As filed with the Securities and Exchange Commission on April 22, 1999
REGISTRATION NO. 333-_____
- ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------
SIMMONS FIRST NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
ARKANSAS 6021 71-0407808
State or other jurisdiction (Primary Standard (I.R.S.employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
501 Main Street, Pine Bluff, Arkansas 71601 (870) 541-1000
(Address,including zip code and telephone number, including area code,
of registrant's principal executive offices)
--------------------------
J. THOMAS MAY,
Chairman of the Board, President and Chief Executive Officer
Simmons First National Corporation
501 Main Street
Pine Bluff, Arkansas 71601
(501) 541-1103
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
With Copies to:
PATRICK A. BURROW, Esq. WILLIAM I. PREWETT, Esq.
WILLIAMS & ANDERSON LLP COMPTON, PREWETT, THOMAS & HICKEY, P.A.
111 CENTER STREET, 22 ND FLOOR 423 NORTH WASHINGTON
LITTLE ROCK, ARKANSAS 72201 EL DORADO, ARKANSAS 71731
(501) 372-0800 (870) 862-3478
--------------------------
Approximate date of commencement of proposed sale of securities to the
public: As promptly as practicable after the effective date of this registration
statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered (1) Offering Price per Share Aggregate Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 par 785,000 $17.01 $13,350,254 $3,711
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based upon the book value of NBC Bank Corp., which amount is estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457.
</FN>
</TABLE>
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>
SIMMONS FIRST NATIONAL CORPORATION
CROSS-REFERENCE SHEET
Pursuant to Item 501 (b) of Regulation S-K Showing Location in the
Prospectus of Information by Items 1 through 19,
Part I, of Form S-4 Registration Statement
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
----------------------- ----------------------
1. Forepart of the Registration Registration Statement Cover;
Statement and Outside Front Front Cover Page of Prospectus
Cover Page of Prospectus.
2. Inside Front and Outside Inside Front and Back Cover Page
Back Cover Page of of Prospectus;Available Information;
Prospectus. Documents Incorporated by Reference
Table of Contents
3. Risk Factors, Ratio of Prospectus Summary; Simmons First
Earnings to Fixed Charges National Corporation
and Other Information.
4. Terms of Transaction. The Merger
5. Pro Forma Financial Information. Financial Information
6. Material Contacts with the The Merger
Company Being Acquired.
7. Additional Information *
Required for Reoffering by
Persons and Parties Deemed
to be Underwriters.
8. Interests of Named Experts Legal Matters
and Counsel.
9. Disclosure of Commission *
Position on Indemnification
for Securities Act Liabilities.
10. Information with Respect to Simmons First National Corporation;
S-3 Registrants. Incorporation of Certain Documents
by Reference; Available Information
11. Incorporation of Certain Incorporation of Certain Documents
Information by Reference. by Reference
12. Information with Respect to *
S-2 or S-3 Registrants.
13. Incorporation of Certain *
Information by Reference.
<PAGE>
14. Information with Respect to *
Registrants other than S-3 or
S-2 Registrants.
15. Information with Respect to *
S-3 Companies.
16. Information with Respect to *
S-2 or S-3 Companies.
17. Information with Respect to Summary; NBC Bank Corp.
Companies Other than S-3 or Special Meeting; Financial
S-2 Companies. Information; NBC Bank Corp.
Financial Statements
18. Information if Proxies, NBC Bank Corp. Special Meeting;
Consents or Authorizations NBC Bank Corp.
are to be Solicited.
19. Information if Proxies Simmons First National Corporation
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer.
<PAGE>
NBC BANK CORP.
PROXY STATEMENT
SIMMONS FIRST NATIONAL CORPORATION
PROSPECTUS
785,000 Shares
Class A Common Stock, $1.00 Par Value
Special Shareholders Meeting
The Board of Directors of NBC Bank Corp. ("NBCBC") is furnishing this Proxy
Statement and Prospectus to its stockholders to solicit proxies for use at the
special meeting of stockholders of NBCBC to be held on June 24, 1999.
Purpose - Merger with Simmons First National Corporation
At the meeting, the stockholders of NBCBC will vote on a proposal to
authorize and approve the merger of NBCBC with and into Simmons First National
Corporation ("Simmons") as set forth in the Agreement and Plan of Merger, dated
March 22, 1999. If the merger is approved, NBCBC will merge into Simmons and
will no longer be a separate corporation. Simmons has agreed to register under
the Securities Act of 1933, as amended, up to 785,000 shares of Simmons Class A,
$1.00 par value, Common Stock to be issued in the merger to stockholders of
NBCBC in exchange for their NBCBC stock. NBCBC shareholders will receive 4.1638
shares of Simmons' common stock in exchange for each share of NBCBC stock owned.
No fractional shares of Simmons Common Stock will be issued, instead NBCBC
shareholders will receive cash for any fractional shares due them. This Proxy
Statement also serves as a Prospectus of Simmons under the Securities Act for
the issuance of shares of Simmons Common Stock to stockholders of NBCBC.
