<PAGE>
<TABLE>
<CAPTION>
As filed with the Securities and Exchange Commission on November 12, 1998
Registration Number: 33-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
HANCOCK HOLDING COMPANY
(Exact name of Registrant as specified in its charter)
<S> <C> <C>
MISSISSIPPI 6022 64-0693170
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification Number)
incorporation or organization) Classification Code Number)
ONE HANCOCK PLAZA, 2510 14TH STREET
GULFPORT, MISSISSIPPI 39501
(228) 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
(228) 868-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
L. KEITH PARSONS, ESQ. ANTHONY J. CORRERO, III
WATKINS LUDLAM WINTER & STENNIS, P.A. CORRERO FISHMAN HAYGOOD PHELPS
POST OFFICE BOX 427 WEISS WALMSLEY & CASTEIX, L.L.P.
633 NORTH STATE STREET 201 ST. CHARLES AVENUE, 46TH FLOOR
JACKSON, MISSISSIPPI 39202 NEW ORLEANS, LA 70170-4600
(601) 949-4900 (504) 586-5253
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. [_]
</TABLE>
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CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to to be offering price per aggregate offering registration
be registered registered unit price ** fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 672,000 * $11,027,477 $3,065.64
$3.33 par value/(1)/
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each share of Common Stock includes one Common Stock Purchase Right which
is not currently exercisable or separable from the Common Stock.
* Not applicable.
** Estimated solely for purposes of determining the amount of the registration
fee in accordance with Rule 457(f)(2) under the Securities Act of 1933.
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>
[AMERICAN LETTERHEAD]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
November ___, 1998
Dear Shareholders:
You are cordially invited to a Special Meeting of Shareholders of American
Security Bancshares of Ville Platte, Inc., to be held at the offices of American
Security Bank on December ___, 1998.
American has agreed on a merger into Hancock Holding Company. If the merger
is completed, American shareholders will receive 13.8651 shares of Hancock
common stock and a cash payment of $285.22 in exchange for each share of
American common stock owned, except that American shareholders with twenty-five
or fewer shares of American common stock will receive a cash payment of $950.75
per American share. We estimate that, on completion of the merger, about 6% of
the outstanding common stock of Hancock will be owned by former American
shareholders and about 94% will be owned by those persons who were Hancock
shareholders just before the merger is completed.
We can't complete the merger unless the shareholders of American approve
it. We have scheduled a special meeting for the shareholders of American to
approve the merger.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE TAKE THE TIME TO VOTE BY COMPLETING AND PROMPTLY MAILING THE
ENCLOSED PROXY CARD TO US. IF YOU SIGN, DATE AND MAIL YOUR PROXY CARD WITHOUT
INDICATING HOW YOU WANT TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE IN FAVOR
OF THE MERGER. IF YOU DON'T RETURN YOUR CARD, THE EFFECT WILL BE A VOTE AGAINST
THE MERGER.
This Proxy Statement-Prospectus provides you with detailed information
about the proposed merger. You can also get information about Hancock from
documents it has filed with the Securities and Exchange Commission. We encourage
you to read this entire document carefully.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE MERGER.
Very truly yours,
Drouet W. Vidrine
Chairman of the Board
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES +
+ COMMISSION HAVE APPROVED THE HANCOCK COMMON STOCK TO BE ISSUED UNDER THIS +
+ PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS+
+ IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL +
+ OFFENSE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Proxy Statement-Prospectus dated November ___, 1998, and first mailed to
shareholders on November___, 1998.
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting of Shareholders of American
Security Bancshares of Ville Platte, Inc. ("American") will be held at the
offices of American Security Bank, 126 E. Main Street, Ville Platte, La., on
December __, 1998, at ____ __.m.
1. Approval and adoption of the Amended and Restated Agreement and Plan
of Merger and related merger agreements dated as of October 15, 1998,
and the transactions contemplated in the agreements pursuant to which
(a) American will be merged into Hancock Holding Company and (b) the
Bank will be merged into Hancock Bank of Louisiana.
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, 1998,
are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the Meeting. To ensure your
representation at the Meeting, please complete and promptly mail your proxy in
the return envelope enclosed. This will not prevent you from voting in person,
but will help to secure a quorum and avoid added solicitation costs. Your proxy
may be revoked at any time before it is voted. Please review the Proxy
Statement-Prospectus accompanying this notice for more complete information
regarding the merger and the Meeting.
Dissenting shareholders who comply with the procedural requirements of the
Business Corporation Law of Louisiana will be entitled to receive payment of the
fair cash value of their shares if the Merger is effected upon approval by less
than 80 percent of the total voting power of American. Please see the section
entitled "THE MERGER -- Dissenters' Appraisal Rights" in the attached Proxy
Statement-Prospectus for a discussion of the procedures to be followed in
asserting these dissenters' rights.
BY ORDER OF THE BOARD OF DIRECTORS
-----------------------------------------
Secretary
Ville Platte, Louisiana
November ____, 1998
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING.
THE BOARD OF DIRECTORS OF AMERICAN UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF THE MERGER AGREEMENT.
<PAGE>
QUESTIONS AND ANSWERS
Q(1): WHY IS AMERICAN MERGING WITH HANCOCK?
A: American's Board has approved the merger with Hancock based upon its
assessment of the financial condition and prospects of American in
particular and the competitive and regulatory environment for financial
institutions generally. Hancock is a Mississippi bank holding company
for Hancock Bank, a Mississippi chartered state bank which operates
offices in Mississippi and Hancock Bank of Louisiana, a Louisiana
chartered state bank which operates offices in Louisiana. Its common
stock is traded on the Nasdaq Stock Market under the symbol HBHC. The
merger will enable American shareholders to hold stock in a larger and
more diversified entity whose shares are more widely held and more
actively traded. The merger will also enable us to better serve our
customers with more products and services. Based upon these and other
factors we believe that the merger is in the best interest of American
shareholders. To review the background and reasons for the merger see
page 11.
Q(2): AS AN AMERICAN SHAREHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
A: If you own 25 or fewer shares of American common stock, Hancock will pay
you $950.75 in exchange for each share of American common stock you own.
If you own more than 25 shares of American common stock, Hancock will
pay you 13.8651 shares of Hancock common stock and a cash payment of
$285.22 in exchange for each share of American common stock you own.
However, Hancock will not issue any fractional shares. Instead, Hancock
will pay you cash for any fraction of a Hancock share based upon a price
of $48.00 per Hancock share.
Example: If you own 100 shares of American common stock, upon completion
of the merger you will have the right to receive 1,386 shares of Hancock
common stock and a check for $28,546.48 ($48 x .51 + $28,522).
Q(3): WHAT HAPPENS AS THE MARKET PRICE OF HANCOCK COMMON STOCK FLUCTUATES?
A: The exchange ratio is based upon a formula that is not determined by the
market price of Hancock common stock and is not expected to change.
Since the market value of the Hancock common stock will fluctuate before
and after the closing date of the merger, the value of the Hancock stock
you will receive in the merger (if you receive Hancock stock) will
fluctuate as well and could decrease.
Q(4): WHAT HAPPENS TO MY DIVIDENDS IN THE FUTURE?
A: After the merger, Hancock expects to pay quarterly dividends on its
common stock in the amount of $0.25 per share, the amount Hancock has
recently paid as a regular quarterly cash dividend to its shareholders.
While we currently expect to pay those dividends, we can't assure these
payments. Hancock's board of directors will use its discretion to decide
whether and when to declare dividends and in what amount, and it will
consider all relevant factors in doing so.
Q(5): WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We hope to complete the merger by the end of 1998 following the approval
of American shareholders.
Q(6): WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
A: We expect that for U.S. federal income tax purposes, your receipt of
Hancock stock in exchange for your shares of American common stock in
the merger generally will not cause you to recognize any gain or loss.
You will, however, have to recognize gain in connection with the cash
payment and any
<PAGE>
cash received instead of fractional shares, as a shareholder of 25 or
fewer shares of American common stock, or if you exercise dissenters'
appraisal rights under Louisiana law.
We provide a more detailed review of the U.S. federal income tax
consequences of the merger on page 20 of this document.
Q(7): AS AN AMERICAN SHAREHOLDER, DO I HAVE TO ACCEPT HANCOCK COMMON STOCK IN
EXCHANGE FOR MY SHARES IF THE MERGER IS APPROVED?
A: It depends. If the merger is completed with the approval of less than
80% of the total voting power of the American shareholders and you
follow the procedures prescribed by Louisiana law, you may dissent from
the merger and have the fair value of your stock determined by a court.
If you follow those procedures, you won't receive Hancock common stock.
The fair value of your American stock, determined in the manner
prescribed by Louisiana law, will be paid to you in cash.
For a more complete description of these dissenters' rights, see page 22
of this document.
Q(8): WHAT DO I NEED TO DO NOW?
A: Just indicate on your proxy card how you want to vote, and sign and mail
the proxy card in the enclosed return envelope as soon as possible so
that your shares may be represented at the meeting. If you sign and send
in your proxy but don't indicate how you want to vote, your proxy will
be counted as a vote in favor of the merger. If you don't return your
proxy card or you abstain, the effect will be a vote against the merger.
The meeting will take place on December __, 1998. You are invited to the
meeting to vote your shares in person rather than signing and mailing
your proxy card. If you do sign your proxy card, you can take back your
proxy until and including the date of the meeting and either change your
vote or attend the meeting and vote in person. We provide more detailed
instructions about voting on page 9.
THE BOARD OF DIRECTORS OF AMERICAN UNANIMOUSLY RECOMMENDS VOTING IN
FAVOR OF THE PROPOSED MERGER.
Q(9): SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. No one should send their stock certificates in now. After the merger
is completed, Hancock will send you written instructions on how to
exchange your American common stock for Hancock common stock.
Q(10): WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger you should contact:
American Security Bank
126 E. Main Street
Ville Platte, Louisiana 70586
Attention: George Comeau
Phone Number: (318) 363-5602, Ext. 313
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
SUMMARY
<S> <C>
The Companies..................................................................................... 1
Reasons for the Merger............................................................................ 1
The Shareholders' Meeting......................................................................... 1
Our Recommendations to Shareholders............................................................... 1
Record Date; Voting Power......................................................................... 1
Votes Required.................................................................................... 2
The Merger........................................................................................ 2
Selected Financial Data........................................................................... 5
Comparative Per Share Data (Unaudited)............................................................ 8
THE MEETING
Introduction...................................................................................... 9
Purpose of the Meeting............................................................................ 9
Solicitation, Voting and Revocation of Proxies.................................................... 9
Shares Entitled to Vote; Quorum................................................................... 9
Vote Required..................................................................................... 10
THE MERGER
Description of the Mergers........................................................................ 10
Background of and Reasons for the Merger Agreement................................................ 11
Opinion of American's Financial Advisor........................................................... 12
Closing........................................................................................... 15
Exchange of Certificates.......................................................................... 16
Regulatory Approvals and Other Conditions......................................................... 16
Conduct of Business Prior to the Effective Date................................................... 17
Waiver, Amendment and Termination................................................................. 18
Interests of Certain Persons...................................................................... 18
Employee Benefits................................................................................. 19
Expenses.......................................................................................... 19
Status Under Federal Securities Laws; Certain Restrictions on Resales of Securities............... 19
Accounting Treatment.............................................................................. 19
Material Federal Income Tax Consequences of the Merger............................................ 20
Dissenters' Appraisal Rights...................................................................... 22
INFORMATION ABOUT AMERICAN
Principal Business................................................................................ 23
Competition....................................................................................... 23
Seasonality of Business and Customers............................................................. 24
Employees......................................................................................... 24
Property.......................................................................................... 24
Stock Prices and Dividends........................................................................ 24
Ownership of American Stock....................................................................... 24
Management Discussion & Analysis of Financial Condition and Results of Operations................. 25
INFORMATION ABOUT HANCOCK
General........................................................................................... 41
Merger Activity................................................................................... 41
Common Stock Prices and Dividends................................................................. 42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Change of Control................................................................................. 42
DESCRIPTION OF HANCOCK CAPITAL STOCK
Authorized and Outstanding Stock.................................................................. 44
Voting Rights..................................................................................... 44
Dividend Rights................................................................................... 44
Preemptive Rights................................................................................. 45
Fully Paid and Nonassessable...................................................................... 45
Liquidation Rights................................................................................ 45
Limitation of Liability of Directors.............................................................. 45
Indemnification of Directors, Officers and Employees.............................................. 45
Transfer Agent.................................................................................... 45
Changes in Control................................................................................ 45
Common Stock Purchase Rights...................................................................... 46
COMPARISON OF RIGHTS OF SHAREHOLDERS
Authorized Capital................................................................................ 46
Board of Directors................................................................................ 46
Removal of Directors.............................................................................. 46
Amendment of the Articles of Incorporation........................................................ 46
Amendment of Bylaws............................................................................... 47
Meetings of Shareholders.......................................................................... 47
Reports to Shareholders........................................................................... 47
Dividends......................................................................................... 47
Redemption and Retirement of Shares............................................................... 47
Reversion of Unclaimed Dividends.................................................................. 48
Shareholders Inspection Rights.................................................................... 48
Limitation of Liability of Directors.............................................................. 48
Indemnification................................................................................... 49
Supermajority Voting Requirements; Business Combinations.......................................... 50
Dissenters' Appraisal Rights...................................................................... 51
Shareholder Rights Plan........................................................................... 51
ADDITIONAL INFORMATION
Legal Matters..................................................................................... 51
Experts........................................................................................... 51
Other Matters..................................................................................... 51
Where You Can Find More Information............................................................... 52
INDEX TO AMERICAN FINANCIAL STATEMENTS............................................................F-1
APPENDICES
APPENDIX A -- FAIRNESS OPINION OF BROWN, BURKE CAPITAL PARTNERS, INC..............................A-1
</TABLE>
<PAGE>
SUMMARY
This summary highlights selected information from this document. It does not
contain all of the information that is important to you. You should carefully
read this entire document and the documents to which we have referred you in
order to understand fully the merger and to obtain a more complete description
of the legal terms of the merger. See "ADDITIONAL INFORMATION -- Where You Can
Find More Information" (page 52). Each item in this summary includes a page
reference that directs you to a more complete description in this document of
the topic discussed.
THE COMPANIES
(Pages 23 and 41)
HANCOCK HOLDING COMPANY
One Hancock Plaza
Gulfport, Mississippi 39501
(228) 868-4000
Hancock is incorporated in Mississippi and is a two-bank holding company.
Hancock provides commercial banking operations, credit card services, insurance
services, trust services and other related financial services in Mississippi and
Louisiana. As of September 30, 1998 Hancock's total assets were $2.7 billion,
deposits were $2.3 billion and shareholders' equity was $284.2 million.
AMERICAN SECURITY BANCSHARES
126 E. Main Street
Ville Platte, Louisiana 70586
(318) 363-5602
American Security Bancshares of Ville Platte, Inc. is a Louisiana corporation
that owns American Security Bank of Ville Platte. The Bank provides traditional
consumer and commercial deposit and loan services to individuals, families and
businesses in Evangeline, Rapides, Avoyelles, St. Landry and Allen Parishes in
Louisiana, through a full service main office and 17 branch offices. As of
September 30, 1998, our total assets were $229.3 million, our deposits were
about $195.8 million and shareholders' equity was about $24.9 million.
REASONS FOR THE MERGER
(Page 11)
We believe that the financial terms of the agreement were attractive based upon
the recent earnings performance of American, the current and prospective
economic and regulatory environment and the Board's belief that Hancock was an
attractive choice as a long-term affiliation partner for American and the Bank.
The merger will offer liquidity to the American shareholders and more products
and services to the Banks' customers.
To review the background of and reasons for the merger in greater detail, please
see page 11.
THE SHAREHOLDERS' MEETING
(Page 9)
The special meeting will be held at the offices of the Bank, at ___ p.m. on
December __, 1998. At the meeting American shareholders will be asked to approve
the merger agreement.
OUR RECOMMENDATIONS TO SHAREHOLDERS
(Page 12)
The Board of Directors of American believes that the merger is fair to you and
in your best interests and unanimously recommends that you vote "FOR" the
proposal to approve the merger agreement.
RECORD DATE; VOTING POWER
(Page 9)
You can vote at the meeting if you owned American common stock as of the close
of business on November 1, 1998, the record date. On that date, 48,467 shares of
1
<PAGE>
American common stock were outstanding and therefore are allowed to vote at the
meeting. You will be able to cast one vote for each share of American common
stock you owned on November 1, 1998.
VOTES REQUIRED
(Page 10)
In order for the merger to be approved, American shareholders holding two-thirds
of the outstanding shares of common stock present at the meeting must vote in
favor of the Merger. Altogether the directors and officers of American can cast
about 33% of the votes entitled to be cast at the meeting. We expect that they
will vote all of their shares in favor of the merger.
THE MERGER
(Page 10)
We have summarized the terms of the merger agreement, which is incorporated into
this Proxy Statement-Prospectus by reference. We encourage you to read the
merger agreement. It is the legal document that governs the merger.
THE EXCHANGE RATIO
(Page 10)
In the merger, if you own more than 25 shares of American common stock, each
outstanding share of American common stock will be converted into 13.8651 shares
of Hancock common stock and a cash payment of $285.22. Holders of 25 or fewer
shares will instead receive a cash payment of $950.75 in exchange for each
American share. The exchange ratio will be adjusted if Hancock or American
increases its number of shares of common stock outstanding from the figures
disclosed in this Proxy Statement-Prospectus.
CONDITIONS TO COMPLETION OF THE MERGER
(Page 16)
The completion of the merger depends on a number of conditions being met,
including the following:
1. American shareholders approving the merger;
2. the absence of any governmental order blocking completion of the merger or
of any proceedings by a governmental body trying to block it; and
3. receipt of opinions of Hancock's counsel that the U. S. federal income tax
treatment of American's shareholders, American and Hancock in the merger
will generally be as we've described it to you in this document.
In cases where the law permits, a party to the merger agreement could elect to
waive a condition that has not been satisfied and complete the merger although
it is entitled not to. We can't be certain whether or when any of the conditions
we've listed will be satisfied (or waived, where permissible), or that the
merger will be completed.
TERMINATION OF THE MERGER AGREEMENT
(Page 18)
We can agree at any time to terminate the merger agreement without completing
the merger, even if the shareholders of American have already voted to approve
it.
Moreover, either of us can terminate the merger agreement in the following
circumstances:
1. if the merger isn't completed by March 31, 1999;
2. if the American shareholders don't approve the merger; or
3. if the other party violates, in a significant way, any of its
representations, warranties or obligations under the merger agreement.
Generally, a party can only terminate the merger agreement in one of the
preceding three situations if that party isn't in violation of the merger
agreement or if its violations of the merger agreement aren't the cause of the
event permitting termination.
2
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
(Page 20)
We have structured the merger with the intent that neither American nor its
shareholders will recognize any gain or loss for U.S. federal income tax
purposes due to the merger, except in connection with cash received by American
shareholders in exchange for their American stock. We have conditioned the
merger on the receipt of legal opinions that this will be the case, but these
opinions won't bind the Internal Revenue Service, which could take a different
view.
SHAREHOLDERS WHO RECEIVE CASH AS A RESULT OF EXERCISING THEIR DISSENTERS'
APPRAISAL RIGHTS UNDER LOUISIANA LAW WILL HAVE TO RECOGNIZE ANY REALIZED GAIN OR
LOSS. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU CAN BE
COMPLICATED. THEY WILL DEPEND ON YOUR SPECIFIC SITUATION AND MANY VARIABLES NOT
WITHIN OUR CONTROL. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL
UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
ACCOUNTING TREATMENT
(Page 19)
We expect the merger to qualify for purchase accounting treatment, which means
that, for accounting and financial reporting purposes, we will combine the
earnings of Hancock and American from and after the effective date of the merger
and any goodwill or other intangibles recorded in the transaction will be
amortized through charges to income in future periods. In addition, assets and
liabilities of American will be recorded at fair value on the date of the
transaction.
OPINION OF FINANCIAL ADVISOR
(Page 12)
In deciding to approve the merger, our Board considered the opinion of its
financial advisor, Brown, Burke Capital Partners, Inc., that as of the date of
the opinion, the exchange ratio was fair from a financial point of view to
American's shareholders. We have attached this opinion as Appendix A to this
document. You should read it carefully.
INTERESTS OF OTHER PERSONS IN THE MERGER THAT ARE DIFFERENT FROM YOURS
(Page 18)
The directors and executive officers of American own shares of American common
stock, which will be converted into shares of Hancock common stock and cash
pursuant to the merger on the same terms and conditions as applied to all other
shares of American common stock.
None of these persons have agreements for additional compensation or any other
rights which become effective upon a change in control or which relate to the
merger other than change of control and retention bonuses that will be paid to
certain members of American's management. The bonuses are provided to ensure
that key personnel remain with the Bank up to the completion of the merger and
for a period of time after the merger.
Current retirement and benefit plans available to employees of American and the
Bank will terminate as of the effective time of the merger. Those American
employees who are retained following the merger will be eligible to participate
in Hancock's employee plans, on substantially the same basis and applying the
same eligibility standards as other Hancock Bank employees.
Hancock also has agreed to provide indemnification to American's Board members
and its officers.
DISSENTERS' APPRAISAL RIGHTS
(Page 22)
Louisiana law permits you to dissent from the merger and to have the fair value
of your American stock determined by a court. To do this, you must follow
certain procedures, including the filing of certain notices with us and voting
your shares against the merger. If you dissent from the merger, your shares of
American common stock will not be exchanged for shares of Hancock common
3
<PAGE>
stock in the merger, and your only right will be to receive the fair value of
your shares in cash.
REGULATORY APPROVALS
(Page 16)
The merger has been approved by the Board of Governors of the Federal Reserve
System and the required waiting period has expired. No other regulatory
approvals are required for the merger of Hancock and American.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
(Pages 24 and 42)
Shares of Hancock are quoted on the Nasdaq Stock Market. Shares of American are
not publicly traded. The last transactions of which American management is aware
were trades which occurred during March 1998 of 149 shares for $400 per share.
American's book value per share as of September 30, 1998 was $513.58. On
October 14, 1998 the last full trading day prior to the public announcement of
the revised Merger Agreement, Hancock stock closed at $42.3125 per share. On
November __, 1998 Hancock stock closed at $__ per share.
Based on a stock price of $42.3125 per Hancock share, the market value of
13.8651 shares of Hancock common stock that American shareholders will receive
in the merger for each share of their American stock would be $586.67 based on
Hancock's October 14, 1998 closing price and $_____ based on Hancock's
November __, 1998 closing price. When added to the cash payment of $285.22 per
American share results in total consideration of $871.89 as of October 14, 1998,
and _________ as of November __, 1998. Of course, the market price of Hancock
common stock will fluctuate prior to and after completion of the merger, while
the exchange ratio is fixed. You should obtain current Hancock stock price
quotations.
4
<PAGE>
SELECTED FINANCIAL DATA
The following tables show summarized unaudited historical financial data
for each of the companies.
The information set forth for the nine-month period ended September 30,
1998 doesn't necessarily indicate what the results will be for the full 1998
fiscal year.
The Hancock information in the following tables is derived from the
historical financial information that has been presented in prior filings with
the Securities and Exchange Commission. All of the summary financial information
provided in the following tables should be read along with this historical
financial information and with the more detailed financial information we have
provided in this Proxy Statement-Prospectus, which you can find beginning on
page F-1. The historical financial information of Hancock has been incorporated
into this Proxy Statement-Prospectus by reference -- see "ADDITIONAL
INFORMATION -- Where You Can Find More Information" on page 52. Hancock's annual
financial statements as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997 were audited by Deloitte & Touche,
LLP and American's annual financial statements as of December 31, 1997 and 1996
and for the years then ended were audited by Broussard, Poche, Lewis and Breaux,
L.L.P., independent Certified Public Accountants. The financial information as
of September 30, 1998 and for the nine month periods ended September 30, 1998
and 1997 has not been audited but in the respective opinions of management
reflects all adjustments (consisting only of normal recurring adjustments)
necessary to a fair presentation of such data.
5
<PAGE>
AMERICAN SECURITY BANCSHARES, INC.
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AS OF AND FOR THE YEARS ENDED DECEMBER 31,
----------------------------- -------------------------------------------------------
(UNAUDITED)
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net interest income $ 6,061 $ 6,295 $ 9,323 $ 9,694 $ 9,592 $ 7,894 $ 7,183
Provision for loan losses 1,340 1,430 1,490 1,220 1,060 335 240
Net earnings 3,698 1,814 1,946 3,086 3,552 2,465 2,324
BALANCE SHEET DATA:
Total assets 229,302 231,591 228,206 228,980 210,200 192,026 165,056
Net loans 101,514 112,346 108,941 111,858 101,265 81,675 74,441
Deposits 195,755 203,960 202,564 199,818 181,616 171,039 147,819
Shareholders' equity 24,891 22,130 20,930 19,978 18,533 13,192 12,567
PER SHARE DATA:
Basic & diluted earnings per share 76.31 37.42 40.16 63.68 73.29 50.85 47.95
Dividends declared 0.00 0.00 25.00 16.00 15.00 8.00 6.00
Dividends paid 0.00 0.00 25.00 16.00 15.00 8.00 6.00
AVERAGE SHARES OUTSTANDING 48 48 48 48 48 48 48
SELECTED RATIOS:
Return on average assets 2.07%* 1.04%* 0.84% 1.38% 1.73% 1.34% 1.45%
Return on average equity 21.37%* 12.00%* 9.73% 15.70% 21.92% 18.42% 20.29%
Average equity to assets 9.70% 8.67% 8.50% 8.62% 7.89% 7.25% 7.13%
Dividend payout N/A N/A 62.25% 25.13% 20.47% 15.73% 12.51%
</TABLE>
*Annualized
6
<PAGE>
HANCOCK HOLDING COMPANY
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AS OF AND FOR THE YEARS ENDED DECEMBER 31,
----------------------------- -------------------------------------------------------
(UNAUDITED)
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net interest income $ 83,670 $ 83,410 $ 112,197 $ 106,719 $ 100,367 $ 86,282 $ 85,319
Provision for loan losses 3,491 5,337 6,399 6,154 4,425 1,998 4,632
Net earnings 23,437 23,137 30,624 31,603 27,017 23,130 24,862
BALANCE SHEET DATA:
Total assets 2,737,383 2,430,915 2,537,957 2,289,582 2,234,286 2,026,929 1,988,125
Net loans 1,271,710 1,219,079 1,220,629 1,173,967 1,034,977 925,665 921,925
Deposits 2,254,453 2,065,891 2,062,648 1,926,576 1,927,681 1,775,664 1,759,189
Shareholders' equity 284,174 283,468 288,573 261,938 224,179 182,277 166,712
PER SHARE DATA:
Basic & diluted earnings
per share $ 2.18 $ 2.13 $ 2.82 $ 3.08 $ 2.65 $ 2.48 $ 2.67
Dividends declared 0.75 0.75 1.00 0.88 0.84 0.80 0.78
Dividends paid 0.75 0.75 1.00 0.88 0.84 0.80 0.78
AVERAGE SHARES OUTSTANDING 10,766 10,857 10,870 10,277 10,181 9,314 9,307
SELECTED RATIOS:
Return on average assets 1.16%** 1.28%** 1.25% 1.38% 1.22% 1.13% 1.27%
Return on average equity 10.75%** 11.51%** 11.29% 13.74% 12.50% 13.22% 15.61%
Average equity to assets 10.87% 11.04% 11.11% 10.06% 9.74% 8.56% 8.11%
Dividend payout 34.40% 35.21% 36.05% 28.90% 31.45% 32.21% 29.29%
</TABLE>
* Earnings and Cash Dividends Declared and Paid per Common Share are based upon
the weighted average number of shares after giving retroactive effect for a 15%
stock dividend in December 1996. Actual cash dividends paid in 1996, 1995, 1994
and 1993 were $1.00, $0.96, $0.92 and $0.90, respectively.
** Annualized
7
<PAGE>
COMPARATIVE PER SHARE DATA (UNAUDITED)
The following table shows information about our companies' income per
share, dividend per share and book value per share, and similar information
reflecting the merger (which is referred to as "pro forma" information). The
Hancock information in the following table is based on the historical financial
information that has been presented in prior Securities and Exchange Commission
filings. This information has been incorporated into this Proxy Statement-
Prospectus by reference. See "ADDITIONAL INFORMATION -- Where You Can Find More
Information" on page 52.
The information listed as "pro forma equivalent" was obtained by
multiplying the pro forma amounts by an amended exchange ratio which assumes the
purchase of additional shares of Hancock stock with the cash portion of the
transaction. (This assumption uses a price of $48 per Hancock share and cash
that has been reduced for capital gains tax of 20%.) It is intended to reflect
the fact that American shareholders will be receiving more than one share of
Hancock common stock for each share of American common stock exchanged in the
merger.
The information we've set forth for the nine-month period ended
September 30, 1998 does not indicate what the results will be for the full 1998
fiscal year.
HISTORICAL PRO FORMA AMERICAN
-------------------- WITH PRO FORMA
HANCOCK AMERICAN AMERICAN EQUIVALENT
------- -------- --------- ----------
PER COMMON SHARE:
NET EARNINGS-Basic & Diluted
For the nine months ended
September 30, 1998 $ 2.18 $ 76.31 $ 2.24 $ 41.71
For the year ended
December 31, 1997 2.82 40.16 2.65 49.31
CASH DIVIDENDS PAID
For the nine months ended
September 30, 1998 $ 0.75 $ 0.00 $ 0.75 $ 13.96
For the year ended
December 31, 1997 1.00 25.00 1.00 18.62
BOOK VALUE
As of September 30, 1998 $27.12 $513.58 $28.38 $528.40
As of December 31, 1997 26.44 431.83 27.69 515.55
For purposes of the pro forma dividends paid equivalent presentation, it
has been assumed that the dividends paid per share would have been equal to what
Hancock actually paid.
For purposes of the pro forma net earnings presentation, it has been
assumed that the only material adjustments to the combined historical amounts of
Hancock and American would have been an amortization of approximately $21.1
million of goodwill over fifteen years, an interest income adjustment on the
$13.8 million cash payment at 6% per year and the related income tax effect of
that adjustment.
8
<PAGE>
THE MEETING
INTRODUCTION
This Proxy Statement-Prospectus is first being mailed on or about
November __, 1998 to the shareholders of American in connection with the
solicitation of proxies on behalf of American Board for use at a special meeting
(the "Meeting") of shareholders of American to be held at the date, time and
place set forth in the accompanying notice, and at any adjournment thereof and
is accompanied by the Notice of Meeting and Form of Proxy.
PURPOSE OF THE MEETING
At the Meeting American shareholders will be asked to consider and vote
upon a proposal to adopt an Amended and Restated Agreement and Plan of Merger
dated as of October 15, 1998 (the "Merger Agreement") by and between American
and Hancock Holding Company, a Mississippi corporation ("Hancock"), and pursuant
to which American will be merged into Hancock (the "Merger"). The Merger
Agreement also contemplates that Bank will be merged into Hancock Bank of
Louisiana following the Merger on a date to be determined by Hancock.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
When a proxy in the form accompanying this Proxy Statement-Prospectus is
properly executed and returned, the shares represented thereby will be voted in
the manner specified therein. ALL EXECUTED BUT UNMARKED PROXIES THAT ARE
RETURNED WILL BE VOTED "FOR" THE MERGER. An instruction to abstain from voting
on the Merger will be considered present for quorum purposes but will have the
same effect as a vote against the Merger. Only a vote against the Merger will
preserve any statutory dissenters' appraisal rights a shareholder may wish to
exercise.
No matters are expected to be considered at the Meeting other than the
proposal to approve the Merger, but if any other matters should properly come
before the Meeting, it is intended that proxies will be voted on all such
matters in accordance with the judgment of the person(s) voting them.
Any proxy may be revoked at any time before it is voted. A shareholder may
revoke a proxy (1) by submitting a subsequently dated proxy, (2) by giving
written notice of revocation to the Secretary of American or (3) upon request,
if such shareholder is present at the Meeting and elects to vote in person. Mere
attendance at the Meeting will not of itself revoke a previously submitted
proxy. Revocation of a proxy will not affect a vote on any matter taken before
receipt of the revocation.
The cost of soliciting proxies will be borne by American. In addition to
the use of the mails, proxies may be solicited personally, by telephone,
telecopier, or telegram, by directors, officers and employees of American or
Bank, who will not receive any additional compensation for so doing.
SHARES ENTITLED TO VOTE; QUORUM
Only shareholders as of the close of business on November 1, 1998, are
entitled to notice of and to vote at the Meeting (the "Record Date"). As of the
Record Date, there were 48,467 shares of American common stock outstanding, each
of which is entitled to one vote on all matters to come before the Meeting. The
presence at the Meeting, in person or by proxy, of the holders of a majority of
the outstanding shares of American common stock is necessary to constitute a
quorum. A quorum is based upon the total number of American shares outstanding.
Therefore, not returning your proxy card would make it more difficult to obtain
a quorum because your shares would not be counted as present at the Meeting for
quorum purposes.
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<PAGE>
VOTE REQUIRED
Approval of the Merger requires the affirmative vote of the holders of at
least two-thirds of American stock present, in person or by proxy, at the
Meeting. As of the Record Date, directors and executive officers of American and
their affiliates were the beneficial owners of approximately 33% percent of the
outstanding American stock entitled to vote at the Meeting, and it is expected
that all such shares will be voted in favor of the Merger. See "INFORMATION
ABOUT AMERICAN -- Ownership of American Stock." Under Mississippi law,
shareholders of Hancock are not required to approve the Merger.
THE MERGER
The following description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete Merger
Agreement itself, which is incorporated herein by reference. See "ADDITIONAL
INFORMATION -- Where You Can Find More Information" on how to get copy of the
Merger Agreement, if desired.
