement subscribed by duly authorized representatives
of SNB and HHC. The Merger Agreement cannot be assigned without the express
written consent of both HHC and SNB.
The Merger Agreement may be terminated either before or after approval
by SNB's shareholders (i) at any time on or prior to the Effective Date, by the
mutual consent in writing of a majority of the members of the Board of
Directors of HHC, Hancock Bank and SNB; (ii) by HHC in writing or by SNB in
writing, if the Bank Merger has not become effective on or before March 31,
1997, unless the absence of such occurrence is due to the failure of the party
seeking to terminate the Merger Agreement to perform each of its obligations
required thereby to be performed on or prior to the Effective Date; (iii) by
HHC, Hancock Bank or SNB in the event of a breach by the other party (a) of any
covenant or agreement contained in the Merger Agreement or (b) of any
representation or warranty in the Merger Agreement under certain specified
circumstances; (iv) by HHC, Hancock Bank or SNB at any time after the FRB,
FDIC, OFI, Office of the Comptroller of the Currency ("OCC") or the United
States Department of Justice has denied any application for any approval or
clearance required to be obtained as a condition to the consummation of the
Bank Merger and the time period for all appeals or requests for reconsideration
has run; (v) by SNB, HHC or Hancock Bank if the Bank Merger is not approved by
the required vote of SNB's shareholders; or (vi) by HHC if holders of ten
percent or more of the outstanding SNB Common Stock exercise statutory rights
of dissent and appraisal pursuant to 12 U.S.C. Section 214a(b).
Except under certain circumstances specified in the Merger Agreement,
upon termination, there will be no liability on the part of either party or
their respective directors, officers, employees, agents or shareholders.
INTERESTS OF CERTAIN PERSONS IN THE BANK MERGER
Certain members of SNB's management and Board of Directors have
interests in the Bank Merger in addition to their interests as shareholders of
SNB generally. Those interests relate to continued employment with Hancock
Bank and employee benefits that will be provided by Hancock Bank. See
"INFORMATION
4
<PAGE> 16
CONCERNING THE BANK MERGER -- Interests of Certain Persons in the Bank Merger"
and "-- Employee Benefits."
EMPLOYEE BENEFITS
SNB's Group Health and Life Benefit Plan will be continued through the
Effective Date of the Bank Merger. Thereafter, all retained employees will be
eligible to participate based on the provisions in the Hancock Bank MS's
Medical Benefit Plan. The ninety-day employment period will be waived for
eligible retained employees in accordance with Hancock Bank MS's Plan. Hancock
Bank will waive pre-existing medical conditions for health insurance purposes
as to all retained personnel provided such pre-existing medical conditions were
covered at Closing under SNB's Group Health Benefit Plan. SNB's 401K Plan (the
"Plan") will remain operative and in effect through the Effective Date of the
Bank Merger. The Plan will be terminated as of the Effective Date of the Bank
Merger and distributed to employees of SNB in accordance with the terms of the
Plan after the normal and customary contributions have been made consistent
with past practices. All termination costs will be paid from the Plan's
assets. All retained employees will be eligible to enter the Hancock Bank MS
Profit Sharing Plan, Hancock Bank MS 401K Plan, and Hancock Bank MS Pension
Plan based on the provisions set forth in the respective plans. Hancock Bank
MS 401K Plan currently does not have a provision which allows for roll over
funds from other qualified plans. All retained employees will be granted full
credit for all prior service for vesting, eligibility and benefit purposes for
the Hancock Bank MS Profit Sharing Plan, for eligibility purposes for the
Hancock Bank MS 401K Plan, and for vesting and eligibility purposes for the
Hancock Bank MS Pension Plan. All other SNB benefit plans will continue
through the Effective Date of the Bank Merger. Thereafter, all retained
employees will be eligible to participate in all Hancock Bank MS employment
benefit plans not set forth above based on the provisions set forth in the
plans with full credit for all prior service.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The Bank Merger will qualify as a tax-free reorganization under the
Internal Revenue Code of 1986, as amended (the "Code"), and each SNB
shareholder who receives HHC Common Stock in the Bank Merger will not recognize
gain or loss, except with respect to the receipt of cash (i) as part of the SNB
Exchange Ratio, (ii) in lieu of fractional shares of HHC Common Stock, or (iii)
pursuant to the exercise of dissenters' rights. See "MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE BANK MERGER."
DISSENTERS' RIGHTS
By complying with the specific procedures required by the National
Bank Act and described herein dissenting shareholders of SNB may be entitled to
be paid the value of their shares, if the Bank Merger is consummated, in lieu
of the consideration to be received in the Bank Merger by the non-dissenting
shareholders of SNB. See "DISSENTERS' RIGHTS."
5
<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL INFORMATION FOR SNB AND HHC
The following selected consolidated financial information of SNB and HHC
should be read in conjunction with the consolidated financial statements of SNB
and HHC and the notes thereto, included elsewhere, or incorporated by reference
herein.
The following selected unaudited pro forma financial information is
presented assuming the proposed mergers of SNB and CBI with and into HHC will
be accounted for using the purchase method of accounting. The unaudited pro
forma finanical information assumes the mergers were consummated on January 1,
1995 and January 1, 1996, respectively, and subject to the purchase
adjustments reflects the combination of the historical consolidated financial
statements of the respective companies commencing as of each such date. The
merger of SNB is scheduled for January of 1997 and CBI's merger is scheduled
for November 1996. The unaudited pro forma information does not purport to
represent what HHC's, SNB's and CBI's combined results of operations would have
been if the respective mergers had occurred as of the dates indicated or will
be for any future period. The selected unaudited pro forma financial
information should be read in conjunction with the Unaudited Pro Forma Combined
Financial Statements and notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
-------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SOUTHEAST NATIONAL BANK (HISTORICAL)
INCOME STATEMENT DATA:
Net interest income $874 $805 $1,634 $1,531 $1,538 $1,307 $1,042
Provision for loan losses 0 0 (134) 0 0 0 60
Net income 258 278 712 464 609 222 207
BALANCE SHEET DATA:
Total assets (period end) $37,082 $32,889 $34,598 $31,279 $30,520 $31,751 $32,653
Net Loans 23,751 20,549 21,565 20,331 17,932 15,888 16,840
Deposits 32,975 29,049 30,450 28,017 27,380 29,224 30,267
Stockholders' equity (period end) 3,813 3,551 3,809 3,026 2,898 2,289 2,067
PER SHARE DATA:
Earnings Per Share $0.56 $0.60 $1.56 $1.02 $1.33 $0.49 $0.45
Dividends Declared 0.50 0.00 0.50 0.00 0.00 0.00 0.00
Dividends Paid 0.50 0.00 0.50 0.00 0.00 0.00 0.00
Shares Outstanding 456,518 456,518 456,518 456,518 456,518 456,518 456,518
SELECTED RATIOS:
Return on Average Assets 1.39% 1.69% 2.02% 1.49% 1.49% 0.47% 0.45%
Return on Average Equity 13.53% 15.66% 19.36% 15.52% 17.93% 6.98% 7.28%
Equity to Assets 10.28% 10.80% 11.01% 9.67% 9.50% 7.21% 6.33%
Dividend Payout 88.47% 0.00% 32.06% 0.00% 0.00% 0.00% 0.00%
HANCOCK HOLDING COMPANY (HISTORICAL)
INCOME STATEMENT DATA:
Net interest income $52,496 $49,252 $100,367 $86,282 $85,319 $81,819 $62,702
Provision for loan losses 1,801 1,177 4,425 1,998 4,632 7,978 5,003
Net income 15,800 13,392 27,017 23,130 24,862 21,410 13,883
BALANCE SHEET DATA:
Total assets (period end) $2,276,357 $2,207,190 $2,234,286 $2,026,929 $1,988,125 $1,899,709 $1,719,805
Net Loans 1,070,561 993,125 1,034,977 925,665 921,925 839,613 812,161
Deposits 1,939,115 1,901,514 1,927,681 1,775,664 1,759,189 1,693,255 1,512,365
Stockholders' equity (period end) 234,447 214,962 224,179 182,277 166,712 148,822 132,731
PER SHARE DATA:
Earnings Per Share $1.78 $1.51 $3.05 $2.86 $3.07 $2.65 $2.08
Dividends Declared 0.50 0.46 0.96 0.92 0.90 0.68 0.60
Dividends Paid 0.50 0.46 0.96 0.92 0.90 0.68 0.60
Shares Outstanding 8,880 8,879 8,853 8,099 8,093 8,093 6,665
SELECTED RATIOS:
Return on Average Assets 1.37% 1.23% 1.22% 1.13% 1.27% 1.17% 0.84%
Return on Average Equity 14.09% 12.62% 12.50% 13.22% 15.61% 15.18% 13.09%
Equity to Assets 10.30% 9.74% 10.03% 8.99% 8.39% 7.83% 7.72%
Dividend Payout 28.55% 30.99% 32.06% 31.90% 28.03% 24.82% 25.25%
HANCOCK HOLDING COMPANY (PRO FORMA)
(Unaudited)
INCOME STATEMENT DATA:
Net interest income $54,664 $50,623 $104,673
Provision for loan losses 1,821 1,177 4,291
Net income 15,996 13,290 27,309
BALANCE SHEET DATA:
Total assets (period end) $2,409,862 $2,272,961 $2,303,422
Net Loans 1,130,654 1,047,527 1,091,432
Deposits 2,051,510 2,004,338 2,040,381
Stockholders' equity (period end) 254,631 227,618 237,358
PER SHARE DATA:
Earnings Per Share $1.70 $1.41 $2.90
Dividends Declared 0.50 0.46 0.96
Dividends Paid 0.50 0.46 0.96
Shares Outstanding 9,432 9,431 9,405
SELECTED RATIOS:
Return on Average Assets 1.34% 1.20% 1.21%
Return on Average Equity 12.83% 12.26% 12.28%
Equity to Assets 10.57% 10.01% 10.30%
Dividend Payout 29.48% 32.64% 33.06%
Shares Outstanding 9,432 9,432 9,405 8,651 8,645 8,645 7,217
Book Value $27.00 $24.13 $25.24 $0.00 $0.00 $0.00 $0.00
EPS $1.70 $1.41 $2.90 $0.00 $0.00 $0.00 $0.00
SOUTHEAST
(Unaudited)
INCOME STATEMENT DATA:
Net interest income $785 $799 $1,480 $1,528 $1,538 $1,307 $1,042
Provision for loan losses 0 0 (134) 0 0 0 60
Net income 258 273 671 463 609 222 207
BALANCE SHEET DATA:
Total assets (period end) $37,081 $32,882 $34,538 $31,279 $30,520 $31,751 $32,653
Stockholders' equity (period end) 3,812 3,544 3,749 3,026 2,898 2,289 2,067
SELECTED RATIOS:
Return on Average Assets 2.02% 1.49% 1.49% 0.47% 0.45%
Return on Average Equity 19.36% 15.52% 17.93% 6.98% 7.28%
Equity to Assets 10.85% 9.67% 9.50% 7.21% 6.33%
</TABLE>
6
<PAGE> 18
COMPARATIVE PER SHARE DATA (UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA SNB
---------------------------- with CBI and PRO FORMA
HHC SNB SNB EQUIVALENT
-------- -------- ------------- ------------
<S> <C> <C> <C> <C>
PER COMMON SHARE:
NET INCOME
For the six months
ended June 30,
1996 $1.78 $0.56 $1.70 $0.40 *
1995 1.51 0.60 1.41 0.33 *
For the years ended
December 31, 1995 $3.05 $1.56 $2.90 $0.68 *
CASH DIVIDENDS PAID
For the six months
ended June 30,
1996 $0.50 $0.50 $0.50 $0.12 *
1995 0.46 0.00 0.46 0.11 *
For the years ended
December 31, 1995 $0.96 $0.50 $0.96 $0.23 *
December 31, 1994 0.92 0.00 0.92 0.22 *
December 31, 1993 0.90 0.00 0.90 0.21 *
December 31, 1992 0.68 0.00 0.68 0.16 *
December 31, 1991 0.60 0.00 0.60 0.14 *
BOOK VALUE
June 30,
1996 $26.40 $8.35 $27.00 $6.33
1995 24.21 7.78 24.82 5.82
December 31, 1995 25.24 8.34 25.95 6.09
</TABLE>
* SNB pro forma equivalents were calculated by taking HHC historical amounts
and multiplying times the stock conversion rate of 0.2345.
7
<PAGE> 19
RECENT STOCK PRICES
There is no established public trading market for the SNB Common
Stock. The SNB Common Stock is not traded on any exchange and is not quoted on
an automated system of a registered securities association. Since January 1,
1994 SNB paid cash dividends on SNB Common Stock in the aggregate amount of
$1.00 per share. See "CERTAIN INFORMATION CONCERNING SNB -- Stock Prices and
Dividends."
HHC Common Stock is traded in the over-the-counter market and quoted
on the NASDAQ National Market System under the symbol "HBHC." The following
table sets forth the per share high and low sale prices of HHC Common Stock as
reported on the NASDAQ National Market System for the periods indicated. These
prices do not reflect retail mark-ups, mark-downs or commissions. The
following table also gives the amount of cash dividends paid on HHC Common
Stock for the time periods indicated.
<TABLE>
<CAPTION>
HIGH BID LOW BID CASH
OR LAST OR LAST DIVIDENDS
SALE PRICE SALE PRICE PAID
----------- ---------- ---------
1994
<S> <C> <C> <C>
1st Quarter $33.00 $28.50 $0.23
2nd Quarter $29.75 $26.25 $0.23
3rd Quarter $30.00 $28.00 $0.23
4th Quarter $30.00 $28.50 $0.23
1995
1st Quarter $30.25 $28.75 $0.23
2nd Quarter $31.75 $29.25 $0.23
3rd Quarter $36.75 $30.75 $0.25
4th Quarter $38.00 $35.50 $0.25
1996
1st Quarter $37.50 $35.75 $0.25
2nd Quarter $40.50 $36.25 $0.25
3rd Quarter $38.00 $36.25 $0.25
</TABLE>
The parties entered into the Merger Agreement as of Wednesday, July
31, 1996. On Tuesday, July 30, 1996, the reported closing sales price of HHC
Common Stock was $36.75. On November 1, 1996, the reported closing sales
price was $40.50. On June 30, 1996, HHC's 9,021,901 outstanding shares of
common stock were owned by 4,534 shareholders of record.
As a bank holding company, HHC depends on dividend payments from its
subsidiary banks, Hancock Bank and Hancock Bank MS, in order to meet its
obligations and to pay dividends. The payment of dividends from the banks to
HHC is regulated and restricted by the bank's primary regulators. Information
about restrictions on the ability of HHC to pay dividends is contained in Item
1 of HHC's 1995 Annual Report on Form 10-K under the caption "Federal
Regulation", which information is incorporated herein by reference.
8
<PAGE> 20
EFFECT OF THE BANK MERGER ON RIGHTS OF SHAREHOLDERS
Certain differences exist in the rights of holders of HHC Common Stock
and holders of SNB Common Stock. These differences relate primarily to the
number, term and removal of directors; changes in control of HHC;
indemnification of directors, officers and employees of HHC; and amending the
Articles of Incorporation and Bylaws of HHC and SNB. See "CERTAIN INFORMATION
CONCERNING HHC," "DESCRIPTION OF HHC CAPITAL STOCK" and "COMPARATIVE RIGHTS OF
SHAREHOLDERS."
RESALES OF HHC COMMON STOCK BY AFFILIATES
The HHC Common Stock to be issued in connection with the Bank Merger
has been registered under the Securities Act and will be freely transferable,
except that certain resale restrictions apply to the sale or transfer of HHC
Common Stock issued pursuant to the Merger Agreement to directors, officers,
and other affiliates of SNB. See "INFORMATION CONCERNING THE BANK MERGER --
Status Under Federal Securities Laws; Certain Restrictions on Resales of
Securities."
ACCOUNTING TREATMENT
HHC and SNB intend to account for the Bank Merger as a purchase
transaction under generally accepted accounting principles. Accordingly, the
earnings of SNB will be combined with the earnings of Hancock Bank from and
after the Effective Date of the Bank Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through charges to
income in future periods. See "INFORMATION CONCERNING THE BANK MERGER --
Accounting Treatment."
GENERAL INFORMATION
INTRODUCTION
This Prospectus/Proxy Statement is being furnished on or about
November 8, 1996 to the shareholders of SNB in connection with the solicitation
of proxies on behalf of the Board of Directors of SNB for use at a Special
Meeting of the Shareholders of SNB, to be held at the offices of SNB, 1855 S.
Morrison Blvd., Hammond, Louisiana, on January 7, 1997, at 1:00 p.m., local
time, and at any adjournment thereof. A Notice of Special Meeting for SNB is
attached hereto and a proxy card relating to the Special Meeting accompanies
this Prospectus/Proxy Statement.
PURPOSE OF THE SPECIAL MEETING
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Reorganization, and
related Bank Merger Agreement (collectively, the "Merger Agreement"), pursuant
to which (a) SNB will be merged with and into Hancock Bank (the "Bank Merger")
and (b) each outstanding share of SNB Common Stock will be converted into the
right to receive 0.2345 shares of HHC common stock, $3.33 par value ("HHC
Common Stock") and $7.9652 in cash; provided, however, each holder of SNB
Common Stock who would otherwise receive 25 or fewer shares of HHC Common Stock
shall not be entitled to receive HHC Common Stock but rather shall be entitled
to receive $16.70 for each share of SNB Common Stock, however, depending on
the value of the HHC Common Stock at closing, the par share value of the
consideration to be received by the de minimus shareholders ($16.70) may be
greater or less than the per share value payable to the non-de minimus
shareholders; provided further, in the event the aggregate amount of cash to be
paid, including cash in lieu of fractional shares, cash paid to those SNB
shareholders who would otherwise receive 25 or fewer shares of HHC Common
Stock, and cash paid to dissenting shareholders who perfect their rights,
exceeds 49% of the aggregate consideration, the exchange ratio shall be
adjusted proportionately to ensure that the maximum aggregate amount of cash to
be paid
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<PAGE> 21
does not exceed $3,735,760 (49% of the aggregate consideration), all in
accordance with the Merger Agreement. See "GENERAL INFORMATION -- Purpose of
the Special Meeting."
SOLICITATION, VOTING AND REVOCATION OF PROXIES
When a proxy in the form accompanying this Prospectus/Proxy Statement
is properly executed and returned, the shares voted thereby will be voted in
accordance with the instructions marked thereon. ALL EXECUTED BUT UNMARKED
PROXIES THAT ARE RETURNED WILL BE VOTED "FOR" THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT AND THE BANK MERGER.
No matters are expected to be considered at the Special Meeting other
than the proposal to approve the Merger Agreement, but if any other matters
should properly come before the Special Meeting, it is intended that proxies in
the form accompanying this Prospectus/Proxy Statement will be voted on all such
matters in accordance with the judgment of the person(s) voting such proxies.
Any proxy may be revoked at any time before it is voted. A
shareholder may revoke a proxy: (i) by submitting a subsequently dated proxy;
(ii) by giving written notice of such revocation to the Secretary of SNB,
provided that such notice is received by such Secretary at the principal
offices of SNB prior to the date of the Special Meeting, or (iii) upon request,
if such shareholder is present at the Special Meeting and advises the
inspector(s) of election that he is revoking a proxy. Mere attendance at the
Special Meeting will not of itself revoke a previously submitted proxy.
Revocation of a proxy will not affect a vote on any matter taken prior to
receipt of such revocation.
The cost of soliciting these proxies, including any and all
professional fees paid to attorneys and accountants in connection with the
preparation and filing with the SEC of this Prospectus/Proxy Statement and
other proxy materials, and the cost of printing and mailing these proxy
materials, will be borne by SNB. In addition to the use of the mails, proxies
may be solicited personally, by telephone, telecopier, or telegram by
directors, officers and employees of SNB. Such officers, directors and
employees will continue to receive any compensation from SNB to which they are
entitled by virtue of their employment or status as an officer or director, but
will not receive any additional fee, compensation, or other remuneration for
soliciting proxies in connection with the Special Meeting.
SHARES ENTITLED TO VOTE; QUORUM; VOTE REQUIRED
The Board of Directors of SNB have fixed the close of business on
November 1, 1996, as the record date for the determination of SNB shareholders
entitled to notice of and to vote at the Special Meeting. As of the Record
Date, there were 456,518 shares of SNB Common Stock outstanding. Each share of
SNB Common Stock is entitled to one vote on all matters to come before the
Special Meeting.
With respect to all matters to come before the Special Meeting, the
presence at the Special Meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of SNB Common Stock is necessary to
constitute a quorum.
VOTE REQUIRED
Approval of the Merger Agreement will require the affirmative vote of
the holders of at least two-thirds of the outstanding shares of SNB Common
Sock, in person or by proxy, at the Special Meeting. Each shareholder of SNB
Common Stock is entitled to one vote for each share owned by him. As of the
Record Date, directors and executive officers of SNB and their affiliates were
the beneficial owners of approximately 20.35% of the outstanding SNB Common
Stock entitled to vote at the Special Meeting. As a condition to consummation
of the Bank Merger, certain directors and shareholders of SNB have executed
agreements ("Joinder Agreements") with HHC, which,
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<PAGE> 22
among other things, obligates each such director or shareholder to vote his
shares of SNB Common Stock in favor of the approval and adoption of the Merger
Agreement. As of the Record Date, the 10 persons who have executed Joinder
Agreements beneficially owned an aggregate of 20.35% of the outstanding SNB
Common Stock. Under Mississippi law, shareholders of HHC are not required to
approve the Merger Agreement. See "GENERAL INFORMATION -- Shares Entitled to
Vote; Quorum; Vote Required."
INFORMATION CONCERNING THE BANK MERGER
GENERAL
The transactions contemplated by the Merger Agreement are to be
effected in accordance with the terms and conditions of the Merger Agreement, a
copy of which is attached hereto as Appendix A. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement.
The ultimate result of the transactions contemplated by the Merger
Agreement will be that the business and properties of SNB will become the
business and properties of HHC and Hancock Bank with all the banking facilities
of SNB becoming branches of Hancock Bank and the shareholders of SNB will
become shareholders of HHC (except for holders of SNB Common Stock who would
otherwise receive 25 or fewer shares of HHC Common Stock, and dissenting
shareholders who will receive cash in exchange for their shares of SNB Common
Stock).
BACKGROUND OF AND REASONS FOR THE BANK MERGER
Background. During the last several years there have been significant
developments in the banking industry. These developments have included the
increased emphasis and dependence on automation, specialization of products and
services, increased competition from other financial institutions, and a trend
toward consolidation and geographic expansion. SNB and its Board of Directors
concluded that they could best serve their shareholders, employees, customers
and communities by combining with a regional banking organization, provided
that SNB could obtain a fair price for its shareholders. Accordingly, in the
spring of 1996, representatives of SNB and HHC entered into extensive
negotiations which ultimately led to the execution of a Letter of Intent on
July 18, 1996. After further negotiations, the parties entered into the Merger
Agreement dated as of July 31, 1996.
Reasons for the Merger. In deciding to enter into the Merger
Agreement, the Board of Directors of SNB, after considering various
alternatives, concluded that the Merger Agreement was in the best interest of
SNB and its shareholders because it would permit shareholders to exchange on
favorable terms their ownership interests in SNB for participation in the
ownership of a regional banking organization operating on a multi-state basis.
The Board of Directors also concluded that the shareholders of SNB
would benefit additionally from the Bank Merger in that they would attain
greater liquidity in their investment by obtaining shares of stock of a
corporation whose securities are more widely held and significantly more
actively traded.
SNB's Board of Directors consulted with their financial and other
advisors, as well as with SNB's management and considered a number of factors,
including, but not limited to, the following: (i) the parties' respective
earnings and dividend records, financial conditions, historical stock prices
and managements; (ii) the market for SNB's services and the competitive
pressures existing in SNB's market area; (iii) the outlook for SNB in the
financial institutions industry; (iv) the amount and type of consideration to
be received by SNB's shareholders pursuant to the Merger Agreement; (v) the
fact that HHC Common Stock to be received pursuant to the Merger Agreement will
be listed for trading on the NASDAQ National Market and should provide SNB's
shareholders with liquidity that is currently unavailable to them; (vi) recent
changes in the regulatory environment will result in SNB facing additional
competitive pressures in its market area from other financial institutions with
greater financial
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<PAGE> 23
resources capable of offering a broad array of financial services; and (vii)
the Bank Merger is expected to qualify as tax-free reorganizations so that
neither SNB nor its shareholders (except to the extent that cash is received in
respect of their shares) will recognize any gain in the transaction upon
consummation of the Bank Merger. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES
OF THE BANK MERGER."
SNB's Board of Directors assigned no specific or relative weight to
the foregoing factors in its considerations. SNB's Board of Directors believes
that the Merger Agreement will provide significant value to all SNB
shareholders and will enable them to participate in opportunities for growth
that SNB's Board of Directors believes the Bank Merger makes possible.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS OF SNB HAS APPROVED THE
MERGER AGREEMENT AND BANK MERGER, BELIEVE THAT THE BANK MERGER IS IN THE BEST
INTEREST OF SNB'S SHAREHOLDERS, AND RECOMMENDS THAT ALL SHAREHOLDERS OF SNB
VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR
SNB retained Chaffe to act as its financial advisor in connection
with the Bank Merger in August, 1996. Chaffe was selected by SNB's Board of
Directors as the financial advisor on the basis of Chaffe's experience and
expertise in transactions similar to the Bank Merger and Chaffe's reputation in
the banking and investment communities. Chaffe is a recognized investment
banking firm and is experienced in the securities industry, in investment
analysis and appraisal, and in related corporate finance and investment banking
activities, including mergers and acquisitions, corporate recapitalization, and
valuations for estate, corporate and other purposes. Chaffe is frequently
retained to perform similar services for other banks and bank holding
companies.
In connection with Chaffe's engagement to act as SNB's financial
advisor with respect to the Bank Merger, SNB instructed Chaffe to evaluate the
fairness to SNB's shareholders, from a financial point of view, of the
Exchange Ratio, pursuant to the provisions of the Merger Agreement, and to
conduct such investigations as Chaffe deemed appropriate for such purposes. SNB
did not place any limitations on the scope or manner of Chaffe's investigation
and review. The Exchange Ratio to be received by SNB's shareholders in the
Bank Merger was determined by SNB and HHC in their negotiations.
Chaffe rendered its opinion to SNB's Board on November 1, 1996, to the
effect that, based upon and subject to the assumptions made, the factors
considered, the review undertaken and the limitations stated and based upon
such other matters as Chaffe considered relevant, on the date thereof, the
Exchange Ratio was fair, from a financial point of view, to the holders of SNB
Common Stock (the "Fairness Opinion").
The full text of Chaffe's Fairness Opinion is attached hereto as
Appendix B and is incorporated by reference. The summary description of the
Fairness Opinion set forth herein is qualified in its entirety by reference to
Appendix B. SNB's shareholders are urged to read the Fairness Opinion in its
entirety in connection with the Proxy Statement/ Prospectus for a description
of the procedures followed, assumptions made, matters considered and
limitations on the review undertaken by Chaffe. Chaffe's opinion relates only
to the Exchange Ratio to be received by SNB's shareholders, from a financial
point of view, and does not constitute a recommendation to any SNB shareholder
as to how such shareholder should vote at the Special Meeting.
In connection with rendering its opinion, Chaffe, among other things:
(i) reviewed the Proxy Statement/Prospectus in substantially the form to be
sent to shareholders, including a copy of the Merger Agreement; (ii) reviewed
and analyzed certain publicly-available financial statements and other
information of SNB and HHC, respectively; (iii) reviewed and analyzed certain
internal financial statements and other financial and operating data concerning
SNB, prepared by the management of SNB, including budget projections; (iv)
discussed the past and current operations and financial condition, and the
prospects of HHC and SNB with senior executives of HHC and SNB,
respectively; (v) reviewed the historical prices and trading volumes of the
shares of HHC Common Stock and SNB Common Stock; (vi) compared the financial
performance of SNB and HHC, and the prices and trading activity of the SNB
Common Stock and HHC Common Stock, with that of certain other comparable
publicly-traded companies and their securities; (vii) reviewed the financial
terms of business combinations in the commercial banking industry specifically
and other industries generally, which Chaffe deemed generally comparable to the
Merger; (viii) considered a number of valuation methods, including among
others, those that incorporate book value, deposit base premium and
capitalization of earnings; and (ix) performed such other studies and analyses
as Chaffe deemed appropriate to its opinion.
In its review, Chaffe relied, without independent verification, upon
the accuracy and completeness of the historical and projected financial
information, and all other information reviewed by it for the purposes of its
opinion. Chaffe did not make or obtain an independent review of SNB's or
HHC's assets or liabilities, nor was Chaffe furnished with any such appraisals.
Chaffe relied solely on SNB and HHC for information as to the adequacy of
their respective loan loss reserves and values of other real estate owned. With
respect to SNB's projected financial results, Chaffe has assumed that they
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of SNB of future financial
performance of SNB. HHC did not allow Chaffe to review any information other
than publicly-available information. The Fairness Opinion was necessarily based
upon market, economic and other conditions as they existed on, and could be
evaluated as of, the date thereof. Chaffe expressed no opinion on the tax
consequences of the proposed transaction or the effect of any tax consequences
on the value to be received by the holders of SNB Common Stock.
The following is a summary of selected analyses performed by Chaffe in
connection with its Fairness Opinion. The summary set forth below does not
purport to be a complete description of the analyses performed in this regard,
but does include all material analyses.
ANALYSIS OF SELECTED FINANCIAL DATA. Chaffe analyzed the historical
performances of SNB and HHC, and considered the current financial conditions,
operations and prospects for each company. Chaffe noted strengths of SNB,
including its consistent profitability and strong capital position. Chaffe
also noted SNB's high overhead expense relative to its peers. In regard to
HHC, Chaffe noted as of September 30, 1996, the return on average assets,
annualized for 1996, was 1.39%, and the return on average equity, also
annualized for 1996, was approximately 14.04%. HHC's efficiency ratio
year-to-date in 1996 improved to approximately 59.98%, from the 1995 ratio of
63.01%. Its Tier 1 equity to total assets as of September 30, 1996 was 9.83%,
and its ratio of nonperforming assets to total assets for that date was 0.38%.
Chaffe also reviewed HHC's history of bank acquisitions over the past 60
months, including the recently announced transaction with Community Bancshares,
Inc., Independence, Louisiana.
STOCK PRICE AND DIVIDEND REVIEW. Chaffe reviewed certain historical
market information for SNB Common Stock and noted that no independent market
exists for these shares. In addition, Chaffe reviewed the trading prices of
HHC Common Stock from January 1, 1995 to October 31, 1996, and noted that as of
October 31, 1996, the closing price of HHC Common Stock was $39.75, near its
52-week high of $41.00. Chaffe also compared the prices of HHC versus the
NASDAQ Bank index from January 1, 1995 to October 31, 1996.
Chaffe reviewed the dividend histories and current dividend levels of
SNB and HHC, and noted that SNB's and HHC's annual dividend per share were
$0.50 and $1.00, respectively. Chaffe determined that as of October 30, 1996,
based on the exchange ratio outlined in the Merger Agreement each share of SNB
Common Stock would receive an annual dividend on the portion of remuneration
received in HHC Common Stock of $0.23.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. In order to obtain a
valuation range for SNB, Chaffe performed an analysis of prices paid for
selected banks with characteristics comparable to SNB, although Chaffe noted
no transaction was identical to the Bank Merger then proposed. Comparable
transactions were considered to be transactions announced in the United States
for the period October 30, 1995 through October 30, 1996, in which the sellers
had total assets between $5 million and $60 million, a tangible equity ratio
between 9% and 13%, a return on average assets between 1.00% and 2.00%, and
nonperforming assets less than 1.5% of total assets. In addition, Chaffe
performed an analysis of prices paid for a similar group of selected banks,
limited in geographic areas to sixteen states in the southern United States.
Finally, Chaffe performed an analysis of prices paid for substantially all
Louisiana banks sold during the period October 30, 1995 through October 30,
1996. With respect to each of these groups of transactions and the proposed
Bank Merger, Chaffe compared the prices to be received by the peer groups as a
multiple of their tangible equity, their earnings per share for the four
quarters prior to the announcement of such a transaction, their premium over
tangible equity to core deposits, and their total assets. The following table
summarizes certain results of this analysis.
<TABLE>
<CAPTION>
Hancock/ U.S. SOUTHERN LOUISIANA
Southeast PEER GROUP PEER GROUP PEER GROUP
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Seller Total Assets ($000's)
o Mean $36,958 $36,149 $171,956
o Median $38,368 $36,144 $36,144 $112,508
Seller Tangible Equity 10.39% 10.28% 9.94% 9.32%
Seller YTD ROAA 1.47% 1.39% 1.37% 1.14%
Seller YTD ROAE 14.23% 14.03% 13.96% 13.46%
Seller NPA/Assets 0.76% 0.23% 0.26% 0.76%
Price/Tangible Equity 1.98x 1.61x 1.58x 2.13x
Price/4-Quarter EPS 14.46x 11.78x 11.77x 16.55x
Price-Tangible Equity/
Core Deposits 12.53% 8.94% 8.94% 13.06%
Price/Assets 20.55% 17.04% 17.34% 19.53%
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow analysis
of SNB, Chaffe determined the net present value for the SNB Common Stock based
on the stream of after-tax cash flows of SNB. This stream of after-tax cash
flows was based on annualized figures for SNB as of September 30, 1996, and
included assumptions relating to earnings and growth thereafter based on
information from the management of SNB. Chaffe reviewed these forecasts and
assessed the likelihood of SNB achieving such forecasts. Chaffe then
discounted these cash flow streams assuming an estimated required rate of
return for SNB of 15.9%.
In arriving at its Fairness Opinion, Chaffe did not rely on any single
analysis, but relied on a combination of factors derived from all of the
analytical procedures employed. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Conclusions based on these analyses are not necessarily
mathematical. Chaffe believes that the summary set forth above and Chaffe's
analysis must be considered as a whole and that selecting portions of its
analyses 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. Additionally, analyses relating to the value of
businesses do not purport to be appraisals or necessarily reflect the prices at
which businesses actually may be sold. The fact that any specific analysis has
been referred to in the summary above is not meant to indicate that such
analysis was given greater weight than any other analysis.
Neither Chaffe nor any of its officers or employees has any interest
in the Common Stock of SNB or HHC. SNB has paid Chaffe approximately $9,500
in fees plus out-of-pocket expenses for its services, including its services in
rendering the Fairness Opinion. For any other services requested of Chaffe by
SNB, SNB has agreed to pay Chaffe on an hourly basis. The fees received by
Chaffe in connection with its services to SNB were not dependent or contingent
upon the occurrence or lack thereof of any transaction.
SNB has agreed to indemnify and hold harmless Chaffe, its subsidiaries
and affiliates, and its officers, directors, shareholders, employees,
attorneys, agents and representatives, and the successor and assigns of each of
the foregoing parties from and against any person claiming to have relied on
Chaffe's advice or services, or the performance or nonperformance thereof, or
claiming to have been entitled to some benefit therefrom, or claiming that such
services were not adequately performed, and all related damage, claim, demand,
expense or cost of any kind or nature, including reasonable attorney fees and
expenses, arising directly or indirectly, from or in any way related to, the
opinions or any other services performed by Chaffe, provided that Chaffe has
not been negligent or guilty of reckless or willful misconduct in connection
with the opinion, or any other services.
CONVERSION OF SNB COMMON STOCK
The Merger Agreement between HHC, Hancock Bank, SNB provides as
follows:
i. On the Effective Date, each share of Common Stock,
$3.33 par value, of HHC issued and outstanding
immediately prior to the Effective Date will remain
outstanding and will continue to represent one share
of Common Stock, $3.33 par value, of HHC.
ii. On the Effective Date, each share of Common Stock,
$5.00 par value of SNB issued and outstanding
immediately prior to the Effective Date will, by
virtue of the Bank Merger and without any action on
the part of the holder thereof, be converted into the
right to receive 0.2345 shares of HHC Common Stock
and $7.9652 in cash; provided, however, each holder
of SNB Common Stock who would otherwise receive 25 or
fewer shares of HHC Common Stock shall not receive
HHC Common Stock but rather shall be entitled to
receive $16.70 for each share of SNB Common Stock,
however, depending on the value of the HHC Common
Stock at closing, the par share value of the
consideration to be received by the de minimus
shareholders ($16.70) may be greater or less than the
per share value payable to the non-de minimus
shareholders;
iii. As a result of the Bank Merger and without any action
on the part of the holder thereof, all shares of SNB
Common Stock will cease to be outstanding and will be
canceled and retired and will cease to exist, and
each holder of a Certificate representing any shares
of SNB Common Stock will thereafter cease to have any
rights with respect to such shares of SNB Common
Stock, except the right to receive, without interest,
the HHC Common Stock and/or cash in accordance with
Section 3.1(b) of the Merger Agreement and cash for
fractional shares of HHC Common Stock in accordance
with Section 3.2(e) of the Merger Agreement upon the
surrender of such Certificate.
No fractional shares of HHC Common Stock will be issued pursuant to
the Merger Agreement. In lieu of the issuance of any fractional share of HHC
Common Stock, cash adjustments will be paid to holders in respect of any
fractional share of HHC Common Stock that would otherwise be issuable, and the
amount of such cash adjustment will be equal to such fractional part of a share
of HHC's Common Stock multiplied by $37.25.
EFFECTIVE DATE
The closing (the "Closing") of the transactions contemplated by the
Merger Agreement will take place at Hancock Bank's office at 3854 American Way
in Baton Rouge, Louisiana on a date that is mutually agreed to by HHC and SNB
("Closing Date") that is within thirty (30) days following the later of the
date of receipt of all applicable regulatory approvals relating to the
transactions contemplated herein, the expiration of all applicable
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<PAGE> 24
statutory and regulatory waiting periods relative thereto, or the date the
Registration Statement filed with the SEC is declared effective, or such later
date as may be agreed to by SNB and HHC.
Immediately upon consummation of the Closing, or on such other later
date as the parties may agree, the Bank Merger Agreement will be certified,
executed, acknowledged and delivered to the OFI for filing pursuant to and in
accordance with the provisions of Section 6:352 of the Louisiana Banking Laws.
The Bank Merger shall become effective as of the date and time specified or
permitted by the OFI in a Certificate of Merger or other written record issued
by the OFI.
EXCHANGE OF CERTIFICATES
As of the Effective Date, HHC will deposit or cause to be deposited
with the Exchange Agent for the benefit of the holders of shares of SNB Common
Stock, pursuant to the Merger Agreement, certificates representing the shares
of HHC Common Stock and cash (such certificates for shares of HHC Common Stock
and cash being hereinafter referred to as the "Exchange Fund") to be issued and
paid, respectively, pursuant to the Merger Agreement in exchange for
outstanding shares of SNB Common Stock.
Promptly after the Effective Date, HHC will cause the Exchange Agent
to mail to each holder of record of a Certificate(s) of SNB Common Stock (other
than those representing shares with respect to which the holder thereof has
perfected appraisal rights under 12 USC Section 214a and has not subsequently
lost, withdrawn or forfeited such rights):
0.1 A letter of transmittal which will specify that delivery
shall be effected, and the risk of loss and title to the
Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and will be in such form
and have such other provisions as HHC may reasonably
specify; and
0.2 Instructions for use in effecting the surrender of the
Certificates in exchange for Certificates representing
shares of HHC Common Stock and/or cash, and cash in lieu
of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate will
be entitled to receive in exchange therefor (i) a certificate representing that
number of whole shares of HHC Common Stock; and (ii) a check representing the
amount of cash and cash in lieu of fractional shares, if any, which such holder
has the right to receive in respect of the Certificates surrendered, after
giving effect to any required withholding tax, and the Certificate so
surrendered shall then be canceled. No interest will be paid or accrued on the
value of any HHC Common Stock or cash payable to holders of Certificates. In
the event of a transfer of ownership of SNB Common Stock which is not
registered in the transfer records of SNB, a certificate representing the
proper number of shares of HHC Common Stock together with a check for the cash
component of the Exchange Ratio and cash to be paid in lieu of fractional
shares, if any, may be issued to such a transferee if the Certificate
representing such SNB Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid.
No dividends on HHC Common Stock will be paid with respect to any
shares of SNB Common Stock represented by a certificate until such certificate
is surrendered for exchange as described above. Subject to the effect of
applicable laws, following surrender of any such Certificate, there will be
paid to the holder of the certificates representing whole shares of HHC Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Date theretofore payable with respect to such whole shares
of HHC Common Stock and not paid, less the amount of any
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<PAGE> 25
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Date but prior to surrender and a payment date subsequent
to surrender payable with respect to such whole shares of HHC Common Stock,
less the amount of any withholding taxes which may be required thereon.