Proxy Mailing
This Proxy Statement and the accompanying forms of proxy were mailed to the
stockholders of NBCBC on or about May ___, 1999.
Recent Stock Price
On May ___, 1999, the closing price per share of Simmons First National
Corporation Class A Common Stock (symbol: SFNCA) on the NASDAQ, National Market
System was $______.
For a more complete discussion of the merger, you are strongly urged to read and
consider carefully this proxy statement in its entirety.
Neither the SEC nor any state securities agency has approved these securities or
determined that this proxy statement and prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
The date of this Proxy Statement is May ___, 1999. The information contained in
the Proxy may change after the date of this Proxy Statement. You should not
assume that none of the information in the Proxy Statement has changed just
because the merger is completed or you receive shares of Simmons Common Stock
pursuant to the merger.
Neither Simmons nor NBCBC have authorized anyone to give any information or to
make any promises, not contained in proxy statement, related to the proxy
solicitation and the stock offering made by this proxy statement. If you receive
any unauthorized information or promises, you should not rely on them.
The proxy solicitation and stock offering are effective only if these activities
are legal in the states and countries in which made.
<PAGE>
AVAILABLE INFORMATION
Simmons is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended. In accordance with this Act,
Simmons files annual reports on form 10-K, quarterly on form 10-Q, current on
form 8-K, proxy statements and other information with the Securities and
Exchange Commission. Reports, proxy statements and other information concerning
Simmons may be inspected and copied at the public reference facilities
maintained by the SEC. These facilities are located at:
o Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
o Citicorp Center,500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
o 7 World Trade Center, Suite 1300, New York, New York 10048.
You may obtain copies of such material from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The public may obtain information regarding the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy statements, registration statements
and other information regarding companies which file electronically with the
SEC. The address of that site is http://www.sec.gov. In addition, reports, proxy
statements and other information concerning the Company may be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
Simmons has filed with the SEC a Registration Statement on Form S-4 under
the Securities Act for a maximum of 785,000 shares of Simmons Class A Common
Stock to be issued upon consummation of the merger. This Proxy Statement does
not contain all the information set forth in the Registration Statement and its
exhibits. Certain portions of the information have been omitted as allowed by
the rules and regulations of the SEC. You may obtain a photocopy of the
Registration Statement from the SEC, upon payment of prescribed copying charges
or you may obtain a copy from the Internet site referred to above. For further
information, you should refer to the Registration Statement and its exhibits.
Statements in this Proxy Statement (or any document incorporated by reference in
this Proxy Statement) relating to the contents of any contract or other document
are not necessarily complete. For additional information about the contract or
other document, you should refer to the Registration Statement and its Exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
INCLUDED OR FURNISHED WITH THE PROXY STATEMENT. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM MR. BARRY L. CROW, EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, SIMMONS FIRST NATIONAL CORPORATION, 501 MAIN STREET, PINE
BLUFF, ARKANSAS 71601, (870) 541-1350. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE ON OR BEFORE [7 days prior to meeting
date], 1999.
The following documents have been filed with the SEC under the Exchange Act
and are incorporated by reference into this Proxy Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the Commission on March 25, 1999.
Disclosed in Note 19 of the Company's financial statements for the year
ended December 31, 1998, the Company consummated a merger with Lincoln
Bankshares, Inc. in January 1999. The financial statements in the 10-K
have not been restated to give effect of the merger.
2. The description of the Company's Common Stock contained in the
Registration Statement on Form S-2, filed April 16, 1993 (File No.
0-06253) and any amendment or report filed for the purpose of updating
such description.
<PAGE>
Each document filed after the date of this Proxy Statement pursuant to
Section 13 (a), 13(c), 14 or 15(d) of the Exchange Act but prior to the special
meeting of the NBCBC stockholders will be treated as incorporated by reference
in this Proxy Statement. These later filed documents shall be treated as a part
of this Proxy Statement from the date of filing of the document. Any statement
contained in a document incorporated in this Proxy Statement shall be treated as
modified or replaced if a statement contained in this Proxy Statement or in any
later filed document which is treated as incorporated by reference modifies or
replaces the original document.
Simmons has supplied all information in this Proxy Statement relating to
Simmons and NBCBC has supplied all information relating to NBCBC.