DESCRIPTION OF THE MERGERS
Subject to the terms and conditions of the Merger Agreement, American will
be merged into Hancock (the "Merger"). As a result of the Merger, the separate
corporate existence of American will cease and Hancock will be the surviving
corporation (the "Surviving Corporation") and will continue to exist as a
Mississippi corporation. Subject to the satisfaction or waiver of certain
conditions set forth in the Merger Agreement and described more fully in
"--Regulatory Approvals and Other Conditions," the Merger will become effective
(the "Effective Date") upon the filing of articles of merger in the offices of
the Secretary of State of the State of Louisiana in accordance with the
Louisiana Business Corporation Law ("LBCL") and in the offices of the Secretary
of State of Mississippi in accordance with the Mississippi Business Corporation
Act ("MBCA").
At and after the Effective Date, the Merger will have the effects set forth
in Article II of the MBCA, and the charter and bylaws of the Surviving
Corporation at the Effective Date shall be the charter and bylaws of Hancock in
effect immediately prior to the Effective Date. The directors of Hancock
immediately following the Merger shall be those directors of Hancock immediately
prior to the Merger without change.
The Merger Agreement also provides that the Bank, a Louisiana state
chartered bank, will be merged with and into Hancock Bank of Louisiana ("HBLA")
(the "Bank Merger") on a future date to be determined by Hancock. As a result of
the proposed Bank Merger, the separate legal existence of Bank will cease, and
HBLA will be the surviving bank and will continue to exist as a Louisiana state
chartered bank. The directors of HBLA immediately following the proposed merger
of Bank and HBLA shall be those directors of HBLA immediately prior to the
proposed merger of Bank and HBLA without change.
As a result of the Merger, all shares of American stock will cease to be
outstanding, and each holder of a certificate for shares of American stock
("Certificate") will thereafter cease to have any rights with respect to such
shares, and the Certificate with respect to holders of more than 25 shares of
American stock will thenceforth represent the number of shares of Hancock stock
into which the stock represented thereby was converted and a cash payment. With
respect to holders of more than 25 shares of American stock, each share of
American stock will be converted into 13.8651 shares of Hancock stock. The cash
payment will consist of $285.22 for each share of American stock and a cash
payment for fractional shares of Hancock stock at the rate of $48 per share of
Hancock stock. Holders of 25 or fewer shares of American will receive a check
for $950.75 for each share of American stock they own (the "De Minimus Holdings
Cash Payment").
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<PAGE>
If before the Effective Date of the Merger American or Hancock changes its
number of outstanding shares as a result of a stock split, reverse stock split,
stock dividend, recapitalization or other similar transaction, the exchange
ratio will be appropriately adjusted.
It is expected that the market price of Hancock common stock will fluctuate
between the date of this Proxy Statement-Prospectus and the date on which the
Merger is consummated and thereafter. Because the exchange ratio is fixed and
because the market price of Hancock common stock is subject to fluctuation, the
value of the shares of Hancock common stock that holders of American common
stock will receive in the Merger may increase or decrease prior to the Merger.
For further information concerning the historical market prices of Hancock
common stock and American common stock, see "INFORMATION ABOUT HANCOCK --
Common Stock Prices and Dividends" and "INFORMATION ABOUT AMERICAN -- Stock
Prices and Dividends." No assurance can be given concerning the market price of
Hancock common stock before or after the Effective Date.
The ultimate result of the transactions contemplated by the Merger
Agreement will be that the business and properties of American will become
Hancock's business and properties, American shareholders will become
shareholders of Hancock (except for American shareholders who hold 25 or fewer
shares and dissenting shareholders, who will receive cash) and upon the
effective date of the Bank Merger, the business and properties of Bank will
become HBLA's business and properties.
BACKGROUND OF AND REASONS FOR THE MERGER AGREEMENT
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. American's Board concluded that it could best serve
American's shareholders, employees, customers and communities by combining with
a regional banking organization, provided that American could obtain a fair
price for its shareholders. Accordingly, in early 1998, representatives of
American and Hancock, with the assistance of American's financial advisor,
Brown, Burke Capital Partners, Inc., entered into extensive negotiations which
ultimately led to the execution of the Merger Agreement.
After the Merger Agreement was signed, American was informed that its lease
on the Centre Court branch facility in Alexandria, Louisiana would not be
renewed which led Hancock to the opinion that it was entitled to terminate the
Merger Agreement, and it notified American of its intent to do so. American
believed that Hancock was not entitled to terminate the Merger Agreement and
sued Hancock in Ville Platte asking the court to order Hancock to proceed with
the Merger. Shortly before the trial, the parties engaged in intensive
settlement negotiations. After discussions with American's financial and legal
advisors, and considering a number of factors, including the uncertainties and
cost of litigation and the absence of another potential acquirer that was
willing to acquire American on more favorable terms, American's Board determined
that it was in the best interest of American and American's shareholders to
settle the litigation to (1) reduce the merger consideration and its composition
from the amount set forth in the original merger agreement which consisted of
Hancock stock to a combination of Hancock stock and cash, (2) revise other terms
of the Merger Agreement to remove certain uncertainties to completion and to
increase the dividends American was allowed to pay pending completion of the
Merger, and (3) receive a payment of $2.5 million from Hancock that would be
retained by American if the Merger Agreement as revised was not completed. On
this basis, the basic terms of the Merger Agreement to be presented at the
Meeting was approved and executed by American's Board of Directors.
In deciding to enter into the Merger Agreement, American Board, after
considering various alternatives, concluded that the Merger Agreement was in the
best interest of American and its shareholders because it would permit
shareholders holding more than 25 American shares to exchange on favorable terms
their ownership interests in American for participation in the ownership of a
regional banking organization operating on a multi-state basis.
11
<PAGE>
American Board also concluded that those shareholders of American would benefit
additionally 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.
American's Board consulted with its financial and other advisors, as well
as with American's management and considered a number of factors, including, but
not limited to, the following: (1) the parties' respective earnings and dividend
records, financial conditions, historical stock prices and managements; (2) the
market for Bank's services and the competitive pressures existing in Bank's
market area; (3) the outlook for American and Bank in the financial institutions
industry; (4) the amount and type of consideration to be received by American
shareholders; (5) the fact that Hancock stock to be received pursuant to the
Merger Agreement will be listed for trading on the Nasdaq Stock Market and
should provide American shareholders with liquidity that is currently
unavailable to them; (6) recent changes in the regulatory environment will
result in American and Bank facing additional competitive pressures in the
Bank's market area from other financial institutions with greater financial
resources capable of offering a broad array of financial services; (7) the
opinion of Brown, Burke Capital Partners, Inc. as to the fairness of the
exchange ratio and (8) the fact that the Merger is expected to qualify as a tax-
free reorganization so that neither American nor American's shareholders (except
to the extent that cash is received as a (a) cash payment, (b) in respect of
fractional shares, (c) by American shareholders holding 25 or fewer American
shares, or (d) in payment of statutory dissenters' appraisal rights) will
recognize any gain due to the Merger.
American Board did not assign any specific or relative weight to the
foregoing factors in its considerations. American Board believes that the Merger
will provide significant value to all American shareholders and will enable them
to participate in opportunities for growth that American Board believes the
Merger makes possible.
BASED ON THE FOREGOING, AMERICAN BOARD HAS APPROVED THE MERGER AGREEMENT,
BELIEVES THAT IT IS IN THE BEST INTEREST OF AMERICAN SHAREHOLDERS, AND
RECOMMENDS THAT SHAREHOLDERS OF AMERICAN VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT.
OPINION OF AMERICAN'S FINANCIAL ADVISOR
American has retained Brown, Burke Capital Partners, Inc. ("BBCP") to act
as its financial advisor in connection with the Merger. Representatives of BBCP
participated in numerous meetings of the American Board including those held on
November 18, 1997, January 20, 1998 and March 31, 1998 and held numerous
discussions with management or representatives of the American Board through
September 25, 1998. At a meeting of the American Board on September 25, 1998,
the American Board approved the revised terms of a merger with Hancock, subject
to satisfactory completion of a merger agreement. BBCP rendered its oral opinion
to the effect that, as of such date, the Merger Consideration to be received by
the shareholders of American under the proposed revised terms (the "Per Share
Purchase Price and Terms") were fair to the shareholders of American from a
financial point of view. BBCP has also rendered a written opinion to the
American Board that, on the date of the opinion, based on the information set
forth therein, the Per Share Purchase Price and Terms were fair, from a
financial point of view, to the American shareholders.
THE FULL TEXT OF BBCP's WRITTEN OPINION IS ATTACHED AS APPENDIX A TO THIS
PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX A. AMERICAN SHAREHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN
BY BBCP IN CONNECTION THEREWITH.
BBCP's opinion is addressed to the American Board only and is directed only
to the Per Share Purchase Price and Terms and does not constitute a
recommendation to any American shareholder regarding how such shareholder should
vote at the Meeting.
12
<PAGE>
In arriving at its written opinion, BBCP, among other things: (i) analyzed
certain audited and unaudited financial statements and other information of
American and Hancock; (ii) reviewed and discussed with appropriate management
personnel of American and Hancock the past and current business activities and
financial results and the business and financial outlook of American and
Hancock; (iii) reviewed the historical price and trading activity of the common
stock of Hancock; (iv) compared certain financial and stock market data relating
to Hancock with similar data of other publicly held banking institutions
considered to be potential alternative affiliation candidates to Hancock for
American; (v) performed an analysis comparing the pro forma consequences of the
Merger to American shareholders with respect to fully diluted earnings per
share, tangible book value per share and dividends per share represented by the
Hancock common stock they will receive in the Merger to those same measures
represented by the American common stock they currently hold; (vi) reviewed the
prices paid in certain comparable acquisition transactions of community banking
institutions and the multiples of earnings and book value and the level of
deposit base premium received by the selling institutions; (vii) reviewed the
Merger Agreement and certain related documents; (viii) considered the financial
implications of certain other strategic alternatives available to American; and
(ix) performed such other analyses as BBCP deemed appropriate.
In conducting its analysis and arriving at its opinion, BBCP assumed and
relied upon, without independent verification, the accuracy and completeness of
the information it reviewed for the purposes of the opinion. BBCP also relied
upon the management of American with respect to the reasonableness and
achievability of the financial forecast (and the assumptions and bases
underlying such forecast) provided to it. American instructed BBCP that, for the
purposes of its opinion, BBCP should assume that such forecast will be realized
in the amounts and in the time periods currently estimated by the management of
American. BBCP also assumed, with American's consent, that the aggregate
allowances for loan losses for each of American and Hancock are adequate to
cover such losses. BBCP is not an expert in the evaluation of allowances for
loan losses and has not reviewed any individual credit files. BBCP did not make,
nor was it furnished with, independent valuations or appraisals of the assets or
liabilities of either American or Hancock or any of their subsidiaries. BBCP did
not, and was not asked to, express any opinion about what the value of Hancock
common stock actually will be when issued to the holders of American common
stock pursuant to the Merger or the price at which Hancock common stock will
trade subsequent to the Merger. Moreover, American has informed BBCP, and BBCP
has assumed, that the Merger will be recorded utilizing purchase accounting
treatment under generally accepted accounting principles.
No limitations were imposed by American or the American Board on the scope
of BBCP's investigation or the procedures to be followed by BBCP in rendering
its opinion. As part of its procedures, BBCP solicited major regional bank
holding companies for their indications of acquisition interest in American. The
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to BBCP as of, the date of its
analysis.
In arriving at the fairness, from a financial point of view, of the
consideration to be received by the shareholders of American, BBCP developed an
opinion of the value of American common stock should the institution remain
independent and analyzed such value in light of the premium represented by the
Per Share Purchase Price and Terms. In connection with rendering its opinion to
the American Board, BBCP also reviewed a variety of generally recognized
valuation methodologies and merger analyses and performed those, which it
believed were most appropriate for developing its opinion of fairness, from a
financial point of view.
The preparation of a fairness opinion involves various determinations of
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and, therefore,
such an opinion is not readily susceptible to summary description. In arriving
at its fairness opinion, BBCP did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments about
the significance and relevancy of each analysis and factor. None of the analyses
performed by BBCP was assigned a greater significance by BBCP than any other.
Accordingly, BBCP believes that its analyses must be considered as a whole and
that a review of selected portions of such analyses and the factors considered
therein, without
13
<PAGE>
considering all analyses and factors, could create a misleading or incomplete
view of the processes underlying its opinion and any conclusions reached
therein. In its analyses, BBCP made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond American's and Hancock's control. Any
estimates contained in BBCP's analyses are not necessarily indicative of actual
values or predictive of future results or values that may be significantly more
or less favorable than such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies or
their securities actually may be sold. In addition, as described above, BBCP's
opinion and presentations to the American Board were only a few of many factors
taken into consideration by the American Board in making its determination to
approve the Merger Agreement.
On October 29, 1998, BBCP updated its oral opinion previously delivered to
the American Board. The following is a brief summary of analyses performed by
BBCP in connection with its updated opinion:
SUMMARY OF PROPOSAL. BBCP reviewed the terms of the proposed transaction
including the calculation of the Merger Consideration. BBCP stated that based on
the assumed price of Hancock common stock of $48, the Merger Consideration of
13.8651 shares of Hancock common stock per share of American common stock and
cash of $285.22 per share of American common stock would provide American
shareholders holding greater than 25 shares of American common stock, a per
share value of $950.74 (the "Per Share Purchase Price") or a total deal value of
$46.1 million.
INDICATED VALUE OF AMERICAN AS AN INDEPENDENT BANK. BBCP undertook an
analysis addressing the range of potential values which would be implied if
American were to remain an independent bank. BBCP computed this range of values
based on a discounted cash flow analysis, relying on projections extrapolated
from American's 1998 budget and its historical performance. In this analysis
methodology, BBCP assumed shareholders received, in addition to the projected
dividend stream, a terminal valuation at December 31, 2002 based upon a 13.0
times multiple of earnings for such year. These amounts were discounted at rates
ranging from 10% to 14% and indicated net present values to American
shareholders between $37.2 million and $44.1 million.
PER SHARE MERGER CONSEQUENCES ANALYSIS. Based upon Merger Consideration of
13.8651 shares of Hancock common stock and cash of $285.22 for each share of
American common stock and using the earnings estimates for American prepared by
American management and earnings estimates for Hancock prepared by independent
securities analysts, BBCP compared the estimated 1999 and 2000 fully diluted
earnings per share of American common stock on a stand-alone basis to the pro
forma equivalent fully diluted earnings per share of Hancock common stock which
would be received in the Merger. BBCP concluded that the Merger would result in
an earnings decrease of 12.11% in 1999 and 13.71% in 2000 for American
shareholders in the combined company.
BBCP also analyzed the impact of the Merger on the amount of fully diluted
book value represented by a share of American common stock. BBCP concluded that
the Merger would result in an increase of 1.5% in fully diluted book value on an
equivalent per share basis, respectively, for American shareholders pro forma as
of September 30, 1998.
Finally, BBCP compared the amount of dividends expected to be paid on a
share of American common stock before the Merger to the level expected to be
paid on a pro forma basis reflecting the Merger, pre-tax. BBCP concluded that
the Merger would result in a decrease of 35.8% in dividends per share for
American shareholders.
ANALYSIS OF SELECTED OTHER BANK MERGERS INVOLVING SOUTHEASTERN COMMUNITY
BANKS. BBCP reviewed seventeen mergers involving Louisiana community banks and
bank holding companies announced between January, 1997, and October, 1998. BBCP
noted in particular the prices paid in these mergers as a multiple of earnings
and book values and the transaction premiums paid in excess of tangible book
value as a percentage of core deposits. BBCP also reviewed other data in
connection with each of these mergers, including the amount of total assets and
14
<PAGE>
the capital level of the acquired institutions and the return on equity and the
return on assets of the acquired institutions. BBCP then compared this data to
that of American and to the value to be received by American shareholders in the
Merger.
This comparison yielded a range of transaction values as multiples of
latest twelve-months earnings per share of a low of 12.3 times and a high of
42.1 times and a median value of 19.0 times. The American multiple of adjusted
trailing earnings was 19.2 times. This calculation removes noncore bank earnings
relating to the sale of branches from trailing earnings. The calculations
yielded a range of transaction values as multiples of book value per share of a
low of 1.52 times to a high of 4.86 times and a median value of 2.52 times. The
American multiple of book value was 1.85 times. American has an equity/assets
ratio of 10.86%, an amount generally considered to be in excess of that
necessary for normal bank operations, which has the effect of decreasing its
book value multiple. Finally, the calculations yielded a range of deposit base
premiums paid from a low of 5.10% to a high of 39.9%, with a median value of
20.1%. The equivalent premium on American deposits represented by the Per Share
Purchase Price and Terms was 12.3%.
The Per Share Purchase Price and Terms were agreed upon after a market
decline in bank stock prices and a large decline in Hancock's stock price. As a
large component of the Merger Consideration is stock, Hancock's market price of
common stock affects the nominal value of the transaction. Using Hancock's
52-week high of $63.50 in calculating the Per Share Price and Terms would result
in multiples to book value, trailing earnings and core deposits for American of
2.27 times, 23.5 times and 18.2%, respectively.
No company or transaction used in the above analyses as a comparison is
identical to American, Hancock, or the Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not, in itself, a meaningful method of
using comparable company data.
In connection with its opinion dated the date of this Proxy Statement-
Prospectus, BBCP confirmed the appropriateness of its reliance on the analyses
used to render its September 25, 1998 opinion by performing procedures to update
certain of such analyses and by reviewing the assumptions on which such analyses
were based and the factors considered in connection therewith.
BBCP is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements, and
valuations for estate, tax, corporate and other purposes. American has paid BBCP
a fee of $25,000 in connection with its engagement. An additional fee of 1% of
the aggregate market value of the consideration received by American
shareholders plus 5% of the aggregate market value of the consideration received
by American shareholders in excess of a Base Valuation of $50 million, in the
case of Hancock not to exceed $350,000, will be payable to BBCP upon
consummation of the Merger. Based upon an assumed market price and value of a
share of Hancock common stock at the Effective Date of the Merger of $_____ (the
closing price of Hancock common stock on November __, 1998) this additional fee
would be approximately $350,000. If the Merger is not consummated, Hancock has
agreed to pay BBCP $100,000. No compensation payable to BBCP is contingent on
the conclusions reached in the opinion of BBCP. American has also agreed to
indemnify BBCP and certain related persons against certain liabilities relating
to or arising out of its engagement.
CLOSING
The closing of the Merger will take place on a date that is mutually agreed
to by Hancock and American that is within five days following the later of the
date of receipt of all applicable regulatory approvals, the expiration of all
applicable statutory and regulatory waiting periods, the date Hancock's
Registration Statement filed with the
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Securities and Exchange Commission is declared effective, and the date American
shareholders approve the Merger Agreement, or such later date as may be agreed
to by American and Hancock. Immediately upon consummation of the closing, or on
such other later date as the parties may agree, the Merger Agreement will be
filed with the respective Secretaries of State of Louisiana and Mississippi and
will thereupon become effective ("Effective Date").
EXCHANGE OF CERTIFICATES
Promptly after the Effective Date of the Merger, the Exchange Agent will
mail to each shareholder of American a letter of transmittal and instructions
for use in effecting the exchange of American Certificates for certificates for
shares of Hancock stock ("Hancock Certificates"), cash payments and cash in lieu
of fractional shares. SHAREHOLDERS OF AMERICAN ARE REQUESTED NOT TO SURRENDER
THEIR AMERICAN STOCK CERTIFICATES UNTIL THEY HAVE RECEIVED A LETTER OF
TRANSMITTAL AND FURTHER WRITTEN INSTRUCTIONS.
Upon surrender of an American Certificate 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 of greater than 25
shares of American stock will be entitled to receive in exchange therefor (1) a
Hancock Certificate for that number of whole shares of Hancock stock into which
his or her American stock were converted, cash in lieu of fractional shares, if
any, which such holder has the right to receive and (2) a check for the cash
payment, after giving effect to any required withholding tax. Holders of 25 or
fewer shares of American stock will receive a check representing the de minimus
holdings cash payment. No interest will be paid or accrued on the value of any
Hancock stock or cash payable to holders of American Certificates. If a transfer
of ownership of American stock is not registered in American's transfer records
but the American Certificate is presented to the Exchange Agent, ac companied by
all documents required to evidence such transfer and evidence that any
applicable stock transfer taxes have been paid, the Exchange Agent will either
(1) send the transferee a check for the cash payment for de minimus holdings or
(2) a Hancock Certificate for the proper number of shares of Hancock stock
together with a check for the cash payment and cash in lieu of fractional
shares, if any.
No dividends on Hancock stock into which shares of American stock were
converted will be paid until the American Certificate is surrendered as
described above. Subject to the effect of applicable laws, following surrender
of any such American Certificate, there will be paid to the holder of American
Certificates surrendered, except for de minimus shareholders, (1) at the time of
such surrender, the amount of dividends or other distributions with a record
date on or after the Effective Date theretofore payable with respect thereto and
not paid, less any applicable withholding taxes, and (2) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Date but prior to surrender, less applicable withholding
taxes. American Certificates surrendered for exchange by any "affiliate" of
American for purposes of Rule 145(c) under the Securities Act will not be
exchanged until Hancock has received a written agreement from such person as
provided in the Merger Agreement.
If any American Certificate has been lost, stolen or destroyed, upon the
making of an affidavit of that fact and, if required by Hancock, the posting of
a bond in such reasonable amount as Hancock may direct as indemnity against any
claim with respect to such American Certificate, the Exchange Agent will either
(1) send the transferee a check for the cash payment for de minimus holdings or
(2) a Hancock Certificate for the proper number of shares of Hancock stock
together with a check for the cash payment, cash in lieu of fractional shares,
if any, unpaid dividends, and distributions on shares of Hancock stock as
provided in the Merger Agreement.
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Federal Reserve Board ("FRB")
under the Bank Holding Company Act of 1956 (the "BHCA"), which requires the FRB,
when approving a transaction such as the Merger, to
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take into consideration the financial and managerial resources (including the
competence, experience and integrity of the officers, directors and principal
shareholders) and future prospects of the existing and proposed institutions and
the convenience and needs of the communities to be served. In considering
financial resources and future prospects, the FRB will, among other things,
evaluate the adequacy of the capital levels of the parties to a proposed
transaction.
The BHCA prohibits the FRB from approving a merger if it would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of the United
States, or if its effect in any section of the country would be substantially to
lessen competition or to tend to create a monopoly, or if it would in any other
manner result in a restraint of trade, unless the FRB finds that the anti-
competitive effects of a merger are clearly outweighed in the public interest by
the probable effect of the transaction in meeting the convenience and needs of
the communities to be served. In addition, under the Community Reinvestment Act
of 1977 the FRB must take into account the record of performance of the existing
institutions in meeting the credit needs of the entire community, including low-
and moderate-income neighborhoods, served by such institutions.
Applicable U. S. federal law provides for the publication of notice and
public comment on applications or notices filed with the FRB and authorizes such
agency to permit interested parties to intervene in the proceedings. If an
interested party is permitted to intervene, such intervention could delay the
FRB approval required for consummation of the Merger.
The Merger generally may not be consummated until 30 days (which may be
shortened to 15 days with the consent of the U. S. Department of Justice)
following the date of applicable United States federal regulatory approval,
during which time the U. S. Department of Justice may challenge the Merger on
antitrust grounds. The commencement of an antitrust action by the U. S.
Department of Justice would stay the effectiveness of the regulatory agency's
approval unless a court specifically ordered otherwise.
On June 8, 1998, Hancock filed with the FRB an application for approval of
the Merger. On September 29, 1997, the FRB was notified that the Merger
Agreement had been restructured. On October 8, 1998, the FRB approved the Merger
application. The applicable waiting period has expired. No other regulatory
approvals are required for consummation of the Merger.
Hancock and American are not aware of any governmental approvals or actions
that are required in order to consummate the mergers except as described herein.
Should such other approval or action be required, it is contemplated that
Hancock and American 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, and the
approval of the Merger Agreement by the shareholders of American, consummation
of the Merger Agreement is subject to the satisfaction of certain other
conditions on or before the Effective Date. Generally, such additional
conditions include, among others, the following: (1) the Proxy Statement-
Prospectus must have been filed with the Securities and Exchange Commission (the
"SEC"), and the Registration Statement of which it is a part must have been
declared effective by the SEC and not be the subject of any stop order or
proceedings seeking a stop order; (2) 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 (3)
American must have received from Watkins Ludlam Winter & Stennis, P.A., an
opinion of counsel as to certain tax aspects of the Merger.
The obligations of American and Hancock to effect the Merger are also
subject to other conditions as set forth in the Merger Agreement to the effect,
among others, as follows: (1) each of the representations and warranties of the
other parties set forth in the Merger Agreement is true and correct in all
material respects on and as of the
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Closing; (2) the other parties have in all material respects performed all
obligations required by the Merger Agreement to be performed before the Closing;
(3) that there has not been a material adverse change in the financial
condition, results of operations or business of the other parties; and (4) the
receipt of customary legal opinion of the others' counsel.
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE DATE
Pending consummation of the Merger Agreement, American has agreed to
conduct its business in the ordinary course consistent with prudent business
practices and in compliance with all applicable laws; and without Hancock's
prior consent, with certain exceptions, American will not, among other matters,
(1) amend its Articles of Incorporation or Bylaws, (2) sell, dispose of or
encumber any assets, issue or reacquire any stock, pay dividends (except as
described below under "INFORMATION ABOUT AMERICAN - Stock Prices and
Dividends"), (3) authorize any capital expenditure over $20,000, (4) extend any
new or renew any existing loan which individually exceeds $250,000, (5) adopt
any type of compensation or benefit plan for American or Bank officers or
employees, (6) grant any increase in compensation to any director, officer,
employee or representative of American except in the ordinary course of business
consistent with past practice, (7) enter into, amend, or terminate any
employment agreement, relationship or responsibilities with any director,
officer or key employee or representative of American or Bank, or (8) 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 that
before the Effective Date, American and Bank will terminate all employment
contracts with employees as described under "--Interest of Certain Persons."
WAIVER, AMENDMENT AND TERMINATION
American and Hancock may waive their respective rights under the Merger
Agreement if any such waiver is in writing. The Merger Agreement may be amended
or modified only upon written agreement of both American and Hancock.
The Merger Agreement may be terminated at any time on or before the
Effective Date (a) by mutual consent; (b) by either party (1) if the Merger has
not become effective on or before March 31, 1999, (2) if the other party has
breached any covenant, representation or warranty that reflects a material
adverse change in the financial condition of the other party, (3) if regulatory
approvals are not obtained, and (4) if the Merger Agreement is not approved by
the required vote of American's shareholders.
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
before the date of termination.
INTERESTS OF CERTAIN PERSONS
Certain officers of American and Bank have employment contracts which,
under the terms of the Merger Agreement, will be terminated on the Effective
Date in exchange for payments (the "Contract Payments") to the officers. In
addition, the Merger Agreement provides that certain officers will be paid
bonuses by Hancock ("Retention Bonuses") if they remain employed by Hancock, or
are terminated under certain circumstances, for six months after the Effective
Date and execute a noncompete agreement with Hancock. The following table shows
the amount of the Contract Payments and the Retention Bonuses.
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CONTRACT RETENTION
OFFICER PAYMENT BONUS
- ------- -------- ---------
Michael Rhodes $204,782 $102,391
John Fusilier 177,328 88,664
June Hamlin 62,075 31,037
Drouet Vidrine 65,460 32,730
Darryl Hebert 61,565 30,783
Anita Soileau 20,000 ---
George Comeau 10,000 20,000
From and after the Effective Date, Hancock has agreed to indemnify and hold
harmless each person who is an officer or director of American or Bank from
claims, based upon or arising from his capacity as an officer or director of
American or Bank, as the case may be, to the same extent he would have been
indemnified under the Articles of Incorporation and Bylaws of Hancock as they
were in effect on the date of the Merger Agreement as if he were an officer or
director of Hancock at all relevant times, up to an aggregate amount of $7.5
million.
EMPLOYEE BENEFITS
American's and Bank's Employee Stock Ownership Plan and 401(k) Plan
("Employee Plans") will remain operative and in effect through the Effective
Date. The Employee Plans will be terminated as of the Effective Date and
distributed to vested employees of American and Bank in accordance with the
terms of the Employee Plans after the normal and customary contributions have
been made consistent with past practices. 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.
All other American and Bank benefit plans will continue through the
Effective Date. Thereafter, all retained employees will be eligible to
participate in all Hancock Bank employment benefit plans not set forth above
based on the provisions set forth in the plans with full credit for all prior
service.
EXPENSES
Hancock and American have each agreed to pay their respective expenses
incurred in connection with or incidental to the Merger Agreement. Hancock is
responsible for preparing the applications, regulatory filings and Registration
Statement necessary to obtain approval of the Merger and the issuance of the
Hancock stock. American is responsible for the cost of its accountants and legal
counsel and will bear all costs related to conducting the Meeting and obtaining
shareholder approval of the Merger Agreement.
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STATUS UNDER FEDERAL SECURITIES LAWS; CERTAIN RESTRICTIONS ON RESALES OF
SECURITIES
The shares of Hancock stock to be issued pursuant to the Merger Agreement
have been registered under the Securities Act of 1933 ("Securities Act"),
thereby allowing such shares to be sold without restriction by shareholders of
American who are not deemed to be "affiliates" (as that term is defined in the
rules under the Securities Act) of American and who do not become affiliates of
Hancock. The shares of Hancock stock to be issued to affiliates of American 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. Hancock will not be obligated
and does not intend to register its shares under the Securities Act for resale
by shareholders who are affiliates.
Before the Effective Date, each affiliate of American will deliver to
Hancock a letter agreement pertaining to the limitations on the transferability
of such affiliate's shares of Hancock stock acquired in the Merger and whereby
such affiliate will agree, among other things, that he or she will not sell,
pledge, transfer, or otherwise dispose of such shares of Hancock stock in
violation of the Securities Act.
ACCOUNTING TREATMENT
It is intended that the Merger will qualify for purchase accounting
treatment under generally accepted accounting principles. Accordingly, the
earnings of American will be combined with the earnings of Hancock from and
after the Effective Date of the Company Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through charges to
income in future periods. In addition, assets and liabilities of American will
be recorded at fair value on the date of the transaction.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion of the principal federal income tax consequences
of the Merger is based on provisions of the Internal Revenue Code of 1986 (the
"Code"), the regulations thereunder, judicial authority, and administrative
rulings and practice as of the date hereof or before the Effective Date.
Consummation of the Merger is conditioned on the receipt by Hancock and American
of an opinion of counsel to Hancock to the effect that the Merger will be
treated, for federal income tax purposes, as a reorganization under
Section 368(a) of the Code.
PART STOCK AND PART CASH RECEIVED. If the consideration received by an
American shareholder consists of part cash and part Hancock common stock, a
shareholder whose adjusted basis in the shares of American common stock
surrendered in the transaction is less than the value, as of the Effective Date,
of the Hancock common stock plus the amount of cash received will realize a gain
on the transaction. Such shareholders will recognize gain equal to the lesser of
(i) the excess, if any, of the value, as of the Effective Date, of the Hancock
common stock plus the amount of cash received, over the adjusted basis of the
shares of American common stock surrendered in the transaction, or (ii) the
amount of cash received. The character of such recognized gain (i.e., as a
dividend or capital gain) will depend upon whether, on a shareholder-by-
shareholder basis, the exchange of American common stock for Hancock common
stock and cash has the effect of the distribution of a dividend. In this case,
there are two applicable tests for this determination: (i) a test to see if the
hypothetical redemption of Hancock common stock (discussed below) is
"substantially disproportionate" with respect to the shareholder, and (ii) a
test to determine whether the hypothetical redemption of Hancock common stock is
"not essentially equivalent to a dividend," with both tests taking into account
the constructive stock ownership rules of Section 318(a) of the Code. If either
one of these tests is met, the American shareholder will be entitled to capital
gain treatment.
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Under the above two tests, each American shareholder is treated first as
hypothetically receiving 100 percent Hancock common stock in the Merger,
followed immediately by a hypothetical redemption for cash of a portion of those
shares assumed received. This hypothetical cash redemption is deemed to reduce
the shareholder's ownership interest in Hancock to the number of Hancock shares
which are actually received in the Merger by an American shareholder. The
"substantially disproportionate" test is met if the number of shares of Hancock
common stock actually received by an American shareholder in the Merger is less
than 80 percent of the number of shares which would have been received had
solely stock been issued to him, thus entitling the shareholder to receive
capital gain treatment with respect to cash received by him, determined in the
manner discussed above.
If the "substantially disproportionate" test is not met, the gain will
nevertheless qualify for capital gain treatment if the "not essentially
equivalent to a dividend' test is met. Under analogous Internal Revenue Service
rulings and case law, this test will be met with respect to any shareholder (i)
who is a minority shareholder whose relative stock ownership in Hancock after
the Merger is minimal and who exercises no control over the affairs of Hancock,
and (ii) whose ownership interest in Hancock is substantially less (after
consideration of pre-existing ownership of Hancock common stock either directly
or through attribution) than what would have resulted in an exchange solely for
stock. The application of these rules pertaining to capital gains treatment is
dependent upon each American shareholder's particular facts and circumstances
and is affected by the above-mentioned attribution rules. Each American
shareholder should consult his tax advisor as to the tax effects of the Merger,
including the receipt of cash.
In the event a shareholder realizes a loss, under current tax laws, such
loss would not be currently allowed and would not be recognized for federal
income tax purposes. Such disallowed loss would be reflected in the adjusted tax
basis of the shares of Hancock common stock received in the Merger.