On or after the Effective Date, there will be no transfers on the
stock transfer books of SNB of the shares of SNB Common Stock which were
outstanding immediately prior to the Effective Date. If, after the Effective
Date, Certificates are presented to HHC, they will be canceled and exchanged
for certificates for shares of HHC Common Stock and/or cash, as appropriate,
and cash in lieu of fractional shares, if any, deliverable in respect thereof
pursuant to the Merger Agreement. Certificates surrendered for exchange by any
person constituting an "affiliate" of SNB for purposes of Rule 145(c) under the
Securities Act will not be exchanged until HHC has received a written agreement
from such person as provided in the Merger Agreement.
No fractional shares of HHC Common Stock will be issued pursuant to
the Merger Agreement. In lieu of the issuance of any fractional share of HHC
Common Stock, cash payments will be paid to holders in respect of any
fractional share of HHC Common Stock that would otherwise be issuable, and the
amount of such cash adjustment will be equal to such fractional proportion of
$37.25.
In the event that any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by HHC, the
posting by such person of a bond in such reasonable amount as HHC may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of HHC Common Stock and cash in lieu of
fractional shares, if any, and unpaid dividends and distributions on shares of
HHC Common Stock as provided in the Merger Agreement, deliverable in respect
thereof pursuant to the Merger Agreement.
In the event that, subsequent to the date of the Merger Agreement but
prior to the Effective Date, SNB or HHC changes the number of shares of SNB
Common Stock or HHC Common Stock, respectively, issued and outstanding as a
result of a stock split, reverse stock split, stock dividend, recapitalization
or other similar transaction, the Exchange Ratio will be appropriately
adjusted.
REGULATORY APPROVALS AND OTHER CONDITIONS TO THE BANK MERGER
The Bank Merger is subject to approval by the FDIC and the OFI.
On or about September 16 and 19, 1996, Hancock Bank filed with the FDIC and the
OFI, respectively, an application seeking approval to merger SNB into Hancock
Bank. As of the date of this Prospectus/Proxy Statement, neither the FDIC
nor the OFI had approved the application for the Bank Merger. The Bank Merger
cannot be consummated for thirty days after approval thereof by the FDIC, and
during such period, the Justice Department may challenge the merger of SNB into
Hancock Bank on antitrust grounds.
There can be no assurance that any applicable regulatory authority
will approve or take other required action with respect to the Bank Merger or
as to the date of such regulatory approval or other action. HHC and SNB are
not aware of any governmental approvals or actions that are required in order
to consummate the Bank Merger
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except as described herein. Should such other approval or action be required,
it is contemplated that HHC and SNB would seek such approval or action. There
can be no assurance as to whether or when any such other approval or action, if
required, could be obtained.
In addition to the receipt of all necessary regulatory approvals, the
expiration of all required notice and waiting periods following the granting of
such approvals, and the approval of the Merger Agreement by the requisite vote
of the shareholders of SNB, consummation of the Bank Merger is subject to the
satisfaction of certain other conditions on or before the Effective Date of the
Bank Merger. Generally, such additional conditions include, among others, the
following: (i) the Prospectus/Proxy Statement must have been filed with the
SEC and must have been cleared thereby or otherwise authorized for mailing, and
the Registration Statement must have been filed with and declared effective by
the SEC and shall not be the subject of any stop order or proceedings seeking a
stop order; (ii) no action or proceeding shall have been threatened or
instituted before a court or other governmental body to restrain or prohibit
the transactions contemplated by the Merger Agreement and no governmental
agency shall have given notice that consummation of the Bank Merger would
constitute a violation of any law; and (iii) SNB has received from Watkins
Ludlam & Stennis, P.A., an opinion of counsel as to certain tax aspects of the
transactions contemplated by the Merger Agreement.
The obligations of SNB to effect the Bank Merger are subject to
conditions as set forth in Article 8 of the Merger Agreement, to the effect,
among others, as follows: (i) Each of the representations and warranties of
HHC in the Merger Agreement is true and correct in all material respects on and
as of the Closing; (ii) HHC has in all material respects performed all
obligations required by the Merger Agreement to be performed prior to the
Closing; (iii) there has not been a material adverse change in the financial
condition, results of operations or business of HHC; and (iv) SNB has received
from Watkins Ludlam & Stennis, P.A., special counsel to HHC, an opinion dated
as of the Closing Date to the effect, among others, that HHC is duly
incorporated, validly existing and in good standing under the laws of the State
of Mississippi, and has corporate authority to own and operate its businesses
and properties and to carry on its business as presently conducted by it;
Hancock Bank is duly organized and validly existing and in good standing under
the laws of the State of Louisiana, and has corporate authority to own and
operate its businesses and properties and to carry on its business as presently
conducted by it; HHC and Hancock Bank had and have corporate authority to make,
execute and deliver the Merger Agreement and it has been duly authorized and
approved by all necessary corporate action of HHC and Hancock Bank and is as
of the Closing its valid and binding obligation subject, however, to
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights generally and to the availability of equitable remedies in general; all
required regulatory approvals have been obtained; to such counsel's knowledge
after inquiry, there is no litigation or proceeding pending or threatened
against HHC relating to the participation in or consummation of the Merger
Agreement by HHC and consummation will not violate any other contract,
agreement, charter or by-law provision of HHC; and all shares of HHC Common
Stock to be issued in the Bank Merger have been duly authorized and when issued
will be validly and legally issued, fully paid and non-assessable and will be
free and clear of all liens, charges, security interests, mortgages, pledges
and other encumbrances and any preemptive or similar rights.
The obligations of HHC to effect the Bank Merger are subject to
certain conditions as set forth in Article 8 of the Merger Agreement to the
effect, among others, as follows: (i) Each of the representations and
warranties of SNB contained in the Merger Agreement is true and correct in all
material respects on and as of the Closing; (ii) SNB have in all material
respects performed all obligations required by the Merger Agreement to be
performed prior to the Closing; (iii) there has not been a material adverse
change in the financial condition, results of operations or business of SNB;
and (iv) HHC has received from SNB's legal counsel an opinion dated as of the
Closing Date to the effect, among others, that SNB is duly incorporated,
validly existing and in good standing under the laws of the United States of
America, and has corporate authority to own and operate its businesses and
properties and to carry on its business as presently conducted by it; SNB had
and have corporate authority to make, execute and deliver the Merger Agreement
and it has been duly authorized and approved by all necessary corporate action
of SNB and has been duly executed and delivered and as of the Closing Date is
its valid and binding
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obligation subject, however, to bankruptcy, insolvency and similar laws
affecting the enforcement of creditors' rights generally and to the
availability of equitable remedies in general; to such counsel's knowledge
after inquiry, there is no litigation or proceeding pending or threatening
against SNB relating to the participation in or consummation of the Merger
Agreement by SNB and consummation will not violate any other contract,
agreement, charter or by-law of SNB, and SNB has complied with all laws and
regulations relating to dissenter's rights and all stock in SNB will be
acquired by HHC pursuant to the terms of the Merger Agreement.
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE DATE
Pursuant to the Merger Agreement, between the date thereof and the
Effective Date, SNB will use its best efforts to preserve its existing business
and to keep its business organization intact, including its present
relationships with its employees and customers and others having business
relations with it. Furthermore, SNB has agreed to operate its business solely
in the ordinary course and to comply with all applicable laws, regulations and
rules. Without the prior written consent of HHC, SNB has agreed not to: (i)
Amend or otherwise change its respective Articles of Incorporation or Bylaws,
as each such document is in effect on the date of the Merger Agreement; (ii)
Issue or sell, or authorize for issuance or sale, any additional shares of any
class of capital stock of SNB; (iii) Issue, grant or enter into any
subscription, option, warrant, right, convertible security, or other agreement
or commitment of any character obligating SNB to issue securities; (iv)
declare, set aside, make, or pay any dividend or other distribution with
respect to its capital stock, provided, however, in the event the Closing
occurs on a date which will not allow the SNB shareholders who will receive HHC
Common Stock to be of record for purposes of receiving HHC's first quarter 1997
dividend, then SNB may, to the extent lawfully permitted, declare and pay
dividends for the purpose of allowing SNB shareholders to receive 25% of the
normal and customary annual dividend in an amount not to exceed $.125 per
outstanding share of SNB Common Stock; (v) redeem, purchase, or otherwise
acquire, directly or indirectly, any of its capital stock respectively; (vi)
authorize any capital expenditures which, individually or in aggregate, exceed
$20,000, provided, however, SNB may purchase a tail on the current SNB
directors and officers policy for a three year period; (vii) except in the
ordinary course of business, sell, pledge, dispose of, or encumber, or agree to
sell, pledge, dispose of, or encumber any assets of SNB; (viii) excluding
normal and customary banking transactions, incur any indebtedness for borrowed
money, issue any debt securities, or enter into or modify any contract,
agreement, commitment, or arrangement with respect thereto; (ix) amend its
Articles of Incorporation or Bylaws, or establish or add any automated teller
machines or branch or other banking offices or take any action that will
materially and adversely affect the ability of any party to the Merger
Agreement to obtain the approvals necessary for consummation of the
transactions contemplated thereby or that would materially and adversely affect
SNB's ability to perform its covenants and agreements thereunder; (x) acquire
(by merger, consolidation, lease or other acquisition of stock, ownership
interests or assets) any corporation, partnership, or other business
organization or division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing; (xi) enter
into, amend, or terminate any employment agreement, relationship or
responsibilities with any director, officer or key employee or representative
of SNB, or enter into, amend, or terminate any employment agreement with any
other person otherwise than in the ordinary course of business, or take any
action with respect to the grant or payment of any severance or termination pay
except as expressly consented to in writing by HHC; (xii) enter into, extend,
or renew any lease for office or other space; (xiii) except as required by law,
enter into, adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment, or other
employee benefit plan, agreement, trust, fund, or arrangement for the benefit
or welfare of any officer, employee or representative of SNB; (xiv) grant any
increase in compensation to any director, officer, employee or representative
of SNB except in the ordinary course of business consistent with past practice,
provided, however, SNB may: (i) provide for a 3% contribution of payroll to
SNB's 401-K Plan in an amount not to exceed $13,300; (ii) declare and pay
employee bonuses in an amount not to exceed $12,000 in the aggregate; and (iii)
declare and pay director bonuses in an amount not to exceed $1,000 per
director; (xv) take any action or omit to take any action which would cause any
of SNB's representations or warranties to be untrue or misleading in any
material respect or any covenant of SNB under the Merger Agreement incapable of
being performed; or (xvi) agree in writing or otherwise to do any of the
foregoing.
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In addition, between the date of the Merger Agreement and the
Effective Date, SNB will not authorize nor knowingly permit any of its
officers, directors, employees, representatives, agents or other persons
controlled by SNB to directly or indirectly, encourage or solicit or, hold any
discussions or negotiations with, or provide any information to, any persons,
entity, or group concerning any merger, consolidation, sale of substantial
assets, sale of shares of capital stock or similar transactions involving,
directly or indirectly, SNB except as contemplated by the Merger Agreement.
SNB will promptly communicate to HHC the identity and terms of any proposal
which it may receive with respect to any such transaction.
WAIVER, AMENDMENT AND TERMINATION
SNB and HHC may waive their respective rights, powers or privileges
under the Merger Agreement provided, however, that any such waiver is in
writing. The Merger Agreement may be amended or modified only upon written
agreement subscribed by both SNB and HHC.
The Merger Agreement may be terminated either before or after approval
of the Merger Agreement by SNB's shareholders upon the occurrence of certain
events including, among others, the following: (i) at any time on or prior to
the Effective Date, by the mutual consent in writing of a majority of the
members of the Board of Directors of SNB, HHC and Hancock Bank; (ii) by either
HHC or SNB, in writing, if the Bank Merger has not become effective on or
before March 31, 1997, unless such expiration date has been mutually extended
or unless the absence of such effectiveness is due to the failure of the party
seeking to terminate the Merger Agreement to perform each of its obligations
required by the Merger Agreement to be performed on or prior to the Effective
Date; (iii) by either party to the Merger Agreement in the event of a breach by
the other party (a) of any covenant or agreement contained therein or (b) of
any representation or warranty therein, if the facts constituting such breach
reflect a material adverse change in the financial condition, results of
operations or business taken as a whole, of the breaching party, which in
either case cannot be or is not cured within sixty (60) days after written
notice of such breach is given to the party committing such breach, or in the
event of a breach of a warranty or covenant, such breach results in a material
increase in the cost of the non-breaching party's performance of the Merger
Agreement; (iv) by HHC, Hancock Bank or SNB at any time after the FRB, FDIC,
OCC, OFI or United States Department of Justice has denied any application for
any approval or clearance required to be obtained as a condition to the
consummation of the Bank Merger and the time period for all appeals or requests
for reconsideration has run; (v) by SNB, HHC or Hancock Bank if the Bank Merger
is not approved by the required vote of SNB's shareholders; and (vi) by HHC if
holders of ten percent or more of the outstanding SNB Common Stock exercise
statutory rights of dissent and appraisal pursuant to 12 USC Section 214a.
Except under certain circumstances specified in the Merger Agreement,
upon termination of the Merger Agreement, no liability will result on the part
of either party or their respective directors, officers, employees, agents, or
shareholders unless there has been an intentional breach of the Merger
Agreement prior to the date of termination.
AGREEMENT NOT TO COMPETE
Except for SNB directors Ronald A. Curet, Floyd H. Stark and Alexandre
Theriot, Jr., each director of SNB has agreed that for a period of two (2)
years after the Effective Date, they will not, directly or indirectly: (i)
serve on the Board of Directors or in any similar capacity of any financial
institution which has an office located in Tangipahoa Parish, Louisiana, and
(ii) participate as an investor in, or an advisor to, any financial institution
in the process of organizing with an office located in or proposed to be
located in Tangipahoa Parish, Louisiana. Director and President Reginald R.
Harper has agreed that for a period of one (1) year after the Effective Date,
he will not, directly or indirectly: (i) serve on a Board of Directors or as an
officer or employee or in any similar capacity of any financial institution
which has an office located in or proposed to be located in Tangipahoa Parish,
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Louisiana; and (ii) participate as an investor in or an advisor to, any
financial institution in the process of organizing with an office located in or
proposed to be located in Tangipahoa Parish, Louisiana.
INTERESTS OF CERTAIN PERSONS IN THE BANK MERGER
The President and executive officers of SNB will become officers of
Hancock Bank following the Bank Merger. In addition, Reginald Harper, Luther
Simon and Vivian Brown will receive merger incentive payments in the aggregate
amount of $42,500 within twelve months of the successful merger of SNB with
Hancock Bank.
EMPLOYEE BENEFITS
SNB's Group Health and Life Benefit Plan will be continued through the
Effective Date of the Bank Merger. Thereafter, all retained employees will be
eligible to participate in Hancock Bank MS's Medical Benefit Plan based on the
provisions in the Plan. The ninety-day employment period will be waived for
eligible retained employees in accordance with Hancock Bank MS's Plan. Hancock
Bank will waive pre-existing medical conditions for health insurance purposes
as to all retained personnel provided such pre-existing medical conditions were
covered at Closing under SNB's Group Health and Life Benefit Plan. SNB's 401K
Plan will remain operative and in effect through the Effective Date of the Bank
Merger. The Plan will be terminated as of the Effective Date of the Bank
Merger and distributed to employees of SNB in accordance with the terms of the
Plan after the normal and customary contributions have been made consistent
with past practices. All termination costs will be paid from the Plan's
assets. All retained employees will be eligible to enter the Hancock Bank MS
Profit Sharing Plan, Hancock Bank MS 401K Plan, and Hancock Bank MS Pension
Plan based on the provisions set forth in the respective plans. Hancock Bank
MS 401K Plan currently does not have a provision which allows for roll over
funds from other qualified plans. All retained employees will be granted full
credit for all prior service for vesting, eligibility and benefit purposes for
the Hancock Bank MS Profit Sharing Plan, for eligibility purposes for the
Hancock Bank MS 401K Plan, and for vesting and eligibility purposes for the
Hancock Bank MS Pension Plan. All other SNB benefit plans will continue
through the Effective Date of the Bank Merger. Thereafter, all retained
employees will be eligible to participate in all Hancock Bank MS employment
benefit plans not set forth above based on the provisions set forth in the
plans with full credit for all prior service.
EXPENSES
HHC and SNB have each agreed to pay their respective costs, fees and
expenses incurred in connection with or incidental to the Merger Agreement,
including without limitation any fees and disbursements to their respective
accountants and counsel. HHC is responsible for preparing the applications,
regulatory filings and Registration Statement necessary to obtain approval of
the Bank Merger and the issuance of the HHC Common Stock. SNB is responsible
for the cost of its accountants and legal counsel and will bear all costs
related to conducting its shareholders' meeting and obtaining shareholder
approval of the Merger Agreement and the Bank Merger.
STATUS UNDER FEDERAL SECURITIES LAWS; CERTAIN RESTRICTIONS ON RESALES OF
SECURITIES
The shares of HHC Common Stock to be issued pursuant to the Merger
Agreement have been registered under the Securities Act of 1933, as amended,
("Securities Act") thereby allowing such shares to be sold without restriction
by shareholders of SNB who are not deemed to be "affiliates" (as that term is
defined in the rules under the Securities Act) of SNB and who do not become
affiliates of HHC. The shares of HHC Common Stock to be issued to affiliates
of SNB may be resold only pursuant to an effective registration statement,
pursuant to Rule 145 under the Securities Act (which, among other things,
permits the resale of securities subject to certain volume limitations) or in
transactions otherwise exempt from registration under the Securities Act. HHC
will not be
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obligated and does not intend to register its shares under the Securities Act
for resale by shareholders who are affiliates.
Prior to the Effective Date of the Bank Merger, each such person
deemed an affiliate of SNB will deliver to HHC a letter agreement pertaining to
the limitations on the transferability of such affiliate's shares of HHC Common
Stock acquired in the Bank Merger, and whereby such affiliate shall represent
and warrant, among other things, that he or she will not sell, pledge,
transfer, or otherwise dispose of such shares of HHC Common Stock in violation
of the Securities Act or the rule and regulations thereunder.
ACCOUNTING TREATMENT
HHC and SNB intend to account for the Bank Merger as a purchase
transaction under generally accepted accounting principles. Accordingly, the
earnings of SNB will be combined with the earnings of Hancock Bank from and
after the Effective Date of the Bank Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through charges to
income in future periods. See "INFORMATION CONCERNING THE BANK MERGER --
Accounting Treatment."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE BANK MERGER
Set forth below is a discussion of material federal income tax
consequences of the Bank Merger. The discussion is intended only as a summary
and does not purport to be a complete analysis of all potential tax effects
relevant to a decision whether to vote for the approval of the Merger Agreement
and related Mergers. The discussion is based on current provisions of the
Code, regulations thereunder, and applicable judicial and administrative
interpretations on the date hereof, any of which is subject to change at any
time.
HHC and SNB expect the Bank Merger to be a tax-free reorganizations
for federal income tax purposes so that no gain or loss will be recognized by
SNB's shareholders, except to the extent of cash consideration received by
shareholders in exchange for SNB Common Stock, fractional shares, or payments
received by shareholders upon exercise of their statutory dissenters' rights.
Consummation of the Bank Merger is conditioned upon receipt by SNB of
an opinion from Watkins Ludlam & Stennis, P.A., to the following effects, among
others:
(i) The Bank Merger will constitute a reorganization under Section
368 of the Code.
(ii) No material gain or loss will be recognized by HHC, Hancock
Bank or SNB as a result of the Bank Merger.
(iii) No gain or loss will be recognized by a shareholder of SNB who
receives solely HHC Common Stock in exchange for his SNB
Common Stock. However, because both HHC Common Stock and
other consideration will be transferred in exchange for shares
of SNB Common Stock, then, in general, such a shareholder will
be required to recognize gain. The amount of gain recognized
will not exceed the amount of cash received in the exchange.
(iv) Cash received in the Bank Merger by a shareholder of SNB in
lieu of a fractional share interest in HHC Common Stock will
be treated under Section 302 of the Code as having been
received by shareholder in exchange for such fractional share,
and the shareholder generally will recognize gain or loss in
such exchange equal to the difference between the cash
received and the shareholder's basis allocable to the
fractional share. If a fractional share of HHC Common Stock
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would constitute a capital asset in the hands of the
shareholder, any resulting gain or loss will be characterized
as capital gain or loss in accordance with the provisions and
limitations of Subchapter P of Chapter 1 of the Code.
(v) A shareholder of SNB who perfects his statutory dissenters'
rights and who receives solely cash in exchange for his SNB
Common Stock will be treated as having received such cash
payment as a distribution in redemption of his shares of SNB
Common Stock, subject to the provisions and limitations of
Sections 302 and 306 of the Code. After such distribution, if
the former shareholder does not actually or constructively own
any SNB Common Stock and if such stock is not treated as
"Section 306 stock," the redemption will constitute a complete
termination of interest and be treated as a distribution in
full payment in exchange for the SNB Common Stock so redeemed.
(vi) A shareholder of SNB who would otherwise receive 25 or fewer
shares of HHC Common Stock and who receives solely cash in
exchange for his SNB Common Stock will be treated as having
received such cash payment as a distribution in redemption of
his shares of SNB Common Stock, subject to the provisions and
limitations of Section 302 of the Code. After such
distribution, if the former shareholder does not actually or
constructively own any SNB Common Stock, the redemption will
constitute a complete termination of interest and be treated
as a distribution in full payment in exchange for the SNB
Common Stock so redeemed.
In connection with the foregoing opinion, counsel will make such
factual assumptions as are customary in similar tax opinions, and such factual
assumptions may be confirmed by certificates signed by appropriate officers of
HHC, Hancock Bank and SNB. The foregoing opinion cannot be relied upon if any
such factual assumptions is, or later becomes, inaccurate. No ruling from the
Internal Revenue Service concerning the tax consequences of the Bank Merger has
been requested, and the opinion will not be binding upon the Internal Revenue
Service or the courts. If the Bank Merger are consummated, and it is later
determined that the Bank Merger did not qualify as a tax-free reorganization
under the Code, shareholders of SNB will, in general, recognize taxable gain or
loss in the Bank Merger equal to the difference between the fair market value
of the consideration received in the Bank Merger and their basis in their SNB
Common Stock.
THE FOREGOING ANALYSIS OF FEDERAL INCOME TAX CONSEQUENCES IS INCLUDED
HEREIN FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED AS A SUBSTITUTE FOR
CAREFUL TAX PLANNING. SHAREHOLDERS OF SNB ARE URGED TO CONSULT THEIR TAX
ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE BANK MERGER AND OF
OWNERSHIP OF HHC COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF STATE
AND LOCAL INCOME AND OTHER TAX LAWS.
DISSENTERS' RIGHTS
Any holder of record of shares of Common Stock of SNB who follows the
procedures specified in Section 214a of Title 12 of the United States Code is
entitled to have the "value" of his shares at the time of the meeting appraised
as set forth in Section 214a and to receive in cash the amount so determined.
A copy of Section 214a is attached to this Prospectus/Proxy Statement as
Appendix C. The following discussion of appraisal rights is qualified in its
entirety by reference to Appendix C.
The address to which dissenting Stockholders should send any
communication regarding their rights is: Southeast National Bank, P. O. Drawer
2488, Hammond, Louisiana, 70404-2488, Attention: Reginald Harper. All
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communications of dissenting Stockholders should be signed by or on behalf of
the dissenting Stockholder in the form in which his shares are registered on
the books of the SNB.
If a holder of shares of the Common Stock of SNB elects to exercise
his rights to an appraisal under Section 214a, such shareholder must do one of
the following:
(i) Vote against approval of the Merger Agreement at the meeting
and, within 30 days after the effective time of the Bank Merger, make written
request for payment and accompany such written request by surrender of the
shareholder's stock certificate; or
(ii) Give notice in writing to SNB at or prior to the meeting that
the shareholder dissents from the Merger Agreement and, within 30 days after
the effective time of the Bank Merger, make written request for payment and
accompany such written request by surrender of the shareholder's stock
certificates.
In order to be considered as having voted against approval of the
Merger Agreement, a shareholder must personally vote against approval or
deliver a proxy (which is not revoked prior to the meeting) containing
directions to vote the shares represented thereby against approval of the
Merger Agreement. A mere failure to vote will not be considered a vote against
the approval of the Merger Agreement.
In order to be considered as having given notice in writing to SNB at
or prior to the meeting that the shareholder dissents from the Merger
Agreement, a shareholder must deliver a written notice to SNB before the
taking of the vote with respect to the Merger Agreement, which notice must
reasonably inform SNB of the identity of the shareholder and that the
shareholder intends thereby to dissent from the Merger Agreement and must be
executed by or for the holder of record. In addition, a shareholder who wishes
to be considered as having delivered notice of dissent must not deliver a proxy
in favor of the Merger Agreement. A failure to deliver such proxy will satisfy
this condition, but voting in favor of, or delivering a proxy (which is not
revoked prior to the meeting) containing directions to vote the shares
represented thereby in favor of approval of, the Merger Agreement (or not
containing directions as to how the shares represented thereby are to be
voted), will nullify any previously filed notice of dissent and constitute a
waiver of such shareholder's right of appraisal.
In the event the Merger Agreement is approved, in order to maintain a
shareholder's rights of appraisal a shareholder who gave notice of dissent
prior to the meeting or who voted against approval at the meeting must make
written request for payment within 30 days after the conversion and accompany
such request by surrender of the shareholder's stock certificates. Such
written request for payment should reasonably inform SNB of the identity of the
shareholder and that the shareholder intends thereby to request payment
pursuant to the right of appraisal and must be executed by or for the holder of
record. Requests for payment should be addressed to Reginald Harper as
provided above. If stock certificates are sent by mail, it is recommended that
registered or certified mail, return receipt requested, be used.
If shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the notice of dissent and/or
request for payment should be made in such capacity; and if the stock is owned
of record by more than one person, as in a joint tenancy or tenancy in common,
such notice and/or request should be executed by or for all owners. An
authorized agent, including one of two or more joint owners, may execute the
notice and/or request for a shareholder of record; however, the agent must
identify the record owner or owners.
In general, a shareholder may not exercise the right of appraisal with
respect to less than all shares owned by such shareholder. However, a record
owner, such as a broker, who holds shares as a nominee for others, may exercise
his right of appraisal with respect to the shares held for one or more
beneficial owners, while not exercising such rights for other beneficial
owners.
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In the event the Merger Agreement is approved, within five days after
the effective time of the Bank Merger, the resulting state bank will give to
each shareholder who gave timely notice of dissent or who voted against
approval of the Merger Agreement a notice of the effective time and of the
actions required in order to maintain each such shareholder's appraisal rights.
The value of a dissenting Shareholder's shares is to be determined by
an appraisal made by a committee of three persons, one chosen by the dissenting
Shareholder(s), one by the Directors of the Resulting Bank and one by the two
appraisers so selected. All expenses incurred in connection with such an
appraisal will be allocated equally between the Resulting Bank and the
dissenting Shareholder(s). SNB will bear the costs of appraisal proceedings.
If any appraiser is not selected within ninety (90) days of consummation of the
consolidation, or the appraisers fail within such period to determine a value,
or if a dissenting Shareholder is dissatisfied with the appraised value and
appeals within five (5) days of notice of the appraisal, the Comptroller will
make a final determination of value, which will be binding on all parties. The
expenses of the Comptroller in making such a reappraisal or appraisal, as the
case may be, will be paid by the Resulting Bank.
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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements are
presented, assuming the mergers of SNB and CBI with and into HHC will be
accounted for using the purchase method of accounting and subject to the
purchase adjustments noted below, to reflect the combination of the historical
consolidated financial statements of the respective companies for the following
periods. The unaudited pro forma combined balance sheet assumes the mergers
were consumated on June 30, 1996. The unaudited pro forma combined statements
of income assumes the mergers were consumated on January 1, 1996 and January 1,
1995 respectively. The unaudited pro forma combined financial statements give
effect of the issuance of approximately 104,500 shares of HHC Common Stock and
the payment of approximately $3.7 million in cash in connection with the merger
of SNB and of the issuance of approximately 447,000 shares of HHC Common Stock
and the payment of approximately $5.6 million in cash in connection with the
merger of CBI.
The unaudited pro forma information does not purport to represent what
HHC's, SNB's and CBI's combined results of operations actually would have been
if the respective 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 SNB and HHC contained elsewhere or incorporated by reference herein.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
SNB
PRO FORMA
ADJUSTMENTS
-------------------------
HHC SNB DEBITS CREDITS CBI
-------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and due from banks $ 145,223 $2,148 3,735 (A) $6,121
Interest bearing time deposits with other banks 2,945 492 0
Securities available-for-sale 108,169 5,262 0
Securities held-to-maturity 807,932 3,381 77 (B) 43,078
Federal funds sold and securities purchased
under agreements to resell 72,175 200 3,450
Loans, net of unearned income 1,070,561 23,751 36,342
Less: Reserve for loan losses (17,698) (381) (475)
---------- ------- -------
Loans, net 1,052,863 23,370 35,867
Property and equipment 38,599 1,457 43 (B) 1,423
Other real estate 749 288 213
Other assets 47,702 483 3,834 (A) 984
---------- ------- -------
TOTAL ASSETS $2,276,357 $37,081 $91,136
---------- ------- -------
LIABILITIES:
Deposits:
Non-interest bearing demand $ 483,335 $ 5,514 $15,132
Interest bearing savings, NOW, money market
and other time 1,455,780 27,461 64,288
---------- ------- -------
Total Deposits 1,939,115 32,975 79,420
Federal funds purchased and securities sold
under agreements to repurchase 82,732 0 0
Other liabilities 18,028 294 12 (C) 744
Long-term bonds and notes 2,035 0 0
---------- ------- -------
TOTAL LIABILITES 2,041,910 33,269 80,164
---------- ------- -------
MINORITY INTEREST 0 0 161
STOCKHOLDERS' EQUITY
Common Stock 30,043 2,282 2,282 (A) 348 (A) 437
Capital surplus 130,000 1,439 1,439 (A) 3,541 (A) 2,664
Undivided profits 75,107 153 153 (A) 7,710
Unrealized loss on securities available for sale (703) (62) 0 62 (A) 0
---------- ------- ------ ------ -------
TOTAL STOCKHOLDERS' EQUITY 234,447 3,812 10,811
---------- ------- -------
TOTAL LIABILITIES AND EQUITY $2,276,357 $37,081 $7,763 $7,763 $91,136
---------- ------- ------ ------ -------
<CAPTION>
CBI
PRO FORMA
ADJUSTMENTS
-------------------------------- PRO FORMA
DEBITS CREDITS HHC
------- ------- ----------
<S> <C> <C> <C>
ASSETS:
Cash and due from banks 5,626 (D) $ 144,131
Interest bearing time deposits with other banks 3,437
Securities available-for-sale 113,431
Securities held-to-maturity 400 (E) 853,914
Federal funds sold and securities purchased
under agreements to resell 75,825
Loans, net of unearned income 1,130,654
Less: Reserve for loan losses (18,554)
----------
Loans, net 1,112,100
Property and equipment 110 (E) 41,632
Other real estate 1,250
Other assets 11,139 (D) 64,142
----------
TOTAL ASSETS $2,409,862
----------
LIABILITIES:
Deposits:
Non-interest bearing demand $503,981
Interest bearing savings, NOW, money market
and other time 1,547,529
----------
Total Deposits 2,051,510
Federal funds purchased and securities sold
under agreements to repurchase 82,732
Other liabilities 100 (F) 18,954
Long-term bonds and notes 2,035
----------
TOTAL LIABILITES 2,155,231
----------
MINORITY INTEREST 161 (A) 0
STOCKHOLDERS' EQUITY
Common Stock 437 (D) 1,487 (D) 31,878
Capital surplus 2,664 (D) 14,808 (D) 148,349
Undivided profits 7,710 (D) 75,107
Unrealized loss on securities available-for-sale 0 (D) (703)
TOTAL STOCKHOLDERS' EQUITY ------- 254,631
----------
TOTAL LIABILITIES AND EQUITY $22,321 $22,321 $2,409,862
------- ------- ----------
</TABLE>
NOTES
(A) To record the issuance of approximately 104,500 shares of HHC stock and
approximately $3.7 million in cash in connection with the acquisition of CBI
under the purchase method of accounting resulting in goodwill of approximately
$3.8 million and the elimination of the capital of SNB.
(B) To record estimated market value adjustment to the securities portfolio
and land of SNB.
(C) To record deferred taxes associated with market adjustments to SNB's
securities portfolio.
(D) To record the issuance of approximately 447,000 shares of HHC stock and
approximately $5.6 million in cash in connection with the acquisition of CBI
under the purchase method of accounting resulting in goodwill of approximately
$11.1 million and the elimination of the capital and minority interest accounts
of CBI.
(E) To record estimated market value adjustment to the securities portfolio
and land of CBI.
(F) To record deferred taxes associated with market adjustments to CBI's
securities portfolio.
23
<PAGE> 35
HANCOCK HOLDING COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1996
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-------------------------
HHC SNB DEBITS CREDITS COMMUNITY
------- ----- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on Loans $51,858 $1,111 $1,629
Interest on securities:
U.S. Treasury securities 7,160 0 0
U.S. government securities and obligations
of U.S. government agencies 17,108 243 1,202
Obligations of state and political subdivisions 1,734 0 103
Interest on federal funds sold and securities
purchased under agreements to resell 3,534 21 93 (G) 124
Interest on time deposits and other interest 3,358 3 0
------- ------ ------
TOTAL INTEREST INCOME 84,752 1,378 3,058
------- ------ ------
INTEREST EXPENSE
Interest on deposits 30,276 588 1,442
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,829 5 0
Interest on bonds, notes and other 151 0 0
------- ------ ------
TOTAL INTEREST EXPENSE 32,256 593 1,442
------- ------ ------
NET INTEREST INCOME 52,496 785 1,616
Provision for possible loan losses 1,801 0 20
------- ------ ------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 50,695 785 1,596
------- ------ ------
NONINTEREST EXPENSE
Service charges on deposits 8,356 204 415
Trust fees 1,153 0 0
Other charges, fees and operating income 2,797 112 115
Securities gains (losses) (34) 12 65
------- ------ ------
TOTAL NONINTEREST INCOME 12,272 328 595
------- ------ ------
NONINTEREST EXPENSE
Salaries and employee benefits 20,770 313 690
Occupancy and equipment expense, net 7,604 116 283
Other operating expenses 11,036 340 128 (H) 352
------- ------ ------
TOTAL NONINTEREST EXPENSE 39,410 769 1,325
------- ------ ------
EARNINGS BEFORE INCOME TAXES 23,557 344 866
Income tax expense 7,757 86 0 33 (I) 275
------- ------ --- -- ------
NET EARNINGS $15,800 $ 258 221 33 $ 591
------- ------ --- -- ------
EARNINGS PER SHARE $1.78 $ 0.56 $ 6.66
AVERAGE SHARES 8,880 457 87
<CAPTION>
PRO FORMA
ADJUSTMENTS
--------------------------- PRO FORMA
DEBITS CREDITS HHC
---------- ------- -------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on Loans $54,598
Interest on securities:
U.S. Treasury securities $ 7,160
U.S. government securities and obligations
of U.S. government agencies 18,553
Obligations of state and political subdivisions 1,837
Interest on federal funds sold and securities
purchased under agreements to resell 140 (J) 3,446
Interest on time deposits and other interest 3,361
-------
TOTAL INTEREST INCOME 88,955
-------
INTEREST EXPENSE
Interest on deposits 32,306
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,834
Interest on bonds, notes and other 151
-------
TOTAL INTEREST EXPENSE 34,291
-------
NET INTEREST INCOME 54,664
Provision for possible loan losses 1,821
-------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 52,843
-------
NONINTEREST EXPENSE
Service charges on deposits 8,975
Trust fees 1,153
Other charges, fees and operating income 3,024
Securities gains (losses) 43
-------
TOTAL NONINTEREST INCOME 13,195
-------
NONINTEREST EXPENSE
Salaries and employee benefits 21,773
Occupancy and equipment expense, net 8,003
Other operating expenses 375 (K) 12,231
-------
TOTAL NONINTEREST EXPENSE 42,007
-------
EARNINGS BEFORE INCOME TAXES 24,031
Income tax expense 0 50 (L) 8,035
--- -- -------
NET EARNINGS 515 50 $15,996
--- -- -------
EARNINGS PER SHARE $ 1.70
AVERAGE SHARES 9,432
</TABLE>
NOTES
(G) To record imputed interest of 5.00% on the $3.7 million cash portion of
the purchase price which assumes a reduction in federal fund sold balances.
(H) To record amortization of goodwill over 15 years using a straight line
basis.
(I) To record the tax effect of the pro forma adjustments.
(J) To record imputed interest of 5.00% on the $5.6 million cash portion of
the purchase price which assumes a reduction in federal fund sold balances.
(K) To record amortization of goodwill over 15 years using a straight line
basis.
(L) To record the tax effect of the pro forma adjustments.
24
<PAGE> 36
HANCOCK HOLDING COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-------------------------
HHC SNB DEBITS CREDITS
------- ----- ------ -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on Loans $97,626 $2,104
Interest on securities:
U.S. government securities and obligations
of U.S. government agencies 48,294 419
Obligations of state and political subdivisions 3,527 0
Interest on federal funds sold and securities
purchased under agreements to resell 5,820 145 185 (G)
Interest on time deposits and other interest 6,262 0
------- ------
TOTAL INTEREST INCOME 161,529 2,668
------- ------
INTEREST EXPENSE
Interest on deposits 57,612 1,035
Interest on federal funds purchased and
securities sold under agreements to repurchase 3,082 0
Interest on bonds, notes and other 468 0
------- ------
TOTAL INTEREST EXPENSE 61,162 1,035
------- ------
NET INTEREST INCOME 100,367 1,633
Provision for possible loan losses 4,425 (134)
------- ------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 95,942 1,767
------- ------
NONINTEREST EXPENSE
Service charges on deposits 15,040 381
Trust fees 2,525 0
Other charges, fees and operating income 6,440 57
Securities gains (losses) (49) 2
------- ------
TOTAL NONINTEREST INCOME 23,956 440
------- ------
NONINTEREST EXPENSE
Salaries and employee benefits 41,319 684
Occupancy and equipment expense, net 13,720 167
Other operating expenses 24,777 684 255 (H)
------- ------
TOTAL NONINTEREST EXPENSE 79,816 1,535
------- ------
EARNINGS BEFORE INCOME TAXES 40,082 672
INCOME TAX EXPENSE 13,065 (40) 0 65 (I)
------- ------ ---- ---
NET EARNINGS $27,017 $ 712 $440 $65
------- ------ ---- ---
EARNINGS PER SHARE $ 3.05 $ 1.56
AVERAGE SHARES 8,853 457
<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------------- PRO FORMA
CBI DEBITS CREDITS HHC
------ ------ ------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on Loans $3,012 $102,742
Interest on securities:
U.S. government securities and obligations
of U.S. government agencies 2,296 51,009
Obligations of state and political subdivisions 171 3,698
Interest on federal funds sold and securities
purchased under agreements to resell 268 280 (J) 5,768
Interest on time deposits and other interest 0 6,262
------ --------
TOTAL INTEREST INCOME 5,747 169,479
------ --------
INTEREST EXPENSE
Interest on deposits 2,602 61,249
Interest on federal funds purchased and
securities sold under agreements to repurchase 7 3,089
Interest on bonds, notes and other 0 468
------ --------
TOTAL INTEREST EXPENSE 2,609 64,806
------ --------
NET INTEREST INCOME 3,138 104,673
Provision for possible loan losses 0 4,291
------ --------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 3,138 100,382
------ --------
NONINTEREST EXPENSE
Service charges on deposits 851 16,272
Trust fees 0 2,525
Other charges, fees and operating income 90 6,587
Securities gains (losses) 9 (38)
------ --------
TOTAL NONINTEREST INCOME 950 25,346
------ --------
NONINTEREST EXPENSE
Salaries and employee benefits 1,459 43,462
Occupancy and equipment expense, net 576 14,463
Other operating expenses 835 750 (K) 27,301
------ --------
TOTAL NONINTEREST EXPENSE 2,870 85,226
------ --------
EARNINGS BEFORE INCOME TAXES 1,218 40,502
Income tax expense 333 0 100 (L) 13,193
------ ------ ---- --------
NET EARNINGS $ 885 $1,030 $100 $ 27,309
------ ------ ---- --------
EARNINGS PER SHARE $ 9.96 $ 2.90
AVERAGE SHARES 87 9,405
</TABLE>
NOTES
(G) To record imputed interest of 5.00% on the $3.7 million cash portion of
the purchase price which assumes a reduction in federal fund sold balances.
(H) To record amortization of goodwill over 15 years using a straight line
basis.
(I) To record the tax effect of the pro forma adjustments.
(J) To record imputed interest of 5.00% on the $5.6 million cash portion of
the purchase price which assumes a reduction in federal fund sold balances.