TABLE OF CONTENTS
SUMMARY
Simmons.................................................................5
NBC Bank Corp...........................................................5
The Merger..............................................................6
Election by NBC Bank Corp. Stockholders under the 1987 Act..............7
The NBC Bank Corp. Special Meeting .....................................7
Certain Federal Income Tax Consequences.................................7
Dissenters' Rights......................................................7
Regulatory Approvals....................................................8
Accounting Treatment....................................................8
Market Prices...........................................................8
Pro Forma and Selected Financial Data...................................9
Pro Forma and Selected Financial Data..................................10
THE NBC BANK CORP. SPECIAL MEETING
Date, Time and Place...................................................11
Purpose of Meeting ....................................................11
Shares Outstanding and Entitled to Vote; Record Date...................11
Vote Required..........................................................11
Voting; Solicitation of Proxies........................................11
THE MERGER
Background of the Merger...............................................12
Reason for the Merger...............................................12-13
The Agreement.......................................................13-14
Fairness Opinion.......................................................14
Regulatory Approvals...................................................14
Antitrust Matters......................................................15
Certain Federal Income Tax Consequences.............................15-16
Accounting Treatment ..................................................16
Right to Dissent.......................................................16
Exchange Ratio for the Merger..........................................17
Expenses of the Merger.................................................17
FINANCIAL INFORMATION
Pro Form Unaudited Combined Financial Statements.......................17
Pro Forma Combined Balance Sheet.......................................18
Pro Forma Combined Income Statements................................19-21
ELECTION BY NBC BANK COP. UNDER THE 1987 ACT
Election Incidental To The Merger......................................22
Reason for the Election................................................22
Result of the Election..............................................22-24
SIMMONS FIRST NATIONAL CORPORATION
General.............................................................24-25
Regulation..........................................................25-27
Offices................................................................27
Employees..............................................................27
Description of Simmons Common Stock....................................27
Resale of Simmons Common Stock......................................27-28
<PAGE>
No Shareholder Approval Required ......................................28
NBC BANK CORP.
Description of Business................................................28
Management's Discussion and Analysis................................28-45
Directors and Executive Officers....................................46-47
Transactions with Management...........................................47
Principal Stockholders of NBC Bank Corp.............................47-48
Competition............................................................48
Litigation.............................................................48
Offices................................................................48
Employees..............................................................48
Description of NBC Bank Corp. Stock....................................48
Comparison of Rights of Holders of NBC Bank Corp. Common Stock
and Simmons Common Stock............................................48-49
LEGAL MATTERS AND EXPERTS
Legal Opinions.........................................................49
Experts.............................................................49-50
General................................................................50
INDEX TO NBC BANK CORP. FINANCIAL STATEMENTS
ANNEXES
I- Agreement and Plan of Merger ..................................74-93
II- Fairness Opinion...............................................94-95
III-Arkansas Business Corporation Act of 1965
Section 4-26-1007 et.seq............ .........................96-101
<PAGE>
SUMMARY
The following is a summary of certain information in this Proxy Statement.
This is only a summary, you should refer to the more detailed discussion in the
Proxy Statement and Annexes and other documents for additional information. You
are urged to read carefully this Proxy Statement and the attached Annexes in
their entirety.
Simmons
Simmons First National Corporation ("Simmons") is registered as a bank
holding company under the Bank Holding Company Act of 1956. Simmons owns the
following seven subsidiary banks in Arkansas which conduct banking operations
through 50 offices located in 26 communities in Arkansas:
Simmons First National Bank Pine Bluff,Arkansas
Simmons First Bank of Jonesboro Jonesboro, Arkansas
Simmons First Bank of South Arkansas Lake Village, Arkansas
Simmons First Bank of Dumas Dumas, Arkansas
Simmons First Bank of Northwest Arkansas Rogers, Arkansas
Simmons First Bank of Russellville Russellville, Arkansas
Simmons First Bank of Searcy Searcy, Arkansas.
Its lead bank, Simmons First National Bank (the "Bank"), is a national bank
which has been in operation since 1903. The Bank has received favorable national
publicity for offering one of the lowest credit card interest rates in the
United States. The Bank's primary market area is the State of Arkansas, except
for its credit cards which are marketed nationally.
Recent Financial Information on Simmons
December 31, 1998
-----------------
Total Consolidated Assets $1,540.5 million
Total Equity Capital $ 137.0 million
Simmons' Common Stock is traded on the National Association of Securities
Dealers Automated Quotation National Market System over-the-counter market
(NASDAQ-NMS) under the symbol "SFNCA". The Corporation's principal executive
offices are located at 501 Main Street, Pine Bluff, Arkansas 71601, and its
telephone number is (870) 541-1000.
NBC Bank Corp.
NBCBC is registered as a bank holding company under the Bank Holding
Company Act of 1956. NBCBC owns all of the outstanding stock of National Bank of
Commerce, El Dorado, Arkansas. There is no public market for shares of NBCBC's
outstanding capital stock. NBCBC's principal executive offices are located at
100 West Grove Street, El Dorado, Arkansas 71730; its telephone number is (870)
862-8161.
Recent Financial Information on NBCBC
December 31, 1998
-----------------
Total Consolidated Assets $ 146.5 million
Total Equity Capital $ 13.4 million
<PAGE>
The Merger
On March 22, 1999, Simmons and NBCBC entered into a merger agreement. Upon
completion of the merger, NBCBC will become a part of Simmons and will no longer
exist as a separate corporation. Simmons will issue up to 785,000 shares of
Simmons Common Stock to the NBCBC shareholders in exchange for their NBCBC
shares. No fractional shares of Simmons Common Stock will be issued. NBCBC
shareholders will receive cash instead of fractional shares of Simmons Common
Stock. Simmons and NBCBC believe that the Merger will
* provide liquidity to the holders of NBCBC common stock,
* expand the present banking services of NBCBC
* expand the geographical presence of Simmons into the banking markets
in which NBCBC operates, and
* increase the earning potential of the consolidated enterprises.