ALL CASH RECEIVED. If the consideration received by an American
shareholder consists entirely of cash (as in the case of those American
shareholders who own 25 or fewer American shares entitled to receive the De
Minimus Holdings Cash Payment), gain or loss will be recognized by the
shareholder to the extent of the difference between the amount of cash received
and the adjusted tax basis of the shares of American common stock surrendered in
the transaction. Any such gain or loss recognized will be treated as capital
gain or loss if the American common stock surrendered in the transaction were
held as capital assets and if after the exchange such shareholder is not treated
as constructively owning any Hancock common stock. In determining constructive
ownership, stock owned by a shareholder's spouse, children, grandchildren and
parent generally must be attributed to that shareholder. Stock owned by
partnerships, estates, trusts and certain corporations is attributed to the
partners, beneficiaries and shareholders in applying these rules. If a
shareholder's interest after application of these attribution rules has not been
completely terminated in the transaction, that shareholder may nevertheless
receive capital gain treatment under the "substantially disproportionate" or
"not essentially equivalent to a dividend" tests discussed above.
FRACTIONAL SHARES. To avoid the expense and inconvenience to Hancock of
issuing fractional shares, no fractional shares of Hancock common stock will be
issued pursuant to the Merger. Any American shareholder who receives cash
pursuant to the Merger in lieu of a fractional share interest will be treated as
having received such fractional share pursuant to the Merger, and then as having
exchanged such fractional share for cash, at $48.00 per share of Hancock common
stock, in a redemption by Hancock subject to the provisions and limitations of
Section 302(a) of the Code. If the Hancock common stock represents a capital
asset in the hands of the shareholder, then the shareholder will generally
recognize capital gain or loss on such a deemed redemption of the fractional
share in an amount determined by the difference between the amount of cash
received for such fractional share and the shareholder's tax basis in the
fractional share.
DISSENTERS. American's shareholders who perfect statutory appraisal rights
will be treated as having received the fair value of the American common stock,
as determined in the dissenters' rights proceeding, in
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redemption of the American common stock subject to the proceeding. Such deemed
redemption will be subject to the provisions and limitations of Section 302(a)
of the Code, with the result that a holder who exercises statutory dissenters'
rights will recognize gain or loss equal to the difference between the amount
realized and such holder's tax basis in the American common stock subject to the
proceeding. Any such gain or loss recognized on such redemption will be treated
as capital gain or loss if the American common stock with respect to which
statutory dissenters' rights were exercised were held as capital assets and if
after the deemed redemption, such shareholder does not constructively own any
Hancock common stock. Each American shareholder who contemplates exercising
statutory dissenters' rights should consult his tax advisor as to the
possibility that all or a portion of the payment received pursuant to the
exercise of such rights will be treated as dividend income.
BACKUP WITHHOLDING. Unless an exemption applies under the applicable law
and regulations, Hancock Bank Trust Department as the Exchange Agent, will be
required to withhold thirty-one percent (31%) of any cash payments to which a
shareholder or other payee is entitled pursuant to the Merger unless the
shareholder or other payee provides his taxpayer identification number (social
security number or employer identification number) and certifies that such
number is correct. Each shareholder and, if applicable, each other payee should
complete and sign the substitute Form W-9 included as part of the transmittal
letter so as to provide the information and certification necessary to avoid
backup withholding, unless an applicable exemption exists and is established in
a manner satisfactory to Hancock and the Exchange Agent.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER WITHOUT REGARD TO THE PARTICULAR FACTS AND
CIRCUMSTANCES OF EACH AMERICAN SHAREHOLDER. AMERICAN SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE COMPANY MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS.
DISSENTERS' APPRAISAL RIGHTS
If a shareholder of American who desires to perfect dissenters rights is
not timely in taking any of the following steps, the shareholder will lose the
right to dissent and the shares owned by such shareholder will be converted as
of the effective date into Hancock stock and cash, or cash in accordance with
the Merger Agreement.
Unless the Merger Agreement is approved by the holders of at least 80% of
the total voting power of American , Section 131 of the Louisiana Business
Corporation Law ("LBCL") allows a shareholder of American stock who objects to
the Merger Agreement and who complies with the provisions of that section to
dissent and to be paid the fair cash value of his shares of American stock as of
the day before the Meeting, as determined by agreement between the shareholder
and Hancock, or by the state district court for the Parish of Evangeline if the
shareholder and Hancock are unable to agree.
To exercise the right of dissent, a shareholder must (1) file with American
a written objection to the Merger Agreement before or at the Meeting, and (2)
vote his shares against the Merger Agreement at the Meeting. Neither a vote
against the Merger Agreement nor a specification in a proxy to vote against the
Merger Agreement will constitute the necessary written objection to the Merger
Agreement. Moreover, by voting in favor of the Merger Agreement, by abstaining
from voting on the Merger Agreement, or by returning the enclosed proxy without
instructing the proxy holders to vote against the Merger Agreement, a
shareholder waives his rights under Section 131.
If the Merger Agreement is approved by less than 80% of the total voting
power of American, and is subsequently completed, then promptly after the
Effective Date written notice of completion will be given to each
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shareholder who filed a written objection to and voted against the Merger
Agreement. Within twenty days of the mailing of such notice, the shareholder
must file with Hancock a written demand for payment of the fair cash value of
his shares as of the day before the Meeting and must state the amount demanded
and a post office address to which Hancock may reply. The shareholder also must
deposit the certificate(s) formerly representing his shares of American stock in
escrow with a bank or trust company located in Evangeline Parish, Louisiana.
With the above-mentioned demand, the shareholder must also deliver to Hancock
the written acknowledgment of such bank or trust company that it holds the
certificate(s), duly endorsed and transferred to Hancock, on the sole condition
that the certificate(s) will be delivered to Hancock upon payment of the value
of the shares in accordance with Section 131.
Unless the shareholder objects to and votes against the Merger Agreement,
demands payment, deposits his certificate(s) and delivers the required
acknowledgment in accordance with the above mentioned procedures and within the
time periods set forth above, the shareholder will conclusively be presumed to
have acquiesced to the Merger Agreement and will forfeit any right to seek
payment pursuant to Section 131.
If Hancock does not agree to the amount demanded by the shareholder, or
does not agree that payment is due, it will notify the shareholder within twenty
days after receipt of the shareholder's demand and acknowledgment, and state in
such notice the value it is willing to pay for the shares or its belief that no
payment is due. If the shareholder does not agree to accept the offered amount,
he must, within 60 days of receipt of such notice, file suit against Hancock in
the state district court for Evangeline Parish Louisiana for a judicial
determination of the fair cash value of the shares. Any shareholder entitled to
file such suit, within such 60-day period, but not thereafter, may intervene as
a plaintiff in any suit filed against Hancock by any other former American
shareholder for a judicial determination of the fair cash value of such other
shareholder's shares. If a shareholder fails to bring or to intervene in such a
suit within the applicable 60-day period, he will be deemed to have consented to
accept Hancock's statement that no payment is due or, if Hancock does not
contend that no payment is due, to accept the amount specified by Hancock in its
notice of disagreement. If, upon filing of any such suit or intervention,
Hancock deposits with the court the amount, if any, that it specified in its
notice of disagreement, and if in that notice Hancock offered to pay such amount
to the shareholder on demand, then the costs (not including legal fees) of the
suit or intervention will be taxed against the shareholder if the amount finally
awarded to him, exclusive of interest or costs, is equal to or less than the
amount so deposited; otherwise, the costs (not including legal fees) will be
taxed against Hancock.
Upon filing a demand for the value of his shares, a shareholder ceases to
have any rights as a shareholder except the rights created by Section 131. The
shareholder's demand may be withdrawn voluntarily at any time before Hancock
gives its notice of disagreement. Withdrawal of a demand thereafter requires the
written consent of Hancock. If withdrawn, or if the shareholder otherwise loses
his dissenters rights under Section 131, he will be restored to his rights as a
shareholder as of the time of filing his demand for fair cash value.
The foregoing summary of dissenters' rights under the LBCL is necessarily
incomplete and is qualified in its entirety by reference to Section 131 of the
LBCL.
INFORMATION ABOUT AMERICAN
PRINCIPAL BUSINESS
American conducts no business other than ownership of the Bank. At
September 30, 1998, American had total consolidated assets of approximately
$229.3 million and shareholders' equity of approximately $24.9 million. The Bank
provides traditional consumer and commercial deposit and loan services to
individuals, families and businesses in Evangeline, Rapides, Avoyelles, St.
Landry and Allen Parishes in Louisiana, through a full service
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main office and 17 branch offices. In addition to traditional bank services, the
Bank offers mortgage loans, and VISA/MasterCard; as well as ATM funding,
Electronic Fund Transfer Network sponsoring and clearing services. Bank's
deposits are insured by the FDIC. At September 30, 1998, Bank had total assets
of approximately $229.3 million and total deposit liabilities of approximately
$198.5 million.
COMPETITION
Bank's primary market area, the Louisiana Parishes of Evangeline, St.
Landry, Rapides, Avoyelles and Allen, has a current population of approximately
305,544.
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. Bank competes
with numerous other commercial banks, savings and loan associations and credit
unions for customer deposits, as well as with a broad range of financial
institutions in consumer and commercial lending activities. In addition to
thrift institutions, other businesses in the financial services industry compete
with Bank for retail and commercial deposit funds and for retail and commercial
loan business. Competition for loans and deposits is intense among the financial
institutions in Bank's primary market area, including those located in the
surrounding parishes.
Currently, all Louisiana state banks 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. Under recent federal banking legislation, banks have been allowed to
establish interstate branches since June 1, 1997.
SEASONALITY OF BUSINESS AND CUSTOMERS
Bank 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 Bank's loans is concentrated within a
single industry or group of related industries. Historically, the business of
Bank has not been seasonal in nature, and management of Bank does not anticipate
any seasonal trends in the future. Bank does not rely on foreign sources of
funds or income.
EMPLOYEES
As of the date of this Proxy Statement-Prospectus, American and Bank have,
in the aggregate, approximately 166 full-time employees. None of such employees
is represented by labor unions. Management of American considers its
relationship with its employees to be good.
PROPERTY
American and Bank have one office located in Ville Platte, Louisiana, which
houses the executive offices of American and the Bank and the Bank's main
office. The Bank also has 17 branch offices. All of the offices and the premises
on which they are located are owned by Bank, except 5 branch offices which are
leased.
STOCK PRICES AND DIVIDENDS
MARKET PRICES. There is no established public trading market for American
common stock. These securities are not traded on any exchange and are not quoted
on an automated system of a registered securities association. The most recent
transactions were two trades in March of 1998 of a total of 149 shares for $400
per share. No assurance can be given that these trades were effected on an
arm's-length basis. At the Record Date, there were 337 shareholders of record of
American stock.
24
<PAGE>
AMERICAN DIVIDENDS. American paid a cash dividend of $25.00 per share in
1997. Under the Merger Agreement, American is permitted to and intends to pay a
dividend before the Effective Date of a pro rata portion of $29.00 per share. In
addition, if the Effective Date occurs after the record date for payment of
dividends on Hancock stock declared after December 31, 1998, American is
permitted to and intends to pay a dividend equal to what American shareholders
would have received if they were shareholders of Hancock on such record date.
Otherwise, American is not permitted to pay dividends without Hancock's consent.
Hancock has historically paid quarterly cash dividends of $0.25 per share.
There is no assurance that Hancock will continue to pay dividends in any amount.
OWNERSHIP OF AMERICAN STOCK
The following tables set 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) of American stock for (1) each person who is
the beneficial owner of more than five percent of any class of the outstanding
voting securities of American; (2) each director and executive officer of
American; and (3) all directors and executive officers of American as a group.
Unless otherwise indicated, all shares indicated as beneficially owned are held
with sole voting and investment power.
NUMBER
NAME OF SHARES PERCENT
- ---- --------- -------
Drouet W. Vidrine 6,988 (1) 14.4
Jean P. Vidrine 1,175 (2) 2.4
Henri J. Vidrine 974 2.0
Pierre E. Vidrine 1,303 2.7
Jim Shipp, Jr. 100 *
Don Descant 100 *
Phillip Lemoine 174 *
Sarah Poret Webb 3,662 (2) (3) 7.6
Norbert Vidrine 192 (4) *
David Roberie 512 1.0
Michael Rhodes 693 (2) (5) 1.4
John Fusilier 116 (6) *
12 directors and executive
officers as a group 15,989 33.0
- -------------------
* Less than 1%.
(1) Mr. Vidrine's address is 901 E. Main Street, Ville Platte, LA 70586.
(2) Does not include 7,345 shares held by American's Employee Stock Ownership
Plan (the "ESOP"), of which Mr. Jean P. Vidrine, Ms. Webb and Mr. Rhodes
are the co-trustees. The ESOP shares will be voted at the Meeting by the
employees individually according to the number of shares allocated to their
respective accounts.
(3) Ms. Webb's address is P. O. Box 663, Ville Platte, LA 70586.
(4) Does not include 8,000 shares held by the Drouet Vidrine Trust, of which
Mr. Vidrine is one of three co-trustees.
(5) Includes approximately 511 shares allocated to his account in the ESOP.
(6) Includes approximately 55 shares allocated to his account in the ESOP.
-----------------------------
25
<PAGE>
MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion provides certain information concerning the
financial condition and results of operations of American as of and for the two
years ended December 31, 1997 and the nine months ended September 30, 1998. The
financial position and results of operations of American were due primarily to
its banking subsidiary, American Security Bank of Ville Platte, Inc.
Management's discussion should be read in conjunction with the financial
statements and accompanying notes presented elsewhere in this Proxy Statement-
Prospectus.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Overview. Net income for 1997 totaled $1,946,217 compared to $3,086,347
for 1996. The decrease in net income of $1,140,130 or 36.94% from 1996 to 1997
was caused by a non-recurring loss from ATM funding activities of $1,253,014, a
decrease in net interest income of $371,351, resulting primarily from a decease
in investment securities owned, an increase in the provision for loan losses of
$270,000, an increase in other operating expense of $1,270,444, resulting from a
$774,486 increase in salaries and benefits, a $103,705 increase in occupancy
expenses and a $392,253 increase in other non-interest expenses. These items
were partially offset by an increase in non-interest income of $1,348,153 and a
decrease in income tax expense of $676,526.
Return on average assets was 0.84% and return on average equity was 9.73%
for 1997, compared to 1.38% and 15.70%, respectively, for 1996.
Average assets in 1997 increased by $8,042,720, or 3.59%, from 1996. During
1997, there was an increase in average customer deposits of $12,577,420,
or 6.50%. The increase in average deposits was caused by increases in average
non-interest-bearing demand deposits of $9,270,375, average interest-bearing
demand deposits of $1,647,035 and average time deposits of $3,694,989, and was
partially offset by a decline in average savings deposits of $2,034,979. The
increase in average deposits along with the decrease in average mortgage-backed
and other investment securities of $4,416,073 helped to fund the increase in ATM
funding activities, which are not included in earning assets, and the changes in
other asset accounts.
The net interest margin, the percentage of net interest income to average
earning assets, decreased in 1997, from 5.37% to 5.17%. The net interest margin
of 5.17% in 1997 is favorable to American and is a reflection of the continued
low interest rates and healthy spread between rates on deposits and yields on
investments and loans. Average earning assets comprised 85.73% and 89.33% of
total average assets in 1997 and 1996, respectively.
RESULTS OF OPERATIONS. Net Interest Income. American's primary source of
revenue is net interest income. Net interest income is the difference between
interest earned on interest-earning assets and interest paid on interest-bearing
sources of funds. The level of net interest income is determined primarily by
the volume of interest-earning assets and the various spreads between the
interest-earning assets and their funding sources.
Net interest income for 1997 was $9,322,893, compared to $9,694,244 for
1996. The decrease of $371,351 or 3.83% from 1996 to 1997 was caused by the
decrease in average net interest-earning assets and the 0.20% decrease in the
net interest margin. The decrease in the net interest margin was due to lower
yields on all of American's interest earning assets. Average non-interest-
bearing deposits as a percent of total deposits increased 3.47% to 20.31% in
1997 from 16.84% in 1996.
Loans continued to be the largest component of earning assets. Total
average loans for 1997 were $113,031,081, or 56.88% of average earning assets.
The remaining earning assets of American were investment securities, its
position in federal funds sold and interest-earning deposits in another
institution. The yield on loans declined 0.36% from 1996 to 1997. The yield on
investment securities also declined 0.07% during that same period. The net yield
on total earning assets declined 0.18% from 1996 to 1997.
The following table presents the average balance sheets, net interest
income, yields earned and rates paid for each category of assets for each of the
periods indicated by setting forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of American from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average
26
<PAGE>
rate; (iii) net interest income; (iv) interest rate spread; and (v) net interest
margin. Information is based on average daily balances during the indicated
periods. Interest income on loans receivable and investment securities has been
adjusted by $291,059 in 1997 and $291,731 in 1996 to a tax equivalent amount
using an effective tax rate of 34% to reflect the effect of non-taxable interest
on yields. Interest income includes fees on loans of $656,064 in 1997 and
$755,919 in 1996. Average loans include non-accrual loans.
27
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
1997 1996
------------------------------------ ------------------------------------
(Dollars in thousands) Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
--------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $113,031 $11,909 10.54% $110,743 $12,068 10.90%
Investment securities 82,148 5,484 6.68% 86,564 5,843 6.75%
Federal funds sold and interest-earning
deposits 3,535 188 5.32% 2,557 145 5.67%
-------- ------- -------- -------
Total interest-earning assets 198,714 17,581 8.85% 199,864 18,056 9.03%
------- -------
Non-interest-earning assets 33,072 23,879
-------- --------
Total assets $231,786 $223,743
======== ========
Interest-bearing liabilities:
Deposits:
Demand $ 29,590 $ 570 1.93% $ 27,942 $ 532 1.91%
Money market 8,706 258 2.97% 10,559 313 2.96%
Savings 23,419 731 3.12% 23,601 735 3.11%
Time 102,357 5,484 5.36% 98,662 5,229 5.30%
-------- ------- -------- -------
Total interest-bearing deposits 164,072 7,043 4.29% 160,764 6,809 4.24%
Other interest-bearing liabilities 4,308 268 6.22% 8,979 506 5.64%
-------- ------- -------- -------
Total interest-bearing liabilities 168,380 7,311 4.34% 169,743 7,315 4.31%
------- -------
Non-interest-bearing demand deposits 41,817 32,547
Other non-interest-bearing liabilities 1,581 1,790
-------- --------
Total liabilities 211,778 204,080
Equity 20,008 19,663
-------- --------
Total liabilities and shareholders' equity $231,786 $223,743
======== ========
Net interest-earning assets $ 30,334 $ 30,121
======== ========
Net interest income/interest rate spread $10,270 4.51% $10,741 4.72%
======= =======
Net interest margin 5.17% 5.37%
Ratio of average interest-earning assets
to average interest-bearing liabilities 118.02% 117.75%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------
1998 1997
------------------------------------ ------------------------------------
(Dollars in thousands) Average Average
Average Yield/ Average Yield/
Balance Interest Cost(1) Balance Interest Cost(1)
--------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $106,125 $ 8,154 10.24% $ 113,033 $ 9,055 10.68%
Investment securities 75,092 3,656 6.49% 83,586 4,194 6.69%
Federal funds sold and
interest-earning deposits 3,333 137 5.48% 1,730 68 5.24%
-------- ------- --------- -------
Total interest-earning assets 184,550 11,947 8.63% 198,349 13,317 8.95%
------- -------
Non-interest-earning assets 53,431 33,948
-------- ---------
Total assets $237,981 $ 232,297
======== =========
Interest-bearing liabilities:
Deposits:
Demand $ 29,800 $ 434 1.94% $ 29,073 $ 418 1.92%
Money market 8,069 180 2.97% 8,821 195 2.95%
Savings 21,546 501 3.10% 23,365 545 3.11%
Time 94,535 3,748 5.29% 103,461 4,143 5.34%
-------- ------- --------- -------
Total interest-bearing deposits 153,950 4,863 4.21% 164,720 5,301 4.29%
Other Interest-bearing liabilities 4,420 207 6.24% 4,596 215 6.24%
-------- ------- --------- -------
Total interest-bearing liabilities 158,370 5,070 4.27% 169,316 5,516 4.34%
------- -------
Non-interest-bearing demand deposits 54,984 41,215
Other non-interest-bearing liabilities 1,550 1,621
-------- ---------
Total liabilities 214,904 212,152
Equity 23,077 20,145
-------- ---------
Total liabilities and shareholders' equity $237,981 $ 232,297
======== =========
Net interest-earning assets $ 26,180 $ 29,033
======== =========
Net interest income/interest rate spread $ 6,877 4.36% $ 7,801 4.61%
======= =======
Net interest margin 4.97% 5.24%
Ratio of average interest-earning assets to
average interest-bearing liabilities 116.53% 117.15%
</TABLE>
(1) Annualized
29
<PAGE>
Rate/Volume Analysis. The following table provides the components of
changes in net interest income in the format of a rate/volume analysis and
analyzes the dollar amount of changes in interest income and interest expenses
for major components of interest-earning assets and interest-bearing
liabilities. The table distinguishes between (i) changes attributable to rate
(changes in rate multiplied by the prior period volume); (ii) changes
attributable to volume (changes in volume multiplied by the prior period's
rate); (iii) total increase (decrease) (sum of the previous columns). Changes
that are not solely due to volume or rate are allocated among the rate and
volume categories.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1997/1996 1996/1995
---------------------------------- -------------------------------
Change Attributable To Change Attributable To
---------------------------------- -------------------------------
(Dollars in thousands) Total Total
Increase Increase
Volume Rate (Decrease) Volume Rate (Decrease)
---------- ------- ------------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 245 $(403) $(159) $1,623 $ 131 $1,754
Investment securities (296) (63) (359) (23) 323 300
Other interest-earning assets 54 (11) 43 (179) 8 (171)
----- ----- ----- ------ ------ ------
Total net change in income on
interest-earning assets 3 (477) (475) 1,421 462 1,883
Interest-bearing liabilities:
Interest-bearing deposits:
Demand 48 (64) (17) 79 235 314
Savings (45) 41 (4) (27) (286) (313)
Time 197 58 255 416 (416) 0
Other interest-bearing liabilities (277) 39 (238) 150 (150) 0
----- ----- ----- ------ ------ ------
Total net change in expense on
interest-bearing liabilities (77) 74 (4) 618 (617) 1
----- ----- ----- ------ ------ ------
Net change in net interest income $ 80 $(551) $(471) $ 803 $1,079 $1,882
===== ===== ===== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------
1998/1997
--------------------------------------------------------
Change Attributable To
--------------------------------------------------------
(Dollars in thousands)
Volume Rate Total Increase (Decrease)
--------- -------- -----------------------------
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable $(542) $(359) $ (901)
Investment securities (420) (118) (538)
Other interest-earning assets 64 5 69
----- ----- -------
Total net change in income on
interest-earning assets (898) (472) (1,370)
Interest-bearing liabilities:
Interest-bearing deposits:
Demand 11 5 16
Savings (59) 0 (59)
Time (356) (39) (395)
Other interest-bearing liabilities (8) 0 (8)
----- ----- -------
Total net change in expense on
interest-bearing liabilities (412) (34) (446)
Net change in net interest income $(486) $(438) $ (924)
===== ===== =======
</TABLE>
30
<PAGE>
Interest Rate Sensitivity. The interest rate sensitivity gap is the
difference between the amount of interest-earning assets and interest-bearing
liabilities maturing in any given time frame. A primary objective of
asset/liability management is to maximize net interest margin while not
subjecting American to significant interest rate risk in periods of rising or
falling interest rates. At December 31, 1997, American's one year repricing gap,
defined as repricing assets minus repricing liabilities as a percentage of total
assets, was 34.62%, i.e. more of American's liabilities than assets reprice
within a one year time frame. Management regularly reviews interest rate
exposure to analyze the impact of changes in market interest rates on net
interest income.
The following table sets forth American's interest rate sensitivity at
various time intervals as of December 31, 1997. (Non-accrual loans and corporate
stock are not included.) Generally, when rate sensitive liabilities exceed rate
sensitive assets, the net interest margin is expected to be positively affected
during periods of decreasing interest rates and negatively affected during
periods of increasing rates.
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY
(Dollars in thousands) Within Three to More than More than
three twelve one year to three to five Over five
months months three years years years Total
---------- ------------ --------------- ----------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ 36,430 $ 12,058 $ 14,442 $ 22,433 $ 23,395 $108,758
Investment securities (fair value) 8,720 14,862 10,147 20,201 23,892 77,822
Other earning assets 1,870 0 0 0 0 1,870
-------- -------- -------- -------- -------- --------
Total interest-earning assets 47,020 26,920 24,589 42,634 47,287 188,450
-------- -------- -------- -------- -------- --------
Interest-bearing liabilities:
Deposits:
Interest-bearing demand 33,650 0 0 0 0 33,650
Savings 32,333 0 0 0 0 32,333
Time 36,776 50,569 8,436 1,480 0 97,261
Other interest-bearing liabilities 0 0 0 0 3,396 3,396
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities 102,759 50,569 8,436 1,480 3,396 166,640
-------- -------- -------- -------- -------- --------
Excess (deficiency) of interest-
earning assets over interest-
bearing liabilities (55,739) (23,649) 16,153 41,154 43,891 21,810
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities (55,739) (79,388) (63,235) (22,081) 21,810
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities as a
percent of total assets (24.31%) (34.62%) (27.58%) (9.56%) 9.58%
</TABLE>
Provisions for Loan Losses. The provision for loan losses is the amount
that is added to the allowance for loan losses, by a charge against earnings, in
order to maintain a balance in the allowance that is deemed by management to be
adequate to absorb the inherent risk of future loan losses in the loan
portfolio. The provision for loan losses charged to operating expense is the
result of a continuing review and assessment of the loan portfolio, taking into
consideration the history of charge-offs in the loan portfolio by category, the
current economic conditions in the lending area , the payment history, the
ability to repay and strength of collateral of specific borrowers, and other
relevant factors. The 1997 provision is $1,490,000, compared to $1,220,000 in
1996. Actual charge-offs, net of recoveries were $1,359,383 in 1997, and
$857,414 in 1996 . The increase was due to charge-offs on a small number of
loans. Since the provision exceeded net charge-offs in all years presented
except 1993, the result was an increase in the allowance for loan losses in all
years presented except 1993.
31
<PAGE>
Non-Interest Income. Non-interest income in 1997 totaled $5,849,952
compared to $4,501,799 in 1996. The increase from 1996 to 1997 was caused mostly
by an increase in ATM funding and electronic banking revenue of $1,191,321. The
largest component of non-interest income in 1997 was service charge income,
which accounted for 41.32% of total non-interest income and increased $219,768
in 1997. Other non-interest income increased $41,717. The increases were
partially offset by decreases in fee income on loans of $99,855 and in net
realized gain on sale of "available for sale" securities of $4,798.
Non-Interest Expenses. Non-interest expenses were $11,040,084 in 1997,
compared to $8,516,626 in 1996. Salaries and related benefits increased $774,486
from 1996 to 1997 while occupancy expenses increased $103,705 from 1996 to 1997.
Other operating expenses increased by $392,253. The largest change in non-
interest expenses from 1996 to 1997 was a non-recurring loss of $1,253,014 from
ATM funding activities recognized in 1997.
American provides funding for several ATMs owned by individual operators
throughout the United States. Losses were recognized in 1997 due to a
contractual violations by a small number of operators. American is presently
seeking restitution for most of these losses.
Income Taxes. American's effective tax rate was 26.36% in 1997, and 30.79%
in 1996. The effective rate is less than the highest statutory rate primarily
because of tax-free income from municipal investments.
ANALYSIS OF FINANCIAL CONDITION. Investment Securities. In 1997 average
investment securities which include mortgage-backed securities, decreased by
$4,416,073 from 1996. The decrease was primarily used to provide cash for the
increase in the ATM funding activities during 1997. The total fair value of
investment securities at December 31, 1997 was $79,687,500, including gross
unrealized gains of $866,691 and gross unrealized losses of $81,923. American
classifies its securities as either "available for sale" or "held to maturity"
at the time they are purchased. Securities which ASB has the ability and intent
to hold to maturity are classified as "held to maturity" and are stated at
amortized cost. All other securities are classified as "available for sale" and
are stated at fair value with net unrealized gains and losses reflected as a
separate component of shareholders' equity, net of estimated income tax effects.
"Available for sale" securities may be sold prior to maturity in response to
liquidity needs, market interest rate changes, or other factors. The investment
securities portfolio provides a means of managing interest rates and interest
rate sensitivity, and also serves as a source of collateral on certain deposits.
93.07% of the investment portfolio is classified as "available for sale" at
December 31, 1997. American has no "trading" portfolio.
Securities Portfolio. The carrying amount of securities at the dates
indicated is set forth in the table below:
<TABLE>
<CAPTION>
December 31,
September 30, ------------------------------------------------------
1998 1997 1996
------------------------ ------------------------------------------------------
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government agencies $62,158 86.23% $67,735 85.17% $68,902 85.92%
State and municipal securities 9,051 12.56% 10,087 12.68% 9,580 11.95%
Corporate stocks 874 1.21% 1,710 2.15% 1,710 2.13%
------- ------ ------- ------ ------- -----
Total $72,083 100.00% $79,532 100.00% $80,192 100.00%
======= ====== ======= ====== ======= ======
</TABLE>
32
<PAGE>
Investment Securities Maturity Distribution. The amortized cost and
estimated fair market value of debt securities "available for sale" and "held to
maturity" at December 31, 1997, by contractual maturity, are shown below.
Expected maturities may differ because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
(Dollars in thousands)
Amortized Cost Fair Value
------------------ --------------
<S> <C> <C>
Securities available for sale:
Due in one year or less $ 9,468 $ 9,484
Due from one to five years 29,505 29,998
Due from five to ten years 26,559 26,620
Due after ten years 7,856 7,915
------------------ --------------
$73,388 $74,017
======= =======
------------------ --------------
Amortized Cost Fair Value
------------------ --------------
Securities to be held to maturity:
Due in one year or less $ 1,243 $ 1,247
Due from one to five years 2,704 2,793
Due from five to ten years 1,567 1,630
Due after ten years 0 0
------------------ --------------
$ 5,514 $ 5,670
======= =======
</TABLE>
Loans. American engages in commercial and industrial, real estate
(residential and non-residential), and consumer lending. Underwriting criteria
for each major loan category is outlined in detail in a formal written loan
policy that is approved by the board of directors. In general, each loan is
evaluated based on such things as the character and repayment capacity of the
borrower, the borrower's investment in a particular property (when applicable),
cash flow, the nature and value of collateral, general market conditions for the
borrower's business or projected and prevailing economic trends. American's loan
policy is changed periodically as considered appropriate to address regulatory
changes and other changes considered necessary by management. Each change is
approved by the board of directors before it becomes a part of the loan policy.
The loan policy and underwriting criteria are regularly reviewed by management
and external examiners to determine compliance with banking regulations and
sound lending principals. American's loan portfolio generally consists of loans
made to customers in the areas where its branches are located.
Net loans outstanding at December 31, 1997 totaled $108,941,320 compared to
$111,858,095 in 1996, a decrease of $2,916,775 or 2.61%. Total average loans in
1997 were $113,031,081, an increase of $2,287,760 or 2.07% from total average
loans of $110,743,321 for 1996. There were no major concentrations in the loan
portfolio to any one customer or industry classification.
The following table sets forth the composition of American's loan portfolio
by type of loan at the dates indicated.
<TABLE>
<CAPTION>
LOAN PORTFOLIO COMPOSITION
December 31,
September 30, ----------------------------------------------------------
1998 1997 1996
-------------------------- ----------------------------------------------------------
(Dollars in thousands) Percent of Percent of Percent of
Balance Total Balance Total Balance Total
----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $ 54,046 53.24% $ 55,875 51.29% $ 54,674 48.88%
Installment loans 29,234 28.80% 28,821 26.46% 28,085 25.11%
Mortgage loans 15,942 15.70% 19,244 17.66% 22,052 19.71%
Other loans 5,147 5.07% 6,672 6.12% 8,587 7.68%
----------- ------------ ----------- ------------ ----------- ------------
Total loans 104,369 102.81% 110,612 101.53% 113,398 101.38%
Allowance for loan loss (2,855) (2.81)% (1,671) (1.53)% (1,540) (1.38)%
----------- ------------ ----------- ------------ ----------- ------------
Total loans, net $101,514 100.00% $108,941 100.00% $111,858 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------------
1995 1994 1993
-------------------------- --------------------------- ---------------------------
(Dollars in thousands) Percent of Percent of Percent of
Balance Total Balance Total Balance Total
----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $ 44,745 44.18% $29,594 36.23% $36,584 49.14%
Installment loans 23,937 23.64% 22,940 28.09% 25,188 33.84%
Mortgage loans 23,821 23.52% 22,516 27.57% 8,372 11.25%
Other loans 9,940 9.82% 7,432 9.10% 5,083 6.83%
----------- ------------ ----------- ------------ ----------- ------------
Total loans 102,443 101.16% 82,482 100.99% 75,227 101.06%
Allowance for loan loss (1,178) (1.16)% (807) (0.99)% (786) (1.06)%
----------- ------------ ----------- ------------ ----------- ------------
Total loans, net $101,265 100.00% $81,675 100.00% $74,441 100.00%
======== ====== ======= ====== ======= ======
</TABLE>
Commercial loans is the largest category of loans, comprising of 51.29% and
48.88% of net loans at December 31, 1997 and 1996, respectively.
At December 31, 1997 and 1996, fixed rate loans totaled $76,164,801 and
$72,858,309, respectively, and variable rate loans totaled $34,447,424 and
$40,540,074, respectively.