(K) To record amortization of goodwill over 15 years using a straight line
basis.
(L) To record the tax effect of the pro forma adjustments.
25
<PAGE> 37
CERTAIN INFORMATION CONCERNING SNB
PRINCIPAL BUSINESS
Southeast National Bank. SNB, organized on July 23, 1984, provides
traditional consumer and commercial deposit and loan services to individuals,
families and businesses in Tangipahoa Parish, Louisiana. SNB also provides
traditional consumer and commercial deposit and loan services to individuals,
families and businesses in the certain portion of the neighboring parish of
Livingston. SNB's services are delivered through a network of two (2) full
service locations, including a main office in Hammond and one (1) branch
located in Ponchatoula, Louisiana. In addition to traditional bank services,
SNB offers VISA/Mastercard through its correspondent relationship with First
National Bank of Commerce, New Orleans, Louisiana. SNB's deposits are insured
by the FDIC. At June 30, 1996, SNB had total assets of approximately $37.1
million and total deposit liabilities of approximately $33.0 million. SNB's
principal executive office is located at 1855 S. Morrison Blvd., Hammond,
Louisiana 70403 and its telephone number is (504) 542-9700.
COMPETITION
SNB's primary market area, Tangipahoa Parish, has a current population
of approximately 91,972.
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.
SNB 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 SNB 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 SNB's primary market area,
including those located in the surrounding parishes.
Currently, all state banks organized under the law of the State of
Louisiana and all national banks domiciled in Louisiana are permitted to
establish branches on a statewide basis. Louisiana's banking laws also permit
bank holding companies domiciled in any other state to acquire Louisiana banks
and bank holding companies. Unless state legislatures elect otherwise, under
recent federal banking legislation, banks will be allowed to establish
interstate branches beginning June 1, 1997.
At present, several bank holding companies with greater resources than
those of SNB have acquired banks or established branches in SNB's market area
and are continuing to do so. The size of these institutions allows certain
economies of scale that permit their operation on a narrower profit margin than
would be appropriate for SNB. SNB has also experienced some competitive
pressure on the interest rates that it is able to charge on its new loans.
SEASONALITY OF BUSINESS AND CUSTOMERS
SNB'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. No significant portion of SNB's loans is concentrated
within a single industry or group of related industries. Historically, the
business of SNB has not been seasonal in nature and management of SNB does not
anticipate any seasonal trends in the future. SNB does not rely on foreign
sources of funds or income.
26
<PAGE> 38
EMPLOYEES
As of the date of this Prospectus/Proxy Statement, SNB has, in the
aggregate, approximately 23 full-time employees and 4 part-time employees.
None of such employees are represented by labor unions. Management of SNB
considers its relationship with its employees to be good.
PROPERTY
SNB has two offices located in Tangipahoa Parish, Louisiana, including
the executive offices of SNB, located at 1855 S. Morrison Blvd., Hammond,
Louisiana 70403. All of the offices are owned by SNB and are not subject to
any mortgages or encumbrances. All of the premises on which the offices are
located, with the exception of the premises for the Ponchatoula branch, are
owned by SNB and are not subject to any mortgages or encumbrances. The
premises on which the Ponchatoula branch is located is leased per a lease
agreement effective on September 1, 1985 which expires on March 31, 2014.
LEGAL PROCEEDINGS
SNB 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 SNB. As of June 30, 1996, SNB did not have any
litigation pending other than ordinary routine litigation incidental to their
business that was not material in amount in respect of SNB's assets on a
consolidated basis.
STOCK PRICES AND DIVIDENDS
Market Prices. There is no established public trading market for the
SNB Common Stock. These securities are not traded on any exchange and are not
quoted on an automated system of a registered securities association.
At the Record Date, there were 451 shareholders of record of SNB
Common Stock and 456,518 shares of SNB Common Stock issued and outstanding.
SNB Cash Dividends. In 1994, SNB did not pay a cash dividend on its
Common Stock. In 1995, SNB paid a cash dividend of $0.50 per share on its
Common Stock for a total cash dividend payment of $228,259, and year-to-date
1996, SNB has paid a cash dividend of $0.50 per share for a total cash dividend
payment of $228,259.
Federal bank regulatory authorities have the power under the Financial
Institutions Supervisory Act to prohibit a bank from engaging in an unsafe or
unsound practice. The payment of a dividend by a bank could, depending on the
financial condition of the bank and other factors, be deemed an unsafe or
unsound practice. The ability of SNB to pay dividends to its shareholders in
the future is dependent upon the financial condition of SNB.
Under the Merger Agreement, SNB is prohibited from declaring or paying
any dividends on SNB Common Stock, unless the Merger Agreement is terminated;
provided however, in the event the Closing occurs on a date which will not
allow the SNB shareholders who will receive HHC Common Stock to be of record
for purposes of receiving HHC's first quarter 1997 dividend, then SNB may, to
the extent lawfully permitted, declare and pay dividends for the purpose of
allowing SNB's shareholders to receive 25% of the normal and customary annual
dividend in an amount not to exceed $.125 per outstanding share of SNB Common
Stock.
27
<PAGE> 39
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with respect to the beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), direct or indirect, of SNB Common
Stock for (i) each person who is the beneficial owner of more than five percent
of any class of the outstanding voting securities of SNB; (ii) each director of
SNB, and each executive officer of SNB, and (iii) all directors and executive
officers of SNB as a group. Unless otherwise indicated, all shares indicated
as beneficially owned are held with sole voting and investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
OF SNB COMMON STOCK
- --------------------------------------------------------------------------------------
<S> <C> <C>
Ronald A. Curet 12,508 2.74%
607 Delmar Blvd.
Hammond, LA 70403
Larry H. Delatte 20,000 4.38%
19113 Weinberger Road
Ponchatoula, LA 70454
Reginald Harper 935 *
17132 Natures Trace
Hammond, LA 70403
Dennis P. Hebert 2,000 *
P. O. Box 343
Ponchatoula, LA 70454
Verna S. Magee 4,000 *
904 West Colorado
Hammond, LA 70401
Joseph Rinaudo, Jr. 20,004 4.38%
P. O. Box 1930
St. Francisville, LA 70775
Raymond Schafer 9,000 1.97%
14625 Highway 22 West
Ponchatoula, LA 70454
Floyd H. Stark 200 *
144 6th Street
Ceredo, WV 25507
Alexandre Theriot, Jr. 19,435 4.26%
710 Maple Drive
Denham Springs, LA 70726
4,800 1.05%
H. Owen Vinyard ------ -----
20459 Highway 190 East
Hammond, LA 70401
92,882 20.35%
ALL DIRECTORS AND EXECUTIVE ====== =====
OFFICERS AS A GROUP (10 PERSONS)
</TABLE>
- ------------------------------
* Indicates less than one percent.
28
<PAGE> 40
SNB MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the
significant changes in income and expenses in relation to the changes in
financial position for the six months ended June 30, 1996 and 1995. This
information should be read in conjunction with the financial statements and
notes relating thereto.
SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
NET INCOME
Net income for the six month period ended June 30, 1996 was $258,140,
as compared to $278,198 for June 30, 1995, a decrease of $20,058 or 7.2%. The
decrease was attributable to an 85,813 increase in income taxes in the current
period. Income before income taxes increased $65,755 during the first six
months of 1996 as compared to 1995 due primarily to an increase in net interest
income.
NET INTEREST INCOME
Net interest income for the six months ended June 30, 1996 was
$873,977 compared to $804,709 in 1995. Interest rates rose slightly during
1996.
Total interest income for the six month period ended June 30, 1996 was
$1,466,950, an increase of $187,044 over the same period in 1995. This increase
was due partly to an increase in volume and partly to an increase in rates.
Loans as of June 30, 1996, as compared to June 30, 1995, increased
$3,201,687 or 15.6% to $23,750,562. Interest and fees on loans increased
$191,953 or 19.3% to $1,185,072 for the six months ended June 30, 1996 from
$993,119 for the six months ended June 30, 1995.
Securities and other interest bearing assets (excluding loans) as of
June 30, 1996 increased $938,930 or 11.8% compared to the similar time period
in 1995. Interest income on these assets decreased $4,909 in the first six
months of 1996 as compared to 1995, primarily attributed to lower yields on
short-term investments.
Interest bearing deposits increased by $4,119,114 or 17.6% from June
30, 1995 to June 30, 1996. Interest expense increased $117,776 or 24.8% from
1995 to 1996 due partly to the increase in volume of deposits and partly to
rising interest rates.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
An adequate level of the allowance for loan losses is determined by
reviewing the quality of the loan portfolio, actual loan loss experience, and
current and future economic conditions and their effect on the market area
served by SNB. The provision for possible loan losses is the amount charged to
earnings in order to maintain an adequate level in the allowance.
Other significant factors considered in determining the level of the
allowance are the growth or decline in the loan portfolio, the composition of
the portfolio, differing risks associated with each type of loan, the current
and prospective financial condition of borrowers, and the level of past due and
nonperforming loans. Management reviews the loan portfolio to identify
potential losses and to determine that the level of allowance adequately
reflects the potential loss exposure. Problem credits are reviewed more
frequently to determine potential changes in the
29
<PAGE> 41
allowance. Since actual losses may vary from current assessments, any
necessary adjustments to the allowance are recorded in the periods in which
they become known.
There was no provision for loan losses charged to expense for either
the first six months of 1996 or 1995. A summary of the activity in the
allowance for loan losses is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
--------------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Balance at Beginning of Year $ 423,631 $ 567,315
Loans Charged-Off (56,025) (307)
Recoveries of Loans Previously Charged-Off 13,430 1,484
Addition to Allowance Charged to Expense - -
--------- ---------
Balance at End of Period $ 381,036 $ 568,492
========= =========
</TABLE>
OTHER INCOME
Total Other Income for the time period under consideration increased
$25,091 or 11.7%. Service Charges on Deposit Accounts increased $23,715 to
$204,125 for the six months ended June 30, 1996 as compared to the six months
ended June 30, 1995.
OTHER EXPENSES
Total Other Expenses have increased $28,604, totaling $769,399 for the
first six months of 1996. Increases in other real estate expense, occupancy
expense, and other operating expenses were offset slightly by a decrease in
salaries and employee benefits.
APPLICABLE INCOME TAXES
Applicable income taxes for the first six months of 1996 were $86,046
representing an effective rate of 25%. Income taxes for the respective period
of 1995 were insignificant. The increase in tax expense during 1996 is mainly
attributable to the decrease in the deferred tax asset due to the utilization
of net operating loss carryforwards from the previous year.
YEARS ENDED DECEMBER 31, 1995 AND 1994
NET INCOME
Net income for the year ended December 31, 1995 was $711,833 compared
to $463,938 for 1994, an increase of $247,895 or 53.43%. SNB's increase in net
income for 1995 was mainly attributable to rising interest rates, increased
loan demand, and a credit provision for loan losses.
Return on average assets was 2.13% and return on average equity was
20.62% for 1995, compared to 1.47% and 15.28% respectively, for 1994.
30
<PAGE> 42
NET INTEREST INCOME
Net interest income for 1995 was $1,633,601 compared to $1,531,185 in
1994. The primary factors that affect net interest income are the changes in
volume and mix of earning assets and interest-bearing liabilities, along with
changes in market interest rates. Interest rates rose slightly during 1995.
Total interest income for 1995 was $2,668,354 as compared to $2,311,995 for
1994, a $356,359 or 15.41% increase. Loan balances increased from $20,350,298
on December 31, 1994 to $21,564,475 on December 31, 1995. The increase in loan
balances and climbing interest rates accounted for the increase in interest
income on loans in the amount of $355,488. Interest expense on deposits was
$1,034,753 in 1995, an increase of $253,943 from 1994. Interest-bearing
deposits increased to $23,982,873, or 5.6%, in 1995. This volume increase, and
increases in interest rates on deposit accounts accounted for the overall
increase in interest expense and a slightly smaller net interest spread in 1995
as compared to 1994.
SNB's Net Interest Spread and Margin are shown below. Net Interest
Spread is the difference between the yield on earning assets and the cost of
funding. Net Interest Margin is net interest income as a percent of average
earning assets.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net Interest Spread 4.55% 4.79%
Net Interest Margin 5.45% 5.41%
</TABLE>
INTEREST EARNING ASSETS
Earning assets averaged $29,982,564 for 1995, an increase of
$1,680,548, or 5.9%, compared to the 1994 average of $28,302,016. For 1995
loans averaged $20,983,962, a $2,703,486 increase, or 14.79% over the balance
reported in 1994. Loans accounted for 70% and 64.6% of average earning assets
in 1995 and 1994, respectively. SNB actively pursues loans to customers in
SNB's service area.
The increase in loan demand attributed to the decrease in average
securities from $8,102,040 in 1994 to $6,578,275 in 1995. Funds are invested
primarily in U.S. Treasury Securities and Securities of Other U. S. Government
Agencies.
Average interest-bearing deposits in other banks increased $257,608 or
72.40% from $355,802 in 1994 to $613,410 in 1995. This shift allowed funds to
be readily available for increased loan demand.
INTEREST-BEARING LIABILITIES
Interest-bearing liabilities in 1995 averaged $23,807,332, an increase
of $736,053, or 3.2%, as compared to the 1994 average.
Savings and NOW accounts averaged $5,513,722 a decrease of $255,653,
or 4.4%, as compared to the 1994 average. Insured money market accounts
decreased $320,229, or 8.2% from the 1994 average. These decreases were more
than offset by the increase in certificates of deposit. Average certificates
of deposits increased to $14,685,932 in 1995 from $13,373,997 in 1994, a
$1,311,935 or 9.81% increase. This shift to higher interest rate certificates
of deposit accounted for the increase in costs of funds of 97 basis points from
1994 to 1995.
31
<PAGE> 43
INTEREST RATE SENSITIVITY
SNB's interest rate sensitivity is modeled in the GAP Analysis Table.
The Table depicts a management measurement of the balance sheet interest rate
sensitivity GAP at December 31, 1995. Interest rate sensitivity results from
the timing differences at which assets and liabilities may be repriced as
market rates change. SNB also utilizes other measurement techniques to analyze
interest rate sensitivity. The Table indicates SNB is positioned, at December
31, 1995, at a negative gap through the 365 day range. In a rising interest
rate situation within the 365 day range, SNB would theoretically reprice more
liabilities than assets; therefore, decreasing net interest income.
GAP ANALYSIS TABLE
(DOLLARS IN THOUSANDS)
<TABLE>
<Caption
0-180 181-365 1-3 3+ NON INTEREST
DAYS DAYS YEARS YEARS BEARING TOTAL
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Reserve Funds Sold $ 430 $ -- $ -- $ -- $ -- $ 430
Securities 998 -- 3,731 2,988 -- 7,717
Loans 4,721 1,894 11,453 3,496 -- 21,564
Other Assets -- -- -- -- 4,887 4,887
-------- -------- -------- -------- -------- --------
Total Assets $ 6,149 $ 1,894 $ 15,184 $ 6,484 $ 4,887 $ 34,598
Liabilities:
Money Market $ 2,844 $ -- $ -- $ -- $ -- $ 2,844
Savings & NOW 5,539 -- -- -- -- 5,539
Certificates 12,336 709 1,719 836 -- 15,600
Other Liabilities and
Capital -- -- -- -- 10,615 10,615
-------- -------- -------- -------- -------- --------
Total Liabilities
and Capital $ 20,719 $ 709 $ 1,719 $ 836 $ 10,615 $ 34,598
-------- -------- -------- -------- -------- --------
Periodic Gap $(14,570) $ 1,185 $ 13,465 $ 5,648 $ (5,728)
======== ======== ======== ======== ========
Cumulative Gap $(14,570) $(13,385) $ 80 $ 5,728
======== ======== ======== ========
</TABLE>
ALLOWANCE AND PROVISION FOR LOAN LOSSES
An adequate level of the allowance for loan losses is determined by
reviewing the quality of the loan portfolio, actual loan loss experience and
current and future economic conditions and their effect on the market area
served by SNB. The provision for possible loan losses is the amount charged to
earnings in order to maintain an adequate level in the allowance.
Other significant factors considered in determining the level of the
allowance are the growth or decline in the loan portfolio, the composition of
the portfolio, differing risks associated with each type of loan, the current
and prospective financial condition of borrowers, and the level of past due and
nonperforming loans. Management
32
<PAGE> 44
reviews the loan portfolio to identify potential losses and to determine that
the level of allowance adequately reflects the potential loss exposure.
Problem credits are reviewed more frequently to determine potential changes in
the allowance. Since actual losses may vary from current assessments, any
necessary adjustments to the allowance are recorded in the periods in which
they become known.
The allowance totaled $423,631 at the end of 1995 as compared to
$567,315 at December 31, 1994. The balance in the allowance reflects
management's continued evaluation of the potential risk of the loans in the
current portfolio. Based upon management's review of the loan portfolio at
December 31, 1995 and upon improving economic conditions in the area, $134,000
of the allowance was reversed into income during the year ended December 31,
1995. The allowance as a percentage of loans outstanding was 1.90% at year end
1995 and 2.8% at year end 1994. Management believes that the allowance is
adequate to absorb potential losses in the loan portfolio.
SNB's net charge offs were $9,684 and $28,748 for 1995 and 1994. The
ratio of net charge offs to average loans outstanding during 1995 and 1994 was
insignificant.
NON-PERFORMING ASSETS
Non-performing assets include non-accrual loans, impaired loans and
other real estate. Loans are placed on non-accrual when they become 90 days
past due as to principal or interest. Interest on impaired loans is
discontinued when, in management's opinion, the borrower may be unable to meet
payments as they become due.
Other Real Estate is carried at the lower of cost or fair value.
Other Real Estate decreased from $286,310 at December 31, 1994 to $113,003 at
December 31, 1995, a 60.5% decrease. Management continues to convert these
non-performing assets to investable funds at a value which management feels is
beneficial to the earnings of SNB.
OTHER INCOME
Other income for 1995 was $440,102, an increase of $44,981 or 11.38%
over the prior year results of $395,121. Exclusive of security transactions,
other income increased $36,435.
Service charges on deposit accounts were $380,849 for 1995, an
increase of 4.5% over 1994. Service charges on deposit accounts were $364,424
in 1994. The primary reason for the increase in 1995 is the increase in number
of deposit accounts.
Other operating income for 1995 was $57,256 compared to the 1994 total
of $37,246. Included in other operating income are fees from bankcard
services, safe deposit box rentals and other operating fees.
OTHER EXPENSES
Other expenses totaled $1,535,539 in 1995, a 3.1% increase over the
1994 total of $1,489,907. Salaries and employee benefits increased $37,536, or
5.8%, to $683,984 for 1995 when compared to $646,448 for 1994. Net occupancy
expense was $166,614 for 1995, versus $171,077 for 1994. Other operating
expenses totaled $638,323 for 1995 compared to $685,878 for 1994, a decrease of
$47,555, or 6.9%.
Net other real estate expense was $46,618 for 1995. Net other real
estate expense provided a benefit of $13,496 in 1994. Net other real estate
expense is the operating expense of other real estate and repossessed assets
less the income generated by other real estate and the net gains from the sales
of other real estate and repossessed assets.
33
<PAGE> 45
APPLICABLE INCOME TAXES
Applicable income taxes provided a benefit of $39,669 and $27,539 for
1995 and 1994, respectively. The benefit is mainly attributable to prior net
operating losses of SNB.
OFF-BALANCE-SHEET ACTIVITIES
In the normal course of business SNB enters into agreements which, for
accounting purposes, are not recorded in the financial statements. These loan
commitments and lines of credit are commitments to customers to extend credit
at specified rates, duration and purpose. The commitments adhere to normal
lending policy and credit reviews. Available commitments at December 31, 1995
were $2,880,328. This amount includes unfunded loan commitments aggregating
$2,854,828 and letters of credit of $25,500. At December 31, 1994 available
commitments were $2,013,090, comprised of unfunded loan commitments in the
amount of $1,983,090 and letters of credit of $30,000.
REGULATORY MATTERS
SNB's records were examined by a regulatory agency during 1995.
Management is not aware of any current recommendations by these authorities
which would have a material impact on capital, asset quality, management,
earnings or liquidity of SNB.
CAPITAL EXPENDITURES
SNB made capital improvements to its main office during 1995. SNB
purchased $553,769 of bank premises and equipment. Included in this amount is
the completion of the new main office site.
CAPITAL
The following table summarizes specific capital ratios of SNB at
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
MINIMUM
REGULATORY
1995 1994 GUIDELINES
---- ---- ----------
<S> <C> <C> <C>
Risk-Based Capital Ratios:
Tier 1 Capital 16.83% 16.12% 4.0%
Total Capital 18.09% 17.39% 8.0%
Leverage Ratio 10.83% 10.67% 4.00 - 5.00%
Stockholders' Equity 10.34% 9.60%
</TABLE>
Various regulatory authorities have attempted to reduce the number of
bank failures by adopting Risk-Based Capital requirements for banks. These
guidelines risk weight all of a bank's assets and off-balance-sheet activities.
A bank's required capital is the risk-weighted total of its assets and
off-balance-sheet activities multiplied by a specified capital percentage. As
shown in the table, SNB's Risk-Based Capital ratios significantly exceed the
minimum regulatory guidelines.
Dividends are payable only out of retained earnings and current
earnings. The amount of dividends paid by SNB may be restricted by law and
require regulatory approval. SNB was restricted from paying dividends until
the deficit in retained earnings was eliminated. Reference is made to Note B
of notes to SNB's 1995 financial
34
<PAGE> 46
statements regarding the Quasi-Reorganization. As of January 1, 1996, SNB had
retained earnings of $193,831 after paying a dividend of $228,258 in 1995 to
its shareholders.
LIQUIDITY
Liquidity management is the process of ensuring that SNB's assets and
liabilities are appropriately structured. SNB's short-term and long-term
liquidity is provided by two sources: core deposits and an adequate level of
assets readily convertible to cash. Management continually monitors the
balance sheet to insure its ability to meet current and future depositor
requirements and loan funding commitments. SNB does not anticipate
difficulties in meeting funding obligations.
35
<PAGE> 47
INVESTMENT SECURITIES
Amortized cost, fair value and weighted average yields of securities
as of December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE YIELD*
----------- ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C>
U.S. Treasury
Securities:
One Year or Less $ 997,240 $ 1,198 $ -- $ 998,438 6.24%
Over 1 through
5 Years 1,781,674 -- (8,705) 1,772,969 5.03
----------- ----------- ----------- ----------- ----
$ 2,778,914 $ 1,198 $ (8,705) $ 2,771,407 5.48%
=========== =========== =========== =========== ====
Securities of Other
U.S. Government
Agencies:
Over 1 through
5 Years $ 3,528,772 $ 5,120 $ (39,963) $ 3,493,929 6.07%
----------- ----------- ----------- ----------- ----
$ 3,528,772 $ 5,120 $ (39,963) $ 3,493,929 6.07%
=========== =========== =========== =========== ====
Mortgage-Backed
Securities:
Over 1 through
5 Years $ 319,203 $ 8,516 $ -- $ 327,719 7.72%
----------- ----------- ----------- ----------- ----
$ 319,203 $ 8,156 $ -- $ 327,719 7.72%
=========== =========== =========== =========== ====
Other Securities:
Over 1 Through 5
Years $ 959,410 $ -- $ (6,358) $ 953,052 7.02%
Over 10 Years 85,817 43 -- 85,860 7.24
----------- ----------- ----------- ----------- ----
$ 1,045,227 $ 43 $ (6,358) $ 1,038,912 7.04%
=========== =========== =========== =========== ====
Equity Securities $ 99,300 $ -- $ -- $ 99,300 -- %
----------- ----------- ----------- ----------- ----
$ 99,300 $ -- $ -- $ 99,300 --
=========== =========== =========== =========== ====
</TABLE>
*Weighted Average Yield.
36
<PAGE> 48
LOAN PORTFOLIO
An analysis of the loan portfolio at December 31, 1995 and 1994, is as
follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Real Estate Loans - Mortgage $17,181,410 $16,999,372
Commercial and Industrial Loans 1,945,607 1,218,715
Loans to Individuals 2,429,088 2,100,507
All Other Loans 8,370 31,704
----------- -----------
Total Loans $21,564,475 $20,350,298
Allowance for Loan Losses (423,631) (567,315)
----------- -----------
$21,140,844 $19,782,983
=========== ===========
</TABLE>
The following is the detail of maturities and sensitivity of loans to
change in interest rates at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
INTEREST RATE MATURITY 1995 1994
- ------------- ---------------------- ----------- -----------
<S> <C> <C> <C>
Floating 1 Year or Less $ 792,080 $ 2,942,606
Floating Over 1 Through 5 Years 1,101,973 -
Fixed 1 Year or Less 10,795,018 7,633,363
Fixed Over 1 Through 5 Years 8,548,372 9,204,875
Fixed Over 5 Years 100,879 277,072
Nonaccrual Various 226,153 292,382
----------- -----------
$21,564,475 $20,350,298
=========== ===========
</TABLE>
Note: The information necessary for a breakdown of maturity of the various
types of loans is not readily available. SNB has no foreign loans.
37
<PAGE> 49
NON-PERFORMING LOANS
The following table presents information on the amount of
non-performing loans at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Loans accounted for on a non-accrual basis $ 226,153 $ 292,382
Loans contractually past due ninety days
or more as to principal or interest
payments - -
Loans whose terms have been renegotiated
to provide a reduction or deferral of
interest or principal due to a deteri-
oration in the financial position of
the borrower - -
----------- -----------
$ 226,153 $ 292,382
=========== ===========
</TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the allowance for loan losses:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Amount of Loans Outstanding at End of
Period $21,564,475 $20,350,298
=========== ===========
Daily Average Amount of Loans $20,983,962 $18,280,476
=========== ===========
</TABLE>
(CONTINUED)
38
<PAGE> 50
<TABLE>
<S> <C> <C>
Balance of Allowance for Loan Losses
at Beginning of Year
$ 567,315 $ 596,063
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Loans Charged Off:
Real Estate $ - $ (49,650)
Commercial, Industrial and Agricultural (2,914) (2,000)
Individuals and Others (7,040) (8,000)
----------- -----------
$ (9,954) $ (59,650)
Recoveries of Loans Previously Charged Off:
Real Estate $ - $ 11,714
Commercial, Industrial and Agricultural - 15,462
Individuals and Others 270 3,726
----------- -----------
Total Recoveries $ 270 $ 30,902
----------- -----------
Net Loans Charged Off $ (9,684) $ (28,748)
Additions to Allowance Charged to Expense $ (134,000) $ -
----------- -----------
Balance at End of Year $ 423,631 $ 567,315
=========== ===========
Ratio of Net Charge-Offs to Total Loans
Outstanding .04% .14%
=========== ===========
Ratio of Net Charge-Offs to Average Loans
Outstanding .05% .15%
=========== ===========
</TABLE>
The allowance for loan losses is an amount which in management's
judgment is adequate to absorb potential losses in the loan portfolio. The
allowance for loan losses is based upon management's review and evaluation of
the loan portfolio. Factors considered in the establishment of the allowance
for loan losses include management's evaluation of specific loans; the level
and composition of classified loans; historical loss experience; results of
examinations by regulatory agencies; an internal asset review process;
expectations of future economic conditions and their impact on particular
borrowers; and other judgmental factors.
The allowance for loan losses is based on estimates of potential
future losses, and ultimate losses may vary from the current estimates. These
estimates are reviewed periodically and as adjustments become
39
<PAGE> 51
necessary, the effect of the change in estimate is charged to operating
expenses in the period incurred. All losses are charged to the allowance for
loan losses when the loss actually occurs or when management believes that the
collectibility of the principal is unlikely. Recoveries are credited to the
allowance at the time of recovery.
The allowance for loan losses has been allocated according to the type
of loan described:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------------- ------------------------------------
PERCENT OF PERCENT OF
LOANS IN LOANS IN
EACH CATEGORY EACH CATEGORY
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
--------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Real Estate $337,525 79.7% $473,900 83.5%
Commercial, Industrial
and Agricultural 38,220 9.0 33,975 6.0
Individuals and Others 47,886 11.3 59,440 10.5
-------- ------ -------- ------
$423,631 100.00% $567,315 100.00%
======== ====== ======== ======
</TABLE>
Management reviews the Allowance for Loan Losses on a monthly basis. As
discussed above, historical loss experience is considered as well as economic
factors that effect the local economy. Specific risk factors that are inherent
with certain types of lending are also considered. Past experience shows that
the greatest exposure is in the area of real estate loans which represent
approximately 80% of the loan portfolio. After reviewing these factors and
reviewing the loan portfolio through internal procedures, it is management's
opinion that an allowance of $423,631 is adequate at December 31, 1995.
Management's Internal Watch List identifies loans requiring special
supervision because of unexpected changes in various risk conditions. The
Watch List may include both accruing and nonaccrual loans. The List categories
resemble the regulators classification methods.
The categories and the similar regulatory classifications are: Loss, Doubtful,
Substandard and OLEM (Other Loans Especially Mentioned). OLEM loans require
special observation to determine if current conditions warrant a
reclassification.
40
<PAGE> 52
WATCH LIST
<TABLE>
<CAPTION>
LOSS DOUBTFUL SUBSTANDARD OLEM
------ -------- ----------- -------
<S> <C> <C> <C> <C>
12/31/95 $ - $100,000 $323,134 $90,603
</TABLE>
The Watch List is routinely evaluated and may vary dramatically based upon
the borrower's status as well as industry and economic trends.
DEPOSITS
The average daily balances and average rates paid on deposits for the
reported years are listed below:
<TABLE>
<CAPTION>
1995 1994
---------------------- ------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE PAID BALANCE RATE PAID
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Noninterest Bearing
Demand Deposits $ 5,804,415 - % $ 5,226,446 - %
Savings and NOW
Accounts 5,513,722 3.26% 5,769,375 3.11%
Insured Money Market
Accounts 3,607,678 2.91% 3,927,907 2.82%
Certificates of
Deposit 14,685,932 5.10% 13,373,997 3.67%
----------- -----------
Total Deposits $29,611,747 $28,297,725
=========== ===========
</TABLE>
Maturities of time deposits of $100,000 or more at December 31, 1995,
are summarized below:
<TABLE>
<CAPTION>
<S> <C>
3 Months or Less $ 400,000
Over 3 through 12 Months 504,736
Over 12 Months 1,400,000
----------
$2,304,736
==========
</TABLE>
41
<PAGE> 53
RETURN ON EQUITY AND ASSETS
The table below summarizes significant financial ratios for the years
ended December 31, 1995 and 1994:
1995 1994
----------- -----------
Average Total Assets $33,379,329 $31,607,254
Average Stockholders' Equity $ 3,452,764 $ 3,035,336
Net Income $ 711,833 $ 463,938
Earnings per Share-Common $ 1.56 $ 1.02
Cash Dividends Paid per Share $ .50 $ --
Return on Average Total Assets 2.13% 1.47%
Return on Average Stockholders' Equity 20.62% 15.28%
Dividend Payout Ratio 32.05% --%
Average Equity to Average Assets 10.34% 9.60%
42
<PAGE> 54
CERTAIN STATISTICAL INFORMATION
The following tables present historical statistical information
concerning SNB's balance sheet items, investment securities, loan portfolio,
loan loss experience, deposits and return on equity and assets for the periods
indicated, and do not purport to be indicative of results that may be obtained
in the future.
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995
-----------------------------------------
INTEREST AVERAGE
AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE
------------- --------------- -----------
<S> <C> <C> <C>
ASSETS
Interest-Bearing Deposits in Other
Banks $ 613,410 $ 37,391 6.09%
Reserve Funds Sold 1,806,917 106,967 5.92
Securities 6,578,275 419,498 6.38
Loans(1) 20,983,962 2,104,498(2) 10.03
----------- ---------- -----
Total Earning Assets $29,982,564 $2,668,354 8.90%
Allowance for Loan Losses (556,634)
Nonearning Assets 3,953,399
-----------
Total Assets $33,379,329
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings and NOW Accounts $ 5,513,722 $ 179,662 3.26%
Insured Money Market Accounts 3,607,678 105,285 2.91
Certificates of Deposit 14,685,932 749,806 5.10
----------- ---------- -----
Total Interest Bearing
Liabilities $23,807,332 $1,034,753 4.35%
---------- -----
Demand Deposits 5,804,415
Other Liabilities 314,818
Stockholders' Equity 3,452,764
-----------
Total Liabilities and
Stockholders' Equity $33,379,329
===========
Net Interest Income $1,633,601
==========
Net Interest Income - Spread 4.55%
=====
Net Interest Income as a % of Total Earning Assets 5.45%
=====
</TABLE>
(1) Balances include non-performing loans.
(2) Interest income includes loan fees of $156,094 and $116,289 for 1995
and 1994, respectively.
43
<PAGE> 55
<TABLE>
<CAPTION>
1994
- --------------------------------------
INTEREST AVERAGE
AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE
- --------------------------------------
<S> <C> <C>
$ 355,802 $ 20,397 5.73%
1,563,698 62,828 4.01
8,102,040 479,760 5.92
18,280,476 1,749,010(2) 9.57
----------- ---------- ----
$28,302,016 $2,311,995 8.17%
(565,251)
3,870,489
-----------
$31,607,254
===========
$ 5,769,375 $ 179,223 3.11%
3,927,907 110,760 2.82
13,373,997 490,827 3.67
----------- ---------- ----
$23,071,279 $ 780,810 3.38%
---------- ----
5,226,446
274,193
3,035,336
-----------
$31,607,254
===========
$1,531,185
==========
4.79%
=====
5.41%
=====
</TABLE>
44
<PAGE> 56
Southeast National Bank
INTEREST DIFFERENTIAL
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 OVER 1994
------------------------------
CHANGE
ATTRIBUTABLE TO TOTAL
------------------ INCREASE
VOLUME RATE (DECREASE)
-------- -------- ----------
<S> <C> <C> <C>
Interest Earning Assets:
Interest-Bearing Deposits in
Other Banks $ 15,237 $ 1,757 $ 16,994
Reserve Funds Sold 12,012 32,127 44,139
Securities (93,870) 33,608 (60,262)
Loans 265,061 90,427 355,488
-------- -------- --------
Total Interest Income $198,440 $157,919 $356,359
-------- -------- --------
Interest Bearing Liabilities:
Savings and NOW Accounts $ (8,083) $ 8,522 $ 439
Insured Money Market
Accounts (9,020) 3,545 (5,475)
Certificates of Deposit 57,939 201,040 258,979
-------- -------- --------
Total Interest Expense $ 40,836 $213,107 $253,943
-------- -------- --------
Increase in Interest Differential $157,604 $(55,188) $102,416
======== ======== ========
</TABLE>
Note: The change in interest due to both volume and rate changes has
been allocated equally between volume and rate.
45
<PAGE> 57
MANAGEMENT OF SNB
BOARD OF DIRECTORS
Certain information concerning the Board of Directors of SNB, as
provided by each of the directors, is set forth below. Directors of SNB are
elected at each annual meeting of the shareholders of SNB to hold office until
the next annual meeting of such entity and until their respective successors
are elected and qualified.
<TABLE>
<CAPTION>
Principal Occupation for
SNB the Past Five Years and
Name and Age Director Since: Certain Other Directorships
----------------------- --------------------------------- --------------------------------------
<S> <C> <C>
Ronald A. Curet (67) 1984 Attorney at Law
Larry H. Delatte (53) 1988 Owner, Delatte Metals, Inc.
Reginald Harper (43) 1995 Banker
Dennis P. Hebert (70) 1985 Retired State Representative
Verna S. Magee (74) 1984 Chairperson of the Board, SNB
Joseph Rinaudo, Jr. (66) 1986 Real Estate Appraiser
Raymond Schafer (75) 1986 Retired
Floyd H. Stark (75) 1996 Banker
Alexandre Theriot, Jr. (59) 1988 President, Alex Theriot, Jr., & Assoc.
H. Owen Vinyard (70) 1984 Dairy Farmer
</TABLE>
EXECUTIVE OFFICERS OF SNB
Executive officers of SNB are appointed by and serve at the pleasure
of the Board of Directors of SNB. The executive officer(s) of SNB and certain
information about them, are set forth below.
<TABLE>
<CAPTION>
Principal Occupation for the
Past Five Years and Certain
Name and Age Position Other Directorships
----------------------------------- --------------------------------- ---------------------------------------
<S> <C> <C>
Reginald R. Harper (43) President & CEO Banker
</TABLE>
COMPENSATION PURSUANT TO PLANS
SNB adopted the Southeast National Bank 401(k) Plan (the "401(k)
Plan") effective January 1, 1993, which conforms to the requirements of Section
401(k) of the Code and is administered through Nationwide Life Insurance
Company. The amount of contribution by each participant is discretionary with
the participant, but may not be less than 2% nor more than 10% of the
participant's compensation. Total deferrals in any calendar year cannot exceed
$9,500 (which limit was established in 1988 and is subject to certain cost of
living changes). While participation in the 401(k) Plan is voluntary, any
eligible employee who has completed one year of service (defined in the 401(k)
Plan as 1,000 hours of service) is eligible to participate in the 401(k) Plan.
Employee contributions are fully vested. Participants become vested
in SNB contributions in accordance with the vesting schedule set forth in the
401(k) Plan, which provides for vesting of 20 percent after 2 years of service,
40 percent vesting after 3 years of service, 60 percent vesting after 4 years
of service, 80 percent vesting after 5 years of service, and 100 percent
vesting after 6 years of service. The Plan administrator will direct the
trustee to pay benefits to participants under either a single lump sum payment
or equal installments over a period of not more than the participant's assumed
life expectancy at the time of distribution. Generally, withdrawals cannot be
processed until after
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the participant reaches age 59 1/2 or upon the participant's death, disability,
termination of employment or reasons of proven financial hardship. The 401(k)
Plan also allows the participant to apply for a loan as long as certain
criteria are met.
TRANSACTIONS WITH MANAGEMENT
SNB had during the past two years, and expects to have in the future,
loan transactions in the ordinary course of business with directors and
officers of SNB, and shareholders owning in excess of five percent of SNB's
Common Stock, relatives of such persons and corporations and firms of which
they are officers or in which they or their immediate families have at least a
10 percent equity interest. Such loans amounted to approximately $135,000 at
December 31, 1995, constituting 0.63% of SNB's total loans as of such date and
3.54% of SNB's shareholders' equity as of such date. These transactions have
been and will be on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unaffiliated
persons and did not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
CERTAIN INFORMATION CONCERNING HHC
GENERAL
HHC is a multi-bank holding company headquartered in Gulfport,
Mississippi with total consolidated assets of approximately $2.3 billion at
June 30, 1996. HHC operates a total of 70 banking offices and 102 automated
teller machines in the States of Mississippi and Louisiana through two wholly
owned bank subsidiaries, Hancock Bank, Gulfport, Mississippi, organized in 1899
("Hancock Bank MS") and Hancock Bank of Louisiana, Baton Rouge, Louisiana,
organized in August 1990 ("Hancock Bank").
As of June 30, 1996, the authorized capital stock of HHC consists of
20,000,000 shares of HHC Common Stock of which, 9,021,901 shares are issued and
outstanding and no shares are held in its treasury. Assuming consummation of
the Bank Merger without any SNB's or SNB's shareholders exercising their
dissenters rights, HHC will have approximately 9,572,800 shares of Common Stock
issued and outstanding after the Closing, assuming the acquisition of Community
State Bank, Independence, Louisiana, has been consummated.
Both Hancock Bank MS and Hancock Bank are community oriented and focus
primarily on offering commercial, consumer and mortgage loans and deposit
services to individuals and small to middle market businesses in their
respective market areas. Hancock Bank MS and Hancock Bank's operating strategy
is to provide their customers with the financial sophistication and breath of
products of a regional bank while successfully retaining the local appeal and
level of service of a community bank.
MERGER AND ACQUISITION HISTORY
HHC has expanded its market area through a series of mergers and
branch and deposit acquisitions. Beginning with the 1985 acquisition of the
Pascagoula-Moss Point Bank in Pascagoula, Mississippi ("PMP"), HHC has assumed
approximately $799.8 million in deposit liabilities and acquired approximately
$891.7 million in assets through acquisitions or purchase and assumption
transactions involving six (6) commercial banks, one (1) savings association
and one (1) savings association branch. At the time of the PMP acquisition,
PMP had total assets of approximately $132 million and total deposit
liabilities of approximately $114 million.