See "The Merger-The Agreement."
Upon completion of the Merger, NBCBC will no longer exist as a corporation.
Simmons will be the surviving corporation in the Merger. Each share of NBCBC
common stock outstanding immediately prior to the effective time of the Merger
(other than shares as to which dissenter's rights have been perfected under the
Arkansas Business Corporation Act of 1987) will be converted into the right to
receive 4.1638 shares of Simmons Common Stock. The Merger will only be completed
if it qualifies as a tax-free reorganization. Simmons will not issue fractional
shares of its common stock in the Merger. Any holder of NBCBC common stock
entitled to a fractional share will be paid cash instead of the fractional
shares.
NBCBC STOCKHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF SIMMONS COMMON STOCK
FOR EACH SHARE OF NBCBC COMMON STOCK BASED UPON THE EXCHANGE RATIO. THE VALUE OF
THE SIMMONS COMMON STOCK TO BE DELIVERED TO NBCBC STOCKHOLDERS UPON COMPLETION
OF THE MERGER IS SUBJECT TO CHANGE, DUE TO FLUCTUATION OF THE PRICE OF SIMMONS
COMMON STOCK. SIMILARLY, THE MARKET VALUE OF THE SHARES OF SIMMONS COMMON STOCK
THAT NBCBC STOCKHOLDERS RECEIVE IN THE MERGER MAY INCREASE OR DECREASE FOLLOWING
THE MERGER, DUE TO THE MARKET FLUCTUATION OF SIMMONS COMMON STOCK
On March 22, 1999, immediately prior to the announcement of the definitive
agreement, shares of Simmons Common Stock closed on the NASDAQ-NMS at a price of
$32.00. There is no established market value for the stock of NBCBC.
THE BOARD OF DIRECTORS OF NBCBC RECOMMENDS THAT THE NBCBC STOCKHOLDERS VOTE IN
FAVOR OF THE APPROVAL OF THE MERGER.
<PAGE>
Election by NBC Bank Corp. Stockholders under the 1987 Act
The Election by the stockholders of NBCBC to be governed by the Arkansas
Business Corporation Act of 1987 (the "1987 Act") is desirable to implement the
Merger. However, the election is effective only if the Merger is approved.
NBCBC is an Arkansas corporation organized under the Arkansas Business
Corporation Act of 1965, (the "1965 Act"). The 1987 Act is applicable to
corporations that were incorporated on or after January 1, 1988 and those other
corporations that elect to be governed by the 1987 Act by amending their
Articles of Incorporation to adopt the 1987 Act. The stockholders of Simmons
elected to be governed by the 1987 Act by amending its Articles of Incorporation
during 1994.
Both the 1965 Act and the 1987 Act contain merger procedures. Although both
Acts contain similar provisions, the parties have determined that it is
desirable for NBCBC to elect to be governed by the 1987 Act to implement the
merger.
The NBC Bank Corp. Special Meeting
The Board of Directors of NBCBC has called a Special Stockholders Meeting
to consider and vote on the proposed merger and the election to be governed by
the 1987 Act. This meeting will be held at the offices of NBCBC, 100 West Grove
Street, El Dorado, Arkansas on June 24, 1999, at 3:00 p.m. Central Daylight
Savings Time.
The holders of two-thirds of the outstanding shares of NBCBC common stock
must vote "yes" to approve the Merger and the election under the 1987 Act. The
principal shareholders, directors, executive officers and certain related
persons and trusts hold a total of 25.38% of the outstanding stock of NBCBC.
Management of NBCBC expects that the principal shareholders, directors,
executive officers, and those related persons and trusts will vote in favor of
the Merger. Stockholders of NBCBC are entitled to assert dissenters' rights. See
"The Merger - Right to Dissent".
Certain Federal Income Tax Consequences
Simmons and NBCBC intend for the Merger to be treated as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, neither Simmons nor NBCBC will recognize any
gain or loss as a result of the Merger. NBCBC's stockholders will not recognize
gain or loss upon the receipt of solely Simmons Common Stock in exchange for
NBCBC common stock. NBCBC will receive an opinion from Simmons' counsel, that
shareholders who exchange their NBCBC common stock for shares of Simmons Common
Stock will not recognize a gain or loss in the Merger. The parties to this
transaction will not request a ruling from the Internal Revenue Service
concerning this transaction. See "The Merger - Certain Federal Income Tax
Consequences."
Dissenters' Rights
NBCBC shareholders are entitled to assert dissenter's rights due to the
Merger. NBCBC Shareholders may exercise their right of dissent under the 1965
Act. The procedure is described in the "The Merger - Right to Dissent". The
applicable part of the statute is set forth in Annex III.
<PAGE>
Regulatory Approvals
Simmons has applied for approval from the Board of Governors of the Federal
Reserve to merge NBCBC into Simmons. See "The Merger - Regulatory Approvals."
Accounting Treatment
Simmons intends to treat the Merger as a pooling-of-interests for
accounting purposes. See "The Merger - Accounting Treatment."