Non-Performing Assets. Non-performing assets include non-performing loans
and foreclosed assets held for sale. Non-performing loans include loans
classified as non-accrual or renegotiated to provide a reduction or deferral of
interest or principal and those past due 90 days or more on which interest is
still being accrued because the loan is both well secured and in the process of
collection. It is the general policy of American to place loans on non-accrual
status when, in the opinion of management, there exists sufficient uncertainty
as to the collectibility of the contractual interest or principal. Placing a
loan on non-accrual status causes an immediate charge against earnings for the
interest accrued but uncollected in the current fiscal year and a charge against
the loan loss reserve for accrued but uncollected interest attributable to prior
periods. Interest earnings are not recognized on such loans until the principal
is collected or until the loan is returned to performing status because it is
well secured and in the process of collection.
Non-performing assets decreased $734,112 during 1997 to $4,598,403 at
December 31, 1997. The decrease is attributable to a decrease in foreclosed real
estate and non-performing loans.
Non-accrual loans are loans on which the accrual of interest income has
been discontinued and previously accrued interest has been reversed because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
34
<PAGE>
The following table sets forth information with respect to non-performing
assets identified by American, including non-accrual loans, foreclosed assets
and troubled debt restructurings at the dates indicated:
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS
(Dollars in thousands) December 31,
September 30, -----------------------
1998 1997 1996
------ ------- ------
<S> <C> <C> <C>
Non-accrual loans:
Commercial $2,797 $1,314 $ 1,218
Installment 157 213 221
Mortgage 360 327 481
------ ------ -------
Total non-accrual loans 3,314 1,854 1,920
Accruing loans past due ninety days or more:
Commercial 857 93 418
Installment 138 250 349
Mortgage 80 228 281
------ ------ -------
Total accruing loans past due ninety days or more 1,075 571 1,048
Total non-performing loans 4,389 2,425 2,968
Other real estate owned 1,048 1,993 2,220
Other foreclosed assets 74 180 144
------ ------ -------
Total non-performing assets $5,511 $4,598 $ 5,332
====== ====== =======
Non-performing assets to net loans and
foreclosed assets 5.37% 4.14% 4.67%
Allowance for loan losses to total loans at
end of period 2.74% 1.51% 1.36%
Allowance for loan losses to non-performing assets 51.81% 36.34% 28.88%
</TABLE>
<TABLE>
<CAPTION>
(Dollars in thousands) December 31,
----------------------------------------
1995 1994 1993
------ ------- ------
<S> <C> <C> <C>
Non-accrual loans:
Commercial $ 877 $ 823 $ 257
Installment 272 217 46
Mortgage 549 245 200
------ ------ ------
Total non-accrual loans 1,698 1,285 503
Accruing loans past due ninety days or more:
Commercial 81 205 312
Installment 273 47 126
Mortgage 346 46 171
------ ------ ------
Total accruing loans past due ninety days or more 700 298 609
Total non-performing loans 2,398 1,583 1,112
Other real estate owned 2,075 2,394 2,815
Other foreclosed assets 132 29 67
------ ------ ------
Total non-performing assets $4,605 $4,006 $3,994
====== ====== ======
Non-performing assets to net loans and
foreclosed assets 4.45% 4.76% 5.17%
Allowance for loan losses to total loans at
end of period 1.15% 0.98% 1.04%
Allowance for loan losses to non-performing assets 25.58% 20.14% 19.68%
</TABLE>
35
<PAGE>
Allowance for Loan Losses. Inherent in American's lending activities is the
risk that loan losses will be experienced, that the risk of loss will vary with
the type of loan being made and the creditworthiness of the borrower over the
term of the loan. To reflect the currently perceived risk of loan loss
associated with American's loan portfolio, provisions are made to the allowance
for loan losses. The allowance is created by direct charges against income and
is available for loan losses. American charges to operating expense an amount
(provision) that is considered necessary to maintain the allowance for loan
losses at a level that it considers to be adequate to offset all anticipated
loan losses. The determination of the adequacy of the allowance is the result of
a continual monitoring and assessment of loan quality reviews, loan growth,
changes in the composition of the loan portfolio, concentrations of credit,
general economic factors, the financial condition of the borrowers and their
ability to repay the loan and the value and liquidity of collateral. The amount
of the allowance is reviewed by management through weekly special assets
meetings and monthly by the board of directors to evaluate its adequacy and
determine if additional provisions should be made. Between such reviews ,
management generally assures that the level of the allowance is maintained at no
less than the amount last approved by the board of directors. American maintains
an allowance for loan losses which it believes is adequate to absorb reasonably
foreseeable losses in the loan portfolio.
The allowance for loan losses increased $130,617 from December 31, 1996 to
1997, to $1,670,905 and was 1.51% of total loans. The 1996 balance in the
allowance for loan losses was $1,540,288 or 1.36% of total loans.
The following table summarizes the loan loss experience for each of the
periods indicated:
<TABLE>
<CAPTION>
ALLOWANCE FOR LOAN LOSSES
September 30, December 31,
------------------------
(Dollars in thousands) 1998 1997 1996
----------------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $1,671 $1,540 $1,178
Provisions charged to expense 1,340 1,490 1,220
Total charge-offs (255) (1,458) (962)
Total recoveries 99 99 104
----------------- ---------- ----------
Net loan charge-offs (156) (1,359) (858)
----------------- ---------- ----------
Balance at end of period $2,855 $1,671 $1,540
====== ====== ======
Allowance for loan losses to total loans at
end of period 2.74% 1.51% 1.36%
Allowance for loan losses to total non-
performing assets 51.81% 36.34% 28.88%
Allowance for loan losses as a multiple of
net loan charge-offs 18.30 1.23 1.79
Net loan charge-offs to average loans 0.15% 1.22% 0.78%
Recoveries as a percentage of charge-offs 38.82% 6.79% 10.81%
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
(Dollars in thousands) 1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $ 807 $ 786 $ 910
Provisions charged to expense 1,060 335 240
Total charge-offs (833) (418) (510)
Total recoveries 144 104 146
------ ------- ------
Net loan charge-offs (689) (314) (364)
------ ------- ------
Balance at end of period $1,178 $ 807 $ 786
====== ======= ======
Allowance for loan losses to total loans at 1.15% 0.98% 1.04%
end of period
Allowance for loan losses to total non-
performing assets 25.58% 20.14% 19.68%
Allowance for loan losses as a multiple of
net loan charge-offs 1.71 2.57 2.16
Net loan charge-offs to average loans 0.73% 0.40% 0.54%
Recoveries as a percentage of charge-offs 17.29% 24.88% 28.63%
</TABLE>
Deposits. Total deposits at December 31, 1997 were $202,564,320, an
increase of $2,745,835 from the December 31, 1996 total of $199,818,485. Average
deposits in 1997 increased $12,577,420 from 1996. As noted earlier, an increase
occurred in the average balance of non-interest-bearing demand deposits,
interest-bearing demand deposits, and time deposits, and was partially offset by
decreases in the average balances of savings deposits.
Time deposits of $100,000 or more were $22,286,878 at December 31, 1997,
which comprised 11.00% of total deposits. These deposits consist primarily of
deposits from customers with which American has other banking relationships.
American had no brokered deposits at December 31, 1997.
Deposit Average Balances and Rates. The following table indicates the
average daily amount of deposits and rates on such deposits for the periods
indicated:
<TABLE>
<CAPTION>
September 30, December 31,
------------------------------ -------------------------------------------------------------
1998 1997 1996
------------------------------ ----------------------------- -----------------------------
(Dollars in thousands) Amount Rate Percent of Amount Rate Percent of Amount Rate Percent of
Total Total Total
-------- ----- ----------- -------- ----- ------------ -------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest-bearing demand $ 54,984 0.00% 26.32% $ 41,817 0.00% 20.31% $ 32,547 0.00% 16.84%
Interest-bearing demand 29,800 1.94% 14.26% 29,590 1.93% 14.37% 27,943 1.91% 14.45%
Money market 8,069 2.97% 3.86% 8,706 2.97% 4.23% 10,559 2.96% 5.46%
Savings 21,546 3.10% 10.31% 23,419 3.12% 11.37% 23,601 3.11% 12.21%
Time 94,535 5.29% 45.25% 102,357 5.36% 49.72% 98,662 5.30% 51.04%
-------- ------ -------- ------ -------- ------
Total $208,934 100.00% $205,889 100.00% $193,312 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
37
<PAGE>
Maturities of Time Deposits of $100,000 or More. The maturities of time
deposits of $100,000 or more are summarized in the table below:
<TABLE>
<CAPTION>
September 30, December 31,
-----------------
1998 1997 1996
------------- ------- -------
(Dollars in thousands) Amount Amount Amount
------------- ------- -------
<S> <C> <C> <C>
Three months or less $ 8,476 $11,218 $ 9,774
Over three months through twelve months 11,670 8,453 14,685
Over one year through three years 2,191 2,216 2,108
Over three years 200 400 101
------- ------- -------
Total $22,537 $22,287 $26,668
======= ======= =======
</TABLE>
Liquidity. Liquidity involves American's ability to raise funds to support
asset growth or to reduce assets, meet deposit withdrawals and borrowing needs,
maintain reserve requirements and otherwise operate American on an ongoing
basis. The primary functions of asset and liability management as it relates to
a financial institution are to provide sufficient liquidity to react to normal
volatility in funding sources and to insulate net interest margins from adverse
effect that may be wrought by major fluctuations in interest rates while
maximizing net interest earnings. Liquidity reflects American's ability to meet
daily demands for funds from its customers and to meet other financial
commitments. Management monitors liquidity requirements as warranted by
interest rate and economic trends, changes in the scheduled maturity and
interest rate sensitivity of the investment and loan portfolios, and changes in
the maturity and perceived interest rate sensitivity of deposit accounts.
Management attempts to match (within acceptable risk guidelines established by
the board of directors) rate-sensitive assets and rate-sensitive liabilities in
order to minimize exposure from adverse fluctuations in interest rates and
maximize net interest earnings through periods of changing interest rates.
At September 30, 1998 American has available on a line of credit at the
Federal Home Loan Bank $22,130,543 to advance for assistance in liquidity needs.
The tables contained in this document indicate that the bulk of American's
deposits are due on demand or that they are time certificates that are generally
due within one year. However, historically the time certificates generally roll
over and the deposit base is core deposits that are stable.
As shown in the accompanying 1997 statement of cash flows, cash and cash
equivalents increased by $3,992,874 from December 31, 1996 to December 31, 1997.
Cash and cash equivalents were generated primarily by proceeds from the sale of
securities of $23,357,449, a net increase in customer deposits of $2,745,835 and
a net decrease in loans of $1,426,775. In addition, operating activities
provided net cash of $6,617,898. Offsetting these increases were investment
securities purchases of $22,489,988, a net increase in short-term investments of
$1,777,239 and purchases of premises and equipment for $344,980.
Capital Resources. American is subject to regulatory "risk-based" capital
guidelines. In the risk-based capital computation, all assets are weighted
based upon assigned risk factors, and certain off-balance sheet items are
included, such as loan commitments and standby letters of credit. Tier 1
capital includes common shareholder equity and perpetual preferred stock,
subject to certain limitations. Tier 2 capital includes Tier 1 capital plus the
reserve for loan losses and subordinate debt, subject to certain limitations.
American maintains adequate capital for regulatory purposes and has
sufficient capital to absorb the risks inherent in the business. Risk-based
capital requirements have been established that weight different assets
according to the level of risk associated with those types of assets. The table
below summarizes American's capital levels at the dates indicated:
<TABLE>
<CAPTION>
December 31,
September 30, --------------- Regulatory
1998 1997 1996 Minimums
------------ ------ ------ -----------
<S> <C> <C> <C> <C>
Tier 1 capital to average assets 10.07% 9.03% 8.66% 4%
Tier 1 capital to risk-weighted assets 16.55% 15.65% 14.63% 4%
Total capital to risk-weighted assets 18.52% 16.95% 15.79% 8%
</TABLE>
38
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997
The following discussion provides certain information concerning the
financial condition and results of operations of American as of September 30,
1998 and 1997 and for the nine months then ended. The financial position and
results of operations of American were due primarily to its banking subsidiary,
American Security Bank of Ville Platte, Inc. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) which are necessary
for a fair presentation of results of operations for such nine month periods
have been made. Management's discussion should be read in conjunction with the
financial statements and accompanying notes presented elsewhere in this Proxy
Statement-Prospectus.
OVERVIEW. Net income for the nine months ended September 30, 1998 totaled
$3,698,308 compared to $1,813,793 for the same period in 1997.
Return on average assets was 2.07% and return on average equity was 21.37%
for the nine months ended September 30, 1998 compared to 1.04% and 12.00%,
respectively, for the comparable period in 1997.
RESULTS OF OPERATION. Net Interest Income. American's primary source of
revenue is net interest income. Net interest income is the difference between
interest earned on interest-earning assets and interest paid on interest-bearing
sources of funds. The level of net interest income is determined primarily by
the volume of interest-earning assets and the various rate spreads between the
interest-earning assets and their funding sources.
Net interest income for the nine months ended September 30, 1998 totaled
$6,060,872, a decrease of $864,073, or 12.48%, from the $6,924,945 total for the
comparable period in 1997. The decrease in net interest income was attributable
to a decrease in total interest income of $1,310,400 and a decrease in total
interest expense of $446,327.
Average interest-earning assets for the nine months ended September 30, 1998
were $184,549,873 and represented 77.55% of average total assets. Decreases in
total average loans outstanding of $6,907,798 and average investment securities
of $8,493,292, partially offset by increases in federal funds sold of $1,587,177
and interest-earning deposits of $14,881 resulted in a decrease in average
interest-earning assets of $13,799,032 from September 30, 1997.
As of September 30, 1998, non-interest-bearing demand deposits averaged
$54,984,460 or 26.32% of average deposits compared to $41,214,960 or 20.01% of
average deposits at September 30, 1997. The large percentage of non-interest-
bearing deposits has a positive impact on American's net interest margin.
Net interest margin, the ratio of net interest income to average earning
assets, for the nine months ended September 30, 1998 decreased to 4.97%, a
decrease of 27 basis points from September 30, 1997. The decrease in net
interest margin from September 30, 1997 to September 30, 1998 primarily resulted
from a decrease in the yields on loans and investment securities.
Net interest spread, the difference between the yield on earning assets and
the rate paid on interest-bearing liabilities was 4.36% for the nine months
ending September 30, 1998, a decrease from September 30, 1997 of 25 basis
points.
39
<PAGE>
Interest Rate Sensitivity. The interest rate sensitivity gap is the difference
between the amount of interest-earning assets and interest-bearing liabilities
maturing in any given time frame. A primary objective of asset/liability
management is to maximize the net interest margin while not subjecting American
to significant interest rate risk in periods of rising or falling interest
rates. At September 30, 1998 American's one year repricing gap, defined as
repricing assets minus repricing liabilities as a percentage of total assets,
was 26.78%, i.e. more of American's liabilities than assets reprice within a one
year time frame. Management regularly reviews interest exposure to analyze the
impact of changes in market interest rates on net interest income.
The following table details American's interest rate sensitivity position at
various time intervals as of September 30, 1998. (Non-accrual loans and
corporate stocks are not included.)
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY
(Dollars in thousands) Within Three to More than More than
three twelve one year to three years to Over
months months three years five years five years Total
--------- --------- -------------- -------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $31,209 $ 11,846 $ 14,835 $ 17,917 $25,248 $101,055
Investment securities (fair
value) 12,304 16,630 8,236 14,932 19,107 71,209
Other earning assets 4,591 0 0 0 0 4,591
--------- --------- -------- -------- ------- --------
Total interest-earning assets 48,104 28,476 23,071 32,849 44,355 176,855
--------- --------- -------- -------- ------- --------
Interest-bearing liabilities:
Deposits:
Interest-bearing demand 21,265 0 0 0 0 21,265
Savings 30,596 0 0 0 0 30,596
Time 33,595 52,525 8,541 2,089 0 96,750
Other interest-bearing
liabilities 0 0 0 0 3,098 3,098
--------- --------- -------- -------- ------- --------
Total interest-bearing
liabilities 85,456 52,525 8,541 2,089 3,098 151,709
--------- --------- -------- -------- ------- --------
Excess (deficiency) of
interest-earning assets
over interest-bearing
liabilities (37,352) (24,049) 14,530 30,760 41,257 25,146
Cumulative excess
(deficiency) of interest-
earning assets over interest-
bearing liabilities (37,352) (61,401) (46,871) (16,111) 25,146
Cumulative excess (deficiency)
of interest-earning assets
over interest-bearing
liabilities as a percent of
total assets (16.29%) (26.78%) (20.44%) (6.98%) 9.72%
</TABLE>
Provision for Possible Loan Losses. The provisions for possible loan losses
charged to operating expense is the result of a continuing review and assessment
of the loan portfolio, taking into consideration the impact of economic
conditions on the borrower's ability to repay, past collection experience, the
risk characteristics of the loan portfolio and such other factors which deserve
current recognition. As of September 30, 1998, the provision for possible loan
losses totaled $1,340,000 compared to $1,430,000 for the same nine month period
in 1997. The decrease in the provision for the nine months ended September 30,
1998 was determined from management's monitoring of the amount in the allowance
for loan losses.
Non-Interest Income. Non-interest income for the nine months ended September
30, 1998 totaled $7,892,106 compared to $4,388,332 for the same period in 1997.
The increase was the result of a $2,500,510 non-recurring gain on the sale of
two branch banking locations, a $769,009 increase in ATM funding activities
income and an increase in other income of $474,517. These increases were
partially offset by decreases in fee income of $50,320 and service charge income
of $189,942.
40
<PAGE>
Non-Interest Expense. For the nine months ended September 30, 1998, non-
interest expenses decreased $395,636 or 18.91% from the same period in 1997.
Decreases of $552,123 in salaries and employee benefits and $24,078 in net
occupancy expenses occurred and were offset by an increase of $180,565 in other
operating expenses.
Income taxes. American's effective tax rate was 35.03% for the nine month
period ended September 30, 1998 compared to 29.33% for the same period in 1997.
Income tax provision increased $1,240,821 for the current nine month period.
ANALYSIS OF FINANCIAL CONDITION. Investment Securities. Average investment
securities for the nine months ended September 30, 1998 were $75,092,431, or
41.25%, of average earning assets compared to $82,148,025 or 41.34% at December
31, 1997. Total investment securities at September 30, 1998 were $72,082,886
including gross unrealized gains of $1,319,524 and gross unrealized losses of
$94,219. The investment securities portfolio is used to make investments of
various maturities in order to improve the overall earning asset yield. It also
serves as a source of liquidity and as collateral to secure certain types of
deposits. Most of American's investment securities are classified as "available
for sale". The remainder are classified as "held to maturity". American has no
securities classified as "trading". The composition of the portfolio,
effectively managed, limits American's exposure to changes in interest rates and
economic conditions as they occur.
Securities Portfolio. The carrying amount of investment securities as of
September 30, 1998 is included with the Securities Portfolio table in the year
end comparison subsection.
Loans and Non-Performing Assets. The loan portfolio is the largest component
of American's earning assets. For the nine months ended September 30, 1998,
total average loans outstanding were $106,124,929 compared to $113,031,081 at
December 31, 1997. The amounts of loans outstanding according to types of loan
as of September 30, 1998 are included in the Loan Portfolio Composition table in
the year end comparison subsection.
The largest segment of American's loan portfolio is commercial loans which
represent approximately 53.24% of net loans as of September 30, 1998. As of
December 31, 1997 commercial loans comprised 51.29% of net loans.
Non-accrual, restructured and ninety days past due loans and other real
estate owned as of September 30, 1998 are summarized in the Non-Performing
Assets table in the year end comparison subsection. Also, several ratios that
measure American's level of non-performing assets are included in such table.
Total non-performing assets at September 30, 1998 were 2.56% of total assets.
This is a 0.57% increase from total non-performing assets at December 31, 1997.
The increase is primarily attributable to an increase in non-accrual loans.
Non-accrual loans are loans on which the accrual of interest income has been
discontinued and previously accrued interest has been reversed, because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
Allowance for Loan Losses. The loan loss experience for the nine months
ended September 30, 1998 and the two years ended December 31, 1997 is summarized
in the Allowance for Loan Losses table in the year end comparison subsection.
At September 30, 1998 the allowance for possible loan losses was $2,854,518
as compared to $1,670,905 at December 31, 1997. The allowance as a percent of
total loans outstanding was 2.74% and 1.51% as of September 30, 1998 and
December 31, 1997, respectively. For the nine month period ending September 30,
1998, charge-offs exceeded recoveries by $156,387.
Deposits. Total deposits at September 30, 1998 were $195,754,793, which is
$6,809,527 or 3.36% lower than at December 31, 1997.
41
<PAGE>
Time deposits of $100,000 or more were $22,536,967 at September 30, 1998.
These deposits consist primarily of deposits from local customers with which
American has other banking relationships. American had no brokered deposits at
September 30, 1998.
Deposit Average Balances and Rates. The average daily amount of deposits and
rates paid on such deposits as of September 30, 1998 is included with the
Deposit Average Balances and Rates table in the year end comparison subsection.
Maturities of Time Deposits of $100,000 or More. The maturities of time
deposits of $100,000 or more as of September 30, 1998 is included with the
Maturities of Time Deposits of $100,000 or More table in the year end comparison
subsection.
Liquidity. Liquidity is the ability of American to fund the needs of its
borrowers, depositors and creditors. American's management maintains a strategy
that provides adequate liquidity and manages interest rate risk. American's
liquidity sources, including cash flows from sales, maturities and paydowns of
loans and investment securities, federal funds purchased, securities sold under
agreements to repurchase and a base of core deposits, are considered adequate to
meet liquidity needs for normal operations.
Capital Resources. American is required to comply with the risk-based
capital guidelines adopted by the FDIC. Those guidelines apply weighting
factors which vary according to the level of risk associated with each asset
category. As of September 30, 1998, American exceeds all minimum capital
ratios. American's consolidated regulatory capital ratios as of September 30,
1998 are included with the Capital Resources in the year end comparison.
INFORMATION ABOUT HANCOCK
GENERAL
Hancock is a multi-bank holding company headquartered in Gulfport,
Mississippi with total consolidated assets of approximately $2.7 billion at
September 30, 1998. Hancock operates a total of 80 banking offices and 115
automated teller machines in the States of Mississippi and Louisiana through two
wholly owned bank subsidiaries: Hancock Bank, Gulfport, Mississippi ("Hancock
Bank MS") and Hancock Bank of Louisiana, Baton Rouge, Louisiana ("HBLA").
Both Hancock Bank MS and HBLA 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 HBLA's operating strategy is to provide their
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.
MERGER ACTIVITY
In November 1996, Hancock acquired Community Bancshares, Inc. which owned
100% of the stock of Community State Bank. This acquisition expanded Hancock's
market to the Hammond, Louisiana area, where many of the people who are employed
in East Baton Rouge Parish reside.
On January 17, 1997, Hancock acquired Southeast National Bank, Hammond,
Louisiana ("Southeast"). The acquisition was in return for approximately
$3,700,000 cash and 121,000 shares of Hancock common stock. The acquisition was
accounted for using the purchase method. Southeast had total assets of
approximately $40,000,000 and shareholders' equity of approximately $4,000,000
as of December 31, 1996 and net earnings of approximately $500,000 for the year
then ended.
42
<PAGE>
On July 15, 1997, Hancock acquired Commerce Corporation, St. Francisville,
Louisiana ("Commerce"), which owned 100% of the stock of Bank of Commerce and
Trust Company, for approximately $330,000 cash, 65,000 shares of common stock
and the assumption of $1,250,000 in debt. The acquisition was accounted for
using the purchase method. Commerce had total assets of approximately
$29,000,000 and shareholders' equity of approximately $800,000 at December 31,
1996 and net earnings of approximately $260,000 for the year then ended.
Hancock's regulatory capital at December 31, 1997, both on a historical basis
and after giving pro forma effect to the Merger, as of that date, substantially
exceeds all current minimum regulatory requirements.
COMMON STOCK PRICES AND DIVIDENDS
Hancock's common stock trades on the Nasdaq Stock Market under the symbol
"HBHC" and is listed in newspapers under Nasdaq market quotations under
"HancHd." The following table sets forth the high and low sale prices of
Hancock's common stock as reported on the Nasdaq Stock Market. These prices do
not reflect retail mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDENDS
SALE SALE PAID
------------ --------- --------------
<S> <C> <C> <C> <C>
1998
1st Quarter $62.75 $58.87 $0.25
2nd Quarter $63.50 $52.50 $0.25
3rd Quarter $55.50 $45.25 $0.25
4th Quarter (through November __) $____ $_____ $____
1997
1st Quarter $42.50 $39.25 $0.25
2nd Quarter $49.00 $39.50 $0.25
3rd Quarter $51.50 $46.00 $0.25
4th Quarter $63.25 $50.12 $0.25
1996
RESTATED* ACTUAL CASH
----------------------------------- DIVIDENDS PAID
1st Quarter $32.83 $31.09 $0.22 $0.25
2nd Quarter $35.22 $31.09 $0.22 $0.25
3rd Quarter $35.00 $31.52 $0.22 $0.25
4th Quarter $42.50 $32.61 $0.22 $0.25
</TABLE>
*The figures presented have been restated to reflect the effect of a 15% stock
dividend in 1996.
CHANGE OF CONTROL
Certain provisions of the Hancock Articles of Incorporation and Bylaws may
have the effect of preventing, discouraging or delaying any change in control of
Hancock which may (or may not) be in the best interest of the majority of the
shareholders.
SUPERMAJORITY VOTE. The Hancock Articles of Incorporation ("Hancock
Articles") contain provisions regarding the vote required to approve certain
business combinations or other significant corporate transactions involving
Hancock 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 Hancock or a
disposition of all or substantially all of its assets. Hancock's Articles raise
the required affirmative
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vote to 80% of the total number of votes entitled to be cast to approve these
and other significant transactions ("business combinations") if a "Substantial
Shareholder" (as defined) is a party to the transaction or its percentage equity
interest in Hancock will be increased by the transaction. Two-thirds of the
whole Board of Directors ("Hancock Board") may, in all such cases, determine not
to require such 80% vote, but only if a majority of the directors making such
determination are "Continuing Directors" (as defined). Such determination may
only be made before the Substantial Shareholder in question achieves such
status.
A "Substantial Shareholder" generally is defined as the "beneficial owner" of
more than 10% of the outstanding shares of stock of Hancock entitled to vote in
the election of directors ("voting shares"). "Beneficial ownership" generally
is defined in accordance with Rule 13d-3 under the Exchange Act, and a
Substantial Shareholder is also deemed to beneficially own 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 Hancock.
A "business combination" includes, but is not limited to, a merger or
consolidation involving Hancock or any of its subsidiaries and a Substantial
Shareholder; a sale, lease or other disposition of a "substantial part" of the
assets of Hancock or any of its subsidiaries (i.e., assets constituting in
excess of 10% of the book value of the total consolidated assets of Hancock) to
a Substantial Shareholder; an issuance of equity securities of Hancock or any of
its subsidiaries to a Substantial Shareholder for consideration aggregating $5
million or more; a liquidation or dissolution of Hancock; and a reclassification
or recapitalization of securities of Hancock 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 Hancock or such subsidiary.
The foregoing provisions may not be amended or repealed without the
affirmative vote of 80% or more of the votes entitled to be cast by all holders
of voting shares (which 80% 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 Shareholder).
The supermajority voting provisions may have the effect of discouraging any
takeover or change in control of Hancock. If the holders of a majority of
Hancock's outstanding common stock desire a takeover or change in control, and
if such takeover or change in control is opposed by Hancock management, the
above provisions could be used to thwart the desires of such majority.
DIRECTORS. The Hancock Articles provide that the number of Hancock directors
shall be fixed from time to time by Bylaw adopted by a majority of the Hancock
Board (but in no event less than nine). Under the Mississippi Business
Corporation Act ("MBCA"), the Hancock Board may only increase or decrease by 80%
or less the number of directors last approved by the shareholders; the
shareholders must approve any proposal by the Hancock Board to increase or
decrease by more than 30% the number of directors last approved by the
shareholders. These provisions may not be amended or repealed without the
approval of the holders of two-thirds of the outstanding Hancock stock.
The Hancock Board may consist of not less than nine persons, as set from time
to time by the Hancock Board, and currently consists of nine members. The
Hancock Board 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.
These provisions may have the effect of making it more difficult for
shareholders to replace or add directors, or to otherwise influence actions
taken by directors, which may discourage attempts to acquire control of Hancock
which may (or may not) be in the best interest of the majority of the
shareholders.
SHAREHOLDER STOCK PURCHASE RIGHTS. On February 21, 1997 the Hancock Board
declared a dividend of one common stock purchase right (a "Right") for each
outstanding share of Hancock's stock. In addition, all shares of
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Hancock stock issued since this date, including shares issued in the Merger,
have been or will be accompanied by a Right. Each Right entitles the registered
holder, subject to the terms of the Rights Agreement, to purchase from Hancock
one share of stock. See "DESCRIPTION OF HANCOCK CAPITAL STOCK -- Common Stock
Purchase Rights."
The Rights are not currently exercisable, but will become exercisable at an
exercise price of 50% of the current market price of the Hancock stock upon the
public announcement that a person or group of persons has acquired 10% or more
of the outstanding Hancock stock (the "Stock Acquisition Date"), or upon the
announcement or commencement of a tender or exchange offer, without the prior
approval of Hancock's Board if at any time following the Stock Acquisition Date
(i) Hancock is acquired in a merger of other business combination and Hancock is
not the surviving corporation, (ii) any person or group effects a share exchange
or merger with Hancock and all or part of Hancock's stock is converted or
exchanged for securities, cash, or property of any other person or group, (iii)
50% or more of Hancock's assets or earning power is sold or transferred (any of
such events also being a "Triggering Event"), then, in each such case, each
holder of a Right shall have the right to receive, upon exercise, that number of
shares of common stock of the Acquiring Person purchasable for the Purchase
Price at a price of 50% of the current market value of such shares. The Rights
are generally designed to deter coercive takeover tactics and to encourage all
persons interested in potentially acquiring control of Hancock to treat each
shareholder on a fair and equal basis.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Hancock on
terms not approved by Hancock's Board. The Rights should not interfere with any
merger of other business combination approved by the Hancock Board prior to the
time that a person or group has acquired, or obtained the right to acquire,
beneficial ownership of 10% or more of the Hancock stock, or has been determined
to be an Adverse Person, because until such time the Rights may be redeemed by
Hancock at $0.01 per Right.
DESCRIPTION OF HANCOCK CAPITAL STOCK
AUTHORIZED AND OUTSTANDING STOCK
As of September 30, 1998, the authorized capital stock of Hancock under its
Articles of Incorporation ("Hancock Articles") consists of 75,000,000 shares of
Hancock stock, of which 10,910,570 shares were outstanding including treasury
shares and/or restricted shares totalling 433,173 shares. Assuming consummation
of the Merger Agreement without any of American's shareholders exercising their
dissenters' appraisal rights and reissue of all treasury shares, Hancock will
have approximately 11,172,300 shares of common stock outstanding.
VOTING RIGHTS
The holders of Hancock stock are each entitled to one vote per share on all
matters brought before shareholders.
DIVIDEND RIGHTS
The holders of stock are entitled to receive such dividends as may be
declared, from time to time, by the Hancock Board out of funds legally available
therefor. Substantially all of the funds available to Hancock for payment of
dividends on the Hancock stock are derived from dividends paid by its
subsidiaries. The payment of dividends by Hancock is subject to the
restrictions of Mississippi law applicable to the declaration of dividends by a
business, under which no distribution may be made if, after giving it effect (1)
Hancock would not be able to pay its debts as they become due in the usual
course of business; or (2) Hancock's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if Hancock were to
be dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distributions.
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Additionally, the Federal Reserve Board 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.
PREEMPTIVE RIGHTS
The holders of Hancock stock do not have any preemptive or preferential right
to purchase or to subscribe for any additional shares of Hancock stock that may
be issued.
FULLY PAID AND NONASSESSABLE
The shares of Hancock stock presently outstanding, and those shares of
Hancock stock to be issued in connection with the Merger Agreement 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 Hancock, whether
voluntary or involuntary, the holders of Hancock stock will be entitled to share
ratably in any of the net assets or funds which are available for distribution
to shareholders 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 Hancock Articles provide that a director shall not be liable to Hancock
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
intentional infliction of harm on Hancock 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
Hancock'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 Hancock,
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 willful 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 Hancock 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 willful 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 Hancock
pursuant to the foregoing provisions, Hancock has been informed that in the
opinion of the Securities and Exchange 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 Hancock stock is Hancock Bank
MS.
CHANGES IN CONTROL
See "INFORMATION ABOUT HANCOCK -- Changes in Control."
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COMMON STOCK PURCHASE RIGHTS
Attached to each share of Hancock stock held by a registered holder is a
common stock Purchase Right. Each Right entitles the registered holder, subject
to the terms of the rights agreement, to purchase from Hancock one share of
common stock in the event of a change in control. See "INFORMATION ABOUT
HANCOCK --Changes in Control."
COMPARISON OF RIGHTS OF SHAREHOLDERS
If the Merger Agreement is consummated, shareholders of American, other than
those exercising dissenter's rights, will become shareholders of Hancock, and
their rights as shareholders will be governed by the Hancock Articles and
Bylaws, rather than the Articles of Incorporation ("American Articles") and
Bylaws of American. The rights of Hancock's shareholders are governed by the
Hancock Articles and Bylaws and the laws of Mississippi. The rights of
American's shareholders are governed by the American Articles and Bylaws and the
laws of Louisiana, including the Louisiana Business Corporation Law ("LBCL").