The majority of HHC's acquisition activity occurred in 1990 and 1991
and then again in 1994 and 1995. In June of 1990, Metropolitan National Bank
("MNB") was merged into Hancock Bank MS. At the time of its acquisition, MNB
had total assets of approximately $98.8 million and total deposit liabilities
of approximately $95.1 million. Also in June of 1990, pursuant to a Purchase
and Assumption Agreement, Hancock Bank MS acquired the Poplarville, Mississippi
branch of Unifirst Bank for Savings from the Resolution Trust Corporation
("RTC"). The acquisition increased HHC's
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total assets by approximately $7.8 million and its total deposit liabilities by
approximately $7.4 million. In August 1990, HHC formed Hancock Bank for the
purpose of assuming the deposit liabilities and acquiring the consumer loan
portfolio, corporate credit card portfolio and non-adversely classified
securities portfolio of AmBank, Baton Rouge, from the FDIC. As a result of the
transaction, Hancock Bank acquired fifteen (15) branch locations in the greater
Baton Rouge area, approximately $337.5 million in assets and approximately
$300.9 million in deposit liabilities. In August 1991, Hancock Bank MS
acquired certain assets and deposit liabilities of Peoples Federal Savings
Association, Bay Saint Louis, Mississippi, from the RTC. As a result of the
transaction, HHC acquired assets of approximately $39.0 million and deposit
liabilities of approximately $38.5 million.
In April 1994, HHC acquired First State Bank and Trust Company of East
Baton Rouge Parish, Baker, Louisiana ("First State Bank"). First State Bank
was merged with Hancock Bank under the pooling-of-interests accounting method.
The acquisition of First State Bank expanded HHC's market share in East Baton
Rouge Parish by increasing HHC's total assets by approximately $82 million and
total deposit liabilities by approximately $70 million. Additionally,
effective January 31, 1995, Washington Bancorp, Inc. and its subsidiary bank,
Washington Bank & Trust Company, Franklinton, Louisiana ("Washington") merged
with and into HHC and Hancock Bank, respectively, with all six (6) facilities
of Washington becoming branches of Hancock Bank. At the time of the
acquisition, Washington had total assets of approximately $90 million and total
deposits of approximately $77 million. On January 13, 1995, HHC also merged
with First Denham Bancshares, Inc., Denham Springs, Louisiana. Its wholly
owned subsidiary, First National Bank of Denham Springs ("FNB Denham") remained
a separate subsidiary of HHC. At the time of acquisition, FNB Denham had total
assets of approximately $108 million and total deposits of approximately $96.5
million. Effective August 15, 1996, HHC merged FNB Denham with and into
Hancock Bank and the six (6) offices of FNB Denham became branches of Hancock
Bank.
HHC and Hancock Bank have entered into an Agreement and Plan of
Reorganization dated June 19, 1996 with Community Bancshares, Inc. ("CBI") and
Community State Bank, Independence, Louisiana ("Community"). Under the
proposed transaction, CBI would be merged with an into HHC and Community would
be merged with and into Hancock Bank with the four (4) offices of Community
becoming branches of Hancock Bank. The proposed merger is expected to be
consummated in the fourth quarter of 1996. At June 30, 1996, Community had
approximately $91.1 million in total assets and $79.4 million in total
deposits.
HHC's regulatory capital at June 30, 1996, both on a historical basis
and after giving pro forma effect to the Bank Merger, as of that date,
substantially exceeds all current minimum regulatory requirements.
INDEMNIFICATION
The HHC Articles of Incorporation and Bylaws provide for
indemnification by HHC, to the fullest extent permitted by the Mississippi
Business Corporation Act, of directors, officers, employees and agents for
expenses, judgments, fines and amounts paid in settlement by such persons. See
"DESCRIPTION OF HHC CAPITAL STOCK -- Indemnification of Directors, Officers and
Employees" and "COMPARISON RIGHTS OF SHAREHOLDERS -- Indemnification."
CHANGES IN CONTROL
Certain provisions of the HHC Articles of Incorporation and Bylaws may
have the effect of preventing, discouraging or delaying any change in control
of HHC. The classification of the HHC Board of Directors would delay any
attempt by dissatisfied shareholders or anyone who obtains a controlling
interest in the HHC Common Stock to elect a new board of directors. The
classes of directors serve staggered three year terms so that one-third of the
directors are elected each year. These staggered terms of service may make it
more difficult for HHC shareholders to effect a change in the majority of the
HHC directors because replacement of a majority of the directors will normally
require two annual meetings of shareholders. Accordingly, this provision may
have the effect of discouraging hostile attempts to gain control of HHC.
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The HHC Articles of Incorporation contain in Article Fifth provisions
regarding the vote required to approve certain business combinations or other
significant corporate transactions involving HHC and a substantial shareholder.
Mississippi law generally requires the affirmative vote of the holders of a
majority of the shares entitled to vote at the meeting to approve a merger,
consolidation or dissolution of HHC or a disposition of all or substantially
all of HHC's assets. Article Fifth raises the required affirmative vote to 80
percent of the total number of votes entitled to be cast to approve these and
other significant corporate transactions ("business combinations") if a
"Substantial Shareholder" (as defined) is a party to the transaction or its
percentage equity interest in HHC will be increased by the transaction.
Two-thirds of the whole Board of Directors may, in all such cases, determine
not to require such 80 percent affirmative vote, but only if a majority of the
directors making such determination are "Continuing Directors" (as defined).
Such determination may only be made prior to the time the Substantial
Shareholder in question achieves such status.
A "Substantial Shareholder" generally is defined under Article Fifth
as the "beneficial owner" of more than 10 percent of the outstanding shares of
stock of HHC entitled to vote in the election of directors ("voting shares").
"Beneficial ownership" generally is defined in accordance with the definition
of beneficial ownership in Rule 13d-3 under the Securities Exchange Act of 1934
and includes all shares as to which the Substantial Shareholder in question has
sole or shared voting or investment power. However, for purposes of Article
Fifth, a Substantial Shareholder is also deemed to own beneficially shares
owned, directly or indirectly, by an "affiliate" or "associate" of the
Substantial Shareholder, as well as (i) shares which it or any such "affiliate"
or "associate" has a right to acquire, (ii) shares issuable upon the exercise
of options or rights, or upon conversion of convertible securities, held by the
Substantial Shareholder and (iii) shares beneficially owned by any other person
with whom the Substantial Shareholder or any of his "affiliates" or
"associates" acts as a partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of shares of capital stock of HHC.
A "business combination" subject to Article Fifth includes, but is not
limited to, the following: a merger or consolidation involving HHC or any of
its subsidiaries and a Substantial Shareholder; a sale, lease or other
disposition of a "substantial part" of the assets of HHC or any of its
subsidiaries (i.e., assets constituting in excess of 10 percent of the book
value of the total consolidated assets of HHC) to a Substantial Shareholder; an
issuance of equity securities of HHC or any of its subsidiaries to a
Substantial Shareholder for consideration aggregating $5 million or more; a
liquidation or dissolution of HHC; and a reclassification or recapitalization
of securities of HHC or any of its subsidiaries or a reorganization, in any
case having the effect, directly or indirectly, of increasing the percentage
interest of a Substantial Shareholder in any class of equity securities of HHC
or such subsidiary.
Article Fifth may not be amended or repealed without the affirmative
vote of 80 percent or more of the votes entitled to be cast by all holders of
voting shares (which 80 percent vote must also include the affirmative vote of
a majority of the votes entitled to be cast by all holders of voting shares not
beneficially owned by any Substantial Stockholder).
The super majority voting provisions embodied in Article Fifth may
have the effect of discouraging any takeover or change in control of HHC. If
the holders of a majority of HHC's outstanding common stock desire a takeover
or change in control, and if such takeover or change in control is opposed by
HHC management, the existing Articles of Incorporation of HHC possibly could be
used to thwart the desires of such majority.
Article Fourth of the Articles provides that the number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by Bylaw adopted by a majority of the Board of Directors (but in no event
less than nine). This provision enables the Board of Directors to increase the
size of the Board during the period between annual meetings of stockholders to
accommodate the inclusion of persons it concludes would be valuable additions
to the Board. It also enables the Board to decrease the number of
directorships in order to respond to circumstances under which the Board deems
a lower number of directors to be desirable, such as when a director
unexpectedly dies or resigns and a qualified candidate to replace the departing
director is not immediately available. It should be noted that, under the
Mississippi BCA, the Board may only increase or decrease by 80 percent or less
the number of directors last approved by the stockholders; the stockholders
must
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approve any proposal by the Board to increase or decrease by more than 30
percent the number of directors last approved by the stockholders.
Article Fourth may not be amended or repealed without the approval of
the holders of 2/3 of the outstanding Common Stock.
These provisions may have the effect of making it more difficult for
stockholders to replace or add directors, or to otherwise influence actions
taken by directors, which may discourage attempts to acquire control of HHC
which may (or may not) be in the best interest of the majority of the
stockholders.
ADDITIONAL INFORMATION
Additional information concerning HHC's business, and information
concerning the principal holders of HHC Common Stock, the directors and
executive officers of HHC, executive compensation, and certain relationships
and related transactions is contained in the Annual Report on Form 10-K of HHC
for the year ended December 31, 1995 (the "HHC 10- K"), in the Joint Proxy
Statement for the February 22, 1996 Annual Meeting of Shareholders of HHC
(incorporated into the HHC 10-K by reference), and the Form 10-Q of HHC for the
quarter ended June 30, 1996. All of such information is hereby incorporated
into this Prospectus/Proxy Statement by reference. See "DOCUMENTS INCORPORATED
BY REFERENCE."
DESCRIPTION OF HHC CAPITAL STOCK
AUTHORIZED AND OUTSTANDING STOCK
The Articles of Incorporation as amended (the "Articles") of HHC
authorize the issuance of 20,000,000 shares of Common Stock having a par value
of 3.33 per share. As of the date of this Prospectus/Proxy Statement, there
were 9,021,901 shares of common stock outstanding.
VOTING RIGHTS
The Holders of HHC Common Stock are each entitled to one vote per
share on all matters brought before shareholders.
DIVIDEND RIGHTS
The holders of Common Stock are entitled to receive such dividends as
may be declared, from time to time, by the Board of Directors out of funds
legally available therefor. Substantially all of the funds available to HHC
for payment of dividends on the Common Stock are derived from dividends paid by
its subsidiaries. The payment of dividends by HHC is subject to the
restrictions of Mississippi law applicable to the declaration of dividends by a
business corporation. Under such provisions, no distribution may be made if,
after giving it effect (1) HHC would not be able to pay its debts as they
become due in the usual course of business; or (2) HHC's total assets would be
less than the sum of its total liabilities plus the amount that would be
needed, if HHC were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distributions.
Additionally, the Federal Reserve, in its Policy Statement on Cash
Dividends Not Fully Covered by Earnings, has stated that bank holding companies
should not pay dividends except out of current earnings and unless the
prospective rate of earnings retention by the holding company appears
consistent with its capital needs, asset quality and overall financial
condition.
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PREEMPTIVE RIGHTS
The holders of HHC Common Stock do not have any preemptive or
preferential right to purchase or to subscribe for any additional shares of
Common Stock that may be issued.
FULLY PAID AND NONASSESSABLE
The shares of HHC Common Stock presently outstanding are, and those
shares of HHC Common Stock to be issued in connection with the Bank Merger will
be when issued, fully paid and nonassessable. Such shares do not have any
redemption provisions.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution or winding-up of HHC, whether
voluntary or involuntary, the holders of HHC Common Stock will be entitled to
share ratably in any of the net assets or funds which are available for
distribution to stockholders after the satisfaction of all liabilities or after
adequate provision is made therefor and after payment of any preferences on
liquidation of preferred stock, if any.
LIMITATION OF LIABILITY OF DIRECTORS
The HHC Articles provide that a director shall not be liable to HHC
or its shareholders for money damages for any action taken, or any failure to
take any action, as a director, except liability for: (i) the amount of
financial benefit received by a director to which he is not entitled; (ii) an
international infliction of harm on HHC or its shareholders; (iii) a violation
of Mississippi Code Annotated Section 79-4-8.33 (1972), as amended; or (iv) an
intentional violation of criminal law.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
HHC's Articles provide for indemnification of officers, directors and
employees in connection with a proceeding including reasonable expenses
(attorney's fees) to the fullest extent permitted by the MBCA in effect from
time to time and also provide for indemnification against liability to HHC,
liability for improperly receiving a personal benefit and/or liability for any
other reason, provided that such person's conduct did not constitute gross
negligence or wilful misconduct as determined by a board of directors or
committee designated by the board, by special legal counsel, by the
shareholders or by a court.
The HHC Articles also provide for advances to persons for reasonable
expenses if the person furnishes a written undertaking to repay the advance if
these actions are adjudged to be grossly negligent or wilful misconduct and a
determination is made that the facts known would not preclude indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling HHC pursuant to the foregoing provisions, HHC has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
TRANSFER AGENT
The registered transfer agent and registrar for HHC Common Stock is
Hancock Bank MS, Gulfport, Mississippi.
CHANGES IN CONTROL
See "CERTAIN INFORMATION CONCERNING HHC -- Changes in Control."
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COMPARISON RIGHTS OF SHAREHOLDERS
If the shareholders of SNB approve the Merger Agreement and the Merger
is subsequently consummated, all shareholders of SNB other than those
exercising dissenter's rights, will become shareholders of HHC. The rights of
shareholders of SNB who receive HHC Common Stock in connection with the Merger
will be governed by the Articles of Association, as amended, and Bylaws, as
amended, of HHC, rather than the Articles of Incorporation and Bylaws of SNB.
The rights of HHC's shareholders are governed by the Articles of Association of
HHC, the Bylaws of HHC and the laws of the State of Mississippi, including the
Mississippi Business Corporation Act (the "MBCA"). The rights of SNB's
shareholders are governed by the Articles of Association of SNB, the Bylaws of
SNB and the National Bank Act, Title 12, United States Code, Chapters 1 and 2.
The following is a brief summary of the principal differences between the
rights of shareholders of HHC and the shareholders of SNB. This summary is
qualified in its entirety by reference to the Articles of Incorporation and
Bylaws of HHC; the Articles of Association and Bylaws of SNB; as well as the
National Bank Act, Louisiana Banking Laws, the Louisiana Business Corporation
Law and the MBCA.
AUTHORIZED CAPITAL
SNB has 500,000 shares of authorized Common Stock having a par value
of $5.00 per share and no authorized preferred stock. SNB currently may, with
the approval of the Comptroller and by vote of shareholders holding a majority
of the outstanding shares of Common Stock of SNB, authorize preferred stock in
one or more series and amend its articles of association for this purpose.
HHC has 20,000,000 shares of authorized Common Stock having a par
value of $3.33 per share.
BOARD OF DIRECTORS
Consistent with the National Bank Act, the Board of Directors of SNB
may be composed of not more than twenty- five and not less than five
shareholders of SNB. Pursuant to Section 72 of the National Bank Act, every
director must, during his whole term of service, be a citizen of the United
States, and at least a majority of the directors must have resided in the State
of Louisiana, or within one hundred miles of the location of the office of the
association for at least one year immediately preceding their election, and
during their continuance in office. Consistent with the National Bank Act, the
Articles provide that each director shall own a minimum of $1,000 par value of
stock. Any director who ceases to be the owner of the required number of
shares of stock or who becomes in any other manner disqualified, is required
under the National Bank Act to vacate his place. The SNB Board currently
consists of 10 members. The directors of SNB are elected each year at the
annual meeting of the shareholders.
The Board of Directors of HHC may consist of not less than nine
persons, as set from time to time by the Board of Directors, and currently
consists of nine members. The HHC Board of Directors is divided into three
classes, as nearly equal in number as possible, with members of each class to
serve for three years and with one class being elected each year.
The Bylaws of SNB provide that a majority of the directors constitutes
a quorum at any meeting, but a lesser number may adjourn any meeting, from time
to time, and the meeting may be held, as adjourned, without further notice.
The Articles and Bylaws of SNB are silent regarding the compensation of
directors, including the compensation of those directors serving on a
committee.
Except as provided otherwise in the Articles of Incorporation of HHC,
a majority of the number of directors that constitutes the whole Board of
Directors constitutes a quorum for the transaction of business at any meeting
of the Board of Directors. If a quorum is present when a vote is taken, the
affirmative vote of a majority of directors present shall be the act of the
Board of Directors. The Bylaws of HHC provide that the Board of Directors may
fix the compensation of directors, including for serving on committees.
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REMOVAL OF DIRECTORS
The Articles and Bylaws of SNB do not have any provisions regarding
the removal of directors. A director of HHC may be removed from office only
for cause, by the affirmative vote of a majority of directors present.
VACANCIES IN THE BOARD OF DIRECTORS
The Bylaws of SNB provide that when any vacancy occurs on the Board of
Directors, the remaining members of the Board according to the laws of the
United States may appoint a director to fill the vacancy at any regular meeting
of the Board, or at a special meeting called for that purpose. Moreover, the
Articles of Incorporation of SNB provide that a director elected to fill a
vacancy shall hold office until the next regular election, or until his, or
their successors, shall be elected and qualified.
The Bylaws of HHC provide that vacancies occurring on the Board of
Directors for any reason must be filled only by vote of a majority of the
remaining members of the Board of Directors, although less than a quorum. The
person filling the vacancy must serve out the remainder of the term of the
vacated directorship or, in case the vacancy results from an increase in the
number of directors, the term designated for the class of directors of which
the directorship is a part.
AMENDMENT OF THE ARTICLES OF INCORPORATION
Consistent with the National Bank Act, the Articles of Incorporation
of SNB may be modified, altered or changed by a majority vote of all
outstanding stock, at any regular or special meeting of the stockholders,
unless the vote of the holders of a greater amount of stock is required by law,
and in that case by the vote of the holders of such greater amount. The
National Bank Act requires that any national banking association with the
approval of the Comptroller of the Currency, and by a vote of shareholders
owning two-thirds of the stock of such association, increase or decrease its
capital stock. Special meetings may be called by the Board of Directors or by
any three or more shareholders holding not less than twenty-five percent (25%)
of the entire stock of the association.
The affirmative vote of the holders of a majority of votes entitled to
be cast at a shareholders meeting is required to amend any provision of the HHC
Articles of Incorporation unless the amendment would amend the Articles
relating to certain changes in control, in which case eighty percent (80%) or
more of the votes entitled to be cast is required or unless the amendment would
amend the Articles relating to size, composition and removal of the HHC Board
of Directors, in which case the approval of the holders of not less than
two-thirds (2/3) of the outstanding shares of common stock is required.
AMENDMENT OF BYLAWS
The Bylaws of SNB may be amended or repealed at any meeting of the
Board of Directors by a vote of a majority of the whole numbers of directors.
Although certain provisions of HHC's Bylaws relating to changes in
control and the size, composition and removal of the HHC Board of Directors
require a vote of eighty percent (80%) of the total voting power and a vote of
two-thirds (2/3) of the outstanding common stock, respectively, the remaining
provisions of HHC's Bylaws may be amended or repealed by the Board of
Directors, if a quorum is present, by the affirmative vote of majority of
directors present or by the shareholders if a quorum exists and the votes cast
favoring the action exceed the votes cast opposing the action.
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SPECIAL MEETINGS OF SHAREHOLDERS
Under the Bank's Articles and Bylaws a special shareholders meeting
may be called by the Board of Directors or any three or more shareholders
owning, in the aggregate, not less than twenty-five percent of the stock of the
Bank. Under HHC's Bylaws, a special meeting of the shareholders may be called,
for any purpose or purposes, unless otherwise prescribed by statute, by the
President or by the Board of Directors, and shall be called by the President at
the request of the holders of not less than one-tenth of all the votes entitled
to be cast on any issue proposed to be considered at the meeting. A request
for a special joint meeting must be signed and dated by the shareholder(s)
requesting the special joint meeting and must state the purpose of the meeting,
and be delivered to the Corporation's Secretary. Business transacted at a
special joint meeting of the shareholders is confined to the purpose(s) stated
in the notice.
PREEMPTIVE RIGHTS
SNB's Articles grant SNB's shareholders preemptive rights to subscribe
to such additional shares of common stock except that the holders of common
stock shall not have any preemptive rights to subscribe for any shares of
common stock for all or any part of 100,000 shares of authorized but unissued
common stock to be issued from time to time by SNB pursuant to the sale
thereof, or for any lawful purpose to be used exclusively for the
implementation of any stock option plan.
The holders of HHC Common Stock do not have any preemptive or
preferential right to purchase or to subscribe for any additional shares of HHC
Common Stock that may be issued.
REPORTS TO SHAREHOLDERS
The HHC Common Stock is registered under the Exchange Act, and,
therefore, HHC is required to provide annual reports containing audited
financial statements to shareholders and to file such other reports with the
SEC and solicit proxies in accordance with the rules of the SEC. HHC also
provides reports to its shareholders on an interim basis containing unaudited
financial information. SNB Common Stock is not registered under the Exchange
Act and the Bank does not provide its shareholders with annual reports
containing audited financial statements of SNB.
DIVIDENDS
The National Bank Act provides that the Board of Directors of a
national banking association may quarterly, semiannually, or annually declare
dividends of so much of the undivided profits of the association subject to the
limitations of the National Bank Act, except that until the surplus fund of
such association shall equal its common capital, no dividends shall be declared
there has been carried to the surplus fund not less than one-tenth part of the
association's net income of the preceding half year in the case of quarterly or
semiannual dividends, or not less than one-tenth part of its net income of the
preceding two consecutive half-year periods in the case of annual dividends.
No dividends may be declared or paid unless SNB has unimpaired surplus equal to
fifty percent of the outstanding capital stock of SNB. SNB's unimpaired
surplus cannot be reduced below fifty percent by the payment of the dividend.
Prior approval of the Comptroller of the Currency may be required if the total
of all dividends declared and paid by the association during any one year would
exceed the total of its net income of that year combined with the retained net
income from the immediately preceding two years.
The sources of funds for payments of dividends by HHC is its
subsidiaries. Because the primary subsidiaries of HHC are financial
institutions, payments made by such subsidiaries of HHC to its shareholders are
limited by law and regulations of bank regulatory authorities.
The MBCA provides that no distribution, including dividend
distributions, may be made if, after giving it effect the corporation would not
be able to pay its debts as they become due in the usual course of business, or
the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if the corporation
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were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders who have superior
preferential rights upon dissolution.
VOTING RIGHTS
In all elections of SNB directors, each shareholder shall have the
right to vote the number of shares owned by him for as many persons as there
are directors to be elected, or to cumulate such shares and give one candidate
as many votes as the number of directors multiplied by the number of his shares
shall equal, or to distribute them on the same principle among as many
candidates as he shall think fit; and in deciding all other questions at
meetings of shareholders, each shareholder shall be entitled to one vote on
each share of stock held by him. The holders of HHC Common Stock are each
entitled to one vote per share on all matters brought before the shareholders.
REDEMPTION AND RETIREMENT
A national banking association is generally prohibited from purchasing
(redeeming) shares of its own capital stock unless such purchase is necessary
to prevent loss upon a debt previously contracted in good faith. Any stock so
purchased or acquired must be sold or disposed of at public or private sale
within six months of its purchase.
Under Mississippi law, a corporation is permitted to purchase or
redeem shares of its own Stock except where upon doing so, the corporation
would not be able to pay its debts as they become due in the usual course of
business. This prohibition also applies to where the corporation's total
assets would be less than the sum of the corporation's total liabilities, plus,
unless the Articles of incorporation permit otherwise, the amount that would be
needed to satisfy the preferential rights upon dissolution of stockholders
whose preferential rights are superior to those whose shares are purchased or
redeemed, if the corporation were to be dissolved at the time of such purchase
or redemption. Mississippi law permits a Board of Directors to base its
determination as to whether such purchase or redemption is prohibited either on
financial statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair valuation or
other method that is reasonable under the circumstances.
STOCKHOLDERS' INSPECTION RIGHTS
Pursuant to the National Bank Act, the president and cashier of every
national banking association shall cause to be kept at all times a full and
correct list of the names and residences of all the shareholders in the
association, and the number of shares held by each, in the office where its
business is transacted. Such list shall be subject to the inspection of all
the shareholders and creditors of the association, and the officers authorized
to assess taxes under State authority, during business hours of each day in
which business may be legally transacted. A copy of such list, verified by the
oath of such president or cashier, shall be transmitted to the Comptroller of
the Currency within ten days of any demand therefor made by him.
Under the MBCA any shareholder may inspect the shareholders' list if
the demand is made in good faith and for a proper purpose. Such shareholder
must describe his purpose and establish that the list is directly connected to
his purpose. Moreover, the stockholders' list must be available for inspection
by any shareholder beginning two days after notice of a shareholder's meeting
is given and continuing until the meeting takes place.
LIMITATION OF LIABILITY OF DIRECTORS
SNB's Articles provide that no director shall be liable to the Bank or
its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for breach of duty of loyalty to SNB or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for any unlawful
dividend or any other unlawful distribution, payment or transaction from which
the director received an improper personal benefit. SNB's Articles further
provide that if the Louisiana Business Corporation Law is thereafter amended to
authorize corporate action further limiting or eliminating the personal
liability of directors or
55
<PAGE> 67
officers, then the liability of each director and officer of the corporation
shall be limited or eliminated to the full extent permitted by the Louisiana
Business Corporation Law.
The HHC Articles provide that a director shall not be liable to HHC or
its shareholders for money damages for any action taken, or any failure to take
any action, as a director, except liability for: (i) the amount of financial
benefit received by a director to which he is not entitled; (ii) an
international infliction of harm on HHC or its shareholders; (iii) a violation
of Mississippi Code Annotated Section 79-4-8.33 (1972), as amended; or (iv) an
intentional violation of criminal law.
INDEMNIFICATION
SNB's Articles provide for indemnification of directors, officers or
employees for reasonable expenses incurred in connection with a proceeding
provided that no person shall be indemnified for any proceeding as to which he
or she is found guilty of or liable for gross negligence, willful misconduct or
criminal acts in the performance of his or her duties to the association.
SNB's Articles further provide that no person shall be indemnified for any
proceeding which has been made the subject of a compromise settlement except
with court approval, or approval of a majority of the outstanding shares of the
association or a majority of disinterested directors.
SNB's Articles further provide that SNB may purchase insurance to
indemnify its officers to the extent provided for in the Articles.
The MBCA provides that a director, officer or agent of a corporation
may be indemnified for such service if he conducted himself in good faith, and
he reasonably believed in the case of conduct in his official capacity with the
corporation, that his conduct was in the corporation's best interests; and in
all other cases that his conduct was at least not opposed to the corporation's
best interests. In the case of a criminal proceeding, a director must show
that he had no reasonable cause to believe his conduct was unlawful.
Indemnification permitted under this section in connection with a derivative
action is limited to reasonable expenses incurred in connection with the
proceeding.
The MBCA further authorizes a corporation to make further indemnity
for actions that do not constitute gross negligence or wilful misconduct if
authorized by the corporation's Articles of Incorporation. The HHC Articles
provide for indemnification to the fullest extent permitted by the MBCA and
specifically provide for the further indemnity authorized by the MBCA.
Under Mississippi law, the corporation may pay, prior to final
disposition, the expenses (including attorneys' fees) incurred by a director or
officer in defending a proceeding. Under Mississippi law, expenses incurred by
an officer or director in defending any action may be advanced prior to final
disposition upon receipt of an undertaking by the director or officer of the
corporation to repay such advances if it is ultimately determined that he is
not entitled to indemnification. Under Mississippi law, however, a
determination must be made that the facts known to those making the
determination would not preclude indemnification. Mississippi law does not
require the undertaking to be secured and the undertaking may be accepted
without reference to financial ability to make the repayment. The HCC Articles
however, provide that the request does not need to be accompanied by the
affirmation otherwise required by the MBCA.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling HHC pursuant to the foregoing provisions, HHC has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
SUPER MAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS
Certain transactions involving SNB as a national banking association,
including liquidation, merger, consolidation, conversion, sale of substantially
all assets and amendments to the Articles of Association which would
56
<PAGE> 68
increase or decrease authorized capital, require the affirmative vote of
holders of at least two-thirds of the outstanding shares of SNB's Common Stock.
HHC's Articles contain provisions regarding the vote required to
approve certain business combinations or other significant corporate
transactions involving HHC and a substantial stockholder. Mississippi law
generally requires the affirmative vote of the holders of a majority of shares
entitled to vote at a meeting to approve a merger, consolidation or dissolution
of HHC or a disposition of all or substantially all of HHC's assets. The
Articles require the affirmative vote of 80 percent of the total number of
votes entitled to be cast to approve these and other significant corporate
transactions ("business combinations") if a "Substantial Stockholder" (as
defined) is a party to the transaction or its percentage equity interest in HHC
will be increased by the transaction. A majority of the "Continuing Directors"
(as defined) of the Board of Directors may, in all such cases, determine not to
require such 80 percent affirmative vote. The required 80 percent approval of
any such business combination includes all votes entitled to be cast with
respect to voting shares not beneficially owned by any Substantial Stockholder.
In addition, such 80 percent affirmative vote will not be required if certain
price criteria and procedural requirements are satisfied. See "CERTAIN
INFORMATION CONCERNING HHC -- Changes in Control" and "DESCRIPTION OF HHC
CAPITAL STOCK -- Changes in Control" for a fuller discussion of this provision
and for definitions of such terms.
APPRAISAL RIGHTS
The National Bank Act provides for dissenters rights for conversion of
National Banks into state banks, consolidations of national banks in the same
state and mergers of national banks into national banks. See "Dissenters'
Rights."
The MBCA provides appraisal rights to shareholders in any of the
following corporate actions: (1) a merger if shareholder approval is required
or if the corporation is a subsidiary that merges with its parent; (2) a plan
of share exchange if the corporation is being acquired and the shareholder is
entitled to vote; and (3) a sale or exchange of all or substantially all of the
property of the corporation that is not in the usual and regular course of
business, but not including a court ordered sale or sale pursuant to a plan
where the shareholders will receive the proceeds within one (1) year after the
date of sale.
LEGAL MATTERS
Certain legal matters in connection with the HHC Common Stock being
offered hereby will be passed upon by Watkins Ludlam & Stennis, P.A., 633 North
State Street, Jackson, Mississippi, counsel for HHC.
EXPERTS
The financial statements of SNB as of and for the years ended December
31, 1995 and 1994 contained in this Prospectus/Proxy Statement have been
audited by Durnin & James and Hannis T. Bourgeois & Co., L.L.P., independent
auditors, as set forth in their report appearing elsewhere herein, and are
included in reliance upon the report of such firms given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of HHC incorporated in this
Prospectus/Proxy Statement by reference from the HHC Annual Report on Form 10-K
for the year ended December 31, 1995 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
57
<PAGE> 69
OTHER MATTERS
At the time of the preparation of this Prospectus/Proxy Statement, SNB
had not been informed of any matters to be presented by or on behalf of SNB or
its management for action at the Special Meeting other than those listed in the
Notice of Special Meeting of Shareholders and referred to herein. If any other
matters come before the meeting or any adjournment thereof, the persons named
in the enclosed proxy will vote on such matters according to their best
judgment.
Shareholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors of SNB and return it at once in the
enclosed envelope.
58
<PAGE> 70
INDEX TO SNB FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Unaudited Financial Statements - Six Months Ended June 30, 1996 and 1995
Condensed Balance Sheets . . . . . . . . . . . . . . . . . . . F-2
Statements of Income . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Changes in Stockholders' Equity . . . . . . . . . F-4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . F-5
Notes to Condensed Financial Statements . . . . . . . . . . . . F-7
Audited Financial Statements - Years Ended December 31, 1995 and 1994
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-8
Condensed Balance Sheets . . . . . . . . . . . . . . . . . . . . F-9
Statements of Income . . . . . . . . . . . . . . . . . . . . . . F-10
Statements of Changes in Stockholders' Equity . . . . . . . . . F-11
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . F-12
Notes to Financial Statements . . . . . . . . . . . . . . . . . F-14
</TABLE>
F-1
<PAGE> 71
Southeast National Bank
CONDENSED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash and Due from Banks $ 2,147,822 $ 2,693,265
Interest-Bearing Deposits in Other Banks 492,000 492,000
Reserve Funds Sold 200,000 430,000
Securities - Held to Maturity (Fair Value $3,303,528 and $2,717,629) $ 3,385,793 $ 2,703,351
Available for Sale (Amortized Cost $5,343,934 and $5,068,065) 5,260,689 5,013,638
----------- -----------
$ 8,646,482 $ 7,716,989
Loans - $23,750,562 $21,564,475
Less: Allowance for Loan Losses (381,036) (423,631)
----------- -----------
$23,369,526 $21,140,844
Bank Premises and Equipment 1,457,070 1,471,713
Other Real Estate 288,003 113,003
Accrued Interest Receivable 309,142 270,561
Other Assets 171,609 269,178
----------- -----------
Total Assets $37,081,654 $34,597,553
=========== ===========
LIABILITIES
-----------
Deposits -
Noninterest Bearing $ 5,512,994 $ 6,466,325
Interest Bearing 27,461,532 23,982,873
----------- -----------
$32,974,526 $30,449,198
Accrued Interest Payable 221,232 244,159
Other Liabilities 73,120 94,796
----------- -----------
Total Liabilities $33,268,878 $30,788,153
STOCKHOLDERS' EQUITY
--------------------
Common Stock - $5 par value; autorized
500,000 shares; issued 456,518 shares $ 2,282,590 $ 2,282,590
Surplus 1,439,637 1,368,907
Unrealized Gain (Loss) on Securities
Available for Sale - Net (62,433) (35,928)
Retained Earnings, Since April 1, 1995
($1,256,016 Deficit Eliminated on March 31, 1995) 152,982 193,831
----------- -----------
Total Stockholders' Equity $ 3,812,776 $ 3,809,400
----------- -----------
Total Liabilities and Stockholders' Equity $37,081,654 $34,597,553
=========== ===========
</TABLE>
* The balance sheet at December 31, 1995, has been taken from the audited
balance sheet at that date.
See notes to condensed financial statements.
F-2
<PAGE> 72
Southeast National Bank
CONDENSED STATEMENTS OF INCOME
for the six months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Interest Income:
Interest and Fees on Loans $ 1,185,072 $ 993,119
Interest on Securities 246,280 206,517
Other Interest Income 35,598 80,270
----------- -----------
Total Interest Income $ 1,466,950 $ 1,279,906
Interest Expense on Deposits 592,973 475,197
----------- -----------
Net Interest Income $ 873,977 $ 804,709
Provision for Loan Losses - -
----------- -----------
Net Interest Income after
Provision for Loan Losses $ 873,977 $ 804,709
Other Income:
Service Charges on Deposit Accounts $ 204,125 $ 180,410
Gain (Loss) on Securities - 1,997
Other Operating Income 35,483 32,110
----------- -----------
Total Other Income $ 239,608 $ 214,517
----------- -----------
Income before Other Expenses $ 1,113,585 $ 1,019,226
Other Expenses:
Salaries and Employee Benefits $ 313,179 $ 324,379
Net Occupancy and Equipment Expense 87,183 74,984
Net Other Real Estate Expense 28,491 9,921
Other Operating Expenses 340,546 331,511
----------- -----------
Total Other Expenses $ 769,399 $ 740,795
----------- -----------
Income before Income Taxes $ 344,186 $ 278,431
Applicable Income Tax 86,046 233
----------- -----------
Net Income $ 258,140 $ 278,198
=========== ===========
Per Share:
Net Income $ 0.56 $ 0.60
=========== ===========
Dividends $ .50 $ -
=========== ===========
</TABLE>
See notes to condensed financial statements.
F-3
<PAGE> 73
Southeast National Bank
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the six months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Common Stock:
Balance - Beginning and End of Period $ 2,282,590 $ 2,282,590
=========== ============
Surplus:
Balance - Beginning of Period $ 1,368,907 $ 2,282,590
Quasi-Reorganization - (1,256,016)
Transfer From Retained Earnings 70,730 -
----------- ------------
Balance - End of Period $ 1,439,637 $ 1,026,574
=========== ============
Net Unrealized Gain (Loss) on
Securities Available for Sale:
Balance - Beginning of Period $ (35,928) $ (334,430)
Net Change in Unrealized Gain
(Loss) on Securities Available
for Sale (26,505) 245,204
----------- ------------
Balance - End of Period $ (62,433) $ (89,226)
=========== ============
Retained Earnings (Deficit):
Balance - Beginning of Period $ 193,831 $ (1,203,427)
Quasi-Reorganization - 1,256,016
Net Income 258,140 278,198
Transfer to Surplus (70,730) -
Dividends Paid to Shareholders (228,259) -
----------- ------------
Balance - End of Period $ 152,982 $ 330,787
=========== ============
</TABLE>
See notes to condensed financial statements.
F-4
<PAGE> 74
Southeast National Bank
CONDENSED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 258,140 $ 278,198
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Provision for Depreciation and
Amortization 42,116 35,065
Net Amortization (Accretion) on
Securities 42,584 74,107
(Gain) Loss on Sale of Securities - (1,997)
(Gain) Loss on Sale of Equipment - (8,533)
(Increase) Decrease in Interest
Receivable (38,581) 37,810
(Increase) Decrease in Other Assets 97,569 23,804
Increase (Decrease) in Interest Payable (22,927) 36,178
Increase (Decrease) in Other Liabilities (21,676) 17,198
----------- -----------
Net Cash Provided by Operating
Activities $ 357,225 $ 491,830
Cash Flows From Investing Activities:
Net (Increase) Decrease in Reserve
Funds Sold $ 230,000 $ (300,000)
Purchases of Securities (2,498,582) (1,029,480)
Proceeds from Sales and Maturities of
Securities 1,500,000 503,543
Net (Increase) Decrease in Loans (2,403,682) (197,400)
Purchases of Premises and Equipment (27,473) (453,713)
Proceeds from Sales of Premises and
Equipment - 100,000
----------- -----------
Net Cash Used in Investing
Activities $(3,199,737) $ (1,377,050)
</TABLE>
(CONTINUED)
F-5
<PAGE> 75
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows From Financing Activities:
Dividends Paid to Shareholders $ (228,259) $ -
Net Increase (Decrease) in Demand
Deposits, NOW Accounts and Savings
Accounts 1,760,804 1,435,019
Net Increase (Decrease) in Certificates
of Deposit 764,524 (403,132)
----------- -----------
Net Cash Provided by
Financing Activities $ 2,297,069 $ 1,031,887
----------- -----------
Increase (Decrease) in Cash and Due
from Banks $ (545,443) $ 146,667
Cash and Due from Banks - Beginning of Period 2,693,265 2,244,367
----------- -----------
Cash and Due from Banks - End of Period $ 2,147,822 $ 2,391,034
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Noncash Investing Activities:
Other Real Estate Acquired in
Settlement of Loans $ 175,000 $ -
=========== ===========
Change in Unrealized Gain (Loss)
on Securities Available for Sale $ (28,818) $ 245,204
=========== ===========
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities
Available for Sale $ 2,313 $ -
=========== ===========
Cash Payments for:
Interest Paid on Deposits $ 615,900 $ 439,019
=========== ===========
</TABLE>
See notes to condensed financial statements.
F-6
<PAGE> 76
Southeast National Bank
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1996 and 1995
Note A - Summary of Significant Accounting Policies -
The accompanying Unaudited Condensed Financial Statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and accordingly, do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the entire year. For further information, refer to the annual
financial statements and notes thereto of Southeast National Bank included
elsewhere herein.
Note B - Proposed Merger
On July 31, 1996, SNB entered into an Agreement and Plan of
Reorganization with Hancock Bank and HHC, pursuant to which SNB will be
merged with and into Hancock Bank of Louisiana. The proposed merger is
subject to various conditions, including approval by shareholders of SNB and
by certain regulatory agencies. The agreement contemplates that the
shareholders of SNB will receive approximately $3.7 million in cash and
shares of HHC Common Stock valued at approximately $3.9 million, all subject
to adjustment under certain circumstances. The merger is expected to be
consummated during the first quarter of 1997.
F-7
<PAGE> 77
January 26, 1996
Independent Auditors' Report
To the Board of Directors
Southeast National Bank
Hammond, Louisiana
We have audited the accompanying Balance Sheets of Southeast National
Bank as of December 31, 1995 and 1994, and the related Statements of Income,
Changes in Stockholders' Equity and Cash Flows for the years then ended. These
financial statements are the responsibility of the Bank's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Southeast National
Bank as of December 31, 1995 and 1994, and the results of its operations,
changes in its stockholders' equity and its cash flows for the years then ended
in conformity with generally accepted accounting principles.
Respectfully submitted,
DURNIN & JAMES HANNIS T. BOURGEOIS & CO., L.L.P.