Market Prices
Simmons Common Stock is traded over-the-counter in the NASDAQ National
Market System. NBCBC common stock is not traded publicly and there is no quoted
market for the stock. The table below shows the high and low closing sales
prices for Simmons Common Stock.
<TABLE>
<CAPTION>
Simmons Common Stock(1)
Price Per Share
High Low
----------- ------------
<S> <C> <C>
1996 $ 27.25 $ 20.50
1997 $ 42.00 $ 25.50
1998 $ 53.25 $ 33.63
01/01/99 - 3/31/99 $ 40.50 $ 31.50
<FN>
(1) All share prices have been adjusted for a 50% stock dividend which was
paid December 6, 1996.
</FN>
</TABLE>
On March 22, 1999, immediately prior to the public announcement of the
definitive agreement between Simmons and NBCBC as to the proposed merger
transaction, the closing sales price for Simmons Common Stock was $32.00. On May
___, 1999, the closing sales price for Simmons Common Stock was $____.
<PAGE>
Pro Forma and Selected Financial Data
The table on the following page shows selected historical financial
information of Simmons and NBCBC and certain unaudited pro forma financial
information after giving effect to the Merger. The Merger is treated as a
pooling-of-interests for accounting purposes. The table also shows certain
historical per share information about Simmons and NBCBC and pro forma
equivalent per share amounts giving effect to the proposed Merger. The Simmons
historical information for each of the years in the three-year period ended
December 31, 1998 are based on the historical financial statements of Simmons as
audited by Baird, Kurtz and Dobson, independent public accountants restated to
give retroactive effect to the merger of Simmons and Lincoln Bankshares, Inc.
which occurred in January 1999, as disclosed in Note 19 of the financial
statements of Simmons for the year ended December 31, 1998, incorporated herein
by reference. The NBCBC historical information as of December 31, 1998 and 1997
and for each of the years in the three-year period ended December 31, 1998 are
based on the historical financial statements of NBCBC as audited by Deloitte &
Touche LLP independent public accountants. The information as of December 31,
1996, is derived from the Company's financial records as of that date. The pro
forma information shown is a combination of prior fiscal periods of Simmons and
NBCBC. This information should be read together with the historical and pro
forma financial statements and related notes. The assumptions used in the
preparation of this table are stated elsewhere in the "Financial Information"
section of this Proxy Statement. This information does not show or project
future operations of Simmons after the Merger or actual results of operations if
the Merger had been completed prior to the periods indicated. Pro forma
consolidated per share data of Simmons and NBCBC is prepared using the exchange
ratio of 4.1638 shares of Simmons Common Stock for each share of NBCBC common
stock.
This information should be read together with the consolidated financial
statements of each of Simmons and NBCBC, and the related notes, which are
incorporated into this Proxy Statement by reference and together with the
unaudited pro forma financial information, including the notes, appearing in
this Proxy Statement. See "Incorporation of Certain Documents by Reference" and
"Financial Information."
<PAGE>
<TABLE>
<CAPTION>
Pro Forma and Selected Financial Data
(Amounts in thousands, except per share)
(unaudited)
For the Year Ended December 31,
------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest income and other income
Simmons First National Corp. $ 87,594 $ 75,296 $ 65,639
NBC Bank Corp 6,557 6,755 6,221
Pro Forma 94,151 82,051 71,860
Net income
Simmons First National Corp. 14,839 13,266 11,716
NBC Bank Corp. 1,648 1,704 1,623
Pro Forma 16,487 14,970 13,339
Diluted net income per common share
Simmons First National Corp. 2.26 2.04 1.80
NBC Bank Corp. 8.77 9.13 8.75
Pro Forma 2.24 2.05 1.83
Historical dividends per common shares
Simmons First National Corp. 0.64 0.56 0.48
NBC Bank Corp. 6.00 6.00 3.00
Pro Forma 0.64 0.56 0.48
Total Assets (end of period)
Simmons First National Corp. 1,540,472 1,484,710 1,029,588
NBC Bank Corp. 146,538 140,782 135,968
Pro Forma 1,687,010 1,625,492 1,165,556
Long-term borrowings (end of period)
Simmons First National Corp. 49,340 53,558 1,067
NBC Bank Corp. -- 50 200
Pro Forma 49,340 53,608 1,267
Total stockholders' equity (end of period)
Simmons First National Corp. 137,034 125,391 114,820
NBC Bank Corp. 13,350 12,688 11,889
Pro Forma 150,384 138,079 126,709
Book value per common share (end of period)
Simmons First National Corp. 21.23
NBC Bank Corp. 70.82
Pro Forma 20.77
</TABLE>
<PAGE>
THE NBC BANK CORP. SPECIAL MEETING
DATE, TIME AND PLACE
The NBCBC Special Shareholders Meeting will be held on June 24, 1999,
commencing at 3:00 p.m. Central Daylight Savings Time, at the offices of NBCBC,
100 West Grove Street, El Dorado, Arkansas.
PURPOSE OF MEETING
The purpose of the NBCBC Special Shareholders Meeting is to consider and
vote upon the adoption of the Agreement and Plan of Merger ("Agreement"), by and
between NBCBC and Simmons, dated March 22, 1999 and to consider and vote the
adoption of the 1987 Act.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on May 10, 1999, has been fixed by the Board of
Directors of NBCBC as the record date for the determination of holders of NBCBC
common stock entitled to notice of and to vote at the NBCBC Special Shareholders
Meeting. At the close of business on May 10, 1999, there were 188,529 shares of
NBCBC common stock issued and outstanding held by ___ shareholders of record.