The following is a brief summary of the principal differences between the rights
of shareholders of Hancock and the shareholders of American. This summary is
qualified in its entirety by reference to the Hancock Articles and Bylaws,
American Articles and Bylaws, the LBCL and the Mississippi Business Corporation
Act ("MBCA").
AUTHORIZED CAPITAL
American has 90,000 shares of authorized common stock. Hancock has
75,000,000 shares of authorized common stock.
BOARD OF DIRECTORS
American Board is composed of such number of persons up to 30 elected by the
shareholders annually. American Board currently consists of 7 members.
Directors are elected for one year terms of office each year or until their
successors are chosen and qualified.
The Hancock Board may consist of not less than nine persons, as set from time
to time by the Hancock Board, and currently consists of nine members. The
Hancock Board 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. See "INFORMATION ABOUT HANCOCK - Changes In Control."
REMOVAL OF DIRECTORS
Under the LBCL, at any meeting of shareholders called expressly for that
purpose any director or the entire American Board may be removed, with or
without cause, by a vote of the holders a majority of the shares then entitled
to vote in the election of directors. A director of Hancock may be removed from
office only for cause, by the affirmative vote of a majority of directors
present.
AMENDMENT OF THE ARTICLES OF INCORPORATION
American Articles may be amended by holders of a majority of its outstanding
stock. 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
Hancock Articles unless the amendment would amend provisions relating to certain
changes in control, in which case 80% or more of the votes entitled to be cast
is required, or unless the amendment would amend the Hancock
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Articles relating to size, composition and removal of the Hancock Board, in
which case the approval of the holders of not less than two-thirds of the
outstanding Hancock common stock is required.
AMENDMENT OF BYLAWS
The Bylaws of American and the LBCL provide that the bylaws may be amended by
a two-thirds vote of the directors present at a regular meeting of directors,
subject to the right of the shareholders to repeal any bylaws so made.
Although certain provisions of Hancock's Bylaws relating to changes in
control and the size, composition and removal of the Hancock Board require a
vote of 80% of the total voting power and a vote of two-thirds of the
outstanding common stock, respectively, the remaining provisions of Hancock's
Bylaws may be amended or repealed by the Hancock Board, if a quorum is present,
by the affirmative vote of a 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.
MEETINGS OF SHAREHOLDERS
Under American's Bylaws and the LBCL, a special meeting of the shareholders
may be called at any time by the President, the Board of Directors, or the
holders of not less than 20% of the outstanding stock.
Under Hancock'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 meeting must be signed and dated by the shareholder(s) requesting the
special meeting and must state the purpose of the meeting, and be delivered to
the corporation's Secretary. Business transacted at a special meeting of the
shareholders is confined to the purpose(s) stated in the notice.
REPORTS TO SHAREHOLDERS
The Hancock stock is registered under the Exchange Act, and, therefore,
Hancock 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. Hancock also provides
reports to its shareholders on an interim basis containing unaudited financial
information. American stock is not registered under the Exchange Act, and
American does not provide its shareholders with annual reports containing
audited financial statements of American.
DIVIDENDS
The sources of funds for payments of dividends by American and Hancock are
their subsidiaries. Because the primary subsidiaries of American and Hancock
are financial institutions, payments made by such subsidiaries of American and
Hancock to their shareholders are limited by law and regulations of the bank
regulatory authorities.
The LBCL provides that a board of directors may declare dividends in cash,
property or shares out of surplus (except earned surplus reserved by the board)
except: (1) when the corporation is insolvent or would thereby become insolvent,
or (2) when such would be contrary to restrictions in the corporation's Articles
of Incorporation. If no surplus is available, dividends may be paid out of net
profits for current or preceding fiscal years, under certain restrictions. 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 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.
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REDEMPTION AND RETIREMENT OF SHARES
A Louisiana corporation cannot purchase or redeem its shares when it is
insolvent, or at a price, in the case of shares subject to redemption, exceeding
the redemption price thereof, or when its net assets are less than, or such
purchase would reduce its net assets below, the aggregate amount payable on
liquidation upon any issued shares having a preferential right to participate in
the assets in the event of liquidation which remain after the purchase or
redemption and cancellation of any shares in connection with the purchase or
redemption. Without submitting such purchase to a vote of the shareholders of
the corporation, the corporation is authorized to purchase, directly or
indirectly, its own shares to the extent of the aggregate of the unrestricted
surplus available therefor, and to the extent of stated capital as will not
reduce stated capital below the aggregate allocated value of the issued shares
remaining after the purchase of its shares.
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
permit otherwise, the amount that would be needed to satisfy the preferential
rights upon dissolution of shareholders 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.
REVERSION OF UNCLAIMED DIVIDENDS
American's Articles provide that any and all cash, property or share
dividends, shares issuable to shareholders in connection with a reclassification
of stock, and the redemption price of redeemed shares, which are not claimed by
the shareholders entitled thereto within a reasonable time (not less than one
year in any event) after the dividend or redemption price became payable or the
shares became issuable, despite reasonable efforts by the corporation to pay the
dividend or redemption price or deliver the certificates for the shares to such
shareholders within such time, shall, at the expiration of such time, revert in
full ownership to the corporation, and the corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided that the Board of Directors may, at any time, for any
reason satisfactory to it, but need not, authorize (a) payment of the amount of
any cash or property dividend or redemption price or (b) issuance of any shares,
ownership of which has reverted to the corporation pursuant to the provision of
this Article, to the entity who or which would be entitled thereto had such
reversion not occurred. The Hancock Articles and Bylaws have no provisions
regarding reversion.
SHAREHOLDERS INSPECTION RIGHTS
Under the LBCL and the Louisiana Banking Law, upon at least five days'
written notice, any shareholder, except a business competitor, who is and has
been the holder of record of at least two percent of the outstanding shares of
any class of a corporation for at least six months has the right to examine, in
person or by agent or attorney, at any reasonable time, for any proper and
reasonable purpose, any and all of the records and accounts of the corporation
and to make extracts therefrom. Louisiana law allows two or more shareholders,
each of whom has been a holder of record for six months, whose aggregate
holdings equal five percent to inspect the records. Under the 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
shareholders' 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
American's Articles provide that directors shall not be personally liable to
American for monetary damages except for (1) breach of the director's duty of
loyalty to the corporation or its shareholders, (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of the
law, (3) any unlawful dividend
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<PAGE>
or any other unlawful distribution, payment or return of assets made to
shareholders, or (4) any transactions from which the director derived an
improper personal benefit. In the event that Louisiana law hereafter authorizes
state banks to further limit or eliminate the personal liability of directors,
then the liability of each director shall be limited or eliminated to the full
extent permitted by Louisiana law as amended.
The Hancock Articles provide that a director shall not be liable to Hancock
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
intentional infliction of harm on Hancock 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
American's Articles permit it to indemnify directors, officers and employees
it or any person serving as a director, officer or employee of another
corporation at American's request and may maintain liability insurance for such
persons as, and to the extent, permitted by the LBCL.
The LBCL permits American to indemnify any person who is or was a party or is
threatened to be made a party to any action, suit, proceeding, whether civil,
criminal, administrative, or investigative. This includes any action by or in
the right of the corporation (a "derivative action"), by reason of fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee,
or agent, against expenses (including attorney's fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit, or proceeding if the director acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation. With respect to any criminal action or proceeding, the
director must show that he or she had no reasonable cause to believe his or her
conduct was unlawful.
In the case of derivative actions, LBCL limits the indemnity to expenses
(including attorney's fees) and amounts paid in settlement not exceeding, in the
judgment of the Board of Directors, the estimated expense of litigating the
action to conclusion, actually and reasonably incurred in connection with the
defense or settlement of such action.
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 certain actions
that do not constitute gross negligence or willful misconduct if authorized by
the corporation's Articles.
The Hancock Articles provide for indemnification to the fullest extent
permitted by the MBCA and specifically provide for the further indemnity
authorized by the MBCA. The Hancock Articles provide that Hancock shall
indemnify any person who was or is a party to, or is threatened to be made a
party to, any threatened pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative or otherwise, formal or
informal (a "Proceeding"), by reason of the fact that such person is or was a
director, officer, employee or agent of Hancock against any obligation to pay a
judgment, settlement, penalty, fine or reasonable expenses (including legal
fees) incurred with respect to the Proceeding: (A) to the fullest extent
permitted by the MBCA and (B) despite the fact that such person has failed to
meet the standard of conduct set forth in the MBCA, or would be disqualified for
indemnification under the Act for any reason, if a determination is made by (i)
the Hancock Board or a committee duly designated by it, consisting of two or
more directors not at the time parties to the Proceeding, (ii) by special legal
counsel, (iii) by the shareholders or (iv) by a court, that the acts or
omissions of the director, officer, employee or agent did not constitute gross
negligence or willful misconduct. However, Hancock may not indemnify a person
for: (i) an intentional infliction of harm on Hancock or its shareholders; (ii)
a violation of
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Mississippi Code Annotated Section 79-4-8.33 (1972), as amended; or for (iii) an
intentional violation of criminal law, nor may it indemnify a person for receipt
of a financial benefit to which he is not entitled unless ordered by a court
under Mississippi Code Annotated, Section 79-4-8.54(9)(3). The Hancock Articles
further provide that Hancock shall indemnify a person in connection with a
proceeding by or in the right of Hancock for reasonable expenses incurred in
connection with the Proceeding if such acts or omissions do not constitute gross
negligence or willful misconduct, and shall make further indemnification in
connection with the Proceeding if so ordered by a court under Mississippi Code
Annotated, Section 79-4-8.54(9)(3).
Hancock, upon request, shall pay or reimburse such person for his reasonable
expenses (including legal fees) in advance of final disposition of the
Proceeding as long as: (i) such person furnishes Hancock a written undertaking,
executed personally or on his behalf, to repay the advance if he is not entitled
to mandatory indemnification under Mississippi Code Annotated, Section 79-4-8.52
and it is ultimately determined by a judgment or other final adjudication that
his acts or omissions did constitute gross negligence or willful misconduct,
which undertaking must be an unlimited general obligation of such person, and
which shall be accepted by Hancock without reference to the financial ability of
the person to make repayment or to collateral; (ii) such person furnishes a
written affirmation of his good faith that his acts or omissions did not
constitute gross negligence or willful misconduct; and (iii) a determination is
made by any of the determining bodies that the facts then known to those making
the determination would not preclude indemnification under the Hancock Articles.
Under the LBCL, a corporation may pay, prior to final disposition, the
expenses (including attorneys' fees) incurred by a director or officer in
defending a proceeding. Under Louisiana 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. Louisiana law does not require the undertaking to be secured
and the undertaking may be accepted without reference to financial ability to
make the repayment.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Hancock
pursuant to the foregoing provisions, Hancock 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.
SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS
American's Articles and Bylaws do not have supermajority voting requirements
for business combinations or other matters. Hancock's Articles contain
provisions regarding the vote required to approve certain business combinations
or other significant corporate transactions involving Hancock and a substantial
shareholder, as described under "INFORMATION ABOUT HANCOCK -- Changes in
Control."
The LBCL places restrictions on "business combinations" (generally including
mergers, consolidations, share exchanges, sales and leases of assets, issuances
of securities, and similar transactions) by Louisiana corporations with an
"interested shareholder" (generally the beneficial owner of 10% or more of the
voting power of the then outstanding voting stock). The restrictions generally
apply to business combinations of Louisiana corporations having greater than 100
beneficial owners of its stock or which did not have an interested shareholder
on January 1, 1985, unless the articles of incorporation expressly provide
otherwise. They generally do not apply if specified conditions are met,
including a combination that the shareholders receive in the business
combination consideration for their shares of stock in the corporation that is
no less than the highest of several different standards, one of which is that
the consideration to be paid must be no less than the highest price as the
interested shareholder paid for shares of stock in the corporation acquired by
such interested shareholder within two years of such business combination, or if
the business combination is recommended by the Board and approved by the
affirmative vote of at least each of the following: (i) 80% of the votes
entitled to be cast by outstanding shares of voting stock voting together as a
single voting group and (ii) two-thirds of the votes entitled to be cast by
holders of voting stock, other than voting stock held by the interested
shareholder who is a party to the business combination, voting together as a
single voting group.
51
<PAGE>
Under other provisions of the LBCL (the "Control Share Law"), a person who
acquires shares in certain Louisiana corporations (including American) and as a
result increases such person's voting power in the corporation to or above any
of three threshold levels (i.e., 20%, 33 1/3%, and 50%), acquires the voting
rights with respect to such shares only to the extent granted by a majority in
voting interest of the pre-existing, disinterested shareholders of the
corporation. Certain acquisitions of shares are exempted from the provisions of
the Control Share Law, including acquisitions pursuant to a merger,
consolidation, or share exchange agreement to which the corporation is a party.
DISSENTERS' APPRAISAL RIGHTS
The LBCL provides appraisal rights to shareholders in connection with mergers
and consolidations and the sale, lease or exchange of all of the corporation's
assets, if such are approved by less than 80% of its total voting power.
Appraisal rights are not available under the LBCL in the case of: (1) a sale
pursuant to a court order; (2) a sale for cash requiring distribution of all or
substantially all of the net proceeds to shareholders in accordance with their
respective interests within one year of the date of the sale; and (3)
shareholders holding shares of any class of stock which, at the record date
fixed to determine shareholders entitled to receive notice of and to vote at the
meeting of shareholders at which a merger or consolidation was acted on, were
listed on a national securities exchange unless the shares of such shareholders
were not converted by the merger or consolidation solely into shares of the
surviving or new corporation. 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 year after the date of sale.
SHAREHOLDER RIGHTS PLAN
Shareholders Rights attached to each share of Hancock stock held by a
registered holder entitles the registered holder, subject to the terms of a
rights agreement, to purchase from Hancock one share of Hancock stock in the
event of a change in control. See "INFORMATION ABOUT HANCOCK -- Changes in
Control." American does not have a shareholder rights plan.
ADDITIONAL INFORMATION
LEGAL MATTERS
Certain legal matters in connection with the Hancock common stock being
offered hereby will be passed upon by Watkins Ludlam Winter & Stennis, P.A.,
counsel for Hancock.
EXPERTS
The consolidated financial statements of American as of and for the years
ended December 31, 1997 and 1996 contained in this Proxy Statement-Prospectus
have been audited by Broussard, Poche, Lewis & Breaux, LLP, Certified Public
Accountants, independent auditors, as set forth in their report with respect
thereon appearing elsewhere herein, and have been included in reliance upon the
authority of such firm as experts in accounting and auditing. The consolidated
financial statements of Hancock as of December 31, 1997 and 1996 and for each of
the three years in the period ended December 31, 1997 incorporated in this Proxy
Statement-Prospectus by reference from the 1997 Hancock Annual Report on Form
10-K 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.
52
<PAGE>
OTHER MATTERS
At the time of the preparation of this Proxy Statement-Prospectus, American
has not been informed of any matters to be presented by or on behalf of American
or its management for action at the Meeting other than those listed in the
Notice of 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 American Board and return it at once in the enclosed envelope.
WHERE YOU CAN FIND MORE INFORMATION
Hancock has filed with the Commission a Registration Statement under the
Securities Act that registers the distribution to American Shareholders of the
shares of Hancock common stock to be issued in connection with the Merger (the
"Registration Statement"). The Registration Statement including the attached
exhibits and schedules, contain additional relevant information about Hancock
and the Hancock common stock. The rules and regulations of the Commission allow
us to omit certain information included in the Registration Statement from this
Proxy Statement-Prospectus.
In addition, Hancock files reports, proxy statements and other information
with the Commission under the Exchange Act. You may read and copy this
information at the following locations of the SEC:
<TABLE>
<CAPTION>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issues, like Hancock, who
file electronically with the Commission. The address of that site is
http://www.sec.gov. You can view and download a copy of the Registration
Statement (including exhibits) at this web site.
You can also inspect reports, proxy statements and other information about
Hancock at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
The Commission allows Hancock to "incorporate by reference" information
into this Proxy Statement-Prospectus. This means that Hancock can disclose
important information to you by referring you to another document filed
separately with the Commission. The information incorporated by reference is
considered to be a part of this Proxy Statement-Prospectus, except for any
information that is superseded by other information that is set forth directly
in this document.
This Proxy Statement-Prospectus incorporates by reference the documents set
forth below that Hancock has previously filed with the Commission. They contain
important information about Hancock and its financial condition.
Hancock SEC Filings Period
- ------------------- ------
Proxy Statement for its annual meeting
of shareholders held on February 19, 1998
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Periods ended:
. March 31, 1998
. June 30, 1998
. September 30, 1998
53
<PAGE>
Current Reports on Form 8-K August 21, 1998
The description of the rights set forth in Item 1
of Hancock's Registration Statement on Form 8-A
(SEC File No. 000-13089), dated February 27,
1997, and any amendment or report filed to
update such description
Hancock incorporates by reference additional documents that it may have
filed with the Commission between the date of this Proxy Statement-Prospectus
and the date of the Meeting. These documents include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as well as proxy statements.
Hancock has supplied all information contained or incorporated by reference
in the Proxy Statement-Prospectus relating to Hancock, as well as all pro forma
financial information, and American has supplied all such information relating
to American.
You can obtain any of the documents incorporated by reference in this
document through Hancock, or from the Commission through the Commission's
Internet world wide web site at the address described above. Documents
incorporated by reference are available from the companies without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference as an exhibit in this Proxy Statement-Prospectus. You
can obtain documents incorporated by reference in this Proxy Statement-
Prospectus by requesting them in writing or by telephone from:
George A. Schloegel, Vice Chairman
Hancock Holding Company
Post Office Box 4019
Gulfport, MS 39502-4019
(228) 868-4706
If you would like to request documents from Hancock, please do so by
___________, 1998 to receive them before the Meeting. If you request any
incorporated documents from us, Hancock will mail them to you by first class
mail, or another equally prompt means, within one business day after we receive
your request.
You should rely only on the information contained in or incorporated by
reference in this Proxy Statement-Prospectus in considering how to vote your
shares at the Meeting. Neither Hancock nor American has authorized anyone to
provide you with information that is different from the information in this
document. This Proxy Statement-Prospectus is dated November ____, 1998. You
should not assume that the information contained in this document is accurate as
of any date other than that date. Neither the mailing of the Proxy Statement-
Prospectus nor the issuance of Hancock common stock in the Merger shall create
any implication to the contrary.
54
<PAGE>
INDEX TO AMERICAN FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS - DECEMBER 1997 AND 1996
Consolidated balance sheets F-3 and F-4
Consolidated statements of income F-5
Consolidated statements of changes in shareholders' equity F-6
Consolidated statements of cash flows F-7 and F-8
Notes to consolidated financial statements F-9 - F-26
FINANCIAL STATEMENTS - SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Condensed consolidated balance sheets F-27 and F-28
Condensed consolidated statements of income F-29
Condensed consolidated statements of cash flows F-30 and F-31
Notes to condensed consolidated financial statements F-32
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
American Security Bancshares
of Ville Platte, Inc.
Ville Platte, Louisiana
We have audited the accompanying consolidated balance sheets of American
Security Bancshares of Ville Platte, Inc. and subsidiary as of December 31, 1997
and 1996, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Corporation'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 audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Security
Bancshares of Ville Platte, Inc. and subsidiary as of December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
years then ended, in conformity with generally accepted accounting principles.
Broussard, Poche, Lewis & Breaux, LLP
Lafayette, Louisiana
May 29, 1998
F-2
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
ASSETS 1997 1996
------------ ------------
Cash and due from banks $ 28,505,392 $ 24,512,518
Interest-bearing deposits in banks 69,529 92,290
Federal funds sold 1,800,000 -
Investment securities:
Available for sale 74,017,217 75,283,364
Held to maturity (estimated market values
$5,670,283 and $5,091,999, respectively) 5,514,365 4,909,135
Loans, less allowance for loan losses
($1,670,905 and $1,540,288, respectively) 108,941,320 111,858,095
Bank premises and equipment, net of
accumulated depreciation ($3,670,277 and
$3,153,025, respectively) 4,762,916 4,963,109
Accrued interest receivable 1,510,576 1,750,015
Other real estate, net of allowances of
$199,798 and $290,356, respectively 1,993,146 2,219,697
Other assets 1,091,874 3,391,324
------------ ------------
Total assets $228,206,335 $228,979,547
============ ============
(continued)
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------ ------------
LIABILITIES
Deposits:
Demand $ 39,320,917 $ 37,692,364
Interest-bearing demand 33,650,101 27,150,514
Savings 32,333,732 31,819,853
Time, $100,000 and over 22,286,878 26,668,487
Other time 74,972,692 76,487,267
------------ ------------
202,564,320 199,818,485
Accrued interest payable 892,334 939,460
Other borrowed funds 3,396,271 7,916,893
Other liabilities 423,666 326,303
------------ ------------
Total liabilities 207,276,591 209,001,141
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, $10 par value; 90,000
shares authorized; 48,467 shares
issued and outstanding 484,670 484,670
Additional paid in capital 342,720 342,720
Surplus 8,000,000 8,000,000
Retained earnings 11,687,313 10,952,771
Net unrealized appreciation on securities
available for sale, net of tax of
$213,809 and $102,126, respectively 415,041 198,245
------------ ------------
20,929,744 19,978,406
------------ ------------
Total shareholders' equity
Total liabilities and shareholders' equity $228,206,335 $228,979,547
============ ============
F-4
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1997 and 1996
1997 1996
----------- ------------
Interest income:
Interest on loans $11,249,554 $11,308,726
Interest on investment securities -
U.S. Treasury 724,312 798,750
U.S. Government agencies 3,888,914 4,169,258
State and political subdivisions 583,506 586,838
Interest on federal funds sold 185,794 77,535
Interest on bank time deposits 1,708 67,168
----------- -----------
16,633,788 17,008,275
----------- -----------
Interest expense:
Interest on deposits -
Interest bearing demand 828,120 844,436
Savings 730,441 734,982
Time, $100,000 and over 1,431,891 1,352,457
Other time 4,052,355 3,876,244
Interest on borrowed funds 268,088 505,912
----------- -----------
7,310,895 7,314,031
----------- -----------
Net interest income 9,322,893 9,694,244
----------- -----------
Provision for possible loan losses 1,490,000 1,220,000
----------- -----------
Net interest income after provision
for possible loan losses 7,832,893 8,474,244
----------- -----------
Non-interest income:
Other fee income 656,064 755,919
Service charges 2,417,052 2,197,284
Income from electronic banking 1,794,298 602,977
Net realized gain on sale of
available for sale securities 161,695 166,493
Other 820,843 779,126
----------- -----------
5,849,952 4,501,799
----------- -----------
Non-interest expense:
Salaries 4,458,780 3,672,881
Officer and employee benefits 1,007,730 1,019,143
Net occupancy expense 1,496,795 1,393,090
Loss on funding of ATM's 1,253,014 -
Other operating expenses 2,823,765 2,431,512
----------- -----------
11,040,084 8,516,626
----------- -----------
Income before income taxes 2,642,761 4,459,417
Income tax provision 696,544 1,373,070
----------- -----------
Net income $ 1,946,217 $ 3,086,347
=========== ===========
Basic and diluted earnings per share $40.16 $63.68
=========== ===========
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation
Additional on Securities
Common Paid in Retained Available
Stock Capital Surplus Earnings for Sale Total
--------- ---------- ---------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $484,670 $342,720 $8,000,000 $ 8,641,896 $1,063,620 $18,532,906
Net income for 1996 - - - 3,086,347 - 3,086,347
Cash dividend for 1996 - - - (775,472) - (775,472)
Net changes in unrealized
appreciation on available
for sale securities - - - - (865,375) (865,375)
--------- ---------- ---------- ----------- ---------- -----------
Balance, December 31, 1996 484,670 342,720 8,000,000 10,952,771 198,245 19,978,406
Net income for 1997 - - - 1,946,217 - 1,946,217
Cash dividend for 1997 - - - (1,211,675) - (1,211,675)
Net changes in unrealized
appreciation on available
for sale securities - - - - 216,796 216,796
--------- ---------- ---------- ----------- ---------- -----------
Balance, December 31, 1997 $484,670 $342,720 $8,000,000 $11,687,313 $ 415,041 $20,929,744
========= ========== ========== =========== ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,946,217 $ 3,086,347
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of investment security premiums 80,719 82,160
Accretion of investment security discounts (70,468) (69,292)
Decrease in interest receivable 239,439 217,975
(Increase) decrease in other assets 2,299,450 (2,778,123)
Provision for loan losses 1,490,000 1,220,000
Provision for depreciation 545,173 460,556
Write down of other real estate 37,131 15,616
Increase (decrease) in interest payable (47,126) 183,034
Increase (decrease) in other liabilities 97,363 (478,787)
------------ ------------
Net cash provided by operating activities 6,617,898 1,939,486
------------ ------------
INVESTING ACTIVITIES
Proceeds from sales and maturities of investment
securities 23,357,449 34,072,167
Purchases of investment securities (22,489,988) (27,781,475)
Net (increase) decrease in short-term investments (1,777,239) 2,033,916
Net (increase) decrease in loans 1,426,775 (11,812,780)
Purchases of premises and equipment (344,980) (630,000)
Net (increase) decrease in other real estate owned 189,421 (159,857)
------------ ------------
Net cash provided by (used in)
investing activities 361,438 (4,278,029)
------------ ------------
FINANCING ACTIVITIES
Net increase in demand deposits,
transaction accounts, and savings accounts 8,642,019 11,682,160
Net increase (decrease) in certificates of deposit (5,896,184) 6,519,836
Increase (decrease) in other borrowed funds (4,520,622) 2,702,764
(Decrease) in federal funds purchased - (3,275,000)
Cash dividends paid (1,211,675) (775,472)
------------ ------------
Net cash provided by (used in)
financing activities (2,986,462) 16,854,288
------------ ------------
Increase in cash and cash equivalents 3,992,874 14,515,745
------------ ------------
</TABLE>
(continued)
F-7
<PAGE>
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Increase in cash and cash equivalents
(brought forward) $ 3,992,874 $14,515,745
Cash and cash equivalents at beginning of year 24,512,518 9,996,773
----------- -----------
Cash and cash equivalents at end of year $28,505,392 $24,512,518
=========== ===========
Cash interest received $16,873,227 $17,226,250
=========== ===========
Cash interest paid $ 7,358,021 $ 6,950,997
=========== ===========
Cash federal income taxes paid $ 405,998 $ 1,595,937
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-8
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
The accounting and reporting policies followed by American Security
Bancshares of Ville Platte, Inc. (the "Corporation") and subsidiary,
American Security Bank (the "Bank"), conform to generally accepted
accounting principles consistently applied and generally practiced within
the banking industry. The following is a summary of the more significant
policies:
Consolidation:
The consolidated financial statements include the accounts of the
respective parent Corporation and its wholly owned subsidiary. All
significant intercompany accounts and transactions have been eliminated
in consolidation.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates.
Investment securities:
At January 1, 1994, the Bank adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." SFAS No. 115 requires the classification of
securities into one of three categories: trading, available for sale,
or held to maturity.
Management determines the appropriate classification of debt securities
at the time of purchase and re-evaluates this classification
periodically. Trading account securities are held for resale in
anticipation of short-term market movements. Debt securities are
classified as held to maturity when the Bank has the positive intent
and ability to hold the securities to maturity. Securities not
classified as held to maturity or trading are classified as available
for sale.
Trading account securities are carried at market value. Gains and
losses, both realized and unrealized, are reflected in earnings. Held
to maturity securities are stated at amortized cost. Available for sale
securities are stated at fair value, with unrealized gains and losses,
net of tax, reported in a separate component of shareholders' equity.
F-9
<PAGE>
The amortized cost of debt securities classified as held to maturity or
available for sale is adjusted for amortization of premiums and
accretion of discounts to maturity or, in the case of mortgage-backed
securities, over the estimated life of the security. Amortization,
accretion and accruing interest are included in interest income on
securities. Realized gains and losses, and declines in value judged to
be other than temporary, are included in net securities gains. The cost
of securities sold is determined on the specific identification method.
Loans:
Commercial and mortgage loans are stated at principal amounts
outstanding at the balance sheet date. Interest on these loans is
accrued daily based on the principal balances outstanding. Unearned
discount on installment loans is amortized and included in interest
income using the sum-of-the-month digits method over the terms of the
applicable loans which does not differ materially from the interest
method.
Commercial loans are placed on nonaccrual status when, in management's
opinion, there is doubt concerning full collectibility of both
principal and interest. All commercial nonaccrual loans are considered
to be impaired in accordance with SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan." Consumer loans are generally
charged off when any payment of principal or interest is more than 120
days delinquent. Interest payments received on nonaccrual loans are
applied to principal if there is doubt as to the collectibility of the
principal; otherwise, these receipts are recorded as interest income. A
loan remains in nonaccrual status until it is current as to principal
and interest, and the borrower demonstrates the ability to fulfill the
contractual obligation.
Loan origination fees and certain direct origination costs are deferred
and recognized as an adjustment to the yield on the related loan.
Allowance for possible loan losses:
The allowance for possible loan losses is maintained to provide for
possible losses inherent in the loan portfolio. On January 1, 1995, the
Company adopted SFAS No. 114, as amended by SFAS No. 118, "Accounting
by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." In accordance with SFAS No. 114, the allowance for
possible loan losses related to loans that are identified as impaired
is based on discounted cash flows using the loan's initial effective
interest rate or the fair value of the collateral for certain
collateral dependent loans.
F-10
<PAGE>
The allowance is based on management's estimate of future losses;
actual losses may vary from the current estimate. The estimate is
reviewed periodically, taking into consideration the risk
characteristics of the loan portfolio, past loss experience, general
economic conditions and other factors which deserve current
recognition. As adjustments to the estimate of future losses become
necessary, they are reflected as a provision (positive or negative) for
possible loan losses in current-period earnings. However, because
factors such as loan growth, the future collectibility of loans and the
amounts and timing of future cash flows expected to be received on
impaired loans are uncertain, the level of future provisions (positive
or negative), if any, generally cannot be predicted. Actual loan losses
are deducted from and subsequent recoveries are added to the allowance.
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed primarily by the straight line
method. Useful lives utilized for purposes of computing depreciation
are as follows: buildings - 10 to 40 years; furniture and equipment - 5
to 20 years. Maintenance and repair costs are expensed as incurred.
The Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of", as of
January 1, 1996. The impact on the Corporation's financial position and
results of operations for the year ended December 31, 1997 was not
material.
Other real estate:
Other real estate owned includes real estate and other collateral
acquired upon the default of loans. Other real estate is recorded at
the fair value of the assets acquired less estimated selling costs.
Losses arising from the initial reduction of the outstanding loan
amount to fair value are deducted from the allowance for possible loan
losses. After foreclosure, these assets are carried at the lower of
their new cost basis or fair value less cost to sell. Valuations are
periodically performed by management, and any subsequent write-downs
are recorded as a charge to operations, if necessary, to reduce the
carrying value of a property to the lower of its cost or fair value
less cost to sell. Income and expenses associated with other real
estate prior to sale are included in current earnings.
Federal income taxes:
The Corporation files a consolidated federal income tax return with the
subsidiary Bank. The Corporation accounts for income taxes using the
asset and liability method. Under this method, deferred tax assets and
liabilities are based on the temporary differences between the
financial reporting basis and tax basis of the Corporation's assets and
liabilities at enacted tax rates expected to be in effect when such
amounts are realized or settled. The principal timing differences are
depreciation expense, write down of other real estate, bad debt expense
and certain expenses related to electronic banking operations.
F-11
<PAGE>
Cash and cash equivalents:
The statements of cash flows classify changes in cash and cash
equivalents according to operating, investing or financing activities.
Cash and due from banks are regarded as cash equivalents for purposes
of the statements of cash flows.
Net income per share of common stock:
Net income per share of common stock is computed by dividing net income
by the weighted average number of shares of common stock outstanding
during the period.
Recent pronouncements:
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share" and SFAS No. 129, "Disclosure of Information About
Capital Structure" which are effective for quarters ending after
December 15, 1997, and fiscal years ending after December 15, 1997,
respectively. The implementation of these statements did not have a
material effect on its results of operations or financial statement
disclosures.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information." SFAS No. 130 establishes standards for
reporting and display of comprehensive income in the financial
statements. Comprehensive income is the total of net income and all
other non-owner changes in equity. SFAS No. 131 requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance. SFAS
Nos. 130 and 131 are effective for 1998. The implementation of these
statements did not have a material effect on its results of operations
or financial statement disclosures.
Reclassifications:
Certain items included in the consolidated financial statements for
1996 have been reclassified to conform with the 1997 presentation.
Note 2. Restrictions on Cash
The Bank is required to maintain average reserve balances as required by
the Federal Reserve Bank. The average amount of these reserves was
$3,790,000 and $2,303,000 for the years ended December 31, 1997 and 1996,
respectively.
The Bank was required to maintain a balance of $20,000 for the years
ended December 31, 1997 and 1996 at First National Bankers Bank (FNBB) in
conjunction with bank card servicing performed at FNBB for the Bank.
The Bank has entered into contractual obligations to provide funding for
ATM's owned by individual operators located throughout the United States.
The cash in these ATM's was $17,713,315 and $12,459,848 at December 31,
1997 and 1996, respectively.