F-8
<PAGE> 78
Southeast National Bank
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash and Due from Banks - Note C $ 2,693,265 $ 2,244,367
Interest-Bearing Deposits in Other Banks 492,000 686,000
Reserve Funds Sold 430,000 600,000
Securities - Note D:
Held to Maturity (Fair Value $2,717,629
and $1,225,568) $ 2,703,351 $ 1,284,329
Available for Sale (Amortized Cost
$5,068,065 and $5,164,623) 5,013,638 4,830,192
----------- -----------
$ 7,716,989 $ 6,114,521
Loans - Note E $21,564,475 $20,350,298
Less: Allowance for Loan Losses - Note F (423,631) (567,315)
----------- -----------
$21,140,844 $19,782,983
Bank Premises and Equipment - Note G 1,471,713 1,127,121
Other Real Estate 113,003 286,310
Accrued Interest Receivable 270,561 239,607
Other Assets 269,178 199,403
----------- -----------
Total Assets $34,597,553 $31,280,312
=========== ===========
LIABILITIES
Deposits - Note H:
Noninterest Bearing $ 6,466,325 $ 5,319,845
Interest Bearing 23,982,873 22,697,626
----------- -----------
$30,449,198 $28,017,471
Accrued Interest Payable 244,159 126,689
Other Liabilities 94,796 108,829
----------- -----------
Total Liabilities $30,788,153 $28,252,989
STOCKHOLDERS' EQUITY
Common Stock - $5 par value; authorized
500,000 shares; issued 456,518 shares - Note I $ 2,282,590 $ 2,282,590
Surplus - Note B 1,368,907 2,282,590
Unrealized Gain (Loss) on Securities
Available for Sale - Net (35,928) (334,430)
Retained Earnings, Since April 1, 1995
($1,256,016 Deficit Eliminated
on March 31, 1995) - Note B 193,831 (1,203,427)
----------- -----------
Total Stockholders' Equity $ 3,809,400 $ 3,027,323
----------- -----------
Total Liabilities and Stockholders'
Equity $34,597,553 $31,280,312
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE> 79
Southeast National Bank
STATEMENTS OF INCOME
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Interest Income:
Interest and Fees on Loans $ 2,104,498 $ 1,749,010
Interest on Securities 419,498 479,760
Other Interest Income 144,358 83,225
----------- -----------
Total Interest Income $ 2,668,354 $ 2,311,995
Interest Expense on Deposits - Note H 1,034,753 780,810
----------- -----------
Net Interest Income $ 1,633,601 $ 1,531,185
Provision for Loan Losses - Note F (134,000) -
----------- -----------
Net Interest Income after Provision
for Loan Losses $ 1,767,601 $ 1,531,185
Other Income:
Service Charges on Deposit Accounts $ 380,849 $ 364,424
Gain (Loss) on Securities - Note D 1,997 (6,549)
Other Operating Income 57,256 37,246
----------- -----------
Total Other Income $ 440,102 $ 395,121
----------- -----------
Income before Other Expenses $ 2,207,703 $ 1,926,306
Other Expenses:
Salaries and Employee Benefits - Note J $ 683,984 $ 646,448
Net Occupancy and Equipment Expense 166,614 171,077
Net Other Real Estate Expense 46,618 (13,496)
Other Operating Expenses - Note K 638,323 685,878
----------- -----------
Total Other Expenses $ 1,535,539 $ 1,489,907
----------- -----------
Income before Income Taxes $ 672,164 $ 436,399
Applicable Income Tax - Note L (39,669) (27,539)
----------- -----------
Net Income $ 711,833 $ 463,938
=========== ===========
Per Share:
Net Income $ 1.56 $ 1.02
=========== ===========
Dividends $ .50 $ -
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 80
Southeast National Bank
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Common Stock:
Balance - Beginning and End of Year $ 2,282,590 $ 2,282,590
=========== ============
Surplus:
Balance - Beginning of Year $ 2,282,590 $ 2,282,590
Quasi-Reorganization - Note B (1,256,016) -
Utilization of Tax Benefit Subsequent
to Quasi-Reorganization - Note B 88,907 -
Transfer From Retained Earnings 253,426 -
----------- ------------
Balance - End of Year $ 1,368,907 $ 2,282,590
=========== ============
Net Unrealized Gain (Loss) on Securities
Available for Sale:
Balance - Beginning of Year $ (334,430) $ -
Net Change in Unrealized Gain (Loss)
on Securities Available for Sale 298,502 (334,430)
----------- -----------
Balance - End of Year $ (35,928) $ (334,430)
=========== ============
Retained Earnings (Deficit):
Balance - Beginning of Year $(1,203,427) $(1,667,365)
Quasi-Reorganization - Note B 1,256,016 -
Utilization of Tax Benefit Subsequent
to Quasi-Reorganization - Note B (88,907) -
Net Income 711,833 463,938
Transfer to Surplus (253,426) -
Dividends Paid to Shareholders (228,258) -
----------- -----------
Balance - End of Year $ 193,831 $(1,203,427)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE> 81
Southeast National Bank
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 711,833 $ 463,938
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Provision (Credit) for Deferred Tax (39,902) (27,539)
Provision (Credit) for Loan Losses (134,000) -
Provision for Writedowns on Other
Real Estate - 9,999
Provision for Depreciation and
Amortization 81,158 66,802
Amortization (Accretion) on
` Securities 11,198 9,476
(Gain) Loss on Sale of Securities (1,997) 6,549
(Gain) Loss on Sale of Other Real Estate 31,387 (26,943)
(Gain) Loss on Sale of Equipment 20,931 12,187
(Increase) Decrease in Interest
Receivable (30,954) (40,991)
(Increase) Decrease in Other Assets (11,373) 24,395
Increase (Decrease) in Interest
Payable 117,470 10,522
Increase (Decrease) in Other
Liabilities (14,033) (16,597)
----------- -----------
Net Cash Provided by Operating
Activities $ 741,718 $ 491,798
Cash Flows From Investing Activities:
Net (Increase) Decrease in Reserve
Funds Sold $ 170,000 $ 250,000
Net (Increase) Decrease in Interest
Bearing Deposits in Other Banks 194,000 (590,911)
Purchases of Securities (1,993,967) (1,991,182)
Proceeds from Sales and Maturities
of Securities 662,300 3,506,375
Net (Increase) Decrease in Loans (1,223,861) (2,588,959)
Purchases of Premises and Equipment (561,681) (174,946)
Proceeds from Sales of Premises and
Equipment 115,000 5,530
Proceeds from Sales of Other Real Estate 141,920 343,810
----------- -----------
Net Cash Used in Investing
Activities $(2,496,289) $(1,240,283)
</TABLE>
(CONTINUED)
F-12
<PAGE> 82
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash Flows From Financing Activities:
Payment of Dividends $ (228,258) $ -
Net Increase (Decrease) in Demand
Deposits, NOW Accounts and Savings
Accounts 126,823 799,081
Net Increase (Decrease) in Certificates
of Deposit 2,304,904 (162,860)
----------- -----------
Net Cash Provided by Financing
Activities $ 2,203,469 $ 636,221
----------- -----------
Increase (Decrease) in Cash and Due
from Banks $ 448,898 $ (112,264)
Cash and Due from Banks - Beginning of Year 2,244,367 2,356,631
----------- -----------
Cash and Due from Banks - End of Year $ 2,693,265 $ 2,244,367
=========== ===========
Supplemental Disclosures of Cash Flow
Information:
Noncash Investing Activities:
Other Real Estate Acquired in
Settlement of Loans $ - $ 141,782
=========== ===========
Change in Unrealized Gain (Loss)
on Securities Available for Sale $ 280,002 $ (334,430)
=========== ===========
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities
Available for Sale $ 18,500 $ -
=========== ===========
Cash Payments for:
Interest Paid on Deposits $ 917,283 $ 770,288
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE> 83
Southeast National Bank
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
Note A - Summary of Significant Accounting Policies -
The accounting principles followed by Southeast National Bank are
those which are generally practiced within the banking industry. The
methods of applying those principles conform with generally accepted
accounting principles and have been applied on a consistent basis. The
principles which significantly affect the determination of financial
position, results of operations, changes in stockholders' equity and
cash flows are summarized below. Certain reclassifications to
previously published financial statements have been made to comply with
current reporting requirements.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Securities
Securities are being accounted for in accordance with Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Investments in Debt and Equity Securities," which requires the
classification of securities as held to maturity, trading, or available
for sale.
Securities classified as held to maturity are those debt
securities the Bank has both the intent and ability to hold to maturity
regardless of changes in market conditions, liquidity needs or changes
in general economic conditions. These securities are carried at cost
adjusted for amortization of premium and accretion of discount, computed
by various methods approximating the interest method over their
contractual lives.
Securities classified as available for sale are those debt
securities that the Bank intends to hold for an indefinite period of
time but not necessarily to maturity. Any decision to sell a security
classified as available for sale would be based on various factors,
including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs,
regulatory capital considerations, and other similar factors.
Securities available for sale are carried at fair value. Unrealized
gains or losses are reported as increases or decreases in stockholders'
equity. Realized gains or losses, determined on the basis of the cost
of specific securities sold, are included in earnings. The Bank does
not engage in trading activities.
Loans
Loans are stated at principal amounts outstanding, less unearned
income and allowance for loan losses. Interest on commercial loans is
accrued daily based on the principal outstanding.
The Bank discontinues the accrual of interest income when a loan
becomes 90 days past due as to principal or interest. Interest on
impaired loans is discontinued when, in management's opinion, the
borrower may be unable to meet payments as they become due. When a loan
is placed on non-accrual status, previously recognized but uncollected
interest is reversed to income or charged to the allowance for loan
losses. Interest income is subsequently recognized only to the extent
cash payments are received.
F-14
<PAGE> 84
Allowance for Loan Losses
The allowance for loan losses is an amount which in management's
judgment is adequate to absorb potential losses in the loan portfolio.
The allowance for loan losses is based upon management's review and
evaluation of the loan portfolio. Factors considered in the
establishment of the allowance for loan losses include management's
evaluation of specific loans; the level and composition of classified
loans; historical loss experience; results of examinations by regulatory
agencies; an internal asset review process; expectations of future
economic conditions and their impact on particular borrowers; and other
judgmental factors.
The allowance for loan losses is based on estimates of potential
future losses, and ultimate losses may vary from the current estimates.
These estimates are reviewed periodically and as adjustments become
necessary, the effect of the change in estimate is charged to operating
expenses in the period incurred. All losses are charged to the
allowance for loan losses when the loss actually occurs or when
management believes that the collectibility of the principal is
unlikely. Recoveries are credited to the allowance at the time of
recovery.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based upon estimated
useful service lives using the straight-line method for financial and
accelerated methods for tax purposes.
The cost of assets retired or otherwise disposed of and the
related accumulated depreciation are eliminated from the accounts in the
year of disposal and the resulting gains or losses are included in
current operations.
Expenditures for maintenance and repairs are charged to
operations as incurred. Cost of major additions and improvements are
capitalized.
Other Real Estate
Other real estate is comprised of properties acquired through
foreclosure or negotiated settlement. The carrying value of these
properties is lower of cost or fair value. Loan losses arising from the
acquisition of these properties are charged against the allowance for
loan losses. Any subsequent market reductions required are charged to
other operating expense. Revenues and expenses associated with
maintaining or disposing of foreclosed properties are recorded during
the period in which they are incurred.
Income Taxes
The provision for income taxes is based on income as reported in
the financial statements after tax free interest income is excluded.
Also certain items of income and expenses are recognized in different
time periods for financial statement purposes than for income tax
purposes. Thus provisions for deferred taxes are recorded in
recognition of such timing differences.
Deferred taxes are provided on a liability method in accordance
with SFAS No. 109 whereby deferred tax assets are recognized for
deductible temporary differences and operating loss and tax credit
carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
The Bank files a federal income tax return, and is exempt from
filing a state income tax return in accordance with state statutes.
Statements of Cash Flows
For purposes of reporting cash flows, cash and due from banks
include cash on hand and amounts due from banks (including cash items in
process of clearing).
F-15
<PAGE> 85
Earnings Per Common Share
The computation of earnings per share and other per share amounts
of common stock is based on the weighted average number of shares of
common stock outstanding during each year, which is 456,518 in 1995 and
1994.
Current Accounting Developments
In December, 1991, the Financial Accounting Standards Board
issued Statement No. 107, "Disclosures about Fair Value of Financial
Instruments". This statement requires disclosure of the fair value of
financial instruments, both assets and liabilities, whether or not such
instruments are recognized in the Balance Sheet. As it relates to the
Bank, financial instruments include primarily cash equivalents,
securities, loans, and deposits. SFAS No. 107 was adopted by the Bank
for the fiscal year ended December 31, 1995. Reference should be made
to Note N regarding the adoption of this statement.
The Financial Accounting Standards Board has issued Statement No.
114, "Accounting by Creditors for Impairment of a Loan," which became
effective for years beginning after December 15, 1994. The Statement
generally requires impaired loans to be measured on the present value of
expected future cash flows discounted at the loan's effective interest
rate, or as an expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. A
loan is impaired when it is probable the creditor will be unable to
collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement. The Financial
Accounting Standards Board has also issued Statement No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures". SFAS No. 118 allows a creditor to use existing
methods for recognizing interest income on impaired loans. Reference
should be made to Note E regarding the application of these statements.
Note B - Quasi-Reorganization -
The shareholders of the Bank on June 22, 1995 approved an
election to effect a quasi-reorganization of the Bank as of April 1,
1995. A quasi-reorganization is an accounting procedure based on the
concept that when a bank has previously suffered losses, but has
subsequently corrected its problems, it should be allowed to restate its
records as if it has been reorganized. This procedure allowed the Bank
to reorganize its equity capital by transferring amounts from surplus to
the retained earnings account to remove the deficit without undergoing a
legal reorganization. The reorganization was granted after proper
regulatory approval. The Bank's assets and liabilities approximated
fair value at the date of reorganization. As a result of the Quasi-
Reorganization, $1,256,016 was transferred from surplus to retained
earnings.
Prior to the reorganization the Bank had a net operating loss
carry forward as explained in Note L. Accounting principles require
that the utilization of tax benefits from Pre-Quasi-Reorganization
amounts shall be reclassified from retained earnings to surplus. In
accordance with this requirement the Bank has reclassified $88,907 as
presented in the Statements of Changes in Stockholders' Equity. Under
ordinary accounting practice, the Bank would have charged this benefit
directly to surplus, which would have decreased net income by $88,907 or
$.20 per share. In future years, any tax benefits from the present net
operating loss carryforward will be accounted for as described above.
Note C - Cash and Due from Banks -
The Bank is required to maintain average cash reserve balances.
The amounts of those reserves at December 31, 1995 and 1994, were
approximately $128,000 and $117,000, respectively.
F-16
<PAGE> 86
Note D - Securities -
Amortized cost and fair values of securities being held to maturity as
of December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $ 498,620 $ 599 $ - $ 499,219
Securities of
Other U.S.
Government
Agencies 1,799,711 5,120 - 1,804,831
Mortgage-Backed
Securities 319,203 8,516 - 327,719
Other Debt Securities 85,817 43 - 85,860
---------- -------- -------- ----------
Total $2,703,351 $ 14,278 $ - $2,717,629
========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Securities of
Other U.S.
Government
Agencies $ 796,925 $ -- $ (53,915) $ 743,010
Mortgage-Backed
Securities 386,136 861 -- 386,997
Other Debt Securities 101,268 -- (5,707) 95,561
---------- ---------- ---------- ----------
Total $1,284,329 $ 861 $ (59,622) $1,225,568
========== ========== ========== ==========
</TABLE>
The amortized cost and fair values of securities being held to maturity
as of December 31, 1995 by contractual maturity are shown below. Maturities
may differ from contractual maturities in mortgage backed securities because
the mortgages underlying the securities may be called or repaid without any
penalties. Therefore, these securities are not included in the maturity
categories in the following maturity summary.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- ----------
<S> <C> <C>
Within One Year $ 498,620 $ 499,219
One to Five Years 1,885,528 1,890,691
---------- ----------
$2,384,148 $2,389,910
========== ==========
</TABLE>
F-17
<PAGE> 87
Securities being held to maturity with a carrying amount of $552,027 and
$483,124 at December 31, 1995 and 1994, respectively, were pledged as
collateral on public deposits and for other purposes as required or
permitted by law.
Amortized cost and fair values of securities available for sale as of
December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $2,280,294 $ 599 $ (8,705) $2,272,188
Securities of
Other U.S.
Government
Agencies 1,729,061 -- (39,963) 1,689,098
Other Debt Securities 959,410 -- (6,358) 953,052
Equity Securities 99,300 -- -- 99,300
---------- ---------- ---------- ----------
Total $5,068,065 $ 599 $ (55,026) $5,013,638
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $2,290,531 $ 1,369 $ (132,105) $2,159,795
Securities of
Other U.S.
Government
Agencies 1,007,462 -- (97,462) 910,000
Other Debt Securities 1,729,630 -- (106,233) 1,623,397
Equity Securities 137,000 -- -- 137,000
---------- ---------- ---------- ----------
Total $5,164,623 $ 1,369 $ (335,800) $4,830,192
========== ========== ========== ==========
</TABLE>
The amortized cost and fair values of securities available for sale as of
December 31, 1995 by contractual maturity are shown below. Equity securities
are not included in the following maturity schedule.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Within One Year $ 498,621 $ 499,219
One to Five Years 1,781,674 1,772,969
Five to Ten Years 959,410 953,052
After Ten Years 1,729,060 1,689,098
---------- ----------
$4,968,765 $4,914,338
========== ==========
</TABLE>
F-18
<PAGE> 88
Securities available for sale with a carrying amount of $3,746,963 and
$2,451,826 at December 31, 1995 and 1994, respectively, were pledged as
collateral on public deposits and for other purposes as required or
permitted by law.
The Bank has invested in Federal Reserve Bank stock which is included in
Equity Securities and is reflected at the net lower of cost or market in
these financial statements. The cost of these securities were $99,300 and
$137,000, respectively, at December 31, 1995 and 1994.
Gross realized gains and losses from the sale of securities for the
years ended December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Realized Gains $ 1,997 $ --
Realized Losses -- (6,549)
------- -------
$ 1,997 $(6,549)
======= =======
</TABLE>
Note E - Loans -
An analysis of the loan portfolio at December 31, 1995 and 1994, is as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Real Estate Loans - Mortgage $17,181,410 $16,999,372
Commercial and Industrial Loans 1,945,607 1,218,715
Loans to Individuals 2,429,088 2,100,507
All Other Loans 8,370 31,704
----------- -----------
Total Loans $21,564,475 $20,350,298
=========== ===========
</TABLE>
The Bank had loans on a non-accrual basis totaling approximately
$226,153 and $292,382 at December 31, 1995 and 1994. The Bank recognized
$-0- in interest income relating to these loans during the years ended
December 31, 1995 and 1994. Had the loans been performing, approximately
$18,117 and $20,329 of additional interest income would have been recognized
for the years ended December 31, 1995 and 1994. Loans contractually past
due 90 days or more, in addition to loans on non- accrual, were $-0- at
December 31, 1995 and 1994.
Impaired loans having recorded investments of approximately $226,000 at
December 31, 1995 have been recorded in accordance with SFAS No. 114 as
amended by SFAS No. 118. The total allowance for loan losses related to
these loans was $100,000 at December 31, 1995.
The Bank is permitted to make extensions of credit to its executive
officers, directors and their affiliates in the ordinary course of business.
The amount of such related party loans was $146,696 and $102,586 at December
31, 1995 and 1994. An analysis of the aggregate of these loans for 1995 and
1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Balance - Beginning of Year $ 102,586 $ 119,292
New Loans 221,454 32,595
Repayments (177,344) (49,301)
--------- ---------
Balance - End of Year $ 146,696 $ 102,586
========= =========
</TABLE>
F-19
<PAGE> 89
Note F - Allowance for Loan Losses -
Following is a summary of the activity in the allowance for loan
losses:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Balance - Beginning of Year $ 567,315 $ 596,063
Current Provision from Income (134,000) --
Recoveries of Amounts
Previously Charged Off 270 30,902
Amounts Charged Off (9,954) (59,650)
--------- ---------
Balance - End of Year $ 423,631 $ 567,315
========= =========
Ratio of Allowance for
Loan Losses to Non-
Performing Loans at
End of Year 93.69% 194.03%
Ratio of Allowance for Loan
Losses to Loans Outstanding
at End of Year 1.97% 2.79%
Ratio of Net Loans Charged
Off to Average Loans
Outstanding for the Year .05% .15%
</TABLE>
Note G - Bank Premises and Equipment -
Bank premises and equipment costs and the related accumulated
depreciation at December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
ACCUMULATED
ASSET COST DEPRECIATION NET
---------- ------------ ----------
<S> <C> <C> <C>
December 31, 1995:
Land $ 460,150 $ -- $ 460,150
Bank Premises 1,000,242 150,972 849,270
Furniture and Equipment 764,315 612,496 151,819
Leasehold Improvements 20,954 10,480 10,474
---------- ---------- ----------
$2,245,661 $ 773,948 $1,471,713
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
ASSET COST DEPRECIATION NET
---------- ------------ ----------
<S> <C> <C> <C>
December 31, 1994:
Land and Land Improvements $ 460,150 $ -- $ 460,150
Bank Premises 679,066 255,801 423,265
Furniture and Equipment 695,336 571,932 123,404
Leasehold Improvements 20,954 8,778 12,176
Construction in Progress 108,126 -- 108,126
---------- ---------- ----------
$1,963,632 $ 836,511 $1,127,121
========== ========== ==========
</TABLE>
F-20
<PAGE> 90
The provision for depreciation charged to operating expenses was $81,158
and $66,802 for the years ended December 31, 1995 and 1994.
During 1994, the Bank started construction on a new building for its
main office operations. All costs associated with construction of the
building through December 31, 1994, are included in construction in
progress. The building was completed in 1995, at a total cost of $600,829.
Funding for the construction and new equipment was provided by internal
operations.
Note H - Deposits -
Following is a detail of deposits:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Demand Deposit Accounts $ 6,466,325 $ 5,319,845
NOW and Super NOW accounts 2,671,179 2,644,501
Money Market Accounts 2,844,671 3,975,492
Savings Accounts 2,867,348 2,782,862
Certificates of Deposit Over $100,000 2,304,736 1,406,777
Other Certificates of Deposit 13,294,939 11,887,994
----------- -----------
$30,449,198 $28,017,471
=========== ===========
</TABLE>
Interest expense on certificates of deposit over $100,000 for the year
ended December 31, 1995 and 1994, amounted to $40,320 and $76,950.
Public fund deposits at December 31, 1995 and 1994, were approximately
$1,266,961 and $1,761,860, respectively.
Note I - Stockholders' Equity and Regulatory Matters -
Dividends are payable only out of retained earnings and current
earnings. The amount of dividends paid by the Bank may be restricted by law
and require regulatory approval. The Bank was restricted from paying
dividends until the deficit in retained earnings was eliminated. Reference
should be made to Note B regarding the Quasi- Reorganization. As of January
1, 1996, the Bank had retained earnings of $193,831 after paying a dividend
of $228,258 in 1995 to its shareholders.
The Bank is also required to maintain minimum amounts of capital to
total risk weighted assets, as required by banking regulators. At December
31, 1995, the Bank is required to have minimum Tier 1 and Total Capital
ratios of 4.00% and 8.00%, respectively. The Bank's actual ratios at that
date were 16.83% and 18.09%, respectively. The Bank's Leverage Ratio at
December 31, 1995, was 10.83%.
Note J - Profit Sharing Plan -
During 1993, the Bank adopted a Salary Deferral Plan qualified under
Internal Revenue Code Section 401(k) for all employees who are 21 years of
age, have at least one year of service and work at least 1,000 hours in the
current year. As part of the plan, the Bank has, at its discretion, the
ability to match the contributions as a percentage of the amounts
contributed. For 1995 and 1994, the Bank elected to make contributions in
the amount of $16,995 and $9,617, respectively.
F-21
<PAGE> 91
Note K - Other Operating Expenses -
An analysis of Other Operating Expenses for the years ended
December 31, 1995 and 1994, is as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ----------
<S> <C> <C>
Ad Valorem Taxes $ 33,983 $ 34,306
Computer Service Fees 169,485 150,439
Legal and Professional Fees 24,951 47,913
Regulatory Assessments 20,078 80,924
Other 389,826 372,296
---------- ----------
$ 638,323 $ 685,878
========== ==========
</TABLE>
Note L - Federal Income Taxes -
The applicable income tax for financial reporting purposes historically
differs from the amount computed by applying the federal statutory tax rate
of 34% to income before income taxes due to increases and decreases in
timing differences and utilization of a prior net operating loss
carryforward.
At December 31, 1995, the Bank had, for tax purposes, a net operating
loss carryforward of approximately $704,000 which begins expiring in the
year 2003.
Following is a reconciliation between income tax expense based on the
federal statutory tax rates and income taxes reported in the statements of
income.
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Income Taxes Based on Statutory
Rate - 34% in 1995 and 1994 $ 228,536 $ 148,376
Tax Exempt Income -- (1,956)
Other - Net (133,958) 65,632
Net Operating Loss Utilized (134,247) (239,591)
--------- ---------
$ (39,669) $ (27,539)
========= =========
</TABLE>
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Components of the Provision for Income Taxes:
Provision for Current Taxes $ 233 $ --
Provision for Deferred Taxes (39,902) (27,539)
-------- --------
$(39,669) $(27,539)
======== ========
</TABLE>
A deferred income tax asset of $230,000 and $171,598 is included in
other assets at December 31, 1995 and 1994.
F-22
<PAGE> 92
The deferred tax provision (benefit) for 1995 consists of the following
timing differences:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net Operating Loss Carryforward $ 134,247 $ 239,591
Depreciation Expense for Tax
Reporting in Excess of Amount
for Financial Reporting (3,098) 7,000
Provision for Loan Losses for
Financial Reporting in Excess
of Amount for Tax Reporting 45,246 --
Other Real Estate Write-Offs for
Financial Reporting in Excess
of Amount for Tax Reporting 50,500 2,000
--------- ---------
Provision (Benefit) for Deferred Taxes $ 226,895 $ 248,591
Adjustment of Valuation Allowance 266,797) (276,130)
--------- ---------
Provision (Benefit) for Deferred Taxes $ (39,902) $ (27,539)
========= =========
</TABLE>
The net deferred tax asset and liability consist of the following
components at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Depreciation $ (20,902) $ (24,000)
Provision for Loan Losses 20,754 66,000
Other Real Estate 8,500 59,000
Unrealized Loss on Securities Available
for Sale 18,500 113,706
Net Operating Loss Carryforward 237,148 371,395
--------- ---------
Total Deferred Tax Asset (Liability) $ 264,000 $ 586,101
Deferred Tax Asset Not Recognized (34,000) (414,503)
--------- ---------
Net Deferred Tax Asset (Liability) $ 230,000 $ 171,598
========= =========
</TABLE>
At December 31, 1995 and 1994, the Bank recorded a valuation allowance
of $34,000 and $414,503, respectively, on the total deferred tax assets to
reduce the total to an amount that management believes will ultimately be
realized. Realization of deferred tax assets is dependent upon sufficient
future taxable income during the period that deductible temporary
differences and net operating loss carryforwards are expected to be
available to reduce taxable income.
Note M - Off-Balance-Sheet Instruments -
The Bank is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and letters of credit. Those instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the Balance
Sheets.
F-23
<PAGE> 93
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments
and conditional obligations as they do for on-balance-sheet instruments.
In the normal course of business the Bank has made commitments to extend
credit of $2,880,328 at December 31, 1995. This amount includes unfunded
loan commitments aggregating $2,854,828 and letters of credit of $25,500.
Note N - Fair Value of Financial Instruments -
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:
Cash and Short-Term Investments - For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
Securities - Fair value of securities held to maturity and available for
sale is based on quoted market prices or dealer notes. If a quoted market
price is not available, fair value is estimated using quoted market prices
for similar securities.
Loans - The fair value for loans is estimated using discounted cash flow
analyses, with interest rates currently being offered for similar loans to
borrowers with similar credit rates. Loans with similar classifications are
aggregated for purposes of the calculations. The allowance for loan loss
which was used to measure the credit risk, is subtracted from loans.
Deposits - The fair value of demand deposits, savings account, and
certain money market deposits is the amount payable at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated using
discounted cash flow analyses, with interest rates currently offered for
deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit - The fair
value of commitments to extend credit and standby letters of credit were not
significant.
The estimated approximate fair values of the Bank's financial
instruments as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
1995
--------------------------
CARRYING FAIR
AMOUNT VALUE
------------ -------------
<S> <C> <C>
Financial Assets:
Cash and Short-Term Investments $ 3,615,265 $ 3,615,265
Securities 7,716,989 7,731,267
Loans-Net 21,140,844 21,198,836
----------- -----------
$32,473,098 $32,545,368
=========== ===========
Financial Liabilities:
Deposits $30,449,198 $30,279,757
=========== ===========
</TABLE>
F-24
<PAGE> 94
Note Q - Concentrations of Credit -
All of the Bank's business activities are with customers in the Bank's
market area, which consists primarily of Tangipahoa and adjacent parishes.
The majority of such customers are depositors of the Bank. The
concentrations of credit by type of loan are shown in Note D. Most of the
Bank's credits are to individuals and small businesses secured by real
estate.
Note P - Commitments -
The Bank has entered into leasing agreements for a parcel of land and
other operating equipment. These agreements, which are treated as operating
leases, expire in various years through 2014. Future minimum rental
payments required under these operating leases follow:
<TABLE>
<CAPTION>
December 31,
------------
<S> <C>
1996 $ 22,800
1997 22,800
1998 23,400
1999 23,400
2000 and Thereafter 436,200
---------
$ 528,600
=========
</TABLE>
Note Q - Litigation and Contingencies -
The Bank is a defendant in a lawsuit filed by one of its customers
requesting the Bank to rescind a sale of real estate from the Bank to the
customer. The basis of this action is the discovery of gasoline
contamination caused by leaking underground tanks. Legal counsel has
advised that the Bank is now presented with the choice of abandoning the
property at a write-off of about $250,000 and expense of about $50,000, or
taking the property back at an as yet undetermined cost. As of December 31,
1995 the Bank has classified the $226,153 loan. In addition, the Bank has
accrued an additional $54,614 in anticipation of future expenses as of
December 31, 1995.
F-25
<PAGE> 95
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
the 31st day of July, 1996, is made between SOUTHEAST NATIONAL BANK, Hammond,
Louisiana, a national banking association ("SNB"), HANCOCK BANK OF LOUISIANA,
Baton Rouge, Louisiana, a Louisiana banking corporation ("Hancock Bank") and
HANCOCK HOLDING COMPANY, Gulfport, Mississippi, a Mississippi corporation
("HHC").
The Boards of Directors of SNB, Hancock Bank and HHC have duly approved
this Agreement and have authorized the execution hereof by their respective
President. SNB has directed that this Agreement be submitted to a vote of its
shareholders, in accordance with Section 214a of Title 12 of the United States
Code ("U.S.C."), and the terms of this Agreement.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Agreement for the merger of SNB with and into
Hancock Bank and prescribe the terms and conditions of such merger and the mode
of carrying it into effect, which shall be as follows:
ARTICLE 1
DEFINITIONS
Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meaning to be equally applicable to
both the singular and plural forms of the terms defined):
1.1 "Agreement" shall mean this Agreement and Plan of
Reorganization by and between SNB, Hancock Bank and HHC and any amendments
thereto. References to Articles, Sections, Schedules and the like refer to the
Articles, Sections, Schedules and the like of this Agreement unless otherwise
indicated.
1.2 "Business Day" shall mean a day on which Hancock Bank is
open for business and which is not a Saturday, Sunday or legal bank holiday.
1.3 "SNB" means Southeast National Bank, a national banking
association duly chartered on July 23, 1984, organized, and existing under and
pursuant to the laws of the United States of America; maintaining its principal
place of business at 1855 S. Morrison Boulevard in Hammond, Tangipahoa,
Louisiana.
1.4 "Closing" The closing (the "Closing") of the transactions
contemplated herein will take place at a place and on a date that is mutually
agreed to by the parties ("Closing Date") that is within thirty (30) days
following the later of the date of receipt of all applicable regulatory
approvals relating to the transactions contemplated herein, the expiration of
all applicable statutory and regulatory waiting periods relative thereto, or
the date the Registration Statement (the "Registration Statement") filed with
the SEC is declared effective, or such later date as may be agreed to by the
parties. At the Closing the parties shall each deliver to the other such
evidence of the satisfaction of the conditions to the Merger (as defined in
Section 2.1 hereof) as may reasonably be required (including material required
to be delivered under this Agreement).
1.5 "Effective Date" Immediately upon consummation of the
Closing, or on such other later date as the parties hereto may agree, the Bank
Merger Agreement (as defined in Section 2.1 hereof) shall be certified,
executed, acknowledged and delivered to the Louisiana Office of Financial
Institutions (the "OFI") for filing pursuant to and in accordance with the
provisions of Section 6:352 of the Louisiana Banking Laws ("LBL"). The Bank
Merger shall become effective as of the date and time specified or permitted by
the OFI in a Certificate of Merger or other written record issued by the OFI.
1.6 "FDIC" means that agency of the United States of America
known as the Federal Deposit Insurance Corporation, or any successor United
States governmental agency which insures deposits of commercial banks.
1.7 "FRB" means that agency of the United States of America
which acts in the capacity of a governmental central bank known as the Federal
Reserve System represented by actions of its Board of Governors, having
regulatory authority over bank holding companies, or any successor United
States governmental agency performing the function of exercising such
regulatory authority.
1.8 "HHC" means Hancock Holding Company, a corporation duly
chartered, organized and existing under and pursuant to the laws of the State
of Mississippi; maintaining its principal place of business at One Hancock
Plaza, in Gulfport, Harrison County, Mississippi; and is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as amended.
1.9 "Hancock Bank" means Hancock Bank of Louisiana, a
Louisiana banking corporation, duly chartered, organized and existing under and
pursuant to the laws of the State of Louisiana and maintaining its principal
place of business at One American Place in Baton Rouge, East Baton Rouge
Parish, Louisiana.
<PAGE> 96
1.10 "OCC" means that agency of the United States of America
known as the Office of the Comptroller of the Currency having regulatory
authority over SNB or any successor United States governmental agency exercising
such regulatory authority.
1.11 "OFI" means the Office of Financial Institutions of the
State of Louisiana having regulatory authority over Hancock Bank or any
successor Louisiana governmental agency exercising such regulatory authority.
1.12 "Party" shall mean HHC, Hancock Bank or SNB and "Parties"
shall mean HHC, Hancock Bank and SNB.
1.13 "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
1.14 "SEC" means that agency of the United States of America
known as the Securities and Exchange Commission.
ARTICLE 2
THE MERGER AND RELATED MATTERS
2.1 Merger. On the Effective Date, SNB shall be merged with
and into Hancock Bank under the Articles of Incorporation of Hancock Bank,
pursuant to the provisions of this Agreement, the provisions of and with the
effect provided in, Section 6:355 of the LBL (the "Bank Merger") and the Bank
Merger Agreement in substantially the form of Exhibit A hereto (the "Bank
Merger Agreement"). For federal income tax purposes, it is intended that the
Bank Merger shall qualify as a non-taxable reorganization under and in
accordance with Section 368(a)1(A) and Section 368 (a)(2)(D) of the Internal
Revenue Code of 1986, as amended, and the applicable IRS regulations. The
Parties expect that the Bank Merger will further certain of their business
objectives, including, and without limitation, the expansion of operations as a
financial institution.
2.2 Effect of Bank Merger. Upon consummation of the Bank
Merger, the separate corporate existence of SNB shall cease and Hancock Bank
shall continue as the surviving corporation. The name of Hancock Bank, as the
surviving corporation, shall by virtue of the Bank Merger remain unchanged. On
the Effective Date, as hereinabove provided, all of the assets and property of
every kind and character, real, personal and mixed, tangible and intangible,
choses in action, rights, and credits then owned by SNB, or which would inure
to it, shall immediately by operation of law and without any conveyance or
transfer or without any further action or deed, be vested in and become the
property of Hancock Bank, which shall have, hold, and enjoy the same in its own
right as fully and to the same extent as the same were possessed, held, and
enjoyed by SNB prior to such merger; and Hancock Bank shall be deemed to be and
shall be a continuation of the original entities and all of the rights and
obligations of SNB shall remain unimpaired, and Hancock Bank, on the Effective
Date of the Bank Merger shall succeed to all such rights, obligations, duties
and liabilities connected therewith.
ARTICLE 3
CONVERSION OF STOCK
3.1 Conversion of SNB Stock.
a. On the Effective Date, each share of the Common
Stock, $3.33 par value, of HHC ("HHC Common Stock") issued and
outstanding immediately prior to the Effective Date shall remain
outstanding and shall represent one share of Common Stock, $3.33
par value, of HHC.
b. The aggregate amount of consideration to be
received by the holders of Common Stock, $5.00 par value of SNB
("SNB Common Stock") shall be $7,624,000 or $16.70 per share based
on 456,518 shares of SNB Common Stock issued and outstanding. Of
the aggregate consideration, up to $3,891,135 shall be paid in the
form of HHC Common Stock based on a value of $37.25 per share and
the balance in cash, provided the maximum aggregate amount of cash
to be paid, including cash in lieu of fractional shares, cash paid
to those SNB stockholders who would otherwise receive 25 or fewer
shares of HHC Common Stock, and cash paid to dissenting
stockholders who perfect their rights, (the "Cash Element") shall
not exceed $3,735,760 (49% of the aggregate consideration).
Assuming no SNB stockholders perfect their right to dissent, on
the Effective Date, each share of SNB Common Stock issued and
outstanding immediately prior to the Effective Date shall, by
virtue of the Bank Merger and without any action on the part of
the holder thereof, be converted into the right to receive 0.2345
shares of HHC Common Stock and $7.9652 in cash (collectively, the
"SNB Exchange Ratio"), provided, however, each holder of SNB
Common Stock who would otherwise receive 25 or fewer shares of HHC
Common Stock shall not receive HHC Common Stock but rather shall
be entitled to receive $16.70 in cash for each share of SNB Common
Stock. In the event: (i) there are SNB stockholders who perfect
their right to dissent or (ii) there is a change in the amount of
fractional shares or the number of SNB stockholders who would
otherwise receive 25 or fewer shares after the date of this
Agreement, the stock portion of the SNB Exchange Ratio will be
increased and the cash portion decreased proportionately to ensure
that the maximum aggregate amount of the Cash Element does not
exceed $3,735,760, but in no event shall the purchase price be
less than $16.70 per share.
c. As a result of the Bank Merger and without any
action on the part of the holder thereof, all shares of SNB Common
Stock, shall cease to be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a
A-2
<PAGE> 97
certificate (a "Certificate") representing any shares of SNB
Common Stock, shall thereafter cease to have any rights with
respect to such shares of SNB Common Stock, except the right to
receive, without interest, the HHC Common Stock and cash in
accordance with Section 3.1(b) and cash for fractional shares of
HHC Common Stock in accordance with Section 3.2(e) upon the
surrender of such Certificate.
d. Each share of SNB Common Stock issued and held in
SNB's treasury, at the Effective Date shall, by virtue of the Bank
Merger, cease to be outstanding and shall be canceled and retired
without payment of any consideration therefor.
3.2 Exchange of Certificates Representing SNB Common Stock.
a. As of the Effective Date, HHC shall deposit, or
shall cause to be deposited, with Hancock Bank Trust Department,
as exchange agent (the "Exchange Agent"), for the benefit of the
holders of shares of SNB Common Stock for exchange in accordance
with this Article 3, certificates representing the shares of HHC
Common Stock and cash (such certificates for shares of HHC Common
Stock and cash being hereinafter referred to as the "Exchange
Fund") to be issued pursuant to Section 3.1 and paid pursuant to
this Section 3.2 in exchange for outstanding shares of SNB Common
Stock.
b. Promptly after the Effective Date, HHC shall
cause the Exchange Agent to mail to each holder of record of a
Certificate or Certificates (other than those representing shares
with respect to which the holder thereof has perfected appraisal
rights under 12 U.S.C. Section 214a and has not subsequently lost,
withdrawn or forfeited such rights) (i) a letter of transmittal
which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as HHC may reasonably specify
and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of
HHC Common Stock and cash, and cash in lieu of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder
of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole
shares of HHC Common Stock and (y) a check representing the amount
of cash and cash in lieu of fractional shares, if any, which such
holder has the right to receive in respect of the Certificate
surrendered pursuant to Section 3.1(b), after giving effect to any
required withholding tax, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the
value of any HHC Common Stock or cash payable to holders of
Certificates. In the event of a transfer of ownership of SNB
Common Stock which is not registered in the transfer records of
SNB, a certificate representing the proper number of shares of HHC
Common Stock, together with a check for the cash component of the
SNB Exchange Ratio and/or cash to be paid in lieu of fractional
shares, may be issued to such a transferee if the Certificate
representing such SNB Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
c. Notwithstanding any other provisions of this
Agreement, no dividends on HHC Common Stock shall be paid with
respect to any shares of SNB Common Stock represented by a
Certificate until such Certificate is surrendered for exchange as
provided herein. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid
to the holder of the certificates representing whole shares of HHC
Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Date
theretofore payable with respect to such whole shares of HHC
Common Stock and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Date but prior to surrender and
a payment date subsequent to surrender payable with respect to
such whole shares of HHC Common Stock, less the amount of any
withholding taxes which may be required thereon.
d. On or after the Effective Date, there shall be no
transfers on the stock transfer books of SNB of the shares of SNB
Common Stock, which were outstanding immediately prior to the
Effective Time. If, after the Effective Date, Certificates are
presented to HHC, they shall be canceled and exchanged for
certificates for shares of HHC Common Stock and cash, as
appropriate, and cash in lieu of fractional shares, if any,
deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 3.