Holders of record of NBCBC common stock on the record date are entitled to one
vote per share and are entitled to dissenters' rights. See "The Merger - Right
to Dissent."
VOTE REQUIRED
The affirmative vote of two-thirds of all the shares of NBCBC common stock
outstanding on the record date is required to approve the Merger and to adopt
the 1987 Act.
As of May 10, 1999, the principal shareholders, directors, executive
officers and their affiliates own 25.38% of the outstanding stock of NBCBC.
Management anticipates that the directors, executive officers, and their
affiliates will vote in favor of the Merger, and therefore, the approval of the
Merger is assured.
VOTING; SOLICITATION OF PROXIES
Proxies for use at the NBCBC Special Meeting accompany this Proxy Statement
delivered to record holders of NBCBC common stock and such proxies are solicited
on behalf of the Board of Directors of NBCBC. A holder of NBCBC common stock may
use his proxy if he is unable to attend the NBCBC Special Meeting in person or
wishes to have his shares voted by proxy even if he does attend the meeting. The
proxy may be revoked in writing by the person giving it at any time before it is
exercised, by notice of such revocation to the secretary of NBCBC, or by
submitting a proxy having a later date, or by such person appearing at the NBCBC
meeting and electing to vote in person. All proxies validly submitted and not
revoked will be voted in the manner specified therein. If no specification is
made, the proxies will be voted in favor of the Merger and the adoption of the
1987 Act.
NBCBC will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mail, proxies may be solicited by
personal interview. Officers and other employees of NBCBC and its subsidiary
acting on NBCBC's behalf, may solicit proxies personally.
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
In June, 1998, the Bank received correspondence from three significant
shareholders regarding their desire that the bank's board evaluate strategic
alternatives, including the possibility of affiliating with another bank.
Specific concerns of these shareholders related to the liquidity of NBC Bank
Corp. stock, as well as significant premiums being paid in bank acquisitions in
Arkansas and the Southwest.
These requests were communicated through the Executive Committee and to the
full Board of Directors, who empanelled a Capital Planning committee comprised
of three directors to study the issue and make recommendations. After
considering the issue, the Capital Planning Committee recommended that the Board
consider retaining an advisor to assist in this process. Brown, Burke Capital
Partners, Inc. of Atlanta, Georgia was retained.
As a result of several previous overtures from Simmons First National
Corporation, and the close relationships between senior management and directors
of Simmons and NBC Bank Corp., Simmons was notified of our willingness to
consider an affiliation.
Simmons requested a meeting with the Board of Directors on September 28,
1998, and presented a preliminary expression of interest to acquire NBC Bank
Corp. Over the next several months, NBC Bank Corp.'s Capital Planning Committee,
Executive Committee, and Board met concerning the possible merger of NBC Bank
Corp. into Simmons First National Corporation. Representatives from Brown, Burke
Capital Partners, Inc. met with directors on several occasions, providing
assistance and analysis related to Simmons and several other identified
potential acquirers. Discussions with Simmons progressed, and on February 9,
1999, Simmons was invited to conduct on site due Diligence with respect to NBC
Bank Corp. and its subsidiary, National Bank of Commerce, El Dorado, Arkansas.
Brown, Burke Capital Partners, Inc. was employed to conduct due diligence of
Simmons.
Following completion of this due diligence process, NBC Bank Corp. received
a formal written offer from Simmons First National Corporation. After
consideration of this offer, the decision was made by NBC Bank Corp. directors
to pursue additional negotiations with Simmons.
NBC Bank Corp. and Simmons exchanged certain information for review by
each party's respective management, counsel, and advisors. Further, negotiations
commenced regarding the negotiation of the merger agreement. On March 22, 1999,
NBC Bank Corp. Board of Directors met for purposes of considering and acting
upon thE proposed agreement between NBC Bank Corp. and Simmons First National
Corporation. Based upon the terms of the Agreement, NBC Bank Corp. directors
unanimously approved the Agreement.