F-12
<PAGE>
Note 3. Investment Securities
The carrying amounts of investment securities as shown in the
consolidated balance sheets of the Bank and their approximate market
values at December 31 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
Carrying Carrying
Value Value
----------- -----------
<S> <C> <C>
Available for sale securities $74,017,217 $75,283,364
Held to maturity securities 5,514,365 4,909,135
----------- -----------
$79,531,582 $80,192,499
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Securities available
for sale:
U.S. Government
agencies $67,307,089 $508,699 $81,327 $67,734,461
State and
municipal
securities 4,371,017 201,478 - 4,572,495
Corporate stocks 1,710,261 - - 1,710,261
----------- -------- ------- -----------
$73,388,367 $710,177 $81,327 $74,017,217
=========== ======== ======= ===========
Securities held to
maturity:
State and municipal
securities $ 5,514,365 $156,514 $ 596 $ 5,670,283
=========== ======== ======= ===========
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Securities available
for sale:
U.S. Government
agencies $68,808,644 $ 93,802 $ - $68,902,446
State and municipal
securities 4,464,087 206,570 - 4,670,657
Corporate stocks 1,710,261 - - 1,710,261
----------- -------- ---- -----------
$74,982,992 $300,372 $-0- $75,283,364
=========== ======== ==== ===========
Securities held to
maturity:
State and municipal
securities $ 4,909,135 $182,864 $-0- $ 5,091,999
=========== ======== ==== ===========
</TABLE>
Securities with book values of $43,840,295 and $41,678,178 were pledged
to secure public deposits and other transactions at December 31, 1997 and
1996, respectively.
Gross-realized gains and gross-realized losses on sales of securities
available for sale were:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Gross-realized gains:
U.S. Government agencies securities $170,220 $290,453
Gross-realized losses:
U.S. Government agencies securities 8,525 123,960
-------- --------
Net realized gains $161,695 $166,493
======== ========
</TABLE>
The maturities of investment securities at December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Securities available for sale:
Due in one year or less $ 9,468,188 $ 9,483,860
Due from one to five years 29,504,725 29,998,229
Due from five to ten years 26,558,975 26,619,974
Due after ten years 7,856,479 7,915,154
----------- -----------
$73,388,367 $74,017,217
=========== ===========
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Securities held to maturity:
Due in one year or less $ 1,243,068 $ 1,247,020
Due from one to five years 2,704,132 2,793,069
Due from five to ten years 1,567,165 1,630,194
Due after ten years - -
----------- -----------
$ 5,514,365 $ 5,670,283
=========== ===========
</TABLE>
Note 4. Loans
Major classifications of the subsidiary Bank's loan portfolio at
December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Commercial loans $ 55,875,300 $ 54,674,357
Installment loans 28,821,138 28,084,665
Mortgage loans 19,244,121 22,052,437
Other 6,671,666 8,586,924
------------ ------------
110,612,225 113,398,383
Allowance for loan losses (1,670,905) (1,540,288)
------------ ------------
Loans, net $108,941,320 $111,858,095
============ ============
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to
$1,854,489 and $1,919,970 as of December 31, 1997 and 1996, respectively.
As discussed in Note 1, the Company adopted SFAS No. 114 effective
January 1, 1995. The adoption of SFAS No. 114 did not have a material
impact on the financial condition or operating results of the Bank. At
December 31, 1997, the recorded investment in loans that were considered
to be impaired under SFAS No. 114 was $1,854,489. The related allowance
for loan losses on the impaired loans was $356,788. The average recorded
investment in impaired loans during the year ended December 31, 1997 was
approximately $2,145,593. Interest payments received on impaired loans
are applied to principal if there is doubt as to the collectibility of
the principal; otherwise, these receipts are recorded as interest income.
For the year ended December 31, 1997, the Bank recognized interest income
on impaired loans of $224,055. Interest income in the amount of $206,163
for 1997 and $359,624 for 1996 would have been recorded on nonperforming
loans if they had been classified as performing.
As it relates to in-substance foreclosures, SFAS No. 114 requires that a
creditor continue to follow loan classification on the balance sheet
unless the creditor receives physical possession of the collateral. The
Bank has had no in-substance foreclosures for any period presented.
F-15
<PAGE>
Note 5. Allowance for Possible Loan Losses
The provision for possible loan losses charged against earnings is based
upon management's judgment of the adequacy of the loan loss provisions
and allowances for possible loan losses. The provision for possible loan
losses has been made on the basis of internal loan review procedures and
in view of economic conditions at the time.
The following is an analysis of the allowance for possible loan losses as
of December 31:
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Balance, beginning $ 1,540,288 $ 1,177,702
Recoveries on loans 98,501 104,407
Loans charged off (1,457,884) (961,821)
Provision for possible loan losses 1,490,000 1,220,000
----------- -----------
Balance, ending $ 1,670,905 $ 1,540,288
=========== ===========
</TABLE>
Note 6. Bank Premises and Equipment
Bank premises and equipment consisted of the following as of December 31:
1997 1996
----------- -----------
Land $ 929,583 $ 952,583
Buildings 2,785,380 2,771,535
Furniture and equipment 4,657,242 4,085,141
Construction work in process 60,988 306,875
----------- -----------
8,433,193 8,116,134
Less accumulated depreciation (3,670,277) (3,153,025)
----------- -----------
Total $ 4,762,916 $ 4,963,109
=========== ===========
Depreciation charged to net occupancy expense was $545,173 in 1997 and
$460,556 in 1996.
Note 7. Other Real Estate
Activity in the allowance for losses on other real estate is as follows:
Balance, January 1, 1995 $ 332,761
Provision charged to income 15,616
Charge offs, net of recoveries (58,021)
-----------
Balance, December 31, 1996 290,356
Provision charged to income 37,131
Charge offs, net of recoveries (127,689)
-----------
Balance, December 31, 1997 $ 199,798
===========
F-16
<PAGE>
Other income includes net revenue of $125,087 in 1997 and $65,300 in 1996
from operation of other real estate.
Note 8. Deposits
At December 31, 1997, the scheduled maturities of certificates of
deposits are as follows:
Year Ended
December 31
-----------
1998 $87,343,429
1999 5,879,632
2000 2,558,190
2001 1,478,319
-----------
$97,259,570
===========
Note 9. Federal Home Loan Bank Borrowings
The Bank is a member of the Federal Home Loan Bank in order to facilitate
the Bank's fixed-rate medium to long-term mortgage lending program. The
Bank has a maximum line of $25,174,499 as of December 31, 1997, secured
by its portfolio of 1-4 family residential mortgages. The balance of
$3,396,271 as of December 31, 1997 is included in other borrowed funds on
the consolidated balance sheets. The balance is to be repaid in monthly
installments over ten years. The annual requirements to retire the
balance at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Total
Principal Interest Payments
---------- --------- ----------
<S> <C> <C> <C>
1998 $ 473,354 $195,869 $ 669,223
1999 502,861 166,361 669,222
2000 534,260 135,021 669,281
2001 567,677 101,515 669,192
2002 603,244 65,975 669,219
2003 - 2004 714,875 31,227 746,102
---------- -------- ----------
$3,396,271 $695,968 $4,092,239
========== ======== ==========
</TABLE>
Note 10. Income Taxes
The applicable income taxes for December 31 were as follows:
1997 1996
------------ -----------
Current $1,137,474 $1,315,070
Deferred (442,930) 58,000
---------- ----------
$ 694,544 $1,373,070
========== ==========
F-17
<PAGE>
Income tax expense includes amounts currently payable and amounts
deferred to or from other years as a result of differences in the timing
of recognition of income and expense for financial reporting and federal
tax purposes. The following table is a reconciliation of taxes recorded
on income before provisions for income taxes to amounts which would have
been provided:
<TABLE>
<CAPTION>
1997 Rate 1996 Rate
---------- ----- ----------- -----
<S> <C> <C> <C> <C>
Amount of tax expense at
Federal statutory tax rates $ 898,539 34.0% $1,516,202 34.0%
Increases (decreases) in taxes
resulting from:
Tax exempt interest income (189,272) (7.2) (189,977) (4.3)
Charitable contributions - - (123,831) (2.8)
Other, net (14,723) (.5) 170,676 3.9
--------- ---- ---------- ----
$ 694,544 26.3% $1,373,070 30.8%
========= ==== ========== ====
</TABLE>
Deferred income tax assets of $539,898 and $151,000 at December 31, 1997
and 1996, are included in other assets on the balance sheet.
A requirement of SFAS Statement No. 109 is that deferred tax liabilities
or assets at the end of each period will be determined using the tax rate
expected to be in effect when taxes are actually paid or recovered.
Accordingly, income tax expense will increase or decrease in the same
period in which a change in tax rates is enacted. Previously, deferred
taxes were provided using rates in effect when the tax asset or liability
was first recorded, without subsequent adjustment for tax-rate changes.
Temporary differences are principally the provision for possible loan
losses, write-downs of other real estate subsequent to capitalization,
depreciation of fixed assets, charitable contributions, and certain
expenses related to electronic banking operations.
Note 11. Basic and Diluted Earnings Per Common Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share."
This Statement simplifies the standards for computing earnings per share
previously required under APB Opinion No. 15, "Earnings Per Share." Basic
earnings per share (EPS) excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number
of common shares outstanding of 48,467 for the year ended December 31,
1997 and 1996. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Diluted EPS
is computed similarly to fully diluted EPS pursuant to APB Opinion No.
15. SFAS No. 128 is effective for 1997. Basic and diluted earnings per
share as currently presented are the same amounts as primary earnings per
share as previously reported.
Note 12. Employee Stock Ownership Plan
American Security Bancshares, Inc. established an Employee Stock
Ownership Plan in 1986. The purpose of the Plan is to enable full-time
employees who are at least eighteen years of age and have been employed
for at least one thousand hours to acquire stock ownership in the
Corporation. For the years ended December 31, 1997 and 1996, the Bank
made cash contributions of $120,000 each year to the Plan. These
contributions are included in compensation expense.
F-18
<PAGE>
In the event a terminated Plan participant desires to sell his or her
shares of the Corporation's stock, or for certain employees who elect to
diversify their account balances, the Corporation may be required to
purchase the shares at their fair market value from the participant.
During the year ended December 31, 1997 and 1996, distributions to
terminated and retired Plan participants totaled $184,148 and $281,385,
respectively.
Note 13. Employee Benefit Plan
Effective January 1, 1995, the Bank established a 401(k) profit sharing
plan to provide retirement benefits for employees. Employees may
participate in the Plan by deferring up to 10% of their annual
compensation within certain IRS imposed limitations for maximum
contributions in a given year. Compensation deferred by employees in this
Plan is not taxable to the employee until received as retirement
benefits. Employees of the Bank are eligible for participation when they
reach eighteen years of age. Employee "elective deferrals" are fully
vested. The Bank makes a discretionary matching contribution equal to a
percentage of each participant's deferred compensation, which is to be
determined each year by the employer. Mr. Michael J. Rhodes, President,
is the trustee of the Plan established by the Bank for its employees.
Total contributions to the Plan by the Bank were $70,042 for 1997 and
$60,004 for 1996.
Note 14. Lease Commitments
Net occupancy expense for 1997 and 1996 of $135,965 and $103,650,
respectively, was paid on noncancellable operating lease agreements on
office space. The future minimum rental commitment as of December 31,
1997 is as follows:
Year Ended
December 31
-----------
1998 $112,800
1999 78,600
2000 3,600
2001 3,600
2002 3,600
--------
$202,200
========
Note 15. Financial Instruments
Generally accepted accounting principles require disclosure of fair value
information about financial instruments for which it is practicable to
estimate fair value, whether or not the financial instruments are
recognized in the financial statements. When quoted market prices are not
available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected
by the assumptions used, including the discount rate and estimates of
future cash flows. The derived fair value estimates cannot be
substantiated through comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the instrument.
Certain financial instruments and all non-financial instruments are
excluded from these disclosure requirements.
F-19
<PAGE>
Further, the disclosures do not include estimated fair values for items
which are not financial instruments but which represent significant value
to the Bank, among them, core deposit intangibles, loan servicing rights
and other fee-generating businesses. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the
Bank.
The carrying amount of cash and short-term investments, federal funds
sold and demand deposits approximates the estimated fair value of these
financial instruments. The estimated fair value of securities is based on
quoted market prices, dealer quotes and prices obtained from independent
pricing services. The estimated fair value of loans and interest-bearing
deposits is based on present values using applicable risk-adjusted
spreads to the appropriate yield curve to approximate current interest
rates applicable to each category of these financial instruments.
Interest rates were not adjusted for changes in credit risk of performing
commercial loans for which there are no known credit concerns. Management
segregates loans into appropriate risk categories and believes the risk
factor embedded in the interest rates results in a fair valuation of
these loans on an entry-value basis.
Variances between the carrying amount and the estimated fair value of
loans reflect both credit risk and interest rate risk. The Bank is
protected against changes in credit risk and interest rate risk by the
allowance for possible loan losses of $1,670,905 and $1,540,288 at
December 31, 1997 and 1996, respectively.
The fair value estimates presented are based on information available to
management as of December 31, 1997 and 1996. Although management is not
aware of any factors that would significantly affect the estimated fair
value amounts, these amounts have not been revalued for purposes of these
financial statements since those dates. Therefore, current estimates of
the fair value may differ significantly from the amounts presented. None
of the assets or liabilities included in the table below are held for
trading purposes.
The Bank issues financial instruments in the normal course of business to
meet the financing needs of its customers and to reduce exposure to
fluctuations in interest rates. These financial instruments include
commitments to extend credit and letters of credit and involve, to
varying degrees, elements of credit and interest rate risk in excess of
the amount recognized on the balance sheet.
F-20
<PAGE>
<TABLE>
<CAPTION>
1997
---------------------------
Carrying Fair
ASSETS Amount Value
------------ ------------
<S> <C> <C>
Cash $ 28,505,392 $ 28,505,392
Interest-bearing deposits in banks 69,529 69,529
Federal funds sold 1,800,000 1,800,000
Securities available for sale 74,017,217 74,017,217
Securities held to maturity 5,514,365 5,670,283
Commercial loans 56,709,143 56,100,590
Consumer loans 52,232,177 52,026,138
LIABILITIES
Demand deposits 39,320,917 39,320,917
Interest-bearing demand deposits 33,650,101 33,650,101
Savings 32,333,732 32,333,732
Time deposits 97,259,570 97,488,387
Other borrowed funds 3,396,271 3,396,271
1996
---------------------------
Carrying Fair
ASSETS Amount Value
------------ ------------
Cash $ 24,512,518 $ 24,512,518
Interest-bearing deposits in banks 92,290 92,290
Securities available for sale 75,283,364 75,283,364
Securities held to maturity 4,909,135 5,091,999
Commercial loans 60,043,084 59,515,351
Consumer loans 51,815,011 52,480,819
LIABILITIES
Demand deposits 37,692,364 37,692,364
Interest-bearing demand deposits 27,150,514 27,150,514
Savings 31,819,853 31,819,853
Time deposits 103,155,754 103,989,414
Other borrowed funds 7,916,893 7,916,893
</TABLE>
Note 16. Related Parties
The Bank has entered into transactions with its employees, directors
and their affiliates. The aggregate amount of loans to such related
parties at December 31, 1997 was $2,062,511. During 1997, new loans to
such related parties amounted to $725,269 and repayments amounted to
$764,288.
F-21
<PAGE>
Note 17. Concentrations of Credit Risk
All of the Bank's loans, commitments and standby letters of credit
have been granted to customers in the Bank's market area of South
Louisiana. Investments in state and municipal securities also involve
governmental entities within the Bank's market area. The
concentrations of credit by type of loan are set forth in Note 4. The
distribution of commitments to extend credit approximates the
distribution of loans outstanding. Standby letters of credit were
granted primarily to commercial borrowers. The Bank, as a matter of
policy, does not extend credit to any single borrower or group of
related borrowers in excess of $4,200,000.
Note 18. Regulatory Matters
A bank is subject to dividend restrictions set forth by the Louisiana
Commissioner of Financial Institutions. Under such restrictions, a
bank may not, without the prior approval of the Commissioner of
Financial Institutions, declare dividends in excess of the sum of the
current year and the prior year earnings less dividends paid during
these periods. The dividends as of December 31, 1997 and 1996, that
the Bank could declare, without the approval of the Commissioner of
Financial Institutions, amounted to $2,822,959 and $4,791,995,
respectively. The Bank is also required to maintain minimum amounts of
capital to total "risk weighted" assets, as defined by the banking
regulators. At December 31, 1997 and 1996, the Bank is required to
have minimum Tier 1 and Total capital ratios of 4% and 8%,
respectively. The Bank's actual ratios at those dates were 15.65% and
16.97% and 14.63% and 15.79%, respectively. The Bank's leverage ratio
was 9.29% and 9.28%, respectively.
Note 19. Contingent Liabilities and Commitments
The Bank's consolidated financial statements do not reflect various
commitments and contingent liabilities that arise in the normal course
of business that involve elements of credit risk, interest rate risk
and liquidity risk. These commitments and contingent liabilities are
commitments to extend credit, and standby letters of credit. A summary
of the Bank's commitments and contingent liabilities at December 31,
is as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
Notional Fair Notional Fair
Amount Value Amount Value
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Commitments to extend
credit $13,418,544 $(88,000) $14,349,645 $(135,000)
Credit card arrangements $ 2,766,810 $(26,000) $ 2,874,168 $ (28,000)
Standby letters of
credit $ 720,450 $ (4,000) $ 266,100 $ (5,000)
</TABLE>
Commitments to extend credit, credit card arrangements, and standby
letters of credit all include exposure to some credit loss in the
event of nonperformance of the customer. The Bank's credit policies
and procedures for credit commitments and financial guarantees are the
same as those for extension of credit that are recorded on the balance
sheets. Because standby letters of credit have fixed maturity dates,
and because many of them expire without being drawn upon, they do not
generally present any significant liquidity risk to the Bank. The
Bank's experience has been that most loan commitments are drawn upon
by customers. The Bank has not been required to perform on any
financial guarantees during the past two years. The Bank has not
incurred any losses on its commitments in either 1997 or 1996.
F-22
<PAGE>
The Bank is involved in litigation and claims arising in the normal
course of business. Management, after consultation with legal counsel,
believes that the liabilities, if any, arising from such litigation and
claims will not be material to the financial position.
Note 20. American Security Bancshares of Ville Platte, Inc. (Parent Company
Only)
The following financial statements of American Security Bancshares of
Ville Platte, Inc. (Parent Company Only) include the Bank under the
equity method of accounting.
<TABLE>
<CAPTION>
BALANCE SHEETS
<S> <C> <C>
December 31,
--------------------------
1997 1996
----------- -----------
ASSETS
Cash on deposit with subsidiary $ 317,310 $ 384,699
Due from subsidiary - 8,000
Investment in subsidiary 20,612,434 19,542,307
Other assets - 43,400
----------- -----------
Total assets $20,929,744 $19,978,406
=========== ===========
SHAREHOLDERS' EQUITY
Common stock: $10 par value, 90,000
shares authorized; 48,467 shares
issued and outstanding $ 484,670 $ 484,670
Additional paid in capital 342,720 342,720
Surplus 8,000,000 8,000,000
Retained earnings 11,687,313 10,952,771
Net unrealized appreciation on securities
available for sale, net of tax
($213,809 and $102,126, respectively) 415,041 198,245
----------- -----------
Total equity $20,929,744 $19,978,406
=========== ===========
</TABLE>
F-23
<PAGE>
American Security Bancshares of Ville Platte, Inc. (Parent Company Only)
STATEMENTS OF INCOME
December 31,
-------------------------
1997 1996
---------- ----------
Income:
Dividends from bank subsidiary $1,121,425 $1,121,425
---------- ----------
Expenses:
Director's fees 21,580 25,850
Consulting fees 25,000 -
Administrative fees 1,509 175
---------- ----------
48,089 26,025
---------- ----------
Earnings before income taxes
and equity in undistributed
earnings of subsidiary 1,073,336 1,095,400
Benefit from income taxes 19,550 13,320
---------- ----------
Earnings before equity in
undistributed earnings of
subsidiary 1,092,886 1,108,720
Equity in undistributed
earnings of subsidiary 853,331 1,977,627
---------- ----------
Net income $1,946,217 $3,086,347
========== ==========
F-24
<PAGE>
American Security Bancshares of Ville Platte, Inc. (Parent Company Only)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,946,217 $ 3,086,347
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of subsidiary (853,331) (1,977,627)
Decrease in due from subsidiary 8,000 -
----------- -----------
Net cash provided by
operating activities 1,100,886 1,108,720
----------- -----------
INVESTING ACTIVITIES
Sale (purchase) of other assets 43,400 (43,400)
----------- -----------
FINANCING ACTIVITIES
Dividends paid to shareholders (1,211,675) (775,472)
----------- -----------
Increase (decrease) in cash
and cash equivalents (67,389) 289,848
Cash and cash equivalents at
beginning of year 384,699 94,851
----------- -----------
Cash and cash equivalents at
end of year $ 317,310 $ 384,699
=========== ===========
</TABLE>
Note 21. Year 2000
The Bank is aware of the issues associated with the programming code
in existing computer systems as the millennium (year "2000")
approaches. The "year 2000" problem is pervasive and complex, as
virtually every computer operation will be affected in some way by the
rollover of the two-digit year value to zero. The issue is whether
computer systems will properly recognize date-sensitive information
when the year changes to 2000. Systems that do not properly recognize
such information could generate erroneous data or cause a system to
fail.
The Bank is utilizing both internal and external resources to
identify, correct or reprogram, and test the systems for the "year
2000" compliance. It is anticipated that all reprogramming efforts
will be complete by December 31, 1998, allowing adequate time for
testing. To date, confirmations have been received from the Bank's
primary processing vendors that plans are being developed to address
processing of transactions in the "year 2000." Management has not yet
assessed the "year 2000" compliance expense and related potential
effect on the Bank's earnings but it is not expected to be
significant.
F-25
<PAGE>
Note 22. Sale of Branch Locations
The Bank entered into negotiations in August 1997 with another
financial institution for the sale of two branch locations in Allen
Parish. The book value of the fixed assets at December 31, 1997 was
$99,490. On February 19, 1998, the fixed assets, as well as loans of
$4,878,073 and deposits of $16,249,048, were sold at a gain of
$2,500,510.
Note 23. Pending Merger
The Corporation entered into an agreement and plan of merger (the
"Agreement") dated April 14, 1998. The Agreement is with Hancock
Holding Company ("HHC") of Gulfport, Mississippi. The Agreement is
expected to be finalized in 1998.
F-26
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1998 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
Cash and due from banks $ 41,430,788 $ 21,416,907
Interest-earning deposits in banks 91,116 86,379
Federal funds sold 4,500,000 2,325,000
Investment securities:
Available for sale 67,166,588 78,954,751
Held to maturity (estimated market values
$5,113,628 and $6,017,095, respectively) 4,916,298 5,851,641
Loans, less allowance for loan losses
($2,854,518 and $1,685,944, respectively) 101,513,753 112,346,042
Bank premises and equipment, net of
accumulated depreciation ($3,963,176 and
$3,554,076, respectively) 5,994,582 4,807,801
Accrued interest receivable 1,408,160 1,699,136
Other real estate, net of allowances of
$255,287 and $207,281, respectively 1,047,575 1,717,974
Other assets 1,232,831 2,385,141
------------ ------------
$229,301,691 $231,590,772
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-27
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
------------ ------------
<S> <C> <C>
LIABILITIES
Deposits:
Demand $ 47,144,233 $ 40,353,004
Interest-bearing demand 21,265,405 29,723,435
Savings 21,164,457 23,807,791
Money market 9,431,185 10,053,445
Time, $100,000 and over 22,536,967 24,835,913
Other time 74,212,546 75,186,281
------------ ------------
195,754,793 203,959,869
Accrued interest payable 866,049 997,027
Other borrowed funds 4,691,623 3,510,209
Other liabilities 3,097,749 993,361
------------ ------------
204,410,214 209,460,466
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, $10 par value; 90,000
shares authorized; 48,467 shares
issued and outstanding 484,670 484,670
Additional paid in capital 342,720 342,720
Surplus 8,000,000 8,000,000
Retained earnings 15,385,623 12,774,565
Net unrealized gain on securities
available for sale, net of tax of
$349,512 and $272,181, respectively 678,464 528,351
------------ ------------
24,891,477 22,130,306
------------ ------------
$229,301,691 $231,590,772
============ ============
</TABLE>
F-28
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 1998 and 1997
(UNAUDITED)
1998 1997
----------- -----------
Interest income:
Interest on loans $ 7,542,503 $ 8,393,248
Interest on investment securities -
U. S. Treasury 419,246 566,619
U. S. Government agencies 2,620,039 2,978,897
State and political subdivisions 412,524 434,547
Interest on federal funds sold 135,266 67,268
Interest on deposits in other institutions 1,757 1,156
----------- -----------
11,131,335 12,441,735
----------- -----------
Interest expense:
Interest on deposits -
Interest-bearing demand 434,416 418,422
Savings 501,134 545,109
Money markets 180,081 195,269
Time, $100,000 and over 903,693 1,105,726
Other time 2,843,820 3,037,626
Interest on borrowed funds 207,319 214,638
----------- -----------
5,070,463 5,516,790
----------- -----------
Net interest income 6,060,872 6,924,945
Provision for possible loan losses 1,340,000 1,430,000
----------- -----------
Net interest income after provision
for possible loan losses 4,720,872 5,494,945
Non-interest income:
Other fee income 609,314 659,634
Service charges 1,595,349 1,785,291
Income from electronic banking 2,136,991 1,367,982
Income from sale of branches 2,500,510 0
Other 1,049,942 575,425
----------- -----------
7,892,106 4,388,332
----------- -----------
Non-interest expense:
Salaries 2,827,206 3,201,534
Officer and employee benefits 654,963 832,757
Net occupancy expense 1,165,894 1,189,972
Other operating expenses 2,272,928 2,092,363
----------- -----------
6,920,991 7,316,626
----------- -----------
Income before income taxes 5,691,987 2,566,651
Income tax provision 1,993,679 752,858
----------- -----------
Net income $ 3,698,308 $ 1,813,793
=========== ===========
Basic and diluted earnings per share $ 76.31 $ 37.42
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
F-29
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended September 30, 1998 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,698,308 $ 1,813,793
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of investment security premiums 72,588 60,539
Accretion of investment security discounts (33,719) (25,289)
Decrease in interest receivable 102,416 50,879
Decrease in other assets 1,340,000 1,430,000
Provision for loan losses 412,440 407,516
Provision for depreciation 43,888 37,131
(Increase) decrease in other assets (140,957) 1,014,183
Increase (decrease) in interest payable (26,285) 57,567
Increase in other liabilities 2,674,083 667,058
------------ ------------
Net cash provided by operating activities 8,142,762 5,513,377
------------ ------------
INVESTING ACTIVITIES
Proceeds from sales and maturities of investment
securities 20,513,961 15,998,088
Purchases of investment securities (12,840,708) (20,317,124)
Net (increase) decrease in short-term investments (2,721,587) (2,319,089)
Net (increase) decrease in loan portfolio 6,087,567 (1,917,947)
Net disposals (purchases) of premises and equipment (1,644,107) (252,208)
Net increase in other real estate owned 901,683 464,592
------------ ------------
Net cash provided by (used in)
investing activities 10,296,809 (8,343,688)
------------ ------------
FINANCING ACTIVITIES
Net decrease in demand deposits, money markets,
and savings accounts (6,299,469) 7,274,944
Net increase (decrease) in certificates of deposit (510,058) (3,133,560)
Increase in other borrowed funds 1,295,352 (4,406,684)
------------ ------------
Net cash used in financing activities (5,514,175) (265,300)
------------ ------------
Increase (decrease) in cash and cash equivalents 12,925,396 (3,095,611)
------------ ------------
(continued)
</TABLE>
F-30
<PAGE>
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents
(brought forward) $12,925,396 $(3,095,611)
Cash and cash equivalents at beginning of period 28,505,392 24,512,518
----------- -----------
Cash and cash equivalents at end of period $41,430,788 $21,416,907
=========== ===========
Cash interest received $11,233,751 $12,492,614
=========== ===========
Cash interest paid $ 5,096,748 $ 5,459,223
=========== ===========
Cash federal income taxes paid $ 2,609,088 $ 502,372
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-31
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The accompanying Unaudited Condensed Consolidated Financial Statements
include the accounts of American Security Bancshares, Inc. of Ville
Platte (ASB) and its wholly owned bank, American Security Bank of
Ville Platte. Intercompany profits, transactions and balances have
been eliminated in consolidation.
The accompanying Unaudited Condensed Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only 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 consolidated
financial statements and notes thereto of ASB's 1997 audited financial
statements.
Note 2. Sale of Branch Locations
ASB sold two branch locations in Allen Parish along with all of the
fixed assets, loans and deposits associated with the locations.
The book value of the fixed assets at sale date was $99,490. On
February 19, 1998 the fixed assets, as well as loans of $4,878,073 and
deposits of $16,249,048, were sold at a gain of $2,500,510.
This transaction caused a decrease in loans and deposits between the
two periods presented on these statements.
Note 3. Year 2000
In 1997 ASB began addressing all the systems requiring modifications
to accommodate the turn of the century. Since there is concern that
computer systems will not properly recognize dates or date sensitive
information when the digit year value rolls over to "00," virtually
every computer operation and every system that has an embedded
microchip is potentially at risk for failure or improper performance.
Many software programs assume the "19" in storing the year and only
utilized the last two digits of the year for calculations and data
storage. The year "2000" may be recognized by some systems as "1900"
which could adversely affect a significant portion of a company's
daily operations, especially those of financial institutions.
Identification of ASB's major Year 2000 issues is substantially
complete and a plan, including replacement of certain systems, has
been implemented to resolve the issues of which management is aware.
Written assurances of expected Year 2000 readiness have been requested
from all material third party vendors, including, but not limited to,
correspondent banks, software providers and utility companies. If any
of the companies providing services, software or equipment to ASB fail
to adequately address the Year 2000 at a reasonable cost, the result
could be a significant adverse effect on ASB's business and
operational results. The readiness of all third parties, including
customers and suppliers, is inherently uncertain and cannot be
assured.
ASB recognizes the importance of its customers' need to address Year
2000 issues. Relationships considered material to ASB's financial
position have been identified and appropriate documentation from
borrowers received. A committee, specifically established for this
project, is in process of reviewing the information obtained and
assessing the risk of repayment impairment.
Testing of information systems and review of property equipment
functions, except those slated for replacement or vendor upgrade, is
near completion. It is anticipated that fully integrated system
testing of current and newly-acquired systems will be completed by the
second quarter of 1999.
Note 4. Pending Merger
ASB has entered into an agreement (the "Agreement") and plan of merger
dated October 15, 1998. The Agreement is with Hancock Holding Company
("HHC") of Gulfport, Mississippi. The transaction is expected to be
finalized in the fourth quarter of 1998 and will be structured as a
purchase. The stockholders of ASB will receive 13.8651 shares of HHC
and $285.22 for each share owned. Holders of 25 or fewer shares of ASB
stock will not receive any HHC shares. Instead they will receive
$950.75 for each ASB share owned. The total estimated consideration of
$46,080,000 is based on the market price of HHC common stock of $48.
Note 5. Comprehensive Income
As of January 1, 1998, ASB adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes new rules for the
reporting and display of comprehensive income and its components;
however, the adoption of SFAS No. 130 had no impact on ASB's net
income or shareholders' equity. SFAS No. 130 requires unrealized gains
or losses on ASB's available for sale securities to be included in
other comprehensive income. Prior to the adoption of SFAS No. 130,
these unrealized gains and losses were reported separately only in
shareholders' equity.
Comprehensive income totaled $2,567,946 and $1,113,265 for the six
months ended June 30, 1998 and 1997, respectively, and $4,376,772 and
$2,342,144 for the nine months ended September 30, 1998 and 1997,
respectively.
F-32
<PAGE>
Contingency plans for the most reasonably likely worst-case scenarios
are in process and should be completed by the end of the year. Plans
will be subject to update as testing and implementation continue.
Issues regarding material equipment and application failure will be
addressed. Contingency plans for liquidity needs due to potentially
significant deposit withdrawals during the fourth quarter of 1999 are
substantially complete.
Management believes it has dedicated adequate resources to address the
issues associated with the turn of the century. The total amount of
expenditures for Year 2000 compliance, including those incurred since
1997 and those anticipated during the next two years, is not expected
to be significant but cannot be predicted with certainty at this time.
F-33
<PAGE>
APPENDIX A
FAIRNESS OPINION OF BROWN, BURKE CAPITAL PARTNERS, LLP
BROWN, BURKE CAPITAL PARTNERS, INC.
ATLANTA, GEORGIA
, 1998
--------------
Board of Directors
American Security Bancshares of Ville Platte, Inc.
126 East Main
Ville Platte, LA 70586
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the shareholders
of American Security Bancshares of Ville Platte, Inc. (the Company), from a
financial point of view, of the per share purchase price and terms (the "Per
Share Purchase Price and Terms") provided for in the Amended and Restated
Agreement and Plan of Merger (the "Merger Agreement") dated October 15, 1998
between the Company and Hancock Holding Company ("Hancock"). The Merger
Agreement provides for a merger (the "Merger") of the Company and Hancock
pursuant to which the common shareholders of the Company who hold greater than
25 shares will receive (i) 13.8651 shares of Hancock common stock and (ii)
$285.22 in cash for every share of the Company currently held and those who hold
25 or fewer shares will receive $950.75 in cash for every share of American
stock they own.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to Hancock and the Company. We have also
reviewed certain other information, including financial forecasts and budgets,
provided to us by Hancock and the Company, and have discussed with the Company's
management the business and prospects of the Company.
We have also considered certain financial and stock market data of Hancock and
the Company and we have compared that data with similar data for other publicly
held bank holding companies and we have considered the financial terms of
certain other comparable transactions which have recently been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified any
of the foregoing information and have relied on its being complete and accurate
in all material respects. With respect to the financial forecasts and budgets,
we have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of Hancock's and the Company's
managements as to the future financial performance of Hancock and the Company.
In addition, we have not made an independent evaluation or appraisal of the
assets of Hancock or the Company and we have assumed that the aggregate
allowances for loan losses for Hancock and the Company are adequate to cover
such losses. We have solicited third party indications of interest in acquiring
the Company and have considered the results of that solicitation in arriving at
our opinion.