Certificates surrendered for exchange by any person constituting
an "affiliate" of SNB for purposes of Rule 145(c) under the
Securities Act of 1933 (the "Securities Act") shall not be
exchanged until HHC has received a written agreement from such
person as provided in Section 4.1.
e. No fractional shares of HHC Common Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional
share of HHC Common Stock pursuant to Section 3.1(b), cash
adjustments will be paid to holders in respect of any fractional
share of HHC Common Stock that would otherwise be issuable, and
the amount of such cash adjustment shall be equal to such
fractional proportion of $37.25.
f. Any portion of the Exchange Fund (including the
proceeds of any investments thereof and any shares of HHC Common
Stock) that remains unclaimed by the former stockholders of SNB
one year after the Effective Date shall be delivered to HHC. Any
former stockholders of SNB who have not theretofore complied with
this Article 3 shall thereafter look only to HHC for payment in
respect of their shares, in any event without any interest
thereon. In the event that any such holder fails to surrender
either such Certificate or the documents and information
contemplated by the letter of transmittal and instructions on or
before the fifth (5th) anniversary of the Effective Date, HHC
shall not have any obligation to deliver the
A-3
<PAGE> 98
amount to which any such holder would have been entitled
in-accordance with the provisions of this Agreement and any such
holder shall not be entitled to receive from HHC any amount in
substitution and exchange for each share canceled and extinguished
in accordance with this Agreement.
g. None of HHC the Exchange Agent or any other
person shall be liable to any former holder of shares of SNB
Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or
similar laws.
h. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by HHC, the posting by such person of a
bond in such reasonable amount as HHC may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the shares of HHC Common
Stock and cash, as appropriate, and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of HHC
Common Stock as provided in Section 3.2(c), deliverable in respect
thereof pursuant to this Agreement.
3.3 Adjustment of Exchange Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Date, SNB
or HHC changes the number of shares of SNB Common Stock or HHC Common Stock,
respectively, issued and outstanding as a result of a stock split, reverse
stock split, stock dividend, recapitalization or other similar transaction, the
SNB Exchange Ratio, shall be appropriately adjusted.
ARTICLE 4
ACCOUNTING AND TAX MATTERS
4.1 Affiliates. SNB and HHC shall cooperate and use their
best efforts to identify those persons who may be deemed to be "affiliates" of
SNB within the meaning of Rule 145(c) or Rule 144 (as applicable) under the
Securities Act. SNB shall use its best efforts to cause each person so
identified to deliver to HHC, not later than thirty (30) days prior to the
Effective Date, a written agreement in substantially the form set forth in
Exhibit B attached hereto. HHC shall be entitled to place appropriate legends
on the certificates evidencing shares of HHC Common Stock to be received
pursuant to this Agreement by such affiliates and to issue appropriate stop
transfer instructions to the transfer agent for HHC Common Stock.
4.2 Accounting Treatment. It is intended by the Parties
hereto, that the Bank Merger will qualify for purchase accounting treatment
under general accepted accounting principles.
4.3 Accounting and Tax Representations. Each Party hereto
represents and warrants that the statements made with respect to it in the
Statement of Representations attached hereto on Schedule 4.3 and made a part
hereof, are true and correct as of the date hereof and will be true and correct
on the Effective Date.
ARTICLE 5
SNB'S COVENANTS AND AGREEMENTS
5.1 Operation of Business. Between the date hereof and the
Effective Date, or until the termination of this Agreement, SNB covenants and
agrees that it will operate its business solely in the ordinary course
consistent with prudent business practices and in compliance with all
applicable laws, regulations and rules; and without prior written consent of
HHC, SNB will not:
a. Amend or otherwise change its respective Articles
of Incorporation or Bylaws, as each such document is in effect on
the date hereof;
b. Issue or sell, or authorize for issuance or sale,
the shares of SNB or any additional shares of any class of capital
stock of SNB;
c. Issue, grant, or enter into any subscription,
option, warrant, right, convertible security, or other agreement
or commitment of any character obligating SNB to issue securities;
d. Declare, set aside, make, or pay any dividend or
other distribution with respect to its capital stock, provided,
however, in the event the Closing occurs on a date which will not
allow the SNB stockholders who will receive HHC Common Stock to be
of record for purposes of receiving HHC's first quarter 1997
dividend, then SNB may, to the extent lawfully permitted, declare
and pay dividends for the purpose of allowing SNB stockholders to
receive 25% of the normal and customary annual dividend in an
amount not to exceed $.125 per outstanding share of SNB Common
Stock, based on 456,518 shares of SNB Common Stock issued and
outstanding;
e. Redeem, purchase, or otherwise acquire, directly
or indirectly, any of its capital stock respectively;
A-4
<PAGE> 99
f. Authorize any capital expenditure(s) which,
individually or in the aggregate, exceed $20,000, provided,
however, SNB may purchase a tail on the current SNB directors and
officers insurance policy for a three year period which will cover
any past liability for acts performed through the Effective Date;
g. Except in the ordinary course of business, sell,
pledge, dispose of, or encumber, or agree to sell, pledge, dispose
of, or encumber, any assets of SNB;
h. Excluding normal and customary banking
transactions, incur any indebtedness for borrowed money, issue any
debt securities, or enter into or modify any contract, agreement,
commitment, or arrangement with respect thereto;
i. Amend its Articles of Incorporation or Bylaws
(except to the extent required in order to effect the Merger as
contemplated herein); establish or add any automated teller
machines or branch or other banking offices; take any action that
would materially and adversely affect the ability of any Party
hereto to obtain the approvals necessary for consummation of the
transactions contemplated hereby or that would materially and
adversely affect SNB's ability to perform its covenants and
agreements hereunder;
j. Acquire (by merger, consolidation, lease or other
acquisition of stock, ownership interests or assets) any
corporation, partnership, or other business organization or
division thereof, or enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing;
k. Enter into, extend, or renew any lease for office
or other space;
l. Except as required by law, enter into, adopt or
amend any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment, or other
employee benefit plan, agreement, trust, fund, or arrangement for
the benefit or welfare of any officer, employee or representative
of SNB;
m. Grant any increase in compensation to any
director, officer, or employee or representative of SNB or Bank
except in the ordinary course of business consistent with past
practice, provided, however, SNB may: (i) provide for a 3%
contribution of payroll to SNB's 401-K Plan in an amount not to
exceed $13,300; (ii) declare and pay employee bonuses in an amount
not to exceed $12,000 in the aggregate; and (iii) declare and pay
director bonuses in an amount not to exceed $1,000 per director;
n. Enter into, amend, or terminate any employment
agreement, relationship or responsibilities with any director,
officer, or key employee or representative of SNB, or enter into,
amend, or terminate any employment agreement with any other person
otherwise than in the ordinary course of business, or take any
action with respect to the grant or payment of any severance or
termination pay except as expressly consented to in writing by
HHC;
o. Take any action or omit to take any action which
would cause any of SNB's representations or warranties to be
untrue or misleading in any material respect or any covenant of
SNB under this Agreement incapable of being performed; or
p. Agree in writing or otherwise to do any of the
foregoing.
5.2 Preservation of Business. Between the date hereof and the
Effective Date, SNB will use its best efforts to preserve its existing business
and to keep its business organization intact, including its present
relationships with its employees and customers and others having business
relations with it. Except in the ordinary course of business consistent with
prudent business practices, SNB will not extend any new, or renew any existing,
loan, credit, lease, or other type of financing. SNB acknowledges that Hancock
Bank shall have the right to review on a monthly basis such financings which
individually exceed $50,000.
5.3 Insurance. Pending the Closing, SNB shall cause the real
property owned by SNB to be insured reasonably against all insurable risks
under policies with reasonable deductibles and in full compliance with any
co-insurance provision.
5.4 Stockholders' Meeting. SNB will promptly give proper
notice of a stockholders' meeting, for the purpose of approving this Agreement.
Said notice shall include notice of dissenter's rights, if any, and shall
solicit stockholders' proxies in favor of this Agreement, and all notices shall
be given in accordance with all applicable laws, regulations, and rules. SNB
and its respective directors and principal stockholders will support and vote
in favor of a stockholder resolution approving this Agreement and SNB shall
cause each respective director and use its best efforts to have each
shareholder owning 5% or more of the SNB Common Stock, directly or
beneficially, to execute within 30 days from the date of this Agreement the
Joinder of Shareholders in the form attached hereto as Exhibit D.
5.5 Property Transfers. From time to time, as and when
requested by HHC and to the extent permitted by Louisiana law, the officers and
directors of SNB last in office shall execute and deliver such deeds and other
instruments and shall take or cause to be taken such further or other actions
as shall be necessary in order to vest or perfect in or to confirm of record or
otherwise to HHC and/or Hancock Bank title to, and possession of, all the
property, interests, assets, rights, privileges, immunities, powers,
franchises, and authorities of SNB, and otherwise to carry out the purposes of
this Agreement.
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<PAGE> 100
5.6 SNB Financial and Other Reports. SNB shall make available
to HHC the following statements and other reports and documents:
a. SNB's Consolidated Balance Sheets as of June 30,
1996 and 1995 (unaudited) and December 31, 1995, 1994 and 1993
(audited); Consolidated Statements of Income and Changes in
Stockholders' Equity and Consolidated Statements of Cash Flows for
the years ended December 31, 1995, 1994 and 1993 (audited), and
Consolidated Statements of Income for the six-month periods ended
June 30, 1996 and 1995 (unaudited) ("SNB Financial Statements");
b. All correspondence with the OCC, the FDIC, and
the Internal Revenue Service from January 1, 1996 through the date
of Closing (for inspection, but copying may be restricted by legal
limitations); and
c. Such additional financial or other information as
may be required for the regulatory applications and Registration
Statement in connection with the consummation of the Bank Merger
(subject to any legal limitations).
5.7 Due Diligence. In order to afford HHC access to such
information as it may reasonably deem necessary to perform any due diligence
review with respect to the assets of SNB to be acquired as a result of the Bank
Merger, SNB shall, upon reasonable notice, afford HHC and its officers,
employees, counsel, accountants, and other authorized representatives access,
during normal business hours throughout the period prior to the Effective Date,
to all of its properties, books, contracts, commitments, loan files, litigation
files and records (including, but not limited to, the minutes of the Board of
Directors of SNB and all committees thereof), and it shall, upon reasonable
notice and to the extent consistent with applicable law, furnish promptly to
HHC such information as HHC may reasonably request to perform such review.
5.8 No Solicitation. Prior to the Effective Date, SNB shall
not authorize nor knowingly permit any of their officers, directors, employees,
representatives, agents or other persons controlled by SNB to directly or
indirectly, encourage or solicit or, hold any discussions or negotiations with,
or provide any information to, any persons, entity or group concerning any
merger, consolidation, sale of substantial assets, sale of shares of capital
stock or similar transactions involving, directly or indirectly, SNB except as
contemplated by this Agreement. SNB shall promptly communicate to HHC the
identity and terms of any proposal which it may receive with respect to any
such transaction.
5.9 Noncompetition. Except for the current directorship set
forth on Schedule 5.9 hereto, each director of SNB agrees that for a period of
two years after the Effective Date, they will not, directly or indirectly: (i)
serve on the board of directors or in any similar capacity of any financial
institution which has an office located in Tangipahoa Parish, Louisiana, and
(ii) participate as an investor in, or an advisor to, any financial institution
in the process of organizing with an office located in or proposed to be
located in Tangipahoa Parish, Louisiana, provided however, this Section 5.9
shall not be applicable to Reginald R. Harper.
ARTICLE 6
SNB'S REPRESENTATIONS AND WARRANTIES
SNB has prepared that certain Disclosure Statement dated July
31,1996, a copy of which is attached as Schedule 6.0, and HHC hereby
acknowledges receipt of said Disclosure Statement. SNB represents and warrants
to HHC as follows:
6.1 Organization and Authority. SNB is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States of America and SNB has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted.
6.2 Authorization. The execution, delivery and performance of
this Agreement by SNB and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of SNB, subject to
regulatory approval. No other corporate proceedings on the part of SNB are
necessary to authorize consummation of this Agreement, except for the approval
of the transaction by SNB's stockholders, and the performance by SNB of the
terms hereof. This Agreement is a valid and binding obligation of SNB
enforceable against SNB in accordance with its terms except as may be limited
by applicable bankruptcy, insolvency, reorganization or moratorium or other
similar laws affecting creditors' rights generally and except that the
availability of equitable remedies is within the discretion of the appropriate
court and except that it is subject to approval by its stockholders and
applicable regulatory agencies.
Neither the execution, delivery or performance of this Agreement
by SNB, nor the consummation of the transactions contemplated hereby, nor
compliance by SNB with any of the provisions hereof, will (a) in any material
respect violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of SNB under any terms,
conditions or provisions of (i) SNB's Charter or Bylaws or other charter
documents of SNB or (ii) any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which SNB
is a party or by which SNB may be bound, or to which SNB or the properties or
assets of it may be subject, or (b) violate in any material respect any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to SNB or any of its properties or assets.
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6.3 Capital Structure of SNB. As of the date hereof, the
authorized capital of SNB consists solely of 500,000 shares of common stock of
the par value of $5.00 each and no preferred stock. As of the date hereof
456,518 shares of such authorized common stock were issued and outstanding.
The outstanding shares of capital stock of SNB are validly issued and
outstanding, fully paid and nonassessable. There are no outstanding options,
conversion rights, warrants, calls, rights, commitments or agreements to issue
any form of stock or other security of SNB. There are no outstanding
obligations or commitments to purchase, redeem or otherwise acquire any
outstanding shares of common stock of SNB.
6.4 Ownership of Other Entities. SNB does not own, directly
or indirectly, five percent (5%) or more of the outstanding capital stock or
other voting securities of any corporation, bank, or other organization.
6.5 SNB Financial and Other Reports. SNB's Financial
Statements and Other Reports (i) have been and future Financial Statements and
Other Reports will be prepared in accordance with generally accepted accounting
principles, consistently applied, (ii) have been and will (as the case may be)
present fairly the consolidated results of operations and financial position of
SNB for the periods and at the times indicated, and (iii) have been and will
(as the case may be) be true and correct in all material respects for the
periods and at the times indicated.
6.6 No Material Adverse Change. Since December 31, 1995,
there has been no event or condition of any character (whether actual, or to
the knowledge of SNB, threatened or contemplated) that has had or can
reasonably be anticipated to have, or that, if concluded or sustained adversely
to SNB would reasonably be anticipated to have, a material adverse effect on
the financial condition, results of operations, business or prospects of SNB,
excluding changes in laws or regulations that affect banking institutions
generally.
6.7 Tax Liability. The amounts set up as liabilities for
taxes in the SNB Financial Statements are sufficient for the payment of all
respective taxes (including, without limitation, federal, state, local, and
foreign excise, franchise, property, payroll, income, capital stock, and sales
and use taxes) accrued in accordance with GAAP and unpaid at the respective
dates thereof.
6.8 Tax Returns: Payment of Taxes. All federal, state, local,
and foreign tax returns (including, without limitation, estimated tax returns,
withholding tax returns with respect to employees, and FICA and FUTA returns)
required to be filed by or on behalf of SNB have been timely filed or requests
for extensions have been timely filed and granted and have not expired for
periods ending on or before December 31, 1995, and all returns filed are
complete and accurate to the best information and belief of their respective
managements and all taxes shown on filed returns have been paid. As of the
date hereof, there is no audit, examination, deficiency or refund litigation or
matter in controversy with respect to any taxes that might result in a
determination materially adverse to SNB except as reserved against in the SNB
Financial Statements. All taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation have been
paid, and SNB's reserves for bad debts at December 31, 1995, as filed with the
Internal Revenue Service were not greater than the maximum amounts permitted
under the provisions of Section 585 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code").
6.9 Litigation and Proceedings. Except as set forth on
Schedule 6.9 hereto, no litigation, proceeding or controversy before any court
or governmental agency is pending against SNB that in the opinion of its
management is likely to have a material and adverse effect on the business,
results of operations or financial condition of SNB taken as a whole, and, to
the best of its knowledge, no such litigation, proceeding or controversy has
been threatened or is contemplated.
6.10 Brokers' or Finders' Fees. No agent, broker, investment
banker, investment or financial advisor or other person acting on behalf of SNB
or under their authority is entitled to any commission, broker's or finder's
fee from any of the Parties hereto in connection with any of the transactions
contemplated by this Agreement.
6.11 Contingent Liabilities. Except as disclosed on Schedule
6.11 hereto or as reflected in the SNB Financial Statements and except in the
case of unfunded loan commitments made in the ordinary course of business
consistent with past practices, as of June 30, 1996, SNB does not have any
obligation or liability (contingent or otherwise) that was material, or that
when combined with all similar obligations or liabilities would have been
material, to SNB and there does not exist a set of circumstances resulting from
transactions effected or events occurring prior to, on, or after June 30, 1996,
or from any action omitted to be taken during such period that, to the
knowledge of SNB, could reasonably be expected to result in any such material
obligation or liability.
6.12 Title to Assets; Adequate Insurance Coverage.
Except as described on Schedule 6.12:
a. As of June 30, 1996, SNB had, and except with
respect to assets disposed of for adequate consideration in the
ordinary course of business since such date, now has, good and
merchantable title to all real property and good and merchantable
title to all other material properties and assets reflected in the
SNB Financial Statements, free and clear of all mortgages, liens,
pledges, restrictions, security interests, charges and
encumbrances of any nature except for (i) mortgages and
encumbrances which secure indebtedness which is properly reflected
in the SNB Financial Statements or which secure deposits of public
funds as required by law; (ii) liens for taxes accrued by not yet
payable; (iii) liens arising as a matter of law in the ordinary
course of business with respect to obligations incurred after June
30, 1996, provided that the obligations secured by
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such liens are not delinquent or are being contested in good
faith; (iv) such imperfections of title and encumbrances, if any,
as do not materially detract from the value or materially
interfere with the present use of any of such properties or assets
or the potential sale of any such owned properties or assets; and
(v) capital leases and leases, if any, to third parties for fair
and adequate consideration. SNB owns, or has valid leasehold
interests in, all material properties and assets, tangible or
intangible, used in the conduct of its business. Any real
property and other material assets held under lease by SNB are
held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made or proposed to be made by HHC in such lease of such property.
b. With respect to each lease of any real property
or a material amount of personal property to which SNB is a party,
except for financing leases in which SNB is lessor, (i) such lease
is in full force and effect in accordance with its terms; (ii) all
rents and other monetary amounts that have been due and payable
thereunder have been paid; (iii) there exists no default or event,
occurrence, condition or act which with the giving of notice, the
lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease; and (iv)
the Bank Merger will not constitute a default or a cause for
termination or modification of such lease.
c. SNB has no legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of
any substantial part of its assets or to sell or dispose of any of
its assets except in the ordinary course of business consistent
with past practices.
d. To the knowledge and belief of its management,
the policies of fire, theft, liability and other insurance
maintained with respect to the assets or business of SNB provides
adequate coverage against loss and the fidelity bonds in effect as
to which SNB is named insured meet the applicable standards of the
American Bankers Association.
6.13 Liabilities. To the best of SNB's and its officers'
and directors' knowledge, all liabilities of SNB were, and will be created, for
good, valuable and adequate consideration in accordance with prudent business
standards and in substantial compliance with all laws, regulations and rules
and the accounts or evidence of ownership of accounts are and will be genuine,
true, valid and enforceable in accordance with their written terms. SNB has
not agreed to any modification or extension of accounts or account terms or
otherwise made any agreements regarding such accounts except as disclosed in
writing on the books and records of SNB; and SNB has no knowledge of any claim
of ownership to any account other than as shown on the written ownership
records of SNB for each account, and SNB has no knowledge of any alleged
improper or wrongful withdrawal or payment of any such account.
6.14 Loans. To the best knowledge and belief of its
management, each loan reflected as an asset of SNB in the SNB Financial
Statements, as of June 30, 1996, or acquired since that date, is the legal,
valid, and binding obligation of the obligor named therein, enforceable in
accordance with its terms, and no loan is subject to any asserted defense,
offset or counterclaim known to SNB, except as disclosed in writing to HHC on
or prior to the date hereof.
6.15 Allowance for Loan Losses. The allowances for
possible loan losses shown on the consolidated balance sheets of SNB as of June
30, 1996 are adequate in all material respects under the requirements of GAAP
to provide for possible losses, net of recoveries, relating to loans previously
charged off, on loans outstanding (including accrued interest receivable) as of
June 30, 1996, and each such allowance has been established in accordance with
GAAP.
6.16 Investments. Except for investments classified as
held-to-maturity as prescribed under the Financial Accounting Standards Board
Statement Number 115, and pledges to secure public or trust deposits, none of
the investments reflected in the SNB Financial Statements under the heading
"Investment Securities", and none of the investments made by SNB since June 30,
1996, and none of the assets reflected in the SNB Financial Statements under
the heading "Cash and Due From Banks," is subject to any restriction, whether
contractual or statutory, that materially impairs the ability of SNB freely to
dispose of such investment at any time. With respect to all repurchase
agreements to which SNB is a party, SNB has a valid, perfected first lien or
security interest in the government securities or other collateral securing
each such repurchase agreement which equals or exceeds the amount of debt
secured by such collateral under such agreement.
6.17 Registration and Proxy Statements. None of the
information supplied or to be supplied by SNB for inclusion in (a) the
Registration Statement to be filed by HHC with the SEC (b) the Notice of
Meeting and Proxy Statement to be mailed by SNB to their stockholders in
connection with the meeting referred to in Section 5.4 hereof (the "Proxy
Statement"), and (c) any other documents to be filed with the SEC or any
regulatory agency in connection with the transactions contemplated hereby will,
as amended or supplemented at the time the Registration Statement is filed with
the SEC or at the time it becomes effective, at the time the Proxy Statement is
mailed to holders of SNB Common Stock, as may be amended at the time of SNB
Stockholders' Meeting, and at the time of filing of such other documents,
respectively, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents, financial statements, or other information or
materials which SNB shall provide for filing with the SEC and any regulatory
agency in connection with the Bank Merger will comply with generally accepted
accounting principles.
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6.18 Commitments and Contracts. SNB is not a party or subject
to any of the following (whether written or oral, express or implied):
a. Except as listed on Schedule 6.18a attached
hereto and with a complete copy provided to HHC, any employment
contract (including any obligations with respect to severance or
termination pay liabilities or fringe benefits) with any present
or former officer, director, employee or consultant (other than
those which are terminable at will by SNB);
b. Except as listed on Schedule 6.18b attached
hereto and with a complete copy provided to HHC, any plan or
contract providing for any bonus, pension, option, deferred
compensation, retirement payment, profit sharing or similar
arrangement with respect to any present or former officer,
director, employee or consultant; or
c. Any contract not made in the ordinary course of
business containing covenants which limit the ability of SNB to
compete in any line of business or with any person or which
involves any restriction of the geographical area in which, or
method by which, SNB may carry on its respective business (other
than as may be required by law or applicable regulatory
authorities).
6.19 Employee Plans. To the best of SNB's knowledge and
belief , it, and all "employee benefit plans", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover one or more employees employed by SNB:
i is in compliance with all laws, regulations, reporting
and licensing requirements and orders applicable to its business or to such
plan or any of its employees (because of such employee's activities on behalf
of it), the breach or violation of which could have a material and adverse
effect on such business; and
ii has received no notification from any agency or
department of federal, state or local government or the staff thereof asserting
that any such entity is not in compliance with any of the statutes, regulations
or ordinances that such governmental authority enforces, or threatening to
revoke any license, franchise, permit or governmental authorization, and is
subject to no agreement with any such governmental authority with respect to
its assets or business.
6.20 Plan Liability. Except for liabilities to the Pension
Benefit Guaranty Corporation pursuant to Section 4007 of ERISA, all of which
have been fully paid, and except for liabilities to the Internal Revenue
Service under Section 4971 of the Internal Revenue Code, all of which have been
fully paid, SNB does not have any liability to the Pension Benefit Guaranty
Corporation or to the Internal Revenue Service with respect to any pension plan
qualified under Section 401 of the Internal Revenue Code.
6.21 Vote Required. The affirmative vote of the holders of at
least two-thirds of the voting power is the only vote of the stockholders of
SNB necessary to approve the Bank Merger and related transactions contemplated
hereby.
6.22 Continuity of Interest. To the best knowledge of SNB,
there is no plan or intention by the SNB shareholders who own 1% or more of the
SNB Common Stock, and to the best of the knowledge of management of SNB, there
is no plan or intention on the part of the remaining SNB shareholders to sell,
exchange or otherwise dispose of a number of shares of HHC Common Stock, to be
received in the Bank Merger that would reduce SNB stockholders' ownership of
the HHC Common Stock to a number of shares having a value, as of the date of
the Bank Merger, of less than 50% of the value of all of the formerly
outstanding SNB Common Stock as of the same date. For purposes of this
representation, shares of SNB Common Stock surrendered by dissenters or
exchanged for cash in lieu of fractional shares of SNB Common Stock will be
treated as outstanding SNB Common Stock on the date of the Bank Merger.
Furthermore, shares of SNB Common Stock and shares of HHC Common Stock held by
SNB stockholders and otherwise sold, redeemed, or disposed of prior to or
subsequent to the Bank Merger are considered in this assumption. See Exhibit D
for additional representations regarding continuity of shareholder interest
under Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue
Code of 1986, as amended.
6.23 Continuity of Business Enterprise. SNB operates at least
one significant historic business line, namely, financial services, and owns at
least a significant portion of its historic business assets within the meaning
of Treasury Regulation Section 1.368-1(d).
6.24 Environmental Matters. Except as set forth on Schedule
6.24; neither SNB nor, to the best knowledge of SNB, any previous owner or
operator of any properties at any time owned (including any properties owned or
subsequently resold) leased, or occupied by SNB or used by SNB in its business
("SNB Properties") used, generated, treated, stored, or disposed of any
hazardous waste, toxic substance, or similar materials on, under, or about SNB
Properties except in compliance with all applicable federal, state, and local
laws, rules and regulations pertaining to air and water quality, hazardous
waste, waste disposal, air omissions, and other environmental matters
("Environmental Laws"). SNB has not received any notice of noncompliance with
Environmental Laws, applicable laws, orders, or regulations of any governmental
authorities relating to waste generated by any such party or otherwise or
notice that any such party is liable or responsible for the remediation,
removal, or clean-up of any site relating to SNB Properties.
6.25 Accuracy of Information. To the best of SNB's and its
officers' and directors' knowledge, all information furnished by SNB to HHC
relating to the assets, liabilities, and this Agreement is accurate, and SNB
has not omitted to disclose any information which is or would be material to
this Agreement.
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6.26 Compliance with Laws and Contracts. To the best of SNB's
and its officers' and directors' knowledge, SNB is not in violation of any
laws, regulations, or agreements to which it is a party and has not failed to
file any material reports required by any governmental or other regulatory
body.
6.27 Stock Ownership. To the best of SNB's and its officers'
and directors' knowledge, no known dispute exists as to the title and/or
ownership interest in any shares of SNB Common Stock and SNB's certificate to
be issued at Closing will represent the title and/or ownership interest in such
shares.
ARTICLE 7
HHC'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
HHC represents and warrants to SNB as follows: for purposes of
this Agreement, except in Section 7.1 and where the context requires otherwise,
any reference to HHC in this Article 7 shall be deemed to include HHC and
Hancock Bank and any reference to "material", material adverse effect or a
similar standard shall refer to the financial condition, operations or other
aspects of HHC and its subsidiaries including Hancock Bank taken as a whole.
7.1 Organization and Authority. HHC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Mississippi and has the corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted.
7.2 Shares Fully Paid and Non Assessable. The outstanding
shares of capital stock of HHC are validly issued and outstanding, fully paid
and nonassessable and all of such shares of Hancock Bank are owned directly or
indirectly by HHC free and clear of all liens, claims, and encumbrances. The
shares of HHC common stock to be issued in connection with the Bank Merger
pursuant to this Agreement have been duly authorized and, when issued in
accordance with the terms of this Agreement, will be validly issued, fully
paid, and nonassessable.
7.3 Authorization. The execution, delivery and performance of
this Agreement by HHC and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of HHC, subject to
regulatory approval. No other corporate proceedings on the part of HHC are
necessary to authorize the execution and delivery of this Agreement and the
performance by HHC of the terms hereof. This Agreement is a valid and binding
obligation of HHC enforceable against HHC in accordance with its terms except
as may be limited by applicable bankruptcy, insolvency, reorganization or
moratorium or other similar laws affecting creditors' rights generally and
except that the availability of equitable remedies is within the discretion of
the appropriate court and except that it is subject to approval of applicable
regulatory agencies.
7.4 No Material Adverse Change. Since June 30, 1996, there
has been no event or condition of any character (whether actual, or to the
knowledge of HHC, threatened or contemplated) that has had or can reasonably be
anticipated to have, or that, if concluded or sustained adversely to HHC would
reasonably be anticipated to have, a material adverse effect on the financial
condition, results of operations, business or prospects of HHC excluding
changes in laws or regulations that affect banking institutions generally.
7.5 Loans. To the best knowledge and belief of its
management, and management of Hancock Bank, each loan reflected as an asset of
HHC in the unaudited consolidated balance sheet contained in HHC's quarterly
report to shareholders for the period ended June 30, 1996, or acquired since
that date, is the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, and no loan is subject to
any asserted defense, offset, or counterclaim known to HHC, except as disclosed
on Schedule 7.5 hereto.
7.6 Litigation. Except as disclosed on Schedule 7.6 hereto,
no litigation, proceeding or controversy before any court or governmental
agency is pending that in the opinion of its management is likely to have a
material and adverse effect on the business, results of operations or financial
condition of HHC and its subsidiaries taken as a whole, and, to the best of its
knowledge, no such litigation, proceeding or controversy has been threatened or
is contemplated.
7.7 Contingent Liabilities. Except as disclosed on Schedule
7.7 hereto or reflected in the HHC reports filed with the SEC and except in the
case of HHC's subsidiaries for unfunded loan commitments made in the ordinary
course of business consistent with past practices, as of June 30, 1996, neither
HHC nor any of its subsidiaries had any obligation or liability (contingent or
otherwise) that was material, or that when combined with all similar
obligations or liabilities would have been material, to HHC and its
subsidiaries taken as a whole.
7.8 Allowances for Possible Loan Losses. The allowances for
possible loan losses shown on the balance sheet of HHC contained in the HHC
reports filed with the SEC as of June 30, 1996, were or will be, as the case
may be, adequate in all material respects under the requirements of GAAP to
provide for possible loan losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including accrued interest
receivable) as of the respective date of such balance sheet and such allowance
has been or will have been established in accordance with GAAP. To the
knowledge of HHC's management, HHC is not likely to be required to materially
increase the provision for loan losses between the date hereof and the
Effective Date.
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7.9 Benefit Plans. To the knowledge and belief of HHC's
senior management, HHC, each of its subsidiaries and all "employee benefit
plans," as defined in Section 3(3) of ERISA, that cover one or more employees
employed by HHC or any of its subsidiaries:
i is in compliance with all laws, regulations,
reporting and licensing requirements and orders applicable to its business or
to such plan or any of its employees (because such employee's activities on
behalf of it), the breach or violation of which could have a material and
adverse effect on such business; and
ii has received no notification from any agency or
department of federal, state or local government or the staff thereof asserting
that any such entity is not in compliance with any of the statutes; regulations
or ordinances that such governmental authority enforces, or threatening to
revoke any license, franchise or permit or governmental authorization, and is
subject to no agreement or written understanding with any such governmental
authorities with respect to its assets or business.
7.10 SEC Documents; Financial Statements. HHC has filed
all required reports, schedules, forms, statements and other documents with the
SEC since January 1, 1993 (the "HHC SEC Documents"). Complete copies of HHC's
most recent Annual Report or Form 10-K and HHC's Form 10-Q for the previous two
quarters have been provided to SNB. The HHC financial statements included in
the HHC SEC Documents have been audited by Deloitte & Touche, LLP, independent
auditors (in the case of the HHC audited financial statements) in accordance
with generally accepted auditing standards, have been prepared in accordance
with generally accepted accounting principles and, except as disclosed therein,
applied on a basis consistent with prior periods, and present fairly the
financial position of HHC and its consolidated subsidiaries at such dates and
the results of operations and cash flows for the periods then ended, except, in
the case of the HHC interim financial statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC. The HHC interim financial statements reflect all
adjustments (consisting only of normal recurring adjustments) that are
necessary for a fair statement of the results for the interim periods presented
therein.
7.11 Disclosure.. No representations or warranties by HHC
or Hancock Bank in this Agreement and no statement contained in the schedules
or exhibits or in any certificates to be delivered pursuant to this Agreement,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
HHC covenants and agrees as follows:
7.12 Conduct of Business. HHC agrees to operate its business
solely in the ordinary course consistent with prudent business practices and in
compliance with all applicable laws, regulations, and rules; but nothing herein
shall be construed as limiting or restricting HHC in its assets, liability, or
capital structure or limiting any action of HHC or its affiliates, nor shall
anything in this Agreement be construed as limiting the future number and
amount of outstanding shares of HHC stock pending settlement of this
transaction.
7.13 Due Diligence. In order to afford SNB access to such
information as it may reasonably deem necessary to perform its due diligence
review with respect to HHC and its assets in connection with the Merger, HHC
shall, (a) upon reasonable notice, afford SNB and its officers, employees,
counsel, accountants and other authorized representatives, during normal
business hours throughout the period prior to the Effective Date and to the
extent consistent with applicable law, access to its premises, properties,
books and records, and to furnish SNB and such representatives with such
financial and operating data and other information of any kind respecting its
business and properties as SNB shall from time to time reasonably request to
perform such review, (b) furnish SNB with copies of all reports filed by HHC
with the Securities and Exchange Commission ("SEC") throughout the period after
the date hereof prior to the Effective Date promptly after such reports are so
filed, and (c) promptly advise SNB of the occurrence before the Effective Date
of any event or condition of any character (whether actual or to the knowledge
of HHC, threatened or contemplated) that has had or can reasonably be
anticipated to have, or that, if concluded or sustained adversely to HHC, would
reasonable be anticipated to have, a material adverse effect on the financial
condition, results of operations, business or prospects of its consolidated
group as a whole.
7.14 Registration of Stock. HHC agrees to register the shares
to be issued to SNB stockholders pursuant to this Agreement with the Securities
and Exchange Commission.
7.15 Continuity of Business Enterprise. It is the present
intention of HHC to continue at least one significant historic business line of
SNB, namely, financial services, and to use at least a significant portion of
SNB's historic business assets in a business within the meaning of Treasury
Regulation Section 1.368-1(d).
7.16 Indemnification. HHC agrees to indemnify the directors
and officers of SNB serving as of the Effective Date for a period of three
years from the Effective Date in an aggregate amount not to exceed the
deductible on the SNB directors and officers insurance policy tail as
contemplated in Section 5.1(f) herein. The persons entitled to indemnification
hereunder and their respective heirs, executors, estates and assigns are
hereinafter referred to as "Indemnified Person(s)." An Indemnified Person
shall give HHC
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prompt notice of any matter as to which indemnification is provided, shall
employ counsel that is reasonably acceptable to HHC (and no more than one
counsel for all Indemnified Persons shall be employed in any one matter or
series of related matters except to the extent that actual conflicts of
interests require otherwise) and shall not settle any such matter unless HHC
shall first consent thereto, which consent shall not be unreasonably withheld.
The total aggregate indemnification to be provided by HHC pursuant to Section
7.16 hereof shall not exceed, as to all of the Indemnified Persons described
herein as a group, an amount equal to the deductible on the SNB directors and
officer insurance policy tail.
ARTICLE 8
CONDITIONS TO CLOSING
The obligations of SNB and HHC under this Agreement, except as
otherwise provided herein, shall be subject to the satisfaction or waiver of
the following conditions on or prior to the Closing:
8.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligation of each party to effect the Bank Merger
shall be subject to the following conditions:
a. Stockholder Approval. The Merger shall have been
approved by the requisite vote of the holders of the outstanding
shares of SNB Common Stock at SNB's Stockholders' Meeting.
b. Regulatory Approvals. The transactions
contemplated by this Agreement shall have been approved by all
governing regulatory authorities, without any condition or
requirement that either HHC or SNB deem burdensome, or which
otherwise would have a material adverse effect on the business,
operations, properties, assets or financial condition of HHC,
Hancock Bank or SNB after the Effective Date, all conditions
required to be satisfied shall have been satisfied, and all
waiting periods relating to such approvals shall have expired.
c. Registration Statement. The Registration
Statement shall have been declared effective and shall not be
subject to a stop order or any threatened stop order, and all
state securities and blue sky permits or approvals required to
consummate the transactions contemplated by this Agreement shall
have been received.
d. No Restraining Action. No action or proceeding
shall have been threatened or instituted before a court or other
governmental body to restrain or prohibit the transactions
contemplated by the Bank Merger Agreement or this Agreement or to
obtain damages or other relief in connection with the execution of
such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall
have given notice to any party hereto to the effect that
consummation of the transactions contemplated by the Bank Merger
Agreement or this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain
consummation of the Bank Merger.
e. Tax Opinion. SNB shall have received an opinion
from Watkins Ludlam & Stennis, P.A. substantially to the effect
that the transactions contemplated by this Agreement will be
treated for federal income tax purposes as a tax-free
reorganization under Section 368 of the Code.
8.2 Conditions to Obligations of SNB to Effect the Bank
Merger. The obligations of SNB to effect the Bank Merger shall be subject to
the following additional conditions:
a. Representations and Warranties. The
representations and warranties of HHC set forth in this Agreement
shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing as though made at and as
of the Closing, except as otherwise contemplated by this Agreement
or consented to in writing by SNB.
b. Performance of Obligations. HHC shall have
performed in all material respects all obligations and complied
with all covenants required by it under this Agreement prior to
the Closing and HHC shall deliver at Closing appropriate
certificates setting forth such.
c. No Material Adverse Change. There shall not have
occurred any material adverse change from the date of this
Agreement to the Closing Date in the financial condition, results
of operations or business of HHC and its subsidiaries taken as a
whole.
d. Legal Opinion. An opinion of Watkins Ludlam &
Stennis, P.A., special counsel to HHC, shall be delivered to SNB
dated the Closing Date and in form and substance reasonably
satisfactory to SNB and its counsel to the effect that:
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<PAGE> 107
i. HHC is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Mississippi, and has corporate authority to own and operate
its businesses and properties and to carry on its business as
presently conducted by it;
ii. Hancock Bank is a Louisiana banking corporation,
duly organized and validly existing and in good standing under
the laws of the State of Louisiana, and has corporate
authority to own and operate its businesses and properties and
to carry on its business as presently conducted by it;
iii. HHC had and has corporate authority to make,
execute and deliver this Agreement, it has been duly
authorized and approved by all necessary corporate action of
HHC and has been duly executed and delivered and is as of the
Closing Date its valid and binding obligation subject,
however, to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally and to the
availability of equitable remedies in general;
iv. All required regulatory approvals have been
obtained;
v. To such counsel's knowledge after inquiry, there
is no litigation or proceeding pending or threatened against
HHC relating to the participation in or consummation of this
Agreement by HHC and consummation will not violate any other
contract, agreement, charter or bylaw of HHC; and
vi. All shares of HHC Common Stock to be issued
pursuant to the Bank Merger have been duly authorized and,
when issued pursuant to the Bank Merger Agreement, will be
validly and legally issued, fully paid and non-assessable and
will be, at the time of their delivery, free and clear of all
liens, charges, security interests, mortgages, pledges and
other encumbrances and any preemptive or similar rights.