REASONS FOR THE MERGER
In reaching its determination that the Merger and the Agreement are fair
to, and in the best interest of NBC Bank Corp. and its shareholders, NBC Bank
Corp.'s Board of Directors consulted with its consultants and counsel, as well
as with NBC Bank Corp.'s management, and considered a number of factors,
including, without limitations, the following:
a. The familiarity of the NBC Bank Corp. Board of Directors with
and review of NBC Bank Corp.'s business, operations, earnings
and financial condition;
b. The recent market performance of Simmons Common Stock, as well as
the recent earnings performance and dividend payment history of
Simmons;
c. The belief of the NBC Bank Corp.'s board of Directors that the
terms of the Agreement are attractive in that the Agreement allows
NBC Bank Corp. shareholders to become shareholders in Simmons;
<PAGE>
d. The wide range of banking products and service Simmons offers
to its customers;
e. The current and prospective economic and regulatory environment
and competitive constraints facing the banking industry and
financial institutions in NBC Bank Corp.'s market area;
f. The belief of the NBC Bank Corp. Board of Directors, based upon
analysis of the anticipated financial effects of the Merger, that
upon consummation of the Merger, Simmons and its banking
subsidiaries would be well-capitalized institutions, with
financial positions in excess of all applicable regulatory
capital requirements;
g. The recent business combinations involving financial institutions,
either announced or completed, during the past 24 to 36 months in
the United States, the State of Arkansas and contiguous states and
the effect of such combinations on competitive conditions in NBC
Bank Corp.'s market area;
h. The belief of the NBC Bank Corp. Board of Directors that, in light
of the reasons discussed above, Simmons was an attractive choice
as a long-term affiliation partner of NBC Bank Corp.; and
i. The expectation that the Merger will generally be a tax-free
transaction to NBC Bank Corp. shareholders who receive Simmons
Common Stock by virtue of the Merger (see "Certain Federal Income
Tax Consequences").
NBC Bank Corp.'s Board did not assign any specific or relative weight to
the foregoing factors in their considerations.
THE BOARD OF DIRECTORS OF NBC BANK CORP. BELIEVES THAT THE PROPOSED ACQUISITION
IS IN THE BEST INTEREST OF THE STOCKHOLDERS OF NBC BANK CORP. AND RECOMMENDS A
VOTE IN FAVOR OF THE ADOPTION OF THE AGREEMENT.
THE AGREEMENT
The following description of certain features of the Agreement is qualified
in its entirety by the full text of the Agreement, which is incorporated herein
by reference and attached hereto by Annex.
Under the terms of the Agreement, NBCBC will be merged with and into
Simmons in exchange for the issuance by the Company of a maximum of 785,000
newly issued shares of Simmons Common Stock to the holders of the common stock
of NBCBC. The consummation of the Merger is conditioned on it being a tax-free
reorganization. Fractional shares of Simmons Common Stock will not be issued in
connection with the Merger. A holder of NBCBC common stock otherwise entitled to
a fractional share will be paid cash in lieu of such fractional shares.
Upon consummation of the Merger, NBCBC will merge with and into Simmons,
and Simmons will be the surviving corporation in the Merger. As a result of the
Merger, each share of NBCBC common stock outstanding immediately prior to the
effective time (the "Effective Time") of the Merger (other than shares as to
which dissenter's rights have been perfected ("Dissenters' Shares") under the
Arkansas Business Corporation Act of 1965) will be converted into the right to
receive 4.1638 shares of Simmons Common Stock (the "Exchange Ratio"). The
payment of cash for fractional shares will be computed by valuing Simmons Common
Stock at the average closing price per share of Simmons Common Stock during the
period of ten (10) trading days on which one or more trades actually takes place
ending immediately prior to the fifth trading day preceding the Effective Time.
Simmons and NBCBC have agreed, for the period prior to the consummation of
the merger, to operate their respective businesses only in the usual, regular
and ordinary course. In addition, Simmons and NBCBC will use reasonable efforts
to maintain and keep their respective properties in as good repair and condition
as at present, except for ordinary wear and tear and to perform all obligations
required under all material contracts, leases, and documents relating to or
affecting their respective assets prior to the consummation of the Merger.
Simmons and NBCBC have further agreed that, prior to consummation of the Merger,
they will not incur any material liabilities or obligations, except in the
ordinary course of business, or take any action which would or is reasonably
likely to
<PAGE>
adversely affect the ability of either Simmons or NBCBC to obtain any necessary
approvals, adversely affect the ability of Simmons or NBCBC to perform their
covenants and agreements under the Agreement, or result in any of the conditions
to the Merger not being satisfied.
The Agreement requires that certain conditions occur or be waived prior to
the closing date ("Conditions Precedent"), including (a) approval by
stockholders of NBCBC holding two-thirds of all outstanding shares; (b)
eligibility of the transaction to be accounted for under the
pooling-of-interests method of accounting, (c) approval by the appropriate bank
regulatory authorities; and (d) satisfaction of other customary conditions
normally associated with closing a merger transaction. It is also a condition to
the Merger that Simmons have an effective registration statement on file with
the Securities and Exchange Commission covering the issuance of shares to be
exchanged pursuant to the Merger. Prior to the effective date of the Merger, any
condition of the Agreement, except those required by law, may be waived by the
party benefited by the condition.
The effective date of the Merger will be the date the Articles of Merger
are filed with the Arkansas Secretary of State, or the date so stated in the
Articles of Merger. The Agreement provides that a closing date will be set by
mutual agreement to occur within a reasonable time following the date on which
the last of all regulatory and other approvals necessary to consummate the
Merger have been received and all necessary time periods imposed by regulatory
authorities have elapsed. The parties may, however, amend the Agreement to
provide a later closing date.