It should be noted that this opinion is based on market conditions and other
circumstances existing on the date hereof and this opinion does not represent
our view as to what the value of the Hancock common stock necessarily will be
when the Hancock common stock is issued to the shareholders of the Company upon
consummation of the Merger.
We have acted as financial advisor to the Company in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger.
We agree to the inclusion of this opinion letter in the Proxy Statement-
Prospectus relating to the Merger. The opinion may not, however, be summarized,
excerpted from or otherwise publicly referred to without our prior written
consent.
Based upon and subject to the foregoing, it is our opinion that as of the date
hereof, the Per Share Purchase Price and Terms of the Merger are fair to the
common shareholders of the Company from a financial point of view.
Very truly yours,
BROWN, BURKE CAPITAL PARTNERS, INC.
A-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS/JOINT 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 Six 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 Mississippi Business Corporation Act (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
certain actions that do not constitute gross negligence or willful misconduct if
authorized by the corporation's Articles of Incorporation. The Hancock Articles
provide for indemnification to the fullest extent permitted by the MBCA and
specifically provide for the further indemnity authorized by the MBCA.
The Hancock Articles provide that Hancock shall indemnify any person who
was or is a party to, or is threatened to be made a party to, any threatened
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, formal or informal (a "Proceeding"),
by reason of the fact that such person is or was a director, officer, employee
or agent of Hancock against any obligation to pay a judgment, settlement,
penalty, fine or reasonable expenses (including legal fees) incurred with
respect to the Proceeding: (A) to the fullest extent permitted by the
Mississippi Business Corporation Act in effect from time to time (the "Act") and
(B) despite the fact that such person has failed to meet the standard of conduct
set forth in the Act, or would be disqualified for indemnification under the Act
for any reason, if a determination is made by (i) the board of directors a
committee duly designated
II-1
<PAGE>
by the board of directors, consisting of two or more directors not at the time
parties to the Proceeding, (ii) by special legal counsel, (iii) by the
shareholders or (iv) by a court, that the acts or omissions of the director,
officer, employee or agent did not constitute gross negligence or willful
misconduct. However, Hancock shall not indemnify a person for: (i) an
intentional infliction of harm on the Corporation or its shareholders; (ii) a
violation of Mississippi Code Annotated Section 79-4-8.33 (1972), as amended; or
for (iii) an intentional violation of criminal law, and Hancock shall not
indemnify a person for receipt of a financial benefit to which he is not
entitled unless ordered by a court under Mississippi Code Annotated,
Section 79-4-8.54(9)(3). The Hancock Articles further provide that Hancock shall
indemnify a person in connection with a proceeding by or in the right of Hancock
for reasonable expenses incurred in connection with the Proceeding if such acts
or omissions do not constitute gross negligence or willful misconduct, and shall
make further indemnification in connection with the Proceeding if so ordered by
a court under Mississippi Code Annotated, Section 79-4-8.54(9)(3). Hancock, upon
request, shall pay or reimburse such person for his reasonable expenses
(including legal fees) in advance of final disposition of the Proceeding as long
as: (i) such person furnishes Hancock a written undertaking, executed personally
or on his behalf, to repay the advance if he is not entitled to mandatory
indemnification under Mississippi Code Annotated, Section 79-4-8.52 and it is
ultimately determined by a judgment or other final adjudication that his acts or
omissions did constitute gross negligence or willful misconduct, which
undertaking must be an unlimited general obligation of such person, and which
shall be accepted by Hancock without reference to the financial ability of the
person to make repayment or to collateral; (ii) such person furnishes a written
affirmation of his good faith that his acts or omissions did not constitute
gross negligence or willful misconduct; and (iii) a determination is made by any
of the determining bodies that the facts then known to those making the
determination would not preclude indemnification under the Hancock Articles.
Article Six of the Articles 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 Six 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
II-2
<PAGE>
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 Amended and Restated Agreement and Plan of Merger.
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).
3.7 Articles of Amendment to the Articles of Incorporation adopted
February 20, 1997.
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. 333-11831), and
incorporated herein by reference).
4.2 Description of common Stock Purchase Rights (set forth in Item 1 of the
Registrants Registration Statement on Form 8-A (Commission file
No. 000-13089 ) ) and incorporated herein by reference.
5* Opinion of Watkins Ludlam Winter & Stennis, P.A. re legality of shares.
8* Opinion of Watkins Ludlam Winter & Stennis, P.A. regarding certain tax
matters.
13 Form 10-K and Annual Report for year ending December 31, 1997 (furnished
for the information of the Commission only and not deemed "filed" except
for those portions which are specifically incorporated herein by
reference).
23.1 Consent of Deloitte & Touche LLP.
II-3
<PAGE>
23.2 Consent of Broussard Poche Lewis and Breaux, L.L.P. and Company.
23.3 Consent of Watkins Ludlam Winter & Stennis, P.A. (included in Exhibits 5
and 8).
23.4 Consent of Brown, Burke Capital Partners, Inc.
24 Power of Attorney (included on the signature page of the Registration
Statement).
99 Form of Proxy of American Security Bancshares, Inc.
* To be filed by Amendment.
II-4
<PAGE>
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;
(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
II-5
<PAGE>
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
II-6
<PAGE>
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-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gulfport, State of
Mississippi, this 10th day of November, 1998.
HANCOCK HOLDING COMPANY
(Registrant)
By: /s/ Leo W. Seal, Jr.,
---------------------------------
Leo W. Seal, Jr.,
President and Chief Executive
Officer
By: /s/ Carl J. Chaney
---------------------------------
Carl J. Chaney
Executive Vice President and
Chief Financial Officer
Know all men by these presents, that each individual whose signature
appears below constitutes and appoints Leo W. Seal, Jr. and George A. Schloegel,
and each or either one of them, his true and lawful attorney-in-fact and agent,
with power of substitution and resubstitution, for him and in his name, place
and stead in any and all capacities, to sign this Registration Statement on
Form S-4 and relating to the registration of shares of Hancock Holding Company
common stock, $3.33 par value per share, and any and all amendments (including
post-effective amendments) to such Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, their, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on November 10, 1998 by the following
persons in the capacities indicated.
Signatures Title
- ---------- -----
By: /s/ Joseph F. Boardman, Jr. Chairman of the
Joseph F. Boardman, Jr. Board and Director
II-8
<PAGE>
By: Director
Thomas W. Milner, Jr.
By: /s/ Dr. Homer C. Moody, Jr. Director
Dr. Homer C. Moody, Jr.
By: /s/ James B. Estabrook, Jr. Director
James B. Estabrook, Jr.
By: /s/ Victor Mavar Director
Victor Mavar
By: /s/ Charles H. Johnson Director
Charles H. Johnson
By: /s/ L. A. Koenenn, Jr. Director
L. A. Koenenn, Jr.
By:/s/ Leo W. Seal, Jr. President, Chief Executive
Leo W. Seal, Jr. Officer and Director
By: /s/ George A. Schloegel Vice Chairman of the
George A. Schloegel Board and Director
II-9
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2 Amended and Restated Agreement and Plan of Merger.
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).
3.7 Articles of Amendment to the Articles of Incorporation adopted
February 20, 1997.
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. 333-11831), and
incorporated herein by reference).
4.2 Description of common Stock Purchase Rights (set forth in Item 1 of
the Registrants Registration Statement on Form 8-A (Commission file
No. 000-13089 ) ) and incorporated herein by reference.
5* Opinion of Watkins Ludlam Winter & Stennis, P.A. regarding legality
of shares.
8* Opinion of Watkins Ludlam Winter & Stennis, P.A. regarding certain tax
matters.
13 Form 10-K and Annual Report for year ending December 31, 1997
(furnished for the information of the Commission only and not deemed
"filed" except for those portions which are specifically incorporated
herein by reference).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Broussard Poche Lewis and Breaux, L.L.P. and Company.
23.3 Consent of Watkins Ludlam Winter & Stennis, P.A. (included in
Exhibits 5 and 8).
23.4 Consent of Brown, Burke Capital Partners, Inc.
24 Power of Attorney (included on the signature page of the Registration
Statement).
99 Form of Proxy of American Security Bancshares, Inc.
*To be filed by Amendment.
<PAGE>
EXHIBIT 2
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
-------------------------------------------------
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of the 15th day of October, 1998, is made between AMERICAN SECURITY
BANCSHARES, INC., Ville Platte, Louisiana, a Louisiana corporation ("ASB"),
HANCOCK HOLDING COMPANY, Gulfport, Mississippi, a Mississippi corporation
("HHC"), American Security Bank of Ville Platte, Ville Platte, Louisiana, a
Louisiana state bank ("Bank"), and Hancock Bank of Louisiana, Baton Rouge,
Louisiana, a Louisiana state bank ("Hancock Bank").
The Boards of Directors of ASB, HHC, Bank and Hancock Bank have duly
approved this Agreement and have authorized the execution hereof by their
respective Presidents. ASB and Bank have directed that this Agreement be
submitted to a vote of their shareholders, in accordance with Part XI of the
Louisiana Business Corporation Law ("LCL"), and Section 6:352 of the Louisiana
Banking Laws ("LBL"), respectively, 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 ASB with and into HHC and
the merger of Bank with and into Hancock Bank and prescribe the terms and
conditions of such mergers and the mode of carrying them into effect, which
shall be as follows:
ARTICLE 1
DEFINITIONS
-----------
Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meaning to be equally applicable to both
the singular and plural forms of the terms defined):
1.1 "Agreement" shall mean this Amended and Restated Agreement and Plan of
Merger by and between ASB, HHC, Bank, and Hancock Bank 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.
<PAGE>
1.2 "Bank" means American Security Bank of Ville Platte, a Louisiana
banking corporation duly chartered on January 9, 1956 organized and existing
under and pursuant to the laws of the State of Louisiana and maintaining its
principal place of business and registered address at 126 E. Main Street, in
Ville Platte, Evangeline Parish, Louisiana 70586.
1.3 "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.
1.4 "ASB" means ASB, a corporation duly chartered on January 15, 1985,
organized, and existing under and pursuant to the laws of the State of
Louisiana; maintaining its principal place of business at 126 E. Main Street in
Ville Platte, Evangeline Parish, Louisiana; and is a bank holding company within
the meaning of the Bank Holding Company Act of 1956, as amended.
1.5 "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 five (5) 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, the date the Registration Statement
(the "Registration Statement") filed with the SEC is declared effective, the
date the ASB shareholders approve the Agreement, or such earlier or 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
Mergers (as defined in Section 2.1 hereof) as may reasonably be required
(including material required to be delivered under this Agreement).
1.6 "Effective Date" Immediately upon consummation of the Closing, or on
such other later date as the parties hereto may agree, the Company Merger
Agreement (as defined in Section 2.1 hereof) shall be certified, executed,
acknowledged and delivered to the Secretary of State of the State of Louisiana
(the "Secretary") for filing pursuant to and in accordance with the provisions
of Section 12:112 of the LCL. The Company Merger shall become effective as of
the date and time of issuance by the Secretary of a Certificate of Merger
relating to the Company Merger.
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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 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.
1.7 "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.
1.8 "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.
1.9 "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.
1.10 "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.
1.11 "OFI" means the Office of Financial Institutions of the State of
Louisiana having regulatory authority over Hancock Bank and Bank or any
successor Louisiana governmental agency exercising such regulatory authority.
1.12 "Party" shall mean HHC, Hancock Bank, ASB, or Bank and "Parties"
shall mean HHC, Hancock Bank, ASB and Bank.
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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 MERGERS AND RELATED MATTERS
-------------------------------
2.1 Mergers. On the Effective Date, ASB shall be merged with and into HHC
under the Articles of Incorporation of HHC, pursuant to the provisions of this
Agreement, the provisions of and with the effect provided in, Part XI of the LCL
(the "Company Merger") and the Company Merger Agreement in substantially the
form of Exhibit A hereto (the "Company Merger Agreement"). On a date following
the Effective Date of the Company Merger on a date determined by HHC, the Bank
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
together with the Company Merger, the "Mergers") and the Bank Merger Agreement
in substantially the form of Exhibit B hereto (the "Bank Merger Agreement" and,
together with the Company Merger Agreement, the "Merger Agreements"). The
Parties expect that the Mergers will further certain of their business
objectives, including, and without limitation, the expansion of operations as a
financial institution.
2.2 The Closing.
a. The closing of the Company Merger (the "Closing") will take place,
assuming satisfaction or waiver of each of the conditions set forth in
Article 8 hereof, on the date provided in Section 1.5.
b. At the Closing (i) ASB, Bank, HHC and Hancock Bank shall each
provide to the other such proof or other indication of satisfaction of the
conditions set forth in Article 8 as the party whose obligations are
conditioned upon such satisfaction may reasonably request, (ii) the
certificates, letters and opinions required by Article 8 shall be
delivered, (iii) the appropriate officers of the parties shall complete the
execution,
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acknowledgment and delivery of the Company Merger Agreement and (iv) the
parties shall take such further action as is required to consummate the
transactions contemplated by this Agreement and the Company Merger
Agreement.
2.3 Effect of Company Merger. Upon consummation of the Company Merger,
the separate corporate existence of ASB shall cease and HHC shall continue as
the surviving corporation. The name of HHC, as the surviving corporation, shall
by virtue of the Company 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 ASB, 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 HHC,
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 ASB prior to such
merger, and HHC shall be deemed to be and shall be a continuation of the
original entities and all of the rights and obligations of ASB shall remain
unimpaired, and HHC, on the Effective Date of the Company Merger shall succeed
to all such rights, obligations, duties and liabilities connected therewith.
2.4 Effect of Bank Merger. Upon consummation of the Bank Merger, the
separate corporate existence of Bank 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 Bank, 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
Bank 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
Bank 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.
5
<PAGE>
ARTICLE 3
CONVERSION OF STOCK
-------------------
3.1 Conversion of ASB Stock and Bank Stock.
a. On the Effective Date of the Company Merger, 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. Except for shares of ASB Common Stock as to which dissenter's
rights have been perfected and not withdrawn or otherwise forfeited under
Section 131 of the LBCL and subject to the provisions of Section 3.2d
relating to fractional shares on the Effective Date of the Company Merger,
each share of ASB Common Stock outstanding immediately following the
Company Merger shall be converted into (i) 13.8651 shares of HHC Common
Stock and (ii) the right to receive $285.22 in cash (the "Cash Payment");
provided, however, that any holder of 25 or fewer shares of ASB Common
Stock ("De Minimus Holdings") shall be entitled to receive a cash payment
of $950.75 per ASB share (the "De Minimus Holdings Cash Payment").
c. On the effective date of the Bank Merger, each share of Common
Stock, $10.00 par value, of Bank ("Bank Common Stock") issued and
outstanding immediately prior to the effective date, shall be canceled.
3.2 Exchange of Certificates Representing ASB Common Stock
and Bank 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 ASB 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 ASB Common Stock.
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b. Within ten business days of 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 Bank Common Stock held by ASB
or other than those representing shares with respect to which the holder
thereof has perfected appraisal rights under the LCL 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 the Cash Payment,
and cash in lieu of fractional shares or the De Minimus Holdings Cash
Payment. 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 either (x) a check
representing the De Minimus Holdings Cash Payment or (y) a certificate
representing that number of whole shares of HHC Common Stock and a check
representing the amount of cash, including the Cash Payment 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 ASB
Common Stock which is not registered in the transfer records of ASB, either
(x) a check representing the De Minimus Holdings Cash Payment or (y) a
certificate representing the proper number of shares of HHC Common Stock,
together with a check for the cash to be paid in lieu of fractional shares,
may be issued to such a transferee if the Certificate representing such ASB
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
ASB Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as
7
<PAGE>
provided herein. Subject to the effect of applicable laws, following
surrender of any such Certificate except for holders of De Minimus Holdings
who shall be paid the De Miniumus Holdings Cash Payment, 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 ASB of the shares of ASB Common Stock which were
outstanding immediately prior to the Effective Date. If, after the
Effective Date, Certificates are presented to HHC, they shall be canceled
and exchanged for either (x) the De Minimus Holdings Cash Payment, or for
(y) certificates for shares of HHC Common Stock and cash, including Cash
Payments 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 ASB or Bank 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 5.9.
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 $48.00.
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
8
<PAGE>
stockholders of ASB one year after the Effective Date shall be delivered to
HHC. Any former stockholders of ASB 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.
g. None of HHC, ASB, Hancock Bank, Bank, the Exchange Agent or any
other person shall be liable to any former holder of shares of ASB 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 either (x) the De Minimus
Holdings Cash Payment or (y) the shares of HHC Common Stock, Cash Payment
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, ASB, Bank, or HHC
changes the number of shares of ASB Common Stock, Bank 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 HHC Common Stock, Cash Payment and De Minimus Holdings Cash
Payment amounts set forth in Section 3.1b shall be appropriately adjusted.
ARTICLE 4
ACCOUNTING AND TAX MATTERS
--------------------------
4.1 Accounting Treatment. It is intended by the Parties hereto, that the
Mergers will qualify for purchase accounting treatment under generally accepted
accounting principles.
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4.2 Tax Consequences. It is the intention of the Parties hereto, that the
Mergers shall constitute reorganizations within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of merger" for purposes of Section 368 of the
Code.
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
ASB'S COVENANTS AND AGREEMENTS
------------------------------
5.1 Operation of Business. Between the date hereof and the Effective
Date, or until the termination of this Agreement, ASB 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, ASB will cause the Bank to 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, ASB will not, and ASB will cause Bank not to:
a. Amend or otherwise change its respective articles of incorporation
or bylaws (except to the extent required in order to effect the Mergers as
contemplated herein), as each such document is in effect on the date
hereof;
b. Issue or sell, or authorize for issuance or sale, the shares of
ASB or Bank or any additional shares of any class of capital stock of ASB
or Bank (except to the extent required to effect the Mergers as
contemplated herein);
c. Issue, grant, or enter into any subscription, option, warrant,
right, convertible security, or other agreement or commitment of any
character obligating ASB or Bank to issue securities;
d. Declare, set aside, make, or pay any dividend or other
distribution with respect to its capital stock except (i) dividends to ASB
shareholders in the aggregate amount per share of (A) $29.00 times a
fraction the denominator of which is 12 and the numerator of which is the
number of whole months between December 31, 1997, and the Effective Date of
the Company Merger minus the number of whole months in respect of which
dividends are paid pursuant to clause (B), plus (B), if the Effective Date
of the Company Merger occurs after the
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record date for the payment of dividends on the Common Stock of HHC
declared with respect to periods after December 31, 1998, an amount per
share equal to the amount per share that shareholders of ASB would have
received had they been shareholders of HHC on and after such record date,
and (ii) dividends from the Bank to ASB consistent with past practices and
to enable ASB to pay the shareholder dividends permitted hereby, to pay the
change of control amounts described herein, and to pay the expenses related
to the transactions contemplated hereby.
e. Redeem, purchase, or otherwise acquire, directly or indirectly,
any of its capital stock respectively;
f. Authorize any capital expenditure(s) which, individually or in the
aggregate, exceed $20,000 other than in connection with the branch
relocations described on Schedules 5.4(h) and 5.4(m);
g. Extend any new, or renew any existing, loan, credit, lease, or
other type of financing which individually exceeds $250,000 or renew any
such type of financing which individually exceeds $100,000 and does not
meet Bank's loan policy requirements except in connection with the workout
of loans;
h. Except in the ordinary course of business, sell, pledge, dispose
of, or encumber, or agree to sell, pledge, dispose of, or encumber, any
assets of ASB or Bank;
i. Excluding normal and customary banking transactions, incur any
indebtedness for borrowed money, issue any debt securities, or enter into
or modify any contract, agreement, commitment, or arrangement with respect
thereto;
j. Impose or suffer the imposition, on any share of stock held by ASB
in the Bank, of any material lien, charge, or encumbrance, or permit any
such lien to exist;
k. Establish or add any automated teller machines or branch or other
banking offices other than as set forth on any of the schedules to this
Agreement;
l. Acquire (by merger, consolidation, lease or other acquisition of
stock, ownership interests or assets) any corporation, partnership, or
other business organization or division thereof, or enter into any
contract, agreement, commitment, or arrangement with respect to any of the
foregoing, except to the extent required in order to effect the Mergers as
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contemplated herein and except in the ordinary course of business in
connection with foreclosures or similar actions;
m. Enter into, extend, or renew any lease for office or other space
other than as contemplated in the schedules to this Agreement;
n. Except as required by law, enter into, adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, or other employee benefit plan, agreement, trust,
fund, or arrangement for the benefit or welfare of any officer, employee or
representative of ASB or Bank, other than as contemplated in the schedules
to this Agreement; provided, however, at Closing ASB and Bank shall make
the change in control payments in the total amount of $601,209.38 to the
persons and in the amounts listed on Schedule 5.1.n.;
o. Grant any increase in compensation to any director, officer, or
employee or representative of ASB or Bank except in the ordinary course of
business consistent with past practice other than as contemplated in the
schedules to this Agreement; or
p. Enter into, amend, or terminate any employment agreement,
relationship or responsibilities with any director, officer, or key
employee or representative of ASB or Bank, 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, provided, however, prior to the Effective
Date of the Company Merger, ASB and Bank shall terminate any and all
employment contracts with the persons listed on Schedule 5.1.p. with no
liability therefor on the part of ASB or Bank;
q. Take any action or omit to take any action which would cause any
of ASB's or Bank's representations or warranties to be untrue or misleading
in any material respect (within the meaning of the first paragraph of
Article 6) or any material covenant of ASB or Bank under this Agreement
incapable of being performed; or
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r. 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 ASB's ability to perform its material
covenants and agreements hereunder;
s. Agree in writing or otherwise to do any of the foregoing.
5.2 Preservation of Business. Between the date hereof and the Effective
Date, ASB will, and will cause Bank to, use its best efforts to preserve its
existing business and to keep its business organization intact, including its
present relationships with its employees and customers and others having
business relations with it, except that ASB and Bank need not attempt to
preserve its relationship with LYNK.
5.3 Insurance. Pending the Closing, ASB shall cause the real property
owned by ASB and Bank 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. ASB will (i) take all steps necessary to call,
give notice of, convene and hold a special meeting of its shareholders as soon
as practicable for the purpose of approving this Agreement, the Merger
agreements and the transactions contemplated hereby and for such other purposes
as may be necessary or desirable, and (ii) cooperate and consult with HHC with
respect to each of the foregoing matters. 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. Except as may be required by fiduciary
obligations, ASB and the directors of ASB and the Bank listed on Schedule 5.4
will support and vote in favor of a stockholder resolution approving this
Agreement.
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 ASB
and Bank last in office shall be authorized to 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 title to, and possession of, all the property,
interests, assets, rights, privileges, immunities, powers, franchises, and
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authorities of ASB and Bank, and otherwise to carry out the purposes of this
Agreement.
5.6 ASB and Bank Financial and Other Reports. ASB shall (and shall cause
Bank to) make available to HHC and Hancock Bank the following statements and
other reports and documents:
a. ASB's Consolidated Balance Sheets as of September 30, 1998 and
1997 (unaudited) and December 31, 1997, 1996 and 1995 (audited);
Consolidated Statements of Income and Changes in Stockholders' Equity and
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995 (audited) and Statements of Income for the nine-month
periods ended September 30, 1998 and 1997 (unaudited) ("ASB Financial
Statements");
b. All correspondence with the OFI, the FDIC, the FRB and the
Internal Revenue Service from January 1, 1997 through the date of Closing
except as 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 Mergers (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 ASB and Bank to be acquired as a result of the Mergers,
ASB shall (and shall cause the Bank to), 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 and the Bank's properties; books,
contracts, commitments, loan files, litigation files and records (including, but
not limited to, the minutes of the Boards of Directors of ASB and the Bank and
all committees thereof), and it shall (and shall cause the Bank to), 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. All information obtained by HHC shall be subject to the Confidentiality
Agreement heretofore executed.
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5.8 No Solicitation. Prior to the Effective Date, neither ASB nor Bank
shall authorize or knowingly permit any of their officers, directors, employees,
representatives, agents or other persons controlled by ASB or Bank 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, ASB or Bank
except as contemplated by this Agreement or as required by fiduciary
obligations. ASB and Bank shall promptly communicate to HHC the identity and
terms of any proposal which they may receive with respect to any such
transaction.
5.9 Affiliates. ASB, Bank and HHC shall cooperate and use their best
efforts to identify those persons who may be deemed to be "affiliates" of ASB or
Bank within the meaning of Rule 145(c) or Rule 144 (as applicable) under the
Securities Act. ASB and Bank shall use its best efforts to cause each person so
identified to deliver to HHC, not later than twenty (20) days after execution of
this Agreement, a written agreement in substantially the form set forth in
Exhibit C 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.
ARTICLE 6
ASB'S REPRESENTATIONS AND WARRANTIES
------------------------------------
ASB represents and warrants to HHC and Hancock Bank as follows: for
purposes of this Agreement, except in Section 6.1 and where the context requires
otherwise, any reference to ASB in this Article 6 shall be deemed to include ASB
and Bank and any reference to "material," material adverse effect or a similar
standard shall refer to the financial condition, operations or other aspects of
ASB and Bank taken as a whole, except that no reduction of earnings for
stockholders' equity of ASB or Bank shall be considered material unless such
reduction is 10% or more of earnings for the comparable period after eliminating
any earnings as a consequence of LYNK, or 10% or more of stockholders' equity at
September 30, 1998.
6.1 Organization and Authority. Each of ASB and Bank is a corporation or
bank duly organized, validly existing and in good standing under the laws of the
State of Louisiana and each of ASB and
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Bank 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 ASB and Bank and the consummation of the transactions contemplated
hereby have been duly authorized by the Boards of Directors of ASB and Bank,
subject to regulatory approval. No other corporate proceedings on the part of
ASB or Bank are necessary to authorize consummation of this Agreement, except
for the approval of the transaction by ASB's and Bank's stockholders, and the
performance by ASB and Bank of the terms hereof. This Agreement is a valid and
binding obligation of ASB and Bank enforceable against ASB and Bank 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 ASB,
nor the consummation of the transactions contemplated hereby, nor compliance by
ASB 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 ASB or Bank under any terms, conditions or
provisions of (i) ASB's or Bank's Charter or Bylaws or other charter documents
of ASB or Bank or (ii) any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which ASB
or Bank is a party or by which ASB or Bank may be bound, or to which ASB or Bank
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 ASB or Bank or any of its properties or assets.
6.3 Capital Structure of ASB. As of the date hereof, the authorized
capital of ASB consists solely of 90,000 shares of common stock of the par value
of $10.00 each and no preferred stock. As of the date hereof 48,467 shares of
such authorized common stock were issued and outstanding. The outstanding
shares of capital stock of
16
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ASB 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 ASB.
There are no outstanding obligations or commitments to purchase, redeem or
otherwise acquire any outstanding shares of common stock of ASB.
6.4 Ownership of Other Organizations. ASB does not own, directly or
indirectly, five percent (5%) or more of the outstanding capital stock or other
voting securities of any corporation, bank, or other organization except the
Bank. The presently authorized capital of the Bank consists solely of 90,000
shares of common stock of the par value of $10.00 each and no preferred stock.
As of the date hereof, 48,867 shares of common stock were issued and
outstanding. The outstanding shares of capital stock of the Bank are validly
issued and outstanding, fully paid and, nonassessable and, all of such shares
are owned by ASB, free and clear of all liens, claims and encumbrances (except
as provided in Section 262 of the LBL).
6.5 ASB Financial and Other Reports. ASB has made available to HHC true
and correct copies of (a) the consolidated balance sheets as of December 31,
1997, 1996 and 1995 of ASB and its consolidated subsidiaries and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the respective years then ended, the related notes thereto, and the
report of its independent public accountants with respect thereto (the "ASB
Audited Financial Statements"), (b) the unaudited balance sheets as of September
30, 1998 and 1997 of ASB and its consolidated subsidiaries and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the nine-month periods then ended and the related notes thereto (the
"ASB Unaudited Financial Statements"), and (c) all correspondence between ASB,
Bank including its electronic banking division (the "ASB Consolidated Group")
and the OFI, the FDIC, the FRB, the SEC and the Internal Revenue Service since
January 1, 1997, except as may be prohibited by law. ASB's Financial Statements
(i) have been prepared in accordance with generally accepted accounting
principles, consistently applied, and (ii) present fairly the consolidated
results of operations of the ASB Consolidated Group for the periods covered
thereby and the consolidated financial condition of the ASB Consolidated Group
as of the dates thereof. The latest balance sheet forming part of the ASB
Unaudited Financial Statements is referred to herein as the "ASB Latest Balance
Sheet."
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6.6 No Material Adverse Change. Since the date of the ASB Latest Balance
Sheet, there has been no event or condition of any character (whether actual, or
to the knowledge of ASB or the Bank, threatened or contemplated) that has had or
can reasonably be anticipated to have, a material adverse effect on the
financial condition, results of operations, business or prospects of ASB and the
Bank, taken as a whole, excluding changes in laws or regulations that affect
banking institutions generally, and excluding the consequences of terminating
its LYNK relationship.
6.7 Tax Liability. The amounts set up as liabilities for taxes in the ASB
Financial Statements are sufficient for the payment of all respective taxes
which in its aggregate are material (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 ASB or the Bank have been timely filed or requests for
extensions have been timely filed and granted and have not expired for periods
ending on or before the date of the ASB Latest Balance Sheet, 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 other
than those returns or taxes that are not material. 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 ASB or the Bank except as reserved against in the ASB
Audited or Unaudited Financial Statements. All taxes, interest, additions and
penalties due with respect to completed and settled examinations or concluded
litigation have been paid, and ASB's reserves for bad debts at December 31,
1996, as filed with the Internal Revenue Service were not greater than the
maximum amounts permitted under the provisions of Section 585 of the 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 ASB 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 ASB and the Bank taken as a whole, and, to
the best of its knowledge, no such
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litigation, proceeding or controversy has been threatened or is contemplated.
6.10 Brokers' or Finders' Fees. Except for the engagement of Brown, Burke
Capital Partners, Inc. pursuant to the engagement letter dated as of November
25, 1997, as amended, a copy of which has been provided to HHC, no agent,
broker, investment banker, investment or financial advisor or other person
acting on behalf of ASB or the Bank or under their authority is entitled to any
commission, broker's or finder's fee from any of the Parties hereto in
connection with any of the transactions contemplated by this Agreement. The
aggregate amount of consideration to be paid Brown, Burke Capital Partners, Inc.
in connection with the transactions contemplated by this Agreement shall not
exceed the consideration provided in such engagement letter.
6.11 Contingent Liabilities. Except as disclosed on Schedule 6.11 hereto
or as reflected in the ASB Audited or Unaudited Financial Statements and except
in the case of the Bank for unfunded loan commitments made in the ordinary
course of business consistent with past practices, since the date of the ASB
Latest Balance Sheet neither ASB nor the Bank has 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 ASB and the Bank
taken as a whole and there does not exist a set of circumstances resulting from
transactions effected or events occurring prior to, on, or after the date of the
ASB Latest Balance Sheet or from any action omitted to be taken during such
period that, to the knowledge of ASB, 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 the date of the ASB Latest Balance Sheet, ASB and the Bank
had, and except with respect to assets disposed of for adequate
consideration in the ordinary course of business since such date, now have,
good and merchantable title to all real property and good and merchantable
title to all other material properties and assets reflected in the ASB
Latest Balance Sheet, free and clear of all mortgages, liens, pledges,
restrictions, security interests, charges and encumbrances of any nature
except for (i) mortgages and encumbrances which secure indebtedness which
is properly reflected in the ASB Audited or Unaudited
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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 the date of the ASB Latest Balance Sheet,
provided that the obligations secured by such liens are not delinquent or
are being contested in good faith; (iv) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or
materially interfere with the present use of any of such properties or
assets or the potential sale of any such owned properties or assets; and
(v) capital leases and leases, if any, to third parties for fair and
adequate consideration. ASB and the Bank own, or have valid leasehold
interests in, all material properties and assets, tangible or intangible,
used in the conduct of its business. Any real property and other material
assets held under lease by ASB or the Bank are held under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made by HHC in such lease of
such property.
b. Except as disclosed on Schedule 6.12 with respect to each lease of
any real property or a material amount of personal property to which ASB or
the Bank is a party, except for financing leases in which ASB or the Bank
is lessor, (i) such lease is in full force and effect in accordance with
its terms; (ii) all rents and other monetary amounts that have been due and
payable thereunder have been paid; (iii) there exists no default or event,
occurrence, condition or act which with the giving of notice, the lapse of
time or the happening of any further event, occurrence, condition or act
would become a default under such lease; and (iv) the Company Merger will
not constitute a default or a cause for termination or modification of such
lease.
c. Neither ASB nor the Bank has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any
substantial part of its assets or to sell or dispose of any of its assets
except in the ordinary course of business consistent with past practices.
d. To the knowledge and belief of its management, the policies of
fire, theft, liability and other insurance maintained with respect to the
assets or businesses of ASB and the Bank provide adequate coverage against
loss and the fidelity bonds in
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effect as to which ASB or the Bank is named insured meet the applicable
standards of the American Bankers Association.