8.3 Conditions to Obligations of HHC to Effect the Bank Merger.
The obligations of HHC to effect the Bank Merger shall be subject to the
following additional conditions:
a. Representations and Warranties. The representations
and warranties of SNB set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing as though made at and as of the Closing, except as
otherwise contemplated by this Agreement or consented to in writing by
HHC.
b. Performance of Obligations. SNB shall have
performed in all material respects all obligations and complied with
all covenants required by it under this Agreement prior to the Closing
and SNB shall deliver at Closing appropriate certificates setting
forth such.
c. No Material Adverse Change. There shall not have
occurred any material adverse change from the date of this Agreement
to the Closing Date in the financial condition, results of operations
or business of SNB and its subsidiaries, if any, taken as a whole.
d. Legal Opinion. An Opinion of Preis & Laborde,
counsel to SNB, shall be delivered to HHC dated the Closing Date, and
in form and substance reasonably satisfactory to HHC to the effect
that:
i. SNB is a national banking association duly or
ganized and validly existing and in good standing under the
laws of the United States of America, and has corporate
authority to own and operate its businesses and properties and
to carry on its business as presently conducted by it;
ii. SNB had and has corporate authority to make,
execute and deliver this Agreement, it has been duly
authorized and approved by all necessary corporate action of
SNB and has been duly executed and delivered and is as of the
Closing Date its valid and binding obligation subject,
however, to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally and to the
availability of equitable remedies in general;
iii. To such counsel's knowledge after inquiry,
there is no litigation or proceeding pending or threatened
against SNB relating to the participation in or consummation
of this Agreement by SNB and consummation will not violate any
other contract, agreement, charter or bylaw of SNB; and
iv. SNB has complied with all laws and regulations
relating to dissenters' rights and all stock in SNB will be
acquired by HHC pursuant to the terms of this Agreement.
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<PAGE> 108
ARTICLE 9
CLOSING
9.1 Closing. The Closing shall be held at the offices of
Hancock Bank or such other place as HHC and SNB shall mutually designate.
9.2 Deliveries at Closing. At the Closing, all documents and
instruments shall be duly and validly executed and delivered by all the Parties
hereto, and possession of all liabilities and assets shall be transferred and
delivered accordingly.
9.3 Documents. The Parties shall execute any and all
documents reasonably requested by them or their legal counsel for the purpose
of effecting the transaction contemplated, including but not limited to the
following:
a. endorsement, negotiation, and/or assignment of
all original notes and Security Agreements relating to all loans;
b. warranty deeds for the real property;
c. commitments for owners title insurance for the
real property;
d. such other endorsements, assignments or other
conveyances as may be appropriate or necessary to effect the
transfer to HHC of the assets, duties, responsibilities and
obligations as referred to herein; and
e. listing of dissenting stockholders, if any,
including name, address, and number of shares owned.
ARTICLE 10
EMPLOYMENT MATTERS
10.1 Employees. Neither HHC nor Hancock Bank shall be obligated
to retain in any capacity any of SNB's officers, directors, or employees or to
pay any stipulated compensation to any employees. HHC will make reasonable
efforts to maintain compensation levels for any retained personnel commensurate
with the employees' experience and qualifications, and in accordance with HHC
and Hancock Bank's salary administration program. With regard to any retained
employee, HHC and Hancock Bank shall be free of any obligation to honor any past
agreement of SNB to such person. If after the Closing Date and prior to the
expiration of six months after the Closing Date, the employment of any officer
of SNB set forth on Schedule 10.1 hereof is terminated, HHC will cause Hancock
Bank to provide such officer sixty days' prior notice of termination and to pay
to such officer an amount equal to one weeks' salary (based upon such officer's
salary as of the Closing Date less statutory payroll deductions) for every year
of employment with a minimum amount equal to thirty days' salary and a maximum
amount equal to six months' salary. As to non-officer employees of SNB, in the
event of termination as provided above, such non-officer employee shall be
entitled to an amount equal to one weeks' salary per year of employment with a
minimum amount equal to two weeks' salary and a maximum amount equal to six
months' salary. Said amount shall be payable in a lump sum within ten days
after the date such termination is effective. Notwithstanding the
aforementioned, if the termination results from the malfeasance, misfeasance,
felony indictment or conviction, or unsatisfactory job performance of such
officer or employee, then HHC and Hancock Bank shall be under no obligation to
make such payment or provide such prior notice of termination.
SNB's group health and life benefit plan will be continued through
the Effective Date of the Bank Merger. Thereafter, all retained employees will
be eligible to participate in Hancock Bank's group health and life benefit plan
based on the provisions in the plan. The ninety (90) day employment period
will be waived for eligible retained employees in accordance with Hancock
Bank's plan. Hancock Bank will waive pre-existing medical conditions for
health insurance purposes as to all retained personnel, provided such
pre-existing medical conditions were covered at Closing under SNB's group
health benefit plan.
10.2 Retirement Plan. SNB currently maintains the Southeast
National Bank 401-K Plan through Nationwide Life Insurance Company which will
remain operative and in effect through the Effective Date of the Bank Merger
(the "Plan"). The Plan will be terminated as of the Effective Date of the Bank
Merger and distributed to vested employees of SNB in accordance with the terms
of the Plans after the normal and customary contributions have been made
consistent with past practices. The trustees for the Plan will be responsible
for the termination, allocation and distribution of plan assets and related
notices and other reporting responsibilities to the IRS, Department of Labor and
other government agencies. All such termination costs will be paid from the
Plan's assets.
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<PAGE> 109
Upon the Effective Date of the Bank Merger, all retained employees will be
eligible to enter the Hancock Bank Profit Sharing Plan, Hancock Bank 401-K
Plan, and Hancock Bank Pension Plan based on the provisions set forth in the
respective plans. All retained employees will be granted full credit for all
prior service for vesting, eligibility and benefit purposes for the Hancock
Bank Profit Sharing Plan, for eligibility purposes for the Hancock Bank 401-K
Plan, and for vesting and eligibility purposes for the Hancock Bank Pension
Plan.
10.3 Other Benefit Plans. Other SNB benefit plans will
continue through the Effective Date of the Bank Merger. Thereafter, all
retained employees will be eligible to participate in all Hancock Bank
employment benefit plans not set forth in Sections 10.1 and 10.2 hereof, based
on the provisions set forth in the plans with full credit for all prior service.
10.4 Notices. SNB shall be responsible for notifying its
employees of the terms of this Agreement as it affects and/or relates to them
and for complying with any applicable laws regarding such notices.
ARTICLE 11
REMEDIES
For purposes of this Agreement, any reference to HHC in this Article 11
shall be deemed to include HHC and Hancock Bank.
11.1 Parties' Joint Remedies. In the event regulatory
authorities impose requirements which do not materially alter this Agreement
and which are not otherwise burdensome or objectionable to the Parties, then
the Parties agree to amend this Agreement to conform to such regulatory
requirements, and specific performance shall be available as a remedy for this
purpose.
11.2 Joint Remedies for Unintentional Breach. Notwithstanding
any remedy in Sections 11.3 or 11.4 hereof, in the event this Agreement is
terminated pursuant to Section 12.1(c) hereof as a result of an unintentional
breach of a warranty, representation, covenant or agreement, then the sole
remedy shall be that this Agreement becomes null and void.
11.3 SNB's Remedies. In the event HHC breaches this Agreement,
other than as provided in Section 11.2 hereof, then SNB shall give HHC notice of
the breach, and HHC shall have a reasonable amount of time to cure the breach,
and HHC shall be liable for such economic damages that are the direct result of
any uncured breach, but HHC shall not be liable for consequential or punitive
damages. In the event SNB elects to terminate this Agreement as a result of a
breach of this Agreement by HHC, then, immediately upon such termination date,
HHC shall pay to SNB the sum of $500,000 in the form of a break-up fee for such
termination. The break-up fee will not serve as the exclusive remedy to SNB
under this Agreement and SNB will be entitled to all other rights and remedies
provided by law or in equity.
11.4 HHC's Remedies. In the event SNB breaches this Agreement,
other than as provided in Section 11.2 hereof, then HHC shall give SNB notice of
the breach, and SNB shall have a reasonable amount of time to cure the breach,
and SNB shall be liable for such economic damages that are the direct result of
any uncured breach, but SNB shall not be liable for consequential or punitive
damages; provided, however, in the event SNB breaches Section 5.8, then SNB
shall be liable to HHC in an amount equal to said economic damages in addition
to HHC's and Hancock Bank's out of pocket expenses incurred in connection with
the transactions contemplated hereby, including but not limited to its attorney
fees and accountant fees. In the event HHC elects to terminate this Agreement
as a result of a breach of this Agreement by SNB, then, immediately upon such
termination date, SNB shall pay to HHC the sum of $500,000 in the form of a
break-up fee for such termination. The break-up fee will not serve as the
exclusive remedy to HHC under this Agreement and HHC will be entitled to all
other rights and remedies provided by law or in equity
11.5 Attorney Fees. Each Party shall bear its own attorney fees
except attorney fees may be awarded by the presiding judge if the trier of fact
finds that the other Party has committed fraud against the other Party.
ARTICLE 12
TERMINATION
12.1 Termination. This Agreement may be terminated, either
before or after approval by the stockholders of SNB as follows:
a. Mutual Consent. At any time on or prior to
the Effective Date, by the mutual consent in writing of a majority
of the members of each of the Board of Directors of the Parties
hereto;
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<PAGE> 110
b. Expiration of Time. By the Board of Directors of
HHC in writing or by the Board of Directors of SNB in writing, if the
Bank Merger shall have not become effective on or before March 31,
1997, unless the absence of such occurrence shall be due to the
failure of the Party seeking to terminate this Agreement to perform
each of its obligations under this Agreement required to be performed
by it on or prior to the Effective Date;
c. Breach of Representation, Warranty or Covenant.
By either Party hereto, in the event of a breach by the other Party
(a) of any covenant or agreement contained herein or (b) of any
representation or warranty herein, if (i) the facts constituting such
breach reflect a material and adverse change in the financial
condition, results of operations, business, or prospects taken as a
whole, of the breaching Party, which in either case cannot be or is
not cured within 60 days after written notice of such breach is given
to the Party committing such breach, or (ii) in the event of a breach
of a warranty or covenant, such breach results in a material increase
in the cost of the non-breaching Party's performance of this
Agreement.
d. Regulatory Approval. By either Party hereto, at
any time after the FRB, FDIC, OCC, OFI or United States Department of
Justice has denied any application for any approval or clearance
required to be obtained as a condition to the consummation of the Bank
Merger and the time-period for all appeals or requests for
reconsideration thereof has run.
e. Shareholder Approval. By either Party hereto, if
the Bank Merger is not approved by the required vote of shareholders
of SNB.
f. Dissenters. By HHC, if holders of ten percent
(10%) or more of the outstanding SNB Common Stock exercise statutory
rights of dissent and appraisal pursuant to 12 U.S.C.Section 214a.
ARTICLE 13
APPRAISAL RIGHTS
13.1 Appraisal Rights of SNB. Notwithstanding any other provision
of this Agreement to the contrary, dissenting stockholders of SNB who comply
with the procedural requirements of 12 U.S.C. Section 214a will be entitled to
receive payment of the fair cash value of their shares.
ARTICLE 14
MISCELLANEOUS
14.1 Entire Agreement. This Agreement embodies the entire
understanding of the Parties in relation to the subject matter herein and
supersede all prior understandings or agreements, oral or written, between the
Parties hereto.
14.2 Survival of Representations, Warranties and Agreements. None
of the representations and warranties made herein shall survive the Effective
Date, or the earlier termination of this Agreement pursuant to Article 12
hereof.
14.3 Headings. The headings and subheadings in this Agreement,
except the terms identified for definition in Article 1 and elsewhere in this
Agreement, are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
14.4 Duplicate Originals. This Agreement may be executed in any
number of duplicate originals, any one of which when fully executed by all
Parties shall be deemed to be an original without having to account for the
other originals.
14.5 Governing Law. This Agreement and the rights and obligations
hereunder shall be governed and construed by the laws of the State of Louisiana.
14.6 Successors: No Third Party Beneficiaries. All terms and
conditions of this Agreement shall be binding on the successors and assigns of
SNB and HHC. Except as otherwise specifically provided in this Agreement,
nothing expressed or referred to in this Agreement is intended or shall be
construed to give any person other than SNB and HHC any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provisions
contained herein, it being the intention of the Parties hereto that this
Agreement, the obligations and statements of responsibilities hereunder, and all
other conditions and provisions hereof are for the sole and exclusive benefit of
SNB and HHC and for the benefit of no other person.
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<PAGE> 111
14.7 Modification; Assignment. No amendment or other modification
of any part of this Agreement shall be effective except pursuant to a written
agreement subscribed by the duly authorized representatives of all of the
Parties hereto. This Agreement may not be assigned without the express written
consent of both Parties.
14.8 Notice. Any notice, request, demand, consent, approval or
other communication to any Party hereof shall be effective when received and
shall be given in writing, and delivered in person against receipt thereof, or
sent by certified mail, postage prepaid or courier service at its address set
forth below or at such other address as it shall hereafter furnish in writing to
the others. All such notices and other communications shall be deemed given on
the date received by the addressee or its agent.
SNB
---
Southeast National Bank
1855 S. Morrison Boulevard
P.O. Drawer 2488
Hammond, Louisiana 70404-2488
Attn: Reggie Harper, President
Copy to: Phillip W. Preis, Esq.
Preis & Laborde, A Professional Law Corporation
1000 Premier Centre-North Tower
450 Laurel Street
Baton Rouge, LA 70801
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<PAGE> 112
HHC
---
Hancock Holding Company
Post Office Box 4019
Gulfport, MS 39502
Attn: Mr. George A. Schloegel, Vice Chairman
Copy to: Carl J. Chaney, Esquire
Watkins Ludlam & Stennis, P.A.
P. O. Box 427
Jackson, MS 39205-0427
or
633 North State Street
Jackson, Mississippi 39202
14.9 Waiver. SNB and HHC may waive their respective rights, powers
or privileges under this Agreement; provided that such waiver shall be in
writing; and further provided that no failure or delay on the part of SNB or HHC
to exercise any right, power or privilege under this Agreement will operate as a
waiver thereof, nor will any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power or privilege by SNB or HHC under the
terms of this Agreement, nor will any such waiver operate or be construed as a
future waiver of such right, power or privilege under this Agreement.
14.10 Costs, Fees and Expenses. Except as provided in Article 11
herein, each Party hereto agrees to pay all costs, fees and expenses which it
has incurred in connection with or incidental to the matters contained in this
Agreement, including without limitation any fees and disbursements to its
accountants and counsel. HHC will be responsible for preparing the
applications, regulatory filings and registration statement necessary to obtain
approval of the Bank Merger and the issuance of the HHC Common Stock. SNB will
be responsible for the cost of its accountants and legal counsel and will bear
all costs related to conducting its stockholders' meetings and obtaining
stockholders' approval of the Bank Merger.
14.11 Press Releases. SNB and HHC shall consult with each other as
to the form and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult each other as to the form
and substance of other public disclosures related thereto, provided, however,
that nothing contained herein shall prohibit HHC, following notification to SNB,
from making any disclosures which its counsel deems necessary to conform with
requirements of law or the rules of the National Association of Securities
Dealers Automated Quotation System.
14.12 Severability. If any provision of this Agreement is invalid
or unenforceable then, to the extent possible, all of the remaining provisions
of this Agreement shall remain in full force and effect and shall be binding
upon the Parties hereto.
14.13 Mutual Covenant of Best Efforts and Good Faith. The Parties
mutually covenant and agree with each other that they will use their best
efforts to consummate the transactions herein contemplated and that they will
act and deal with each other in good faith as to this Agreement and all matters
arising from or related to it.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the
date first above written.
SOUTHEAST NATIONAL BANK
By: /s/R. R. Harper. Pres & C.E.O.
-------------------------------
Name: REGINALD R. HARPER
Title: PRESIDENT & CHIEF
EXECUTIVE OFFICER
Attest:
/s/Karen M. Granier
- ----------------------
Name: KAREN M. GRAINER
----------------------
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<PAGE> 113
HANCOCK HOLDING COMPANY
By: /s/ Leo W. Seal, Jr.
--------------------------------
Name: LEO W. SEAL, JR.
Title: PRESIDENT & CEO
Attest:
/s/ C. Stanley Bailey
- ---------------------------
Name: C. STANLEY BAILEY
----------------------
HANCOCK BANK OF LOUISIANA
By:/s/ Robert E. Easterly
--------------------------------
Name: ROBERT E. EASTERLY
Title: CHIEF OPERATING OFFICER
Attest:
/s/ Jeanie L. Cassano
- -----------------------------
Name: JEANIE L. CASSANO
-----------------------
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<PAGE> 114
EXHIBIT "A"
BANK MERGER AGREEMENT
This Bank Merger Agreement is made and entered into as of the 31st day
of July, 1996, between Hancock Bank of Louisiana, Baton Rouge, Louisiana, a
state banking corporation ("Hancock Bank") and Southeast National Bank,
Hammond, Louisiana, a national banking association ("SNB") (the "Bank Merger
Agreement").
WITNESSETH:
WHEREAS, Hancock Bank and SNB (collectively, the "Constituent Banks")
and their respective Boards of Directors deem it advisable that SNB be merged
into Hancock Bank (the "Bank Merger") pursuant to the provisions of the
Louisiana Banking Laws, Section 214a of Title 12 of the United States Code
("U.S.C.") and upon the terms and conditions hereinafter set forth and in the
Plan (as hereinafter defined); and;
WHEREAS, the Constituent Banks have entered into an Agreement and Plan
of Reorganization dated as of the date hereof (the "Plan") (the defined terms
in which are used herein as defined therein) setting forth certain
representations, warranties, covenants and conditions relating to the Bank
Merger;
NOW THEREFORE, the Constituent Banks hereby make, adopt and approve
this Bank Merger Agreement and prescribe the terms and conditions of the Bank
Merger and the mode of carrying the Bank Merger into effect as follows:
ARTICLE ONE
The Bank Merger
Upon the terms and subject to the conditions hereinafter set forth,
and in the Plan, on the Effective Date (as defined in Article Two hereof) SNB
shall be merged into Hancock Bank and the separate existence of SNB shall
cease.
ARTICLE TWO
Effective Date and Time
The Bank Merger shall be effective no earlier than the latter of: (a)
the date and time specified or permitted by the Louisiana Office of Financial
Institutions ("OFI") in a Certificate of Merger or other written record issued
by the OFI; or (b) fifteen (15) days after the time specified in the
certificate to be issued by the Federal Deposit Insurance Corporation under its
seal approving the Bank Merger, such date to be determined by resolution of the
Board of Directors of Hancock Bank (such time and date being herein referred to
as the "Effective Time" and the "Effective Date", respectively).
ARTICLE THREE
Conversion and Cancellation of Shares
The aggregate amount of consideration to be received by the holders of
Common Stock, $5.00 par value of SNB ("SNB Common Stock") shall be $7,624,000
or $16.70 per share based on 456,518 shares of SNB Common Stock issued and
outstanding. Of the aggregate consideration, up to $3,891,135 shall be paid in
the form of HHC Common Stock based on a value of $37.25 per share and the
balance in cash, provided the maximum aggregate amount of cash to be paid,
including cash in lieu of fractional shares, cash paid to those SNB
stockholders who would otherwise receive 25 or fewer shares of HHC Common
Stock, and cash paid to dissenting stockholders who perfect their rights, (the
"Cash Element") shall not exceed $3,735,760 (49% of the aggregate
consideration). Assuming no SNB stockholders perfect their right to dissent,
on the Effective Date, each share of SNB Common Stock issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Bank Merger and
without any action on the part of the holder thereof, be converted into the
right to receive 0.2345 shares of HHC Common Stock and $7.9652 in cash
(collectively, the "SNB Exchange Ratio"), provided, however, each holder of SNB
Common Stock who would otherwise receive 25 or fewer shares of HHC Common Stock
shall not receive HHC Common Stock but rather shall be entitled to receive
$16.70 in cash for each share of SNB Common Stock. In the event: (i) there are
SNB stockholders who perfect their right to dissent, or (ii) there is a change
in the amount of fractional shares or the number of SNB stockholders who would
otherwise receive 25 or fewer shares after the date of this Agreement, the
stock portion of the SNB Exchange Ratio will be increased and the cash portion
decreased proportionately to ensure that the maximum aggregate amount of the
Cash Element does not exceed $3,735,760, but in no event shall the purchase
price be less than $16.70 per share. The exchange of certificates representing
HHC Common Stock for certificates formerly representing SNB Common Stock shall
be effected as provided in the Plan. No fractional shares of HHC
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<PAGE> 115
Common Stock representing such fractional shares will be issued to the holders
of SNB Common Stock. Instead, a shareholder otherwise entitled to receive such
fractional shares shall be entitled to a cash payment (without interest) as
provided in the Plan.
ARTICLE FOUR
Effects of Bank Merger
The Bank Merger shall have the effects set forth in Section 6:355 of
the Louisiana Banking Laws and 12 U.S.C. Section 214b. Upon the Effective
Date, each branch office maintained by SNB as a branch office immediately
before the Bank Merger becomes effective, shall become a branch office of
Hancock Bank.
ARTICLE FIVE
Filing of Merger Agreement
If this Merger Agreement is approved by the shareholders of SNB and
Hancock Bank, then the fact of such approval shall be certified hereon by the
Secretary or Assistant Secretary of the Constituent Banks, and this Merger
Agreement, as approved and certified, shall be signed and acknowledged by the
President or Vice President of each of the Constituent Banks. Thereafter, a
multiple original of this Merger Agreement, so certified, signed and
acknowledged, shall be delivered to the OFI for filing and recordation in the
manner required by law; and thereafter, as soon as practicable (but not later
than the time required by law), a copy of the Certificate of Merger issued by
the OFI shall be filed for record in the office of the recorder of mortgages
for the parishes of Tangipahoa and East Baton Rouge and shall also be recorded
in the conveyance records for the parishes of Tangipahoa and East Baton Rouge
and any other parish in which any of the Constituent Banks owns real property
on the Effective Date of the Bank Merger.
ARTICLE SIX
Miscellaneous
The obligations of the Constituent Banks to effect the Bank Merger
shall be subject to all of the terms and conditions of the Plan. At any time
prior to the Effective Date, this Bank Merger Agreement may be terminated (a)
by the mutual agreement of the Boards of Directors of the Constituent Banks or
(b) pursuant to the terms and provisions of the Plan.
IN WITNESS WHEREOF, this Bank Merger Agreement is signed by a majority
of the Directors of each of the Constituent Banks as of the day first above
written.
HANCOCK BANK OF LOUISIANA
BY A MAJORITY OF ITS BOARD OF DIRECTORS
/s/ Richard M. Hill
-------------------------------------------
/s/ J. B. Olinde
-------------------------------------------
/s/ Bruce Easterly
-------------------------------------------
/s/ Charles A. Webb, Jr.
-------------------------------------------
/s/ George A. Schloegel
-------------------------------------------
-------------------------------------------
-------------------------------------------
-------------------------------------------
(consisting of a majority of its Directors)
-------------------------------------------
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<PAGE> 116
SOUTHEAST NATIONAL BANK
BY A MAJORITY OF ITS BOARD OF DIRECTORS
/s/ R.R. Harper, Pres. & C.E.O.,
------------------------------------------
/s/ H. Owen Vinyard
------------------------------------------
/s/ Joe Rinaudo, Jr.
------------------------------------------
/s/ Verna S. Magee
------------------------------------------
/s/ Raymond E. Schafer
------------------------------------------
/s/ Alex Theriot
------------------------------------------
/s/ Ronald A. Curet
------------------------------------------
/s/ Dennis P. Herbert
------------------------------------------
/s/ Larry Delatte
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
consisting of a majority of its Directors)
------------------------------------------
Aa-3
<PAGE> 117
EXHIBIT "B"
FORM OF AFFILIATE AGREEMENT
DATE
Hancock Holding Company
One Hancock Plaza
Gulfport, Mississippi 39502
Gentlemen:
This letter agreement is given in connection with the closing of the
proposed merger (the "Merger") of Southeast National Bank ("SNB") with and into
Hancock Bank of Louisiana ("Hancock Bank"). I am aware and acknowledge that,
as a member of the Board of Directors or an executive officer or the beneficial
owner of a substantial amount of the outstanding common stock of SNB, I may be
an "affiliate" of SNB as that term is defined in the Securities Act of 1933
(the "Securities Act") and the rules and regulations thereunder.
I understand that resales or other dispositions of shares of the
common Stock, $3.33 par value, of Hancock Holding Company (the "HHC Common
Stock") to be acquired by me as a result of the Merger may be governed by Rules
144 and 145 promulgated under the Securities Act.
I have no plan or intention to sell, exchange, transfer by gift or
otherwise dispose of a number of said securities to be received in the Merger
that would reduce SNB stockholders' ownership of the HHC Common Stock to a
number of shares having a value, as of the date of the Merger, of less than 50%
of the value of all of the formerly outstanding SNB Common Stock as of the same
date.
I understand that the certificates for shares of Hancock Holding
Company received pursuant to the Merger will bear a restrictive legend, to the
effect that the shares were received in a transaction to which Rule 145
applies, as follows:
"The shares represented by this certificate have been issued or
transferred to the registered holder as a result of a transaction to
which Rule 145 under the Securities Act of 1933 (the "Act") applies.
The shares represented by this certificate may not be sold, assigned
or otherwise disposed of, and the issuer shall not be required to give
effect to any attempted sale, transfer or assignment, except in
accordance with the requirements of the Act and the other conditions
specified in that certain Affiliates Agreement, dated as of
____________________, 199_ between the issuer and the shareholder, a
copy of which Agreement will be furnished, without charge, by Hancock
Holding Company to the holder of this certificate upon written request
therefor."
On the basis of the foregoing, and in consideration of the delivery to
me of the HHC Common Stock into which my SNB Common Stock will be converted, I
agree that I will not, directly or indirectly, sell, exchange, transfer by gift
or otherwise dispose of any of the HHC Common Stock held by me in violation of
the Securities Act or the rules or regulations promulgated thereunder.
Sincerely,
Ab-1
<PAGE> 118
EXHIBIT "C"
CERTIFICATE OF SOUTHEAST NATIONAL BANK
RELATING TO SECTION 368 OPINION ON THE BANK MERGER
This Certificate has been requested by the law firm of Watkins Ludlam
& Stennis, P.A. in connection with the rendering of its opinion as to certain
federal income tax consequences relating to the merger (the "Bank Merger") of
Southeast National Bank ("SNB") with and into Hancock Bank of Louisiana
("Hancock Bank") as such transaction is described in that certain Agreement and
Plan of Reorganization By and Among Hancock Holding Company ("HHC"), Hancock
Bank and SNB dated as of July __, 1996 (the "Merger Agreement"). Watkins
Ludlam & Stennis, P. A. will rely on the representations stated hereinafter, as
well as on other facts, assumptions, and representations described in its
opinion letter dated [____________________, 1996 (date of closing)] (the "WL&S
Tax Opinion") in opining on the federal income tax issues stated therein.
Accordingly, this Certificate is an integral part of the WL&S Tax Opinion.
Unless otherwise noted, all defined or capitalized terms used in this
Certificate have the same meaning ascribed to such terms in the Merger
Agreement or in the WL&S Tax Opinion.
The following representations are being made in connection with the
Bank Merger:
1. The fair market value of the HHC Common Stock and cash (or,
where a Bank shareholder is entitled to receive cash only, the
cash) received in the Bank Merger exchange by each SNB
shareholder (collectively, the "Hancock Bank Consideration")
will be approximately equal to the fair market value of the
SNB Common Stock surrendered in the exchange.
2. The aggregate fair market value of the HHC Common Stock
portion of the Hancock Bank Consideration will, on the
Effective Date of the Bank Merger, constitute at least
fifty-one percent (51%) of the total fair market value of the
Hancock Bank Consideration exchanged in the Bank Merger.
3. To the best of the knowledge of management of SNB, there is no
plan or intention by the shareholders of SNB who own one
percent (1%) or more of the SNB Common Stock, and to the best
of the knowledge of management of SNB there is no plan or
intention on the part of the remaining shareholders of SNB, to
sell, exchange, or otherwise dispose of a number of shares of
HHC Common Stock received in the Bank Merger that would
collectively reduce the SNB shareholders' ownership of HHC
Common Stock to a number of shares having a value, as of the
date of the Bank Merger, of less than fifty percent (50%) of
the value of all of the formerly outstanding stock of SNB as
of the same date. For purposes of this representation, shares
of SNB Common Stock exchanged for cash in lieu of fractional
shares of HHC Common Stock, exchanged for cash or other
property, or surrendered by dissenters will be treated as
outstanding shares of SNB Common Stock on the date of the Bank
Merger. Moreover, shares of SNB Common Stock and shares of
HHC Common Stock held by SNB shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the Bank
Merger will be considered as part of this representation.
4. SNB will transfer and Hancock Bank will acquire at least 90
percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets
held by SNB immediately prior to the Bank Merger. For
purposes of this representation, amounts paid by SNB to
dissenters, assets used by SNB to pay its reorganization
expenses, amounts paid by SNB to shareholders who receive cash
or other property in connection with the Bank Merger, and all
redemptions and distributions (except for regular, normal
dividends) made by SNB immediately preceding the Bank Merger,
are included as assets of SNB held immediately prior to the
Bank Merger.
5. The liabilities of SNB assumed by Hancock Bank and the
liabilities, if any, to which the transferred assets of SNB
are subject, were incurred by SNB in the ordinary course of
its business.
6. SNB and the shareholders of SNB will pay their respective
expenses, if any, incurred in connection with the Bank Merger
(subject to representation 14 below).
7. There is no intercorporate indebtedness existing between HHC
and SNB or between Hancock Bank and SNB that was issued,
acquired, or will be settled at a discount.
8. SNB is not an investment company as defined in Code section
368(a)(2)(F)(iii) and (iv).
9. SNB is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of section 368(a)(3)(A) of the
Code.
10. The fair market value of the assets of SNB transferred to
Hancock Bank will equal or exceed the sum of the liabilities
assumed by Hancock Bank, plus the amount of the liabilities,
if any, to which the transferred assets are subject.
11. No stock of Hancock Bank will be issued in the Bank Merger.
12. The payment of cash in lieu of fractional shares of HHC Common
Stock is solely for the purpose of avoiding the expense and
inconvenience to HHC of issuing fractional shares and does not
represent separately bargained-for consideration. The total
cash consideration that will be paid in the Bank Merger to the
SNB shareholders instead of issuing fractional shares of HHC
Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Bank Merger to the
SNB shareholders in exchange for their shares of SNB Common
Stock. The fractional share interests of each SNB shareholder
will be aggregated, and no SNB shareholder will receive cash
(in payment for fractional share interests) in an amount equal
to or greater than the value of one (1) full share of HHC
Common Stock.
13. None of the compensation received by any shareholder-employee
of SNB pursuant to any employment, consulting or similar
arrangement is or will be separate consideration for, or
allocable to, any of his shares of SNB Common Stock; none of
the shares of HHC Common Stock received by any
shareholder-employee of SNB pursuant to the Bank Merger will
be separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any
shareholder-employee of SNB pursuant to any employment,
consulting or similar arrangement is or will be for services
actually rendered and will be commensurate with amounts paid
to third parties bargaining at arm's-length for similar
services.
14. Hancock Bank will pay or assume only those expenses of SNB
that are solely and directly related to the Bank Merger in
accordance with the guidelines established in Rev. Rul. 73-54,
1973-1 C.B. 187.
SNB hereby certifies that the officer of the corporation executing
this Certificate has knowledge of the pertinent information set forth herein
and that he has examined the foregoing representations and, to the best of such
officer's knowledge and belief, the representations made are true, complete and
correct as of the date, ______________, 1996, of this Certificate, and he
further certifies that he is duly authorized and empowered to execute and
deliver this Certificate.
SOUTHEAST NATIONAL BANK
By:
-------------------------
Title:
----------------------
CERTIFICATE OF HANCOCK HOLDING COMPANY AND
HANCOCK BANK OF LOUISIANA RELATING TO
SECTION 368 OPINION ON THE BANK MERGER
This Certificate has been requested by the law firm of Watkins Ludlam
& Stennis, P.A. in connection with the rendering of its opinion as to certain
federal income tax consequences relating to the merger (the "Bank Merger") of
Southeast National Bank ("SNB") with and into Hancock Bank of Louisiana
("Hancock Bank") as such transaction is described in that certain Agreement and
Plan of Reorganization By and Among Hancock Holding Company ("HHC"), Hancock
Bank and SNB dated as of July __, 1996 (the "Merger Agreement"). Watkins
Ludlam & Stennis, P. A. will rely on the representations stated hereinafter, as
well as on other facts, assumptions, and representations described in its
opinion letter dated [____________________, 1996 (date of closing)] (the "WL&S
Tax Opinion") in opining on the federal income tax issues stated therein.
Accordingly, this Certificate is an integral part of the WL&S Tax Opinion.
Unless otherwise noted, all defined or capitalized terms used in this
Certificate have the same meaning ascribed to such terms in the Merger
Agreement or in the WL&S Tax Opinion.
The following representations are being made in connection with the
Bank Merger:
1. Prior to the Bank Merger, HHC will be in control of Hancock
Bank within the meaning of section 368(c)(1) of the Code.
2. Following the Bank Merger, Hancock Bank will not issue
additional shares of its stock that would result in HHC losing
control of Hancock Bank within the meaning of section
368(c)(1) of the Code.
3. HHC has no plan or intention to reacquire any of the HHC
Common Stock issued in the Bank Merger.
4. HHC has no plan or intention to liquidate Hancock Bank; to
merge Hancock Bank with and into another corporation; to sell
or otherwise dispose of the stock of Hancock Bank; or to cause
Hancock Bank to sell or otherwise dispose of any of the assets
of SNB acquired in the Bank Merger, except for dispositions
made in the ordinary course of business or transfers described
in section 368(a)(2)(C) of the Code.
5. Following the Bank Merger, Hancock Bank will continue the
historic business of SNB or use a significant portion of SNB's
historic business assets in a business.
6. HHC, Hancock Bank, SNB, and the shareholders of SNB will pay
their respective expenses, if any, incurred in connection with
the Bank Merger (subject to representation 9 below).
7. There is no intercorporate indebtedness existing between HHC
and SNB or between Hancock Bank and SNB that was issued,
acquired, or will be settled at a discount.
8. Neither HHC nor Hancock Bank is an investment company as
defined in Code section 368(a)(2)(F)(iii) and (iv).
9. Hancock Bank will pay or assume only those expenses of SNB
that are solely and directly related to the Bank Merger in
accordance with the guidelines established in Rev. Rul. 73-54,
1973-1 C.B. 187.
10. No stock of Hancock Bank will be issued in the Bank Merger.
11. The payment of cash in lieu of fractional shares of HHC Common
Stock is solely for the purpose of avoiding the expense and
inconvenience to HHC of issuing fractional shares and does not
represent separately bargained-for consideration. The total
cash consideration that will be paid in the Bank Merger to
certain of the SNB shareholders instead of issuing fractional
shares of HHC Common Stock will not exceed one percent (1%) of
the total consideration that will be issued in the Bank Merger
to the SNB shareholders in exchange for their shares of SNB
Common Stock. The fractional share interests of each SNB
shareholder of record will be aggregated, and no SNB
shareholder, will receive cash (in payment of fractional share
interests) in an amount equal to or greater than the value of
one (1) full share of HHC Common Stock.
12. The fair market value of the HHC Common Stock portion of the
total consideration paid by Hancock Bank in the Bank Merger
will, on the Effective Date, constitute at least fifty-one
percent (51%) of the fair market value of the total
consideration paid by Hancock Bank in the Bank Merger.
HHC and Hancock Bank hereby certify that the officer of the
corporation executing this Certificate has knowledge of the pertinent
information set forth herein and that he has examined the foregoing
representations and, to the best of such officer's knowledge and belief, the
representations made are true, complete and correct as of the date,
________________, 1996, of this Certificate, and he further certifies that he
is duly authorized and empowered to execute and deliver this Certificate.
HANCOCK HOLDING COMPANY
By:
------------------------
Title:
---------------------
HANCOCK BANK OF LOUISIANA
By:
------------------------
Title:
---------------------
<PAGE> 119
EXHIBIT "D"
FORM OF JOINDER OF SHAREHOLDERS
The undersigned shareholder of Southeast National Bank ("SNB"), in
consideration of the benefits to be derived by SNB and its shareholders
pursuant to an Agreement and Plan of Reorganization dated July ____, 1996 (the
"Agreement") by and between SNB, Hancock Holding Company ("HHC") and Hancock
Bank of Louisiana ("Hancock Bank") (the defined terms in which are used herein
as defined therein) and the expenses to be incurred by HHC in connection
therewith, hereby agrees with HHC as follows:
1. Such shareholder, acting solely in such shareholder's capacity
as such, agrees and undertakes to vote or cause to be voted all shares of SNB
Common Stock as to which such shareholder has voting power at any meeting or
meetings (including any and all adjournments thereof) before which the
Agreement or any similar agreement may come for consideration by SNB
shareholders, in favor of the approval of the Agreement and the Bank Merger
Agreement, and against any similar agreement, unless HHC then is in breach or
default in any material respect with respect to any covenant, representation or
warranty as to it contained in the Agreement to an extent that would permit SNB
to terminate the Agreement pursuant to Section 12.1 of the Agreement. Such
shareholder further agrees not to transfer any of the shares of SNB Common
Stock over which such shareholder has dispositive power or grant any proxy
thereto (except any such proxy approved by HHC) until the earlier of the
Effective Date or the date that the Agreement has been terminated pursuant to
its provisions, except (i) for transfers by operation of law and (ii) for
transfers in connection with which the transferee shall agree in writing with
HHC to be bound by this Joinder as fully as the undersigned. In the case of any
transfer by operation of law, the provisions of this Joinder of Shareholders
are intended to be binding upon and to inure to the benefit of such transferee,
and such transferee shall be bound thereby.
2. The provisions of this Joinder of Shareholders shall be
enforceable through an action by HHC for damages at law or a suit for specific
performance or other appropriate extraordinary relief, the signatory
shareholder acknowledging that remedies at law for breach or default under this
Joinder of Shareholders might be or become inadequate.
All provisions hereof shall survive the Effective Date of the
Bank Merger.
This Joinder of Shareholders is dated , 1996.
-------------------
------------------------------------
Ad-1
<PAGE> 120
EXHIBIT "E"
CASHIER'S CERTIFICATE
I certify that I am the Cashier of Hancock Bank of Louisiana ("Hancock
Bank") located in Baton Rouge, Louisiana, and that I have been appointed and
that I am presently serving in that capacity in accordance with the Bylaws of
Hancock Bank.
I further certify that the Agreement and Plan of Reorganization dated
as of July 31, 1996 (the "Agreement") by and among Southeast National Bank,
Hammond, Louisiana; Hancock Holding Company, Gulfport, Mississippi; and Hancock
Bank of Louisiana, Baton Rouge, Louisiana, a wholly owned subsidiary of Hancock
Holding Company, does not amend the Articles of Incorporation of Hancock Bank
of Louisiana as the surviving bank, and the shares of Hancock Holding Company
common stock to be issued under the Agreement do not exceed fifteen percent
(15%) of the shares of Hancock Holding Company or Hancock Bank of Louisiana
outstanding immediately prior to effectiveness of the Merger, and thus pursuant
to Louisiana Revised Statutes 6:352(6), the approval of the Agreement by
Hancock Holding Company's stockholders or Hancock Bank's stockholders is not
required.
IN WITNESS WHEREOF, I have hereupon set the seal of this Bank, this
the 25 day of October, 1996.
HANCOCK BANK OF LOUISIANA
By: /s/ Charles Ray Pourciau
-------------------------------------
Vice President, Cashier
---------------
Ae-1
<PAGE> 121
APPENDIX B
[CHAFFE & ASSOCIATES, INC. LETTERHEAD]
November 1, 1996
The Board of Directors
Southeast National Bank
1855 S. Morrison Boulevard
P. O. Box 2488
Hammond, LA 70404-2488
Gentlemen and Mrs. Magee:
We understand that Southeast National Bank ("SNB"), on the one hand, and
Hancock Holding Company ("HHC") and its wholly-owned subsidiary, Hancock Bank
of Louisiana ("Hancock Bank"), on the other hand, have entered into an
Agreement and Plan of Reorganization by and among these parties, dated as of
July 31, 1996 (the "Agreement") which provides, among other things, for the
merger of SNB into Hancock Bank. Pursuant to the Agreement and subject to
certain possible adjustments, each issued and outstanding share of SNB common
stock, $5.00 par value per share (the "SNB Common Stock"), excluding shares
held by stockholders who perfect their dissenter's rights of appraisal, shall
be converted into the right to receive 0.2345 shares of HHC common stock, $3.33
par value per share (the "HHC Common Stock") and $7.9652 cash; provided,
however, each holder of SNB Common Stock who would otherwise receive 25 or
fewer shares of HHC Common Stock shall not receive HHC Common Stock but rather
shall be entitled to receive $16.70 in cash for each share of SNB Common Stock
(the "Exchange Ratio"). No franctional share of HHC Common Stock shall be
issued, and in lieu of such fractional share, a shareholder will receive a cash
amount equal to such fractional portion of $37.25. If the maximum aggregate
amount of cash to be paid, including cash in lieu of fractional shares, cash
paid to those SNB shareholders who would otherwise receive 25 or fewer shares
of HHC Common Stock and cash paid to dissenting shareholders who perfect their
rights (the "Cash Element"), would exceed 49% of the aggregate consideration,
the Exchange Ratio shall be adjusted proportionally to ensure that the Cash
Element does not exceed $3,735,760. The terms and conditions of the proposed
transaction and the Exchange Ratio are more fully described in the Agreement.
You have asked our opinion as to whether the Exchange Ratio is fair, from a
financial point of view, to the stockholders of SNB.
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 Exchange Ratio contemplated herein. Neither Chaffe nor any of
its officers or employees has an interest in SNB or HHC Common Stocks. The fee
received for the preparation and delivery of this opinion is not dependent or
contingent upon any transaction.
In connection with rendering its opinion, Chaffe, among other things: (i)
reviewed SNB's draft Proxy Statement/HHC's Prospectus for this proposed
transaction as of November 1, 1996, in substantially the
<PAGE> 122
The Board of Directors November 1, 1996
Southeast National Bank Page 2
form to be sent to stockholders, including a copy of the Agreement; (ii)
reviewed and analyzed certain publicly- available financial statements and
other information of SNB and HHC, respectively; (iii) reviewed and analyzed
certain internal financial statements and other financial and operating data
concerning SNB, prepared by the management of SNB, including budget
projections; (iv) discussed the past and current operations and financial
condition, and the prospects of SNB and HHC with senior executives of SNB and
HHC, respectively; (v) reviewed the historical prices and trading volumes of
the shares of HHC Common Stock and SNB Common Stock; (vi) compared the
financial performance of SNB and HHC, and the prices and trading activity of
the SNB Common Stock and HHC Common Stock, with that of certain other
comparable publicly-traded companies and their securities; (vii) reviewed the
financial terms of business combinations in the commercial banking industry
specifically and other industries generally, which Chaffe deemed generally
comparable to the proposed transaction; (viii) considered a number of valuation
methodologies, including among others, those that incorporate book value,
deposit base premium and capitalization of earnings, and (ix) performed such
other studies and analyses as we deemed appropriate to this opinion.
In its review, Chaffe relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial
information, and all other information reviewed by it for purposes of its
opinion. Chaffe did not make or obtained an independent review of SNB's or
HHC's assets or liabilities, nor was Chaffe furnished with any such appraisals.
Chaffe relied solely on SNB and HHC for information as to the adequacy of their
respective loan loss reserves and values of other real estate owned. With
respect to SNB's projected financial results, Chaffe has assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgements of the management of SNB of future financial performance of SNB.
This opinion was necessarily based upon market, economic and other conditions
as they existed on, and could be evaluated as of, the date hereof. Chaffe
expressed no opinion on the tax consequences of the proposed transaction or the
effect of any tax consequences on the value to be received by the holders of
SNB Common Stock.
Based upon and subject to the foregoing and based upon such other matters as
we considered relevant, it is our opinion on the date hereof that the Exchange
Ratio is fair, from a financial point of view, to the holders of SNB Common
Stock.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
- -----------
GFGL:mb
<PAGE> 123
APPENDIX C
12 U.S.C. Section 214a
PROCEDURE FOR CONVERSION, MERGER, OR CONSOLIDATION; VOTE OF STOCKHOLDERS
Section 214a (Act of August 17, 1950, Sec. 2). A national banking
association may, by vote of the holders of at least two-thirds of each class of
its capital stock, convert into, or merge or consolidate with, a State bank in
the same State in which the national banking association is located, under a
State charter, in the following manner:
APPROVAL OF BOARD OF DIRECTORS; PUBLICATION OF NOTICE OF STOCKHOLDERS' MEETING;
WAIVER OF PUBLICATION; NOTICE BY REGISTERED OR CERTIFIED MAIL
(a) The plan of conversion, merger, or consolidation must be approved
by a majority of the entire board of directors of the national banking
association. The bank shall publish notice of the time, place, and object of
the shareholders' meeting to act upon the plan, in some newspaper with general
circulation in the place where the principal office of the national banking
association is located, at least once a week for four consecutive weeks;
Provided, That newspaper publication may be dispensed with entirely if waived
by all the shareholders and in the case of a merger or consolidation one
publication at least ten days before the meeting shall be sufficient if
publication for four weeks is waived by holders of at least two-thirds of each
class of capital stock and prior written consent of the Comptroller of the
Currency is obtained. The national banking association shall send such notice
to each shareholder of record by registered mail or by certified mail at least
ten days prior to the meeting, which notice may be waived specifically by any
shareholder.
RIGHTS OF DISSENTING SHAREHOLDERS
(b) A shareholder of a national banking association who votes against
the conversion, merger, or consolidation, or who has given notice in writing to
the bank at or prior to such meeting that he dissents from the plan, shall be
entitled to receive in cash the value of the shares held by him, if and when
the conversion, merger, or consolidation is consummated, upon written request
made to the resulting State bank at any time before thirty days after the date
of consummation of such conversion, merger, or consolidation, accompanied by
the surrender of his stock certificates. The value of such shares shall be
determined as of the date on which the shareholders' meeting was held
authorizing the conversion, merger, or consolidation, by a committee of three
persons, one to be selected by majority vote of the dissenting shareholders
entitled to receive the value of their shares, one by the directors of the
resulting State bank, and the third by the two so chosen. The valuation agreed
upon by any two of three appraisers thus chosen shall govern; but, if the value
so fixed shall not be satisfactory to any dissenting shareholder who has
requested payment as provided herein, such shareholder may within five days
after being notified of the appraised value of his shares appeal to the
Comptroller of the Currency, who shall cause a reappraisal to be made, which
shall be final and binding as to the value of the shares of the appellant. If,
within ninety days from the date of consummation of the conversion, merger, or
consolidation, for any reason one or more of the appraiser is not selected as
herein provided, or the appraisers fail to determine the value of such shares,
the Comptroller shall upon written request of any interested party, cause an
appraisal to be made, which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal, or the appraisal as the
case may be, shall be paid by the resulting State bank. The plan of
conversion, merger, or consolidation shall provide the manner of disposing of
the shares of the resulting State bank not taken by the dissenting shareholders
of the national banking association.
<PAGE> 124
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS/PROXY STATEMENT
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation provide for indemnification
to the fullest extent allowed by law. The Articles of the Registrant provide
in Article Sixth certain provisions regarding the extent to which the
Registrant will provide indemnification and advancement of expenses to its
directors, officers, employees and agents as well as persons serving at the
request of the Registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (collectively referred as "Eligible Persons").
The Registrant's Bylaws currently contain a provision requiring the
Registrant to indemnify any director, officer, employee or agent who is made a
party or threatened to be made a party to any threatened, pending or completed
claim, action, suit or proceeding, other than an action by or in the right of
the Registrant, by reason of the fact that such person is or was a director,
officer, employee or agent of the Registrant, or is or was serving at the
request of the Registrant as director, officer, partner, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against reasonably incurred expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, but only if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Registrant, and, in criminal actions, he had no
reasonable cause to believe his conduct was unlawful.
Unless limited by its Articles of Incorporation the Mississippi
Business Corporation Act ("MBCA") mandates that the Registrant indemnify any
director who is successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party, against reasonable expenses incurred by him
in connection with such proceeding (the "Mandatory Provision"). The MBCA
permits the Registrant to indemnify a director who is made a party to a
proceeding against liability (including reasonable expenses) incurred in
connection with such proceeding provided (1) the director's conduct was in good
faith, (2) in the case of conduct in his official capacity, the director
reasonably believed his conduct was in the best interests of the Registrant,
(3) in the case of conduct not in his official capacity, the director
reasonably believed his conduct was not opposed to the best interests of the
Registrant, (4) in the case of any criminal proceeding, the director had no
reasonable cause to believe that his conduct was unlawful, (5) in the case of
claims by or in the right of the Registrant, the director is not adjudged
liable to the Registrant, and (6) in the case of third-party claims, the
director is not adjudged liable on the basis that he derived an improper
personal benefit (the "Permissive Provision"). Statutory indemnification is
permitted under the Permissive Provision, however, only if indemnification is
authorized in a specific case after a determination is made by the Board of
Directors (by majority vote of a quorum consisting of directors not at the time
parties to the proceeding), by a majority of a special committee of
disinterested directors (if such quorum of directors is unobtainable), by
special legal counsel or by the shareholders (a "Disinterested Party"), that
the director has met the applicable standard of conduct. The MBCA also
provides that unless the Registrant's Articles of Incorporation provide
otherwise, a court may order indemnification of a director even if it finds he
has not met the applicable standard of conduct, or in the case of third-party
claims, involving action where the director acted within or without of his
official capacity, the director is adjudged liable on the basis that he derived
an improper personal benefit, the director was adjudged liable to the
Registrant in a proceeding by or in the right of the Registrant, if the court
determines that the director is reasonably entitled to indemnification in view
of all the relevant circumstances; provided, however, that if the director was
adjudged liable to the Registrant, his indemnification is limited to reasonable
expenses. The MBCA permits the Registrant to pay for or reimburse the
reasonable expenses incurred by a director in advance of final disposition of
the proceeding, provided the director affirms that he reasonably believes he
has met the applicable standard of conduct, the director agrees to repay the
advance if it is ultimately determined that he did not meet the standard of
conduct, and a determination is made by a Disinterested Party that the facts
then known to the person(s) making the determination would not preclude
indemnification. The MBCA also permits the Registrant to indemnify officers,
employees and agents of the Registrant to the same extent permitted for
directors. Finally, the MBCA allows indemnification beyond the scope of the
Amended and Restated Mandatory and Permissive Provisions.
Article Sixth of the Registrant's Articles of Incorporation does not
limit the applicability of the indemnification provisions contained in the MBCA
and, as permitted by the MBCA, requires the Registrant to indemnify Eligible
Persons beyond the scope of such provisions. The Registrant must indemnify an
Eligible Person, despite the fact that such person has not met the standard of
conduct set forth in the Permissive Provision or would be disqualified for
indemnification under the Permissive Provision because such person was either
found liable to the Registrant in a suit brought by or in the right of the
Registrant or was found liable in a third-party action on the basis that he
received an improper personal benefit, if a determination is made by a
Disinterested Party, or a court, that the act or omissions of the person
seeking indemnification did not constitute gross negligence or willful
misconduct. Article Sixth also provides for mandatory advancement of
reasonable expenses to a person seeking indemnification, without an affirmation
by such person that he believes he has met the applicable standard of conduct,
as long as he agrees to repay the advance if it is ultimately determined that
he has not met the standard of conduct and a Disinterested Party determines
that the facts then known to such Disinterested Party would not preclude
indemnification.
II-1
<PAGE> 125
Article Sixth further provides that no amendment or repeal of its
provisions may be applied retroactively with respect to any event that occurred
prior to such amendment or appeal. The effect of such provision is that the
protection of Article Sixth may not be taken away or diminished by an amendment
in the event of a change in control of the Registrant.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the successful
defense of any such action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
ITEM 21. EXHIBITS
2 Agreement and Plan of Reorganization dated July 31, 1996 among Hancock
Holding Company, Southeast National Bank and Hancock Bank of Louisiana
(included as Appendix A to the Prospectus/Proxy Statement).
3.1 Amended and Restated Articles of Incorporation dated November 8, 1990
(filed as Exhibit 3.1 to the Registrant's Registration Statement on
Form S-8 (No. 333-11831), and incorporated herein by reference).
3.2 Bylaws of Hancock Holding Company restated through November 8, 1990
(filed as Exhibit 3.2 to the Registrant's Registration Statement on
Form S-8 (No. 333-11831), and incorporated herein by reference).
3.3 Articles of Amendment to the Articles of Incorporation of Hancock
Holding Company, dated October 16, 1991 (filed as Exhibit 4.1 to the
Registrant's Form 10-Q for the quarter ended September 30, 1991, and
incorporated herein by reference).
3.4 Articles of Correction, filed with Mississippi Secretary of State on
November 15, 1991 (filed as Exhibit 4.2 to the Registrant's Form 10-Q
for the quarter ended September 30, 1991, and incorporated herein by
reference).
3.5 Articles of Amendment to the Articles of Incorporation of Hancock
Holding Company, adopted February 13, 1992 (filed as Exhibit 3.5 to
the Registrant's Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference).
3.6 Articles of Correction, filed with the Mississippi Secretary of State
on March 2, 1992 (filed as Exhibit 3.6 to the Registrant's Form 10-K
for the year ended December 31, 1992, and incorporated herein by
reference).
4.1 Specimen stock certificate (reflecting change in par value from $10.00
to $3.33, effective March 6, 1989)(filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8 (No. 33-11831), and
incorporated herein by reference).
5 Opinion of Watkins Ludlam & Stennis, P.A. as to the legality of the
shares being registered.
8 Opinion of Watkins Ludlam & Stennis, P.A. regarding certain tax
matters.
21 Subsidiaries of the Registrant (filed as Exhibit 22 to the
Registrant's Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference).
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Hannis T. Bourgeois & Co., L.L.P. and Durnin & James.
23.3 Consent of Watkins Ludlam & Stennis, P.A. (included in Exhibits 5 and
8).
23.4 Consent of Chaffe and Associates, Inc.
24* Power of Attorney (included on the signature page of the Registration
Statement).
27* Financial Data Schedule.
99 Form of Proxy for Southeast National Bank.
* Previously filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1993;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan or distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
II-2
<PAGE> 126
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, when applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately
preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not
be used until such amendment is effective, and that,
for purposes of determining any liability under the
Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Gulfport, State of Mississippi, this 4th day of November, 1996.
HANCOCK HOLDING COMPANY
(Registrant)
By:/s/ Leo W. Seal, Jr.
-------------------------------
Leo W. Seal, Jr.,
President and Chief Executive
Officer
By:/s/ C. Stanley, Bailey
-------------------------------
C. Stanley Bailey
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
By: /s/ Joseph F. Boardman, Jr.* Chairman of the November 4, 1996
---------------------------- Board and Director
Joseph F. Boardman, Jr.
By: /s/ Thomas W. Milner, Jr.* Director November 4, 1996
----------------------------
Thomas W. Milner, Jr.
By: /s/ Dr. Homer C. Moody, Jr.* Director November 4, 1996
----------------------------
Dr. Homer C. Moody, Jr.
By: /s/ James B. Estabrook, Jr. Director November 4, 1996
----------------------------
James B. Estabrook, Jr.
By: /s/ Victor Mavar* Director November 4, 1996
----------------------------
Victor Mavar
By: /s/ Charles H. Johnson* Director November 4, 1996
----------------------------
Charles H. Johnson
By: /s/ L.A. Koenenn, Jr.* Director November 4, 1996
----------------------------
L. A. Koenenn, Jr.
By: /s/ Leo W. Seal, Jr. President, Chief Executive November 4, 1996
---------------------------- Officer and Director
Leo W. Seal, Jr.
By: /s/ George A. Schloegel Vice Chairman of the November 4, 1996
---------------------------- Board and Director
George A. Schloegel
By: /s/ George A. Schloegel
----------------------------
Attorney in fact
</TABLE>
<PAGE> 128
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2 Agreement and Plan of Reorganization dated July 31, 1996 among
Hancock Holding Company, Southeast National Bank and Hancock
Bank of Louisiana (included as Appendix A to the
Prospectus/Proxy Statement). . . . . . . . . . . . . . . . . .
3.1 Amended and Restated Articles of Incorporation dated November 8,
1990 (filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-8 (No. 333-11831), and incorporated herein
by reference) . . . . . . . . . . . . . . . . . . . . . . . . .
.
3.2 Bylaws of Hancock Holding Company restated through November 8,
1990 (filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-8 (No. 333-11831), and incorporated herein
by reference) . . . . . . . . . . . . . . . . . . . . . . . .
3.3 Articles of Amendment to the Articles of Incorporation of
Hancock Holding Company, dated October 16, 1991 (filed as
Exhibit 4.1 to the Registrant's Form 10-Q for the quarter ended
September 30, 1991, and incorporated herein by reference). . .
3.4 Articles of Correction, filed with Mississippi Secretary of
State on November 15, 1991 (filed as Exhibit 4.2 to the
Registrant's Form 10-Q for the quarter ended September 30, 1991,
and incorporated herein by reference) . . . . . . . . .
3.5 Articles of Amendment to the Articles of Incorporation of
Hancock Holding Company, adopted February 13, 1992 (filed as
Exhibit 3.5 to the Registrant's Form 10-K for the year ended
December 31, 1992, and incorporated herein by reference) . . .
3.6 Articles of Correction, filed with the Mississippi Secretary of
State on March 2, 1992 (filed as Exhibit 3.6 to the Registrant's
Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference) . . . . . . . . . . . .
4 Specimen stock certificate (reflecting change in par value from
$10.00 to $3.33, effective March 6, 1989)(filed as Exhibit 4.1
to the Registrant's Registration Statement on Form S-8 (No.
333-11831), and incorporated herein by reference). . . . . . .
5 Opinion of Watkins Ludlam & Stennis, P.A. as to the legality of
the shares being registered . . . . . . . . . . . . . . . . .
8 Opinion of Watkins Ludlam & Stennis, P.A. regarding certain tax
matters . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.1* Consent of Deloitte & Touche LLP . . . . . . . . . . . . . . .
23.2* Consent of Hannis T. Bourgeois & Co., L.L.P. and Durnin & James
23.3 Consent of Watkins Ludlam & Stennis, P.A. (included in Exhibits
5 and 8). . . . . . . . . . . . . . . . . . . . . . . . . . .
23.4 Consent of Chaffe and Associates, Inc. . . . . . . . . . . . .
24* Power of Attorney (included on the signature page of the
Registration Statement) . . . . . . . . . . . . . . . . . . . .
27* Financial Data Schedule . . . . . . . . . . . . . . . . . . .
99 Form of Proxy for Southeast National Bank . . . . . . . . . .
* Previously filed.
<PAGE> 1
EXHIBIT 5
[WATKINS LUDLAM & STENNIS. P.A. LETTERHEAD]
November 4, 1996
Board of Directors
Hancock Holding Company
One Hancock Plaza
2510 14th Street
Gulfport, Mississippi 39501
Gentlemen:
We have acted as counsel to Hancock Holding Company in connection with
the preparation of its Registration Statement on Form S-4 for registration of
104,460 shares of Common Stock, $3.33 par value, under the Securities Act of
1933. Such shares are to be issued pursuant to the Agreement and Plan of
Reorganization (the "Merger Agreement"), dated as of July 31, 1996, by and
among Hancock Holding Company, Hancock Bank of Louisiana, and Southeast
National Bank.
We have examined the Merger Agreement, the Articles of Incorporation
and the amendments thereto of Hancock Holding Company, and such other documents
as we deemed relevant.
Based on the foregoing, it is our opinion that the 104,460 shares of
Common Stock of Hancock Holding Company to be registered under the Securities
Act of 1933, when issued pursuant to the Merger Agreement will be legally
issued, fully paid and non-assessable shares of Common Stock of Hancock Holding
Company
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Opinion" in the Prospectus/Proxy Statement comprising Part I of the
Registration Statement.
Sincerely,
/s/ Watkins Ludlam & Stennis, P.A.
WATKINS LUDLAM & STENNIS, P.A.
<PAGE> 1
Exhibit 8
[Watkins Ludlam & Stennis, P.A. Letterhead]
[Date of Closing]
Board of Directors
Southeast National Bank
1855 South Morrison Boulevard
Hammond, Louisiana 70404-2488
Board of Directors
Hancock Holding Company
Post Office 4019
Gulfport, Mississippi 39502
Re: The Federal Income Tax Consequences of Certain Matters Arising
Under the Corporate Reorganization Provisions of the Internal
Revenue Code of 1986, as amended.
Gentlemen:
We have acted as special counsel to Hancock Holding Company, a
Mississippi corporation ("HHC") and Hancock Bank of Louisiana, a Louisiana
state bank ("Hancock Bank"), in connection with certain federal income tax
matters relating to the transactions described in: (a) that certain Agreement
and Plan of Reorganization, dated as of July 31, 1996 (the "Merger Agreement"),
by and among HHC, Hancock Bank and Southeast National Bank ("SNB"), and (b)
that certain Bank Merger Agreement between SNB and Hancock Bank, dated as of
July 31, 1996. This opinion is furnished to you pursuant to Section 8.1(e) of
the Merger Agreement. Except as otherwise defined herein, all capitalized
terms herein have the meanings set forth in the Merger Agreement.
In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our
satisfaction, of the Merger Agreement and such other documents as we have
deemed necessary or appropriate in order to enable us to render the opinion
below. In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies. In rendering the opinion set
forth below, we have relied upon certain written representations and covenants
of the parties to the Bank Merger set forth in the Certificates which are
attached hereto as Exhibits "A" and "B."
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, pertinent judicial authorities, interpretive rulings of the
Internal Revenue Service (the "Service") and such other authorities as we have
considered relevant.
I. DESCRIPTION OF PROPOSED BANK MERGER
The proposed Bank Merger will be structured in accordance with the
Merger Agreement, the Bank Merger Agreement, the laws of the State of
Louisiana, applicable federal law, the statements and representations of the
parties to the transactions, and the following descriptions:
<PAGE> 2
Board of Directors
Southeast National Bank
Hancock Holding Company
[Date of Closing]
Page 2
(1) On the Effective Date, SNB will be merged with and into
Hancock Bank on the terms and subject to the conditions set
forth in the Merger Agreement and the Bank Merger Agreement,
some of which are further described below. Hancock Bank will
acquire all of the assets and assume all of the liabilities of
SNB. Hancock Bank will continue in existence as the surviving
corporation. SNB will cease to exist at the Effective Date of
the Bank Merger.
(2) Except for shares as to which dissenters' rights, if any, have
been perfected and not withdrawn or otherwise forfeited under
applicable Louisiana law, and except for shares held by
certain "Small Shareholders" as described below, on the
Effective Date (pursuant to Section 3.1(b) of the Merger
Agreement), the issued and outstanding shares of SNB Common
Stock shall automatically be exchanged for and converted into
the right to receive a fixed number of shares of HHC Common
Stock and a fixed amount of cash (collectively the "SNB
Exchange Ratio"). Each holder of 25 or fewer shares of SNB
Common Stock (a "Small Shareholder"), shall not receive HHC
Common Stock, but rather shall be entitled to receive as
consideration a fixed cash amount for each share of SNB Common
Stock held.
(3) If after calculation of the SNB Exchange Ratio, a holder of
shares of SNB Common Stock is entitled to receive a fraction
of a share of HHC's Common Stock, no such fractional share
will be issued. In lieu thereof, cash will be paid to such
shareholder in an amount equal to such fractional part of a
share of HHC Common Stock multiplied by $37.25.
(4) As a result of the Bank Merger, the SNB shareholders (other
than the Small Shareholders and those SNB shareholders who
perfect any applicable dissenters' rights) will become
shareholders of HHC.
(5) No Hancock Bank Common Stock will be issued in the Bank
Merger.
(6) The ownership structure between HHC and Hancock Bank will not
change as a result of the Bank Merger. After the Bank Merger,
Hancock Bank will continue its historical business in a
substantially unchanged manner.
II. OPINION
In reliance upon the foregoing facts and the representations of the
parties to the Bank Merger transactions, and based upon our review of such
documents and consideration of such legal matters as we have deemed relevant
and sufficient to enable us to render an informed opinion, we are of the
opinion that the federal income tax consequences of the proposed Bank Merger
will be as follows:
1. Provided the proposed Bank Merger of SNB with and into Hancock
Bank qualifies as a statutory merger under applicable state or
federal law, the acquisition by Hancock Bank of all of the
assets of SNB in exchange for the SNB Exchange Ratio, cash,
and the assumption of liabilities of SNB will constitute a
reorganization within the meaning of Code section
368(a)(1)(A)1 and section 368(a)(2)(D).
<PAGE> 3
Board of Directors
Southeast National Bank
Hancock Holding Company
[Date of Closing]
Page 3
For purposes of this opinion, "substantially all" means at
least 90 percent of the fair market value of the net assets
and at least 70 percent of the fair market value of the gross
assets of SNB held immediately prior to the Bank Merger. HHC,
Hancock Bank, and SNB will each be "a party to a
reorganization" within the meaning of section 368(b) of the
Code.
2. No gain or loss will be recognized by SNB upon the transfer of
substantially all of its assets to Hancock Bank in exchange
for the SNB Exchange Ratio and cash (all of which will be
distributed to the SNB shareholders), and the assumption by
Hancock Bank of the liabilities of SNB and the liabilities to
which the transferred assets are subject (Code sections
361(b)(1)(A) and 357(a)).
3. No gain or loss will be recognized by either HHC or Hancock
Bank on the receipt by Hancock Bank of substantially all of
the assets of SNB in exchange for the SNB Exchange Ratio,
cash, and the assumption by Hancock Bank of the liabilities of
SNB and the liabilities to which the transferred assets are
subject (Rev. Rul. 57-278, 1957-1 C.B. 124).
4. Gain, if any, will be realized by the SNB shareholders who
receive HHC Common Stock and cash (i.e., the SNB Exchange
Ratio) in exchange for their SNB Common Stock. Such gain will
be recognized, but not in excess, in each instance, of the
sum of such cash received (section 356(a)(1)). If the
exchange has the effect of the distribution of a dividend
(determined with the application of section 318(a)), then the
amount of the gain recognized that is not in excess of the SNB
shareholder's ratable share of undistributed earnings and
profits will be treated as a dividend (section 356(a)(2)).
The determination of whether the exchange has the effect of
the distribution of a dividend must be made on a
shareholder-by-shareholder basis in accordance with the
principles set forth in Commissioner v. Clark, 489 U.S. 726
(1989), Rev. Rul. 93-61, 1993-2 C.B. 118, and United States v.
Davis, 397 U.S. 301 (1970). The remainder, if any, of the
gain recognized will be treated as gain from the exchange of
property. No loss will be recognized on the exchange of SNB
Common Stock for the SNB Exchange Ratio (section 356(c)).
5. Where a dissenting SNB shareholder receives solely cash in
exchange for all of his or her SNB Common Stock, such cash
will be treated as having been received by the shareholder as
a distribution in redemption of his or her stock subject to
the provisions and limitations of section 302.
6. In the case of a Small Shareholder of SNB who receives solely
cash in exchange for all of his or her SNB Common Stock, such
cash will be treated as having been received by the
shareholder as a distribution in redemption of his or her
stock subject to the provisions and limitations of section
302.
- ---------------
(1) Unless otherwise noted, hereafter all section references are to
the Code.
<PAGE> 4
Board of Directors
Southeast National Bank
Hancock Holding Company
[Date of Closing]
Page 4
7. The payment of cash to SNB shareholders in lieu of fractional
shares of HHC Common Stock will be treated for federal income
tax purposes as if the fractional shares were distributed as
part of the reorganization exchange and then redeemed by HHC.
The cash payments will be treated as having been received as
distributions in redemption of such stock, subject to the
provisions and limitations of section 302 of the Code (Rev.
Rul. 66-365, 1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B.
574).
We have qualified our opinions by reference to the Code, the Treasury
Regulations promulgated thereunder, and existing judicial and administrative
interpretations thereof. In so opining, we have relied upon the foregoing
facts and representations and have reviewed such documents and have considered
such legal matters as we have deemed relevant and sufficient to enable us to
render an informed opinion. While we have not been requested nor have we
undertaken to make independent investigations to verify the representations and
statements described above or set forth in the Certificates attached as
Exhibits "A" and "B," based upon our discussions with representatives of the
parties and our limited review of certain background material, we believe that
it is reasonable for us to rely on such representations and statements.
Our opinion is limited to the specific opinions expressed above, and
no other opinions are intended nor should they be inferred. An opinion of
counsel has no binding effect upon the Service and no assurances can be given
that the conclusions reached in any opinion will not be contested by the
Service, or if contested, will be sustained by a court.
The opinions we have expressed above are based on the facts and
representations outlined herein being correct in all material respects as of
the dates indicated or at the time of the proposed transactions as the case may
be. In the event that one or more of the facts or representations are
incorrect for any such time, our opinion would likely be substantially
different than that expressed above.
The opinion expressed herein is for the sole benefit of HHC, Hancock
Bank and SNB, together with their respective shareholders for their use in
connection with the proposed Bank Merger, and is not to be used, delivered to
or relied upon by any other party for any other purpose, and may not be
circulated, quoted, or otherwise referred to for any other purpose without our
prior written consent.
Very truly yours,
/s/ WATKINS LUDLAM & STENNIS, P.A.
<PAGE> 5
CERTIFICATE OF SOUTHEAST NATIONAL BANK
RELATING TO SECTION 368 OPINION ON THE BANK MERGER
This Certificate has been requested by the law firm of Watkins Ludlam
& Stennis, P.A. in connection with the rendering of its opinion as to certain
federal income tax consequences relating to the merger (the "Bank Merger") of
Southeast National Bank ("SNB") with and into Hancock Bank of Louisiana
("Hancock Bank") as such transaction is described in that certain Agreement and
Plan of Reorganization By and Among Hancock Holding Company ("HHC"), Hancock
Bank and SNB dated as of July __, 1996 (the "Merger Agreement"). Watkins
Ludlam & Stennis, P. A. will rely on the representations stated hereinafter, as
well as on other facts, assumptions, and representations described in its
opinion letter dated [____________________, 1996 (date of closing)] (the "WL&S
Tax Opinion") in opining on the federal income tax issues stated therein.
Accordingly, this Certificate is an integral part of the WL&S Tax Opinion.
Unless otherwise noted, all defined or capitalized terms used in this
Certificate have the same meaning ascribed to such terms in the Merger
Agreement or in the WL&S Tax Opinion.
The following representations are being made in connection with the
Bank Merger:
1. The fair market value of the HHC Common Stock and cash (or,
where a Bank shareholder is entitled to receive cash only, the
cash) received in the Bank Merger exchange by each SNB
shareholder (collectively, the "Hancock Bank Consideration")
will be approximately equal to the fair market value of the
SNB Common Stock surrendered in the exchange.
2. The aggregate fair market value of the HHC Common Stock
portion of the Hancock Bank Consideration will, on the
Effective Date of the Bank Merger, constitute at least
fifty-one percent (51%) of the total fair market value of the
Hancock Bank Consideration exchanged in the Bank Merger.
3. To the best of the knowledge of management of SNB, there is no
plan or intention by the shareholders of SNB who own one
percent (1%) or more of the SNB Common Stock, and to the best
of the knowledge of management of SNB there is no plan or
intention on the part of the remaining shareholders of SNB, to
sell, exchange, or otherwise dispose of a number of shares of
HHC Common Stock received in the Bank Merger that would
collectively reduce the SNB shareholders' ownership of HHC
Common Stock to a number of shares having a value, as of the
date of the Bank Merger, of less than fifty percent (50%) of
the value of all of the formerly outstanding stock of SNB as
of the same date. For purposes of this representation, shares
of SNB Common Stock exchanged for cash in lieu of fractional
shares of HHC Common Stock, exchanged for cash or other
property, or surrendered by dissenters will be treated as
outstanding shares of SNB Common Stock on the date of the Bank
Merger. Moreover, shares of SNB Common Stock and shares of
HHC Common Stock held by SNB shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the Bank
Merger will be considered as part of this representation.
4. SNB will transfer and Hancock Bank will acquire at least 90
percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets
held by SNB immediately prior to the Bank Merger. For
purposes of this representation, amounts paid by SNB to
dissenters, assets used by SNB to pay its
Exhibit "A" to Tax Opinion
<PAGE> 6
reorganization expenses, amounts paid by SNB to shareholders
who receive cash or other property in connection with the Bank
Merger, and all redemptions and distributions (except for
regular, normal dividends) made by SNB immediately preceding
the Bank Merger, are included as assets of SNB held
immediately prior to the Bank Merger.
5. The liabilities of SNB assumed by Hancock Bank and the
liabilities, if any, to which the transferred assets of SNB
are subject, were incurred by SNB in the ordinary course of
its business.
6. SNB and the shareholders of SNB will pay their respective
expenses, if any, incurred in connection with the Bank Merger
(subject to representation 14 below).
7. There is no intercorporate indebtedness existing between HHC
and SNB or between Hancock Bank and SNB that was issued,
acquired, or will be settled at a discount.
8. SNB is not an investment company as defined in Code section
368(a)(2)(F)(iii) and (iv).
9. SNB is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of section 368(a)(3)(A) of the
Code.
10. The fair market value of the assets of SNB transferred to
Hancock Bank will equal or exceed the sum of the liabilities
assumed by Hancock Bank, plus the amount of the liabilities,
if any, to which the transferred assets are subject.
11. No stock of Hancock Bank will be issued in the Bank Merger.
12. The payment of cash in lieu of fractional shares of HHC Common
Stock is solely for the purpose of avoiding the expense and
inconvenience to HHC of issuing fractional shares and does not
represent separately bargained-for consideration. The total
cash consideration that will be paid in the Bank Merger to the
SNB shareholders instead of issuing fractional shares of HHC
Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Bank Merger to the
SNB shareholders in exchange for their shares of SNB Common
Stock. The fractional share interests of each SNB shareholder
will be aggregated, and no SNB shareholder will receive cash
(in payment for fractional share interests) in an amount equal
to or greater than the value of one (1) full share of HHC
Common Stock.
13. None of the compensation received by any shareholder-employee
of SNB pursuant to any employment, consulting or similar
arrangement is or will be separate consideration for, or
allocable to, any of his shares of SNB Common Stock; none of
the shares of HHC Common Stock received by any
shareholder-employee of SNB pursuant to the Bank Merger will
be separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any
shareholder-employee of SNB pursuant to any employment,
consulting or similar arrangement is or will be for services
actually rendered and will be commensurate with amounts paid
to third parties bargaining at arm's-length for similar
services.
14. Hancock Bank will pay or assume only those expenses of SNB
that are solely and directly related to the Bank
2
<PAGE> 7
Board of Directors
Southeast National Bank
Hancock Holding Company
[Date of Closing]
Page 1
Merger in accordance with the guidelines established in Rev.
Rul. 73-54, 1973-1 C.B. 187.
SNB hereby certifies that the officer of the corporation executing
this Certificate has knowledge of the pertinent information set forth herein
and that he has examined the foregoing representations and, to the best of such
officer's knowledge and belief, the representations made are true, complete and
correct as of the date, ______________, 1996, of this Certificate, and he
further certifies that he is duly authorized and empowered to execute and
deliver this Certificate.
SOUTHEAST NATIONAL BANK
By:
-------------------------
Title:
----------------------
<PAGE> 8
CERTIFICATE OF HANCOCK HOLDING COMPANY AND
HANCOCK BANK OF LOUISIANA RELATING TO
SECTION 368 OPINION ON THE BANK MERGER
This Certificate has been requested by the law firm of Watkins Ludlam
& Stennis, P.A. in connection with the rendering of its opinion as to certain
federal income tax consequences relating to the merger (the "Bank Merger") of
Southeast National Bank ("SNB") with and into Hancock Bank of Louisiana
("Hancock Bank") as such transaction is described in that certain Agreement and
Plan of Reorganization By and Among Hancock Holding Company ("HHC"), Hancock
Bank and SNB dated as of July __, 1996 (the "Merger Agreement"). Watkins
Ludlam & Stennis, P. A. will rely on the representations stated hereinafter, as
well as on other facts, assumptions, and representations described in its
opinion letter dated [____________________, 1996 (date of closing)] (the "WL&S
Tax Opinion") in opining on the federal income tax issues stated therein.
Accordingly, this Certificate is an integral part of the WL&S Tax Opinion.
Unless otherwise noted, all defined or capitalized terms used in this
Certificate have the same meaning ascribed to such terms in the Merger
Agreement or in the WL&S Tax Opinion.
The following representations are being made in connection with the
Bank Merger:
1. Prior to the Bank Merger, HHC will be in control of Hancock
Bank within the meaning of section 368(c)(1) of the Code.
2. Following the Bank Merger, Hancock Bank will not issue
additional shares of its stock that would result in HHC losing
control of Hancock Bank within the meaning of section
368(c)(1) of the Code.
3. HHC has no plan or intention to reacquire any of the HHC
Common Stock issued in the Bank Merger.
4. HHC has no plan or intention to liquidate Hancock Bank; to
merge Hancock Bank with and into another corporation; to sell
or otherwise dispose of the stock of Hancock Bank; or to cause
Hancock Bank to sell or otherwise dispose of any of the assets
of SNB acquired in the Bank Merger, except for dispositions
made in the ordinary course of business or transfers described
in section 368(a)(2)(C) of the Code.
5. Following the Bank Merger, Hancock Bank will continue the
historic business of SNB or use a significant portion of SNB's
historic business assets in a business.
6. HHC, Hancock Bank, SNB, and the shareholders of SNB will pay
their respective expenses, if any, incurred in connection with
the Bank Merger (subject to representation 9 below).
7. There is no intercorporate indebtedness existing between HHC
and SNB or between Hancock Bank and SNB that was issued,
acquired, or will be settled at a discount.
8. Neither HHC nor Hancock Bank is an investment company as
defined in Code section 368(a)(2)(F)(iii) and (iv).
9. Hancock Bank will pay or assume only those expenses of SNB
that are solely and directly related to the Bank Merger in
accordance with the guidelines established in Rev. Rul. 73-54,
1973-1 C.B. 187.
10. No stock of Hancock Bank will be issued in the Bank Merger.
11. The payment of cash in lieu of fractional shares of HHC Common
Stock is solely for the purpose of avoiding the expense and
inconvenience to HHC of issuing fractional shares and does not
represent separately bargained-for consideration. The total
cash consideration that will be
Exhibit B to Tax Opinion
<PAGE> 9
paid in the Bank Merger to certain of the SNB shareholders
instead of issuing fractional shares of HHC Common Stock will
not exceed one percent (1%) of the total consideration that
will be issued in the Bank Merger to the SNB shareholders in
exchange for their shares of SNB Common Stock. The fractional
share interests of each SNB shareholder of record will be
aggregated, and no SNB shareholder, will receive cash (in
payment of fractional share interests) in an amount equal to
or greater than the value of one (1) full share of HHC Common
Stock.
12. The fair market value of the HHC Common Stock portion of the
total consideration paid by Hancock Bank in the Bank Merger
will, on the Effective Date, constitute at least fifty-one
percent (51%) of the fair market value of the total
consideration paid by Hancock Bank in the Bank Merger.
HHC and Hancock Bank hereby certify that the officer of the
corporation executing this Certificate has knowledge of the pertinent
information set forth herein and that he has examined the foregoing
representations and, to the best of such officer's knowledge and belief, the
representations made are true, complete and correct as of the date,
________________, 1996, of this Certificate, and he further certifies that he
is duly authorized and empowered to execute and deliver this Certificate.
HANCOCK HOLDING COMPANY
By:
------------------------
Title:
---------------------
HANCOCK BANK OF LOUISIANA
By:
------------------------
Title:
---------------------
3
<PAGE> 1
EXHIBIT 23.4
Consent of Chaffe & Associates, Inc.
We consent to the inclusion in the Proxy Statement/Prospectus forming a
part of this Registration Statement on Form S-4 of our opinion to the Board of
Directors of Southeast National Bank dated November 1, 1996, and to be included
as an Appendix to the Proxy Statement/Prospectus, and to the references to our
firm in the Proxy Statement/Prospectus. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
CHAFFE & ASSOCIATES, INC.
By: /s/ G.F. Gay LeBreton
----------------------------
G.F. Gay LeBreton
Vice President
New Orleans, Louisiana
November 1, 1996
<PAGE> 1
EXHIBIT 99
SOUTHEAST NATIONAL BANK
1855 S. Morrison Blvd.
P. O. Drawer 2488
Hammond, Louisiana 70404-2488
(504) 542-9700
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Verna S. Magee and Reginald R. Harper, or any
of them (with full power to act alone and to appoint a substitute), as Proxies,
and hereby authorizes them to represent and to vote all the shares of common
stock of Southeast National Bank ("Bank") held of record by the undersigned on
November 1, 1996, at the Special Meeting of shareholders to be held on Tuesday,
January 7, 1997, at 1:00 p.m., local time, and at any and all adjournments
thereof as follows:
1. The proposal to approve and adopt the Agreement and Plan of
Reorganization and related Bank Merger Agreement by and among
Hancock Holding Company, Southeast National Bank ("SNB") and
Hancock Bank of Louisiana whereby SNB will be merged with and
into Hancock Bank of Louisiana.
FOR AGAINST ABSTAIN
-------- --------- --------
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Special
Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" Proposal 1.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR DISCRETION.
Please sign exactly as your name appears on certificate(s) rpresenting
shares to be voted by this proxy. When signing as attorney, executor,
administrator, trustee, or guardian, please give your full title. If a
corporation, please sign in full corporare name by the president or other
authorized officer. If a parrnership, please sign in full parrnership name by
an authorized person. If shares are held as joint tenants, each holder should
sign.
Dated November 8, 1996
- --------------------------- ---------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- --------------------------- ---------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
PLEASE PROMPTLY COMPLETE, DATE, SIGN
AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