6.13 Liabilities. To the best knowledge and belief of its management, all
liabilities of ASB and Bank 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. Neither ASB nor Bank has
agreed to any modification or extension of accounts or account terms or
otherwise made any agreements regarding such accounts except as disclosed in
writing on the books and records of ASB or Bank or which are not material; and
ASB and Bank have no knowledge of any claim of ownership to any account other
than as shown on the written ownership records of ASB and Bank for each account,
and ASB and Bank have 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 ASB in the ASB Latest Balance Sheet, 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 ASB, 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 ASB Latest Balance Sheet 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 the date of the ASB Latest Balance
Sheet 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 ASB Financial Statements under the heading "Investment
Securities," and none of the investments made by ASB or the Bank since the date
of the ASB Latest Balance Sheet, and none of the assets reflected in the ASB
Financial Statements under the heading "Cash and Due From Banks," is subject to
any restriction, whether contractual or statutory, that
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materially impairs the ability of ASB or the Bank freely to dispose of such
investment at any time except as disclosed in Schedule 6.16. With respect to all
repurchase agreements to which ASB or the Bank is a party, ASB or the Bank, as
the case may be, has a valid, perfected first lien or security interest in the
government securities or other collateral securing each such repurchase
agreement which equals or exceeds the amount of debt secured by such collateral
under such agreement.
6.17 Information for Registration and Proxy Statements. None of the
information supplied or to be supplied by ASB 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 ASB to its 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 ASB's stock, as may be amended at the time of ASB 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 ASB and Bank shall
provide for filing with the SEC and any regulatory agency in connection with the
Mergers will comply with generally accepted accounting principles.
6.18 Commitments and Contracts. Neither ASB nor Bank is a party or subject
to any of the following (whether written or oral, express or implied):
a. Except as listed on Schedule 5.1.p. 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 ASB or Bank);
b. Except as listed on Schedule 5.1.n. 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
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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 ASB or Bank to compete in
any line of business or with any person or which involves any restriction
of the geographical area in which, or method by which, ASB or Bank 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 ASB's knowledge and belief, it, the
Bank, and all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover one or more employees employed by ASB or the Bank:
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 in all material respects, and except for liabilities to the Internal
Revenue Service under Section 4971 of the Code, all of which have been fully
paid in all material respects, neither ASB nor the Bank has any liability to the
Pension Benefit Guaranty Corporation or to the Internal Revenue Service with
respect to any pension plan qualified under Section 401 of the Code.
6.21 Vote Required. The affirmative vote of the holders of at least two-
thirds of the voting power of ASB present, is the only vote
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<PAGE>
of the stockholders of ASB necessary to approve the Company Merger and related
transactions contemplated hereby. The affirmative vote of the holders of at
least two-thirds of the voting power present is the only vote of the
stockholders of Bank necessary to approve the Bank Merger and related
transactions contemplated hereby.
6.22 Continuity of Interest. To the best knowledge of ASB and Bank, there
is no plan or intention by the ASB or Bank shareholders who own 1% or more of
the ASB Common Stock or Bank Common Stock, and to the best of the knowledge of
management of ASB and Bank, there is no plan or intention on the part of the
remaining ASB or Bank shareholders to sell, exchange or otherwise dispose of a
number of shares of HHC Common Stock, to be received in the Mergers that would
reduce ASB or Bank stockholders' ownership of the HHC Common Stock to a number
of shares having a value, as of the date of the Mergers, of less than 50% of the
value of all of the formerly outstanding ASB or Bank Common Stock as of the same
date. For purposes of this representation, shares of ASB or Bank Common Stock
surrendered by dissenters or exchanged for cash in lieu of fractional shares of
ASB or Bank Common Stock will be treated as outstanding ASB or Bank Common Stock
on the date of the Mergers. Furthermore, shares of ASB or Bank Common Stock and
shares of HHC Common Stock held by ASB or Bank stockholders and otherwise sold,
redeemed, or disposed of prior to or subsequent to the Mergers are considered in
this assumption. See Schedule 4.4 for additional representations regarding
continuity of shareholder interest under Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Code of 1986, as amended.
6.23 Continuity of Business Enterprise. ASB 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
ASB nor the Bank nor, to the best knowledge of its management, any previous
owner or operator of any properties at any time owned (including any properties
owned or subsequently resold) leased, or occupied by ASB or the Bank or used by
ASB or the Bank in their respective business ("ASB Properties") used, generated,
treated, stored, or disposed of any hazardous waste, toxic substance, or similar
materials on, under, or about ASB Properties except in compliance with all
applicable federal, state, and local laws, rules and regulations pertaining to
air and water quality, hazardous waste, waste
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disposal, air omissions, and other environmental matters ("Environmental Laws").
Neither ASB nor the Bank has 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 ASB Properties.
6.25 Accuracy of Information. To the best of ASB's and its officers' and
directors' knowledge, all information furnished by ASB or Bank to HHC and
Hancock Bank relating to the assets, liabilities, and this Agreement is
accurate, and ASB has not omitted to disclose any information which is or would
be material to this Agreement.
6.26 Compliance with Laws and Contracts. To the best of ASB's and its
officers' and directors' knowledge, neither ASB nor the Bank is in violation of
any laws, regulations, or agreements to which it is a party and have failed to
file any material reports required by any governmental or other regulatory body,
in which violations or failure to file would have a material adverse effect on
ASB and Bank as a whole.
ARTICLE 7
HHC'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
-----------------------------------------------------------
HHC represents and warrants to ASB 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. Each of HHC and Hancock Bank is a
corporation or bank duly incorporated, validly existing and in good standing
under the laws of the State of Mississippi and Louisiana, respectively, 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
25
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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
Mergers 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 and Hancock Bank,
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 the date of the ASB Latest Balance
Sheet, there has been no event or condition of any character (whether actual, or
to the knowledge of HHC or Hancock Bank, 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 or Hancock Bank 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 September 30, 1998, 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
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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 the date of the ASB Latest
Balance Sheet, 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 the date of the ASB Latest Balance Sheet, 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 and
Hancock Bank'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.
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
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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 RESERVED
7.11 Year 2000 Compliance. HHC and Hancock Bank are Year 2000 compliant.
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 consummation of the transactions
contemplated hereby; provided however, that HHC and Hancock Bank shall not, and
shall instruct their executive officers, directors, and control persons and any
affiliates of any of the foregoing not to, effect any transactions in HHC Common
Stock in violation of Regulation M of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or otherwise for the purpose, or with the effect,
of manipulating the trading price of HHC Common Stock.
7.13 Due Diligence. In order to afford ASB 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 Mergers, HHC shall (and
shall cause Hancock Bank to), (a) upon reasonable notice, afford ASB 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 ASB and such representatives with
such financial and operating data and other information of any kind respecting
its business and properties as ASB shall from time to time reasonably request to
perform such review, (b) furnish ASB 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
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so filed, and (c) promptly advise ASB 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 Statement.
a. HHC will prepare and file on Form S-4 a registration statement
under the Securities Act (which will include the Proxy Statement) complying
with all the requirements of the Securities Act applicable thereto, for the
purpose, among other things, of registering the HHC Common Stock which will
be issued to the holders of ASB Common Stock pursuant to the Mergers. HHC
shall use its best efforts to cause the Registration Statement to become
effective as soon as practicable, to qualify the HHC Common Stock under the
securities or blue sky laws of such jurisdictions as may be required and to
keep the Registration Statement and such qualifications current and in
effect for so long as is necessary to consummate the transactions
contemplated hereby.
b. ASB's Consolidated Group shall cooperate in preparing the
Registration Statement and the Proxy Statement, and will promptly furnish
all such data and information relating to it as HHC may reasonably request
for the purpose of including such data and information in the Registration
Statement.
c. HHC will indemnify and hold harmless each member of ASB's
consolidated group and each of their respective directors, officers, agents
and other persons, if any, who control ASB within the meaning of the
Securities Act from and against any losses, claims, damages, liabilities or
judgments, joint or several, to which they or any of them may become
subject under the Securities Act or any state securities or blue sky laws
or otherwise, insofar as such losses, claims, damages, liabilities, or
judgements (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or in any amendment or supplement
thereto, or in any state application for qualification, permit, exemption
or registration as a broker/dealer, or in any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each such
person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that HHC shall not be liable, in any such case, to the
extent that any such loss, claim, damage, liability, or judgment (or action
in respect thereof) arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, or any such amendment or supplement thereto, or in
any such state application, or in any amendment or supplement thereto, in
reliance upon and in conformity with information furnished in writing to
HHC by ASB.
7.15 Application to Regulatory Authorities. HHC shall prepare, as promptly
as practicable, all regulatory applications and filings which
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are required to be made with respect to the Mergers and provide copies
thereof to ASB and its counsel.
7.16 Indemnification of Directors and Officers of ASB and Bank.
a. From and after the Effective Date of the Company Merger, HHC
agrees to indemnify and hold harmless each person who is an officer or
director of ASB or Bank on the day of this agreement or hereafter from and
against all losses, claims, damages, liabilities and judgments (and related
expenses including, but not limited to, attorney's fees and amounts paid in
investigating or defending any action in respect thereof or in settlement
of any such action) based upon or arising from his capacity as an officer
or director of ASB or Bank, as the case may be, to the same extent he would
have been indemnified under the Articles of Incorporation and Bylaws of HHC
as such documents were in effect on the date of this Agreement as if he
were an officer or director of HHC at all relevant times. Any
indemnification to which subparagraph (c) of Section 7.14 applies shall be
paid pursuant thereto and shall not be payable under this Section 7.16.
The persons entitled to indemnification hereunder and their respective
heirs, executors, estates and assigns are hereinafter referred to as
"Indemnified Persons."
b. The rights granted to the Indemnified Persons hereby shall be
contractual rights inuring to the benefit of all Indemnified Persons and
shall survive the Mergers, and any merger, consolidation or reorganization
of HHC.
c. An Indemnified Person shall give HHC 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 interest
require otherwise) and shall not settle any such matter unless HHC shall
first consent thereto.
d. The total aggregate indemnification to be provided by HHC
pursuant to Section 7.16 hereof will not exceed, as to all of the
Indemnified Persons described herein as a group, the sum of Seven Million
Five Hundred Thousand Dollars ($7,500,000).
e. ASB shall pay the insurance premium required for an extension of
the existing directors and officer's liability insurance
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policy of ASB and Bank, respectively, covering persons who are currently
covered by such insurance for a "discovery" period of three (3) years after
the Effective Date on terms generally no less favorable than those in
effect on the date of this Agreement, provided the total of such premium
shall not exceed $18,000.
7.17 Continuity of Business Enterprise. It is the present intention of HHC
to continue at least one significant historic business line of ASB, namely,
financial services, and to use at least a significant portion of ASB's historic
business assets in a business within the meaning of Treasury Regulation Section
1.368-1(d).
7.18 Payment of Bonuses. HHC agrees to pay up to a total of $305,604.69
bonuses to the persons and in the amounts listed on Schedule 7.18 that are
employed by HHC or Hancock Bank on the six-month anniversary date of the
Effective Date of the Company Merger or whose employment is terminated either by
the employer without "cause" or by the employee voluntarily after an "effective
termination," as defined in Schedule 7.18, provided that as a condition to
payment of the Bonus, such employee shall agree to a reasonable non-compete
agreement to be executed at the closing of the Company Merger which would
prohibit such employee from competing against HHC within the Louisiana Parishes
of Evangeline, St. Landry, Rapids, Avoyelles and Allen, for a six-month period
beginning upon the date of such employee's voluntary resignation.
ARTICLE 8
CONDITIONS TO CLOSING
---------------------
The obligations of ASB, Bank, HHC and Hancock Bank 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 of the Company
Merger:
8.1 Conditions to Each Party's Obligations to Effect the Company Merger.
The respective obligation of each party to effect the Company Merger shall be
subject to the following conditions:
a. Stockholder Approval. The Company Merger shall have been approved
by the requisite vote of the holders of the outstanding shares of ASB
Common Stock at ASB's Stockholders' Meeting.
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b. Regulatory Approvals. The transactions contemplated by this
Agreement, with respect to the Company Merger, shall have been approved by
all governing regulatory authorities, without any condition or requirement
that either HHC or ASB deem burdensome, or which otherwise would have a
material adverse effect on the business, operations, properties, assets or
financial condition of HHC, Hancock Bank, ASB or Bank 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 Merger Agreements
or this Agreement or to obtain damages or other relief in connection with
the execution of such agreements or the consummation of the transactions
contemplated hereby or thereby other than as described on the schedules
hereto; and no governmental agency shall have given notice to any party
hereto to the effect that consummation of the transactions contemplated by
the Merger Agreements or this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain consummation of
the Mergers.
8.2 Conditions to Obligations of ASB to Effect the Company Merger. The
obligations of ASB to effect the Company 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 (except to the extent such representation or warranty
is qualified by materiality in which case such representation or warranty
shall be true and correct) as of the date of this Agreement and as of the
Closing as though made at and as of the Closing, except as otherwise
contemplated by this Agreement or consented to in writing by ASB.
b. Performance of Obligations. HHC and Hancock Bank shall have
performed in all material respects all obligations and complied with all
covenants required by it under this Agreement prior to the Closing and HHC
shall deliver at Closing appropriate certificates setting forth such.
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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 Winter & Stennis,
P.A., special counsel to HHC, shall be delivered to ASB dated the Closing
Date and in form and substance reasonably satisfactory to ASB and its
counsel to the effect that:
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 with
respect to the Company Merger;
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
Mergers have been duly authorized and, when issued pursuant to the
Merger Agreements, will be
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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.
e. Tax Opinion. ASB shall have received from Watkins Ludlam Winter &
Stennis, P.A. an opinion of counsel, dated the Closing Date, as to certain
federal income tax aspects of the Company Merger, including an opinion that
such merger will constitute a tax free reorganization and shareholders of
American who receive Hancock Common Stock and cash in the merger will not
recognize gain with respect to the Hancock Common Stock.
f. Fairness Opinion. ASB and Bank shall have received a letter from
Brown, Burke Capital Partners, Inc., or another financial advisor selected
by ASB, dated within five (5) business days of the date of the mailing of
the Proxy Statement to its shareholders to the effect that the terms of the
Mergers are fair to its shareholders from a financial point of view.
g. Transaction Value. The total value of the HHC Common Stock to be
issued pursuant to the Company Merger shall be not less than 51% of the
total value of all consideration issued or deliverable by HHC pursuant to
this Agreement, all as determined under applicable provisions of the
Internal Revenue Code and regulations.
8.3 Conditions to Obligations of HHC to Effect the Company Merger. The
obligations of HHC to effect the Company Merger shall be subject to the
following additional conditions:
a. Representations and Warranties. The representations and
warranties of ASB and Bank set forth in this Agreement shall be true and
correct in all material respects (except to the extent such representation
or warranty is qualified by materiality in which case such representation
or warranty shall be true and correct) as of the date of this Agreement and
as of the Closing as though made at and as of the Closing, except as
otherwise contemplated by this Agreement or consented to in writing by HHC,
and except that no inaccuracy shall give rise to a termination right unless
it and all the other inaccuracies together result in a material and adverse
change in ASB.
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b. Performance of Obligations. ASB and Bank shall have performed in
all material respects all obligations and complied with all covenants
required by it under this Agreement prior to the Closing and ASB 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 ASB and
its subsidiaries taken as a whole, excluding the consequences of
terminations of the LYNK relationship and other items as contemplated by
this Agreement and its Schedules hereto.
d. Termination of Employment Contract. Immediately prior to the
Effective Date of the Company Merger, ASB and Bank shall have terminated
any and all employment contracts listed at Schedule 5.1.p. with no further
obligation whatsoever owed by any of the Parties hereto.
e. Affiliate Agreement. An Affiliate Agreement substantially in the
form specified on Exhibit C hereto (as contemplated by Section 5.9 hereof)
shall have been executed by each person who serves as an executive officer
or director of ASB or Bank or who beneficially owns 10% or more of the ASB
Common Stock outstanding; and HHC shall have received from each such person
a written confirmation dated not earlier than five business days prior to
the Closing Date to the effect that each representation made in such
person's Affiliate Agreement is true and correct as of the date of such
confirmation and that such person has complied with all of his or her
covenants therein through the date of such confirmation.
f. Legal Opinion. An Opinion of Daryll Hebert, counsel to ASB, shall
be delivered to HHC dated the Closing Date, and in form and substance
reasonably satisfactory to HHC to the effect that:
i. ASB is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Louisiana, and has
corporate authority to own and operate its businesses and properties
and to carry on its business as presently conducted by it;
ii. Bank is a Louisiana banking corporation, duly organized and
validly existing and in good standing under
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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. ASB and Bank had and have corporate authority to make,
execute and deliver this Agreement, it has been duly authorized and
approved by all necessary corporate action of ASB and Bank 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. To such counsel's knowledge after inquiry, there is no
litigation or proceeding pending or threatened against ASB or Bank
relating to the participation in or consummation of this Agreement by
ASB or Bank other than as may be disclosed in a schedule to this
Agreement and consummation will not violate any other contract,
agreement, charter or bylaw of ASB or Bank; and
v. ASB and Bank have complied with all laws and regulations
relating to dissenters' rights and all stock in ASB and Bank will be
acquired by HHC pursuant to the terms of this Agreement and that the
title and/or ownership interest in the shares of ASB and Bank stock
are as represented in ASB's and Bank's certificate at Closing and that
no known dispute exists as to the title and/or ownership of any such
shares.
ARTICLE 9
CLOSING
-------
9.1 Closing. The Closing shall be held at the offices of Hancock Bank or
such other place as HHC and ASB 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:
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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 ASB's or Bank's officers, directors, or employees or to
pay any stipulated compensation to any employees, other than as contemplated by
Section 7.18. 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 ASB or Bank
to such person.
ASB's and Bank's group health and life benefit plan as it relates to
employees, HHC shall have the option of either: (1) continuing such plan on and
after the Effective Date of the Mergers; or (2) discontinuing such plan upon the
Effective Date and 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.
10.2 Retirement Plan. ASB and Bank currently maintain the American
Security Bank of Ville Platte Employee Stock Ownership Plan (the "ESOP") and
401(k) Plan which will remain operative and in effect through the Effective Date
of the Company Merger (the
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"Plans"). The Plans will be terminated as of the Effective Date of the Company
Merger and distributed to vested employees of ASB and Bank 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 Plans 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 Plans' assets, if permitted by law. For purposes of Section 3.2b of
this Agreement, the trustee of the ESOP is the shareholder of record of the ASB
Common Stock held by the ESOP.
Upon the Effective Date of the Company 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 ASB and Bank benefit plans will continue
through the Effective Date of the Company 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. ASB shall be (and shall cause Bank to 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 and any reference to ASB in this
Article 11 shall be deemed to include ASB and 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.
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11.2 ASB's Remedies. In the event HHC breaches this Agreement, then ASB
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. If HHC breaches a warranty, representation,
covenant or agreement that does not materially affect the entire transaction,
then the amount of the damages shall be mutually agreed upon by the Parties, and
if they cannot agree as to the damage, then by an arbitrator mutually agreeable
to them, and the damage determined shall be conclusively binding on both Parties
and shall be treated as an adjustment to the Conversion Amount.
11.3 HHC's Remedies. In the event ASB breaches this Agreement, then HHC
shall give ASB notice of the breach, and ASB shall have a reasonable amount of
time to cure the breach, and ASB shall be liable for such economic damages that
are the direct result of any uncured breach, but ASB shall not be liable for
consequential or punitive damages. If ASB breaches a warranty, representation,
covenant or agreement that does not materially affect the entire transaction,
then the amount of the damages shall be mutually agreed upon by the Parties, and
if they cannot agree as to the damage, then by an arbitrator mutually agreeable
to them, and the damage determined shall be conclusively binding on both Parties
and shall be treated as an adjustment to the ASB Exchange Ratio.
11.4 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 ASB and Bank as follows:
a. Mutual Consent. At any time on or prior to the Effective Date of
the Company Merger, by the mutual consent in writing of a majority of the
members of each of the Board of Directors of the Parties hereto;
b. Expiration of Time. By the Board of Directors of HHC in writing
or by the Board of Directors of ASB in writing, if the Company Merger shall
have not become effective on or
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before March 31, 1999, 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 of the Company Merger;
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 the facts constituting such breach of a covenant, agreement,
representation or warranty 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 results in an increase in the cost of the
non-breaching Party's performance of this Agreement in excess of $200,000.
d. Regulatory Approval. By either Party hereto, at any time after
the FRB, FDIC, or OFI has denied any application for any approval or
clearance required to be obtained as a condition to the consummation of the
Mergers and the time-period for all appeals or requests for reconsideration
thereof has run.
e. Shareholder Approval. By either Party hereto, if the Company
Merger is not approved by the required vote of shareholders of ASB.
ARTICLE 13
APPRAISAL RIGHTS
----------------
13.1 Appraisal Rights of ASB. Notwithstanding any other provision of this
Agreement to the contrary, dissenting stockholders of ASB who comply with the
procedural requirements of the LCL Section 12:131 will be entitled to receive
payment of the fair cash value of their shares if the Company Merger is effected
upon approval by less than eighty percent of ASB's total voting power.
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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 other
than the Confidentiality Agreement heretofore executed by the Parties.
14.2 Effect of Termination or Consummation; Survival.
a. Upon termination of this Agreement pursuant to Article 12, the
Merger Agreements shall also terminate, and this Agreement and the Merger
Agreements shall be void and of no effect, and there shall be no liability
by reason of this Agreement or the Merger Agreements, or the termination
thereof, on the part of any party or their respective directors, officers,
employees, agents or shareholders except for any liability of a party
hereto arising out of (i) an intentional breach of any representation,
warranty or covenant in this Agreement prior to the date of termination,
except if such breach was required by law or by any bank or bank holding
company regulatory authority or (ii) a breach of the covenant in Section
7.14(c).
b. None of the representations and warranties in this Agreement or
in any instrument delivered pursuant hereto shall survive the Effective
Time. Each party hereby agrees that its sole right and remedy with respect
to any breach of a representation or warranty or covenant by the other
party prior to the Closing Date shall be not to close the transactions
described herein if such breach results in the nonsatisfaction of a
condition set forth in Article 8 hereof; provided, however, that the
foregoing shall not be deemed to be a waiver of any claim for an
intentional breach of a representation, warranty or covenant or for fraud
except if such breach is required by law or by any bank or bank holding
company regulatory authority. Each covenant of the Parties to be performed
after the Effective Time shall survive the Effective Time and may be
enforced by the person or persons in whose favor it runs.
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.
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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 ASB and HHC.
Except as otherwise specifically provided in this Agreement, including Section
14.2 nothing expressed or referred to in this Agreement is intended or shall be
construed to give any person other than ASB 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
ASB and HHC and for the benefit of no other person.
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.
ASB
---
ASB
126 E. Main Street
Ville Platte, Louisiana 70586-0280
Attn: John Fusilier, CEO
Fax Number: 318-363-1298
Copy to: Anthony J. Correro, III, Esq.
Correro Fishman Haygood Phelps Weiss
Walmsley & Casteix
201 St. Charles Avenue, 46th Floor
New Orleans, Louisiana 70170-4700
Fax Number: 504-586-5250
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HHC
---
Hancock Holding Company
Post Office Box 4019
Gulfport, MS 39502
Attn: Mr. Carl J. Chaney, Chief Financial Officer
Copy to: Watkins Ludlam Winter & Stennis, P.A.
P. O. Box 427
Jackson, MS 39205-0427
or
633 North State Street
Jackson, Mississippi 39202
Fax Number: (601) 949-4804
14.9 Waiver. ASB 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 ASB 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 ASB 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. 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, financial advisors and counsel. HHC will be
responsible for preparing the applications, regulatory filings and registration
statement necessary to obtain approval of the Mergers and the issuance of the
HHC common stock. ASB will be responsible for the cost of its (and Bank's)
accountants and legal counsel and will bear all costs related to conducting its
stockholders' meetings and obtaining stockholders' approval of the Mergers.
14.11 Press Releases. ASB 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 ASB,
from making any disclosures which its counsel deems necessary to conform with
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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.
[Signatures omitted]
44
<PAGE>
EXHIBIT A
COMPANY MERGER AGREEMENT
------------------------
This Company Merger Agreement is made and entered into as of the 15th day
of October, 1998, between Hancock Holding Company, Gulfport, Mississippi, a
Mississippi corporation ("HHC") and American Security Bancshares, Inc., Ville
Platte, a Louisiana corporation ("ASB") (the "Company Merger Agreement").
W I T N E S S E T H:
WHEREAS, HHC and ASB (collectively, the "Constituent Corporations") and
their respective Boards of Directors deem it advisable that ASB be merged into
HHC (the "Company Merger") pursuant to the provisions of the Louisiana Business
Corporation Law and upon the terms and conditions hereinafter set forth and in
the Plan (as hereinafter defined); and
WHEREAS, the Constituent Corporations have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Plan") (the defined terms in
which are used herein as defined therein) setting forth certain representations,
warranties, covenants and conditions relating to the Company Merger;
NOW THEREFORE, the Constituent Corporations hereby make, adopt and approve
this Company Merger Agreement and prescribe the terms and conditions of the
Company Merger and the mode of carrying the Company Merger into effect as
follows:
ARTICLE ONE
The Company Merger
------------------
Upon the terms and subject to the conditions hereinafter set forth, on the
Effective Date (as defined in Article Two hereof) ASB shall be merged into HHC
and the separate existence of ASB shall cease.
ARTICLE TWO
Effective Date and Time
-----------------------
The Company Merger shall be effective as of the date and time when this
Company Merger Agreement, having been certified, signed and acknowledged in the
manner required by law, is filed in the office of the Secretary of State of
Louisiana (such time and date being herein referred to as the "Effective Time"
and the "Effective Date," respectively).
45
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ARTICLE THREE
Conversion and Cancellation of Shares
-------------------------------------
a. On the Effective Date of the Company Merger, 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. Except for shares of ASB Common Stock as to which dissenter's
rights have been perfected and not withdrawn or otherwise forfeited under
Section 131 of the LBCL and subject to the provisions of Section 3.2d
relating to fractional shares on the Effective Date of the Company Merger,
each share of ASB Common Stock outstanding immediately following the
Company Merger shall be converted into (i) 13.8651 shares of HHC Common
Stock and (ii) the right to receive $285.22 in cash (the "Cash Payment");
provided, however, that any holder of 25 or fewer shares of ASB Common
Stock ("De Minimus Holdings") shall be entitled to receive a cash payment
of $950.75 per ASB share (the "De Minimus Holdings Cash Payment").
ARTICLE FOUR
Effects of Company Merger
-------------------------
The Company Merger shall have the effects set forth in Section 12:115 of
the Louisiana Business Corporation Law.
ARTICLE FIVE
Filing of Company Merger Agreement
----------------------------------
If this Company Merger Agreement is approved by the shareholders of ASB,
then the fact of such approval shall be certified hereon by the Secretary or
Assistant Secretary of ASB, and this Company Merger Agreement, as approved and
certified, shall be signed and acknowledged by the President or Vice President
of each of the Constituent Corporations. Thereafter, a multiple original of this
Company Merger Agreement, so certified, signed and acknowledged, shall be
delivered to the Secretary of State of Louisiana 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 Secretary of State of Louisiana
46
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shall be filed for record in the office of the recorder of mortgages for the
parishes of Evangeline and East Baton Rouge and shall also be recorded in the
conveyance records for the parishes of Evangeline and East Baton Rouge and any
other parish in which any of the Constituent Corporations owns real property on
the Effective Date of the Company Merger.
ARTICLE SIX
Miscellaneous
The obligations of the Constituent Corporations to effect the Company
Merger shall be subject to all of the terms and conditions of the Plan. At any
time prior to the Effective Date, this Company Merger Agreement may be
terminated (a) by the mutual agreement of the Boards of Directors of the
Constituent Corporations or (b) pursuant to the terms and provisions of the
Plan.
IN WITNESS WHEREOF, this Company Merger Agreement is signed by a majority
of the Directors of each of the Constituent Corporations as of the day first
above written.
[Signatures omitted]
47
<PAGE>
EXHIBIT B
BANK MERGER AGREEMENT
---------------------
This Bank Merger Agreement is made and entered into as of the 15th day of
October, 1998, between Hancock Bank of Louisiana, Baton Rouge, Louisiana, a
Louisiana banking corporation ("Hancock Bank") and American Security Bank, Ville
Platte, Louisiana, a Louisiana banking corporation ("Bank") (the "Bank Merger
Agreement").
WITNESSETH:
WHEREAS, Hancock Bank and Bank (collectively, the "Constituent Banks") and
their respective Boards of Directors deem it advisable that Bank be merged into
Hancock Bank (the "Bank Merger") pursuant to the provisions of the Louisiana
Banking Laws and upon the terms and conditions hereinafter set forth and in the
Plan (as hereinafter defined); and;
WHEREAS, the Constituent Corporations 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
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, on the
Effective Date (as defined in Article Two hereof) Bank shall be merged into
Hancock Bank and the separate existence of Bank shall cease.
ARTICLE TWO
Effective Date and Time
-----------------------
48
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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
-------------------------------------
Except for shares as to which dissenters' rights have been perfected and
not withdrawn or otherwise forfeited under Section 6:376 of the Louisiana
Banking Laws, on the Effective Date each issued and outstanding share of Bank
Common Stock, par value $10.00, shall be canceled.
ARTICLE FOUR
Effects of Bank Merger
----------------------
The Bank Merger shall have the effects set forth in Section 6:355 of the
Louisiana Banking Laws. Upon the Effective Date, each branch office maintained
by Bank 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 Bank 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
49
<PAGE>
of Merger issued by the OFI shall be filed for record in the office of the
recorder of mortgages for the parishes of Evangeline and East Baton Rouge and
shall also be recorded in the conveyance records for the parishes of Evangeline
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.
(Signatures omitted]
50
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EXHIBIT C
FORM OF AFFILIATE AGREEMENT
Hancock Holding Company
One Hancock Plaza
Gulfport, Mississippi 39502
Gentlemen:
I, the undersigned director, executive officer or significant stockholder
of American Security Bancshares, Inc. ("ASB") Ville Platte, Louisiana,
acknowledge and understand that, as an affiliate of ASB, Rule 145 promulgated
under the Securities Act of 1933, as amended (the "Act"), restricts my ability
to sell, pledge, transfer or otherwise dispose of the shares of Hancock Holding
Company ("HHC") common stock to be issued to me in the Agreement and Plan of
Merger ("Merger") between HHC and ASB, unless the requirements of Rule 145(d)
are satisfied or the sale, transfer or disposition is otherwise in compliance
with the Act.
On the basis of the foregoing, and in consideration of the delivery to me
of the HHC Common Stock into which my ASB common stock will be converted, I
agree that:
1. I will not sell, transfer, pledge, alienate, encumber or otherwise
dispose of said securities in violation of the Act or rules of
regulations promulgated thereunder.
2. I have no plan or intention to sell, transfer or otherwise dispose of
a number of said securities to be received in the Merger that would
reduce ASB 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 ASB common stock
as of the same date.
3. I expressly agree to the placement of a restrictive legend on any and
all certificates for shares of HHC Common Stock 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, as amended (the
"Act"), applies. The shares represented by this certificate may not
be sold, transferred, pledged or assigned, 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 _________________________, 1998 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."
4. I agree to be bound by the terms of this letter until the expiration
of the time period set forth in Rule 145(d)(2) or (3), whichever may
apply.
Sincerely,
_____________________________________
Title: ______________________________
Accepted and agreed to:
HANCOCK HOLDING COMPANY Date: _____________________
By: ______________________________
Title: ___________________________ Number of ASB Shares owned: _____________
51
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Hancock Holding Company on Form S-4 of our report dated January 13, 1998,
incorporated by reference in the Annual Report on Form 10-K of Hancock Holding
Company for the year ended December 31, 1997 and to the reference to us under
the heading "Experts" in the Prospectus/Proxy Statement, which is a part of this
Registration Statement.
Deloitte & Touche LLP
New Orleans, Louisiana
November 6, 1998
<PAGE>
EXHIBIT 23.2
BROUSSARD, POCHE, LEWIS & BREAUX, LLP
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors Consent
We consent to the use in this Registration Statement of Hancock Holding Co.
on Form S-4 of our audit report dated May 29, 1998 relating to the financial
statement of American Security Bancshares, Inc. and subsidiary, appearing in the
Proxy Statement/Prospectus, which is a part of this Registration Statement, and
to the reference to us under the heading "Experts" in such Proxy
Statement/Prospectus.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX, LLP
November 9, 1998
Lafayette, Louisiana
<PAGE>
EXHIBIT 23.4 CONSENT OF BROWN, BURKE CAPITAL PARTNERS INC.
BROWN, BURKE CAPITAL PARTNERS INC.
ATLANTA, GEORGIA
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on Form S-4 of
Hancock Holding Company of our letter to the Board of Directors of American
Security Bancshares of Ville Platte, Inc. included as Appendix A to the Proxy
Statement-Prospectus that is part of the Registration Statement, and to the
references to such letter and to our firm in the Proxy Statement-Prospectus. In
giving such consent we do not thereby admit that we come within the category of
persns 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.
BROWN, BURKE CAPITAL PARTNERS INC
November 10, 1998
<PAGE>
AMERICAN SECURITY BANCSHARES OF VILLE PLATTE, INC.
126 E. MAIN STREET
VILLE, PLATTE, LOUISIANA 70586
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Drouet W. Vidrine and Michael J. Rhodes or
either 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 American Security Bancshares of Ville Platte, Inc. ("American")
held of record by the undersigned on __________, 1998, at the special meeting of
shareholders (the "Meeting") to be held on ___________ , 1998, at 1:00 p.m.,
local time, and at any and all adjournments thereof as follows:
1. The proposal to approve and adopt the Amended and Restated Agreement and Plan
of Merger and related merger agreements among Hancock Holding Company
("Hancock") and American whereby American will be merged into Hancock and
American Security Bank will be merged 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 Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" Proposal 1.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
DISCRETION.
Please sign exactly as your name appears on certificate(s) representing shares
to be voted by this proxy. When signing as attorney, executor, administrator,
trustee, or guardian, please give your full title. If a corporation, please
sign in full corporate name by the president or other authorized officer. If a
partnership, please sign in full partnership name by an authorized person. If
shares are held as joint tenants, each holder should sign.
Dated ___________________, 1998
________________________ ________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