All shares of NBCBC common stock converted into the right to receive the
merger consideration in the Merger shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each certificate
previously representing any such shares shall thereafter represent the right to
receive a certificate representing shares of Simmons Common Stock into which
such shares of NBCBC common stock are convertible. Certificates previously
representing shares of NBCBC common stock shall be exchanged for certificates
representing whole shares of Simmons Common Stock issued in consideration
therefor upon the surrender of such certificates as provided below.
The Agreement provides that Simmons and NBCBC will cause the Effective Time
to occur as promptly as practicable after the approval by the stockholders of
NBCBC of the Agreement and the satisfaction (or waiver, if permissible) of the
other conditions set forth in the Agreement. As soon as the date on which the
Effective Time is anticipated to occur is determined, Simmons and NBCBC will
publicly announce such date, although no assurance can be given that the
Effective Time will occur on such date.
FAIRNESS OPINION
NBCBC has retained the services of Brown, Burke Capital Partners, Inc.
("BBCP") to evaluate the proposed merger with Simmons and issue an opinion
regarding whether the consideration being provided by Simmons is fair to the
shareholders of NBCBC. BBCP has made a preliminary determination that the
consideration being offered is fair and has issued its opinion, dated April __,
1999, which is attached hereto as Annex II. BBCP will re-examine the proposed
merger transaction within five (5) days of consummation to confirm its opinion.
The obligation of NBCBC to consummate the Merger is conditioned upon the receipt
of the confirmation of BBCP's preliminary opinion.
REGULATORY APPROVAL
The Merger is subject to prior approval by the appropriate banking
regulatory authorities. An application was filed for approval of the Merger with
the Board of Governors of the Federal Reserve System ("Federal Reserve") for
Simmons to acquire NBCBC on April 14, 1999. The Merger is also subject to review
by the Department of Justice as to its competitive effects. Simmons and NBCBC
expect the application with the Federal Reserve to be approved in due course.
<PAGE>
ANTITRUST MATTERS
After approval by the Federal Reserve, the Department of Justice has
fifteen (15) calendar days in which to challenge the proposed Merger on
anti-trust considerations. The ordinary form of approval letter from the Federal
Reserve provides that the Merger may not be consummated until fifteen (15)
calendar days after the effective date of such letter.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses the principal federal income tax
consequences of the Merger. The summary is based upon the Code, applicable
Treasury Regulations thereunder and administrative rulings and judicial
authority as of the date hereof. All of the foregoing are subject to change, and
any such change could affect the continuing validity of the discussion. The
discussion assumes that holders of shares of NBCBC common stock hold such shares
as a capital asset, and does not address the tax consequences that may be
relevant to a particular stockholder subject to special treatment under certain
federal income tax laws, such as dealers in securities, banks, insurance
companies, tax-exempt organizations, non-United States persons, nor any
consequences arising under the laws of any state, locality or foreign
jurisdiction.
Williams & Anderson LLP, counsel to Simmons is of the opinion, subject to
the assumptions set forth below, that the Merger will constitute a tax-free
reorganization pursuant to Sections 368(a)(1)(A) of the Code and that,
accordingly, neither Simmons nor NBCBC will recognize gain or loss as a result
of the Merger, and (ii) holders of NBCBC common stock who receive shares of
Simmons Common Stock for their shares of NBCBC Stock will not recognize gain or
loss in the Merger, except to the extent of cash received in lieu of fractional
shares of Simmons Common Stock.
The foregoing opinion is based upon (i) certain representations of Simmons
and NBCBC, (ii) the assumption that the Merger will be consummated in accordance
with its terms, and (iii) the assumption that the "continuity of interest"
requirement for tax-free reorganization treatment will be satisfied. The
consummation of the Merger is conditioned on the receipt by Simmons and NBCBC of
an opinion of Williams & Anderson LLP confirming that the requirements for
tax-free reorganization treatment, including the continuity of interest
requirement, have been met and that accordingly, the Merger qualifies as a
tax-free reorganization. The discussion below summarizes certain federal income
tax consequences of the Merger to an NBCBC stockholder, assuming that the Merger
will qualify as a tax-free reorganization.
GENERAL. Except as discussed below with respect to cash received in lieu of
a fractional share of Simmons Common Stock, the receipt of Simmons Common Stock
by a stockholder of NBCBC in exchange for such stockholder's shares of NBCBC
common stock will not cause the shareholder to recognize gain or loss. The tax
basis of the shares of Simmons Common Stock received will be the same as the tax
basis of the shares of NBCBC common stock exchanged, decreased by the basis of
any fractional share interest for which cash is received in the Merger. The
holding period of the shares of Simmons Common Stock received will include the
holding period of the shares of NBCBC common stock exchanged therefor.
FRACTIONAL SHARES. If a holder of shares of NBCBC common stock receives
cash in lieu of a fractional share of Simmons Common Stock in the Merger, such
cash amount will be treated as received in exchange for the fractional share of
Simmons Common Stock. Gain or loss recognized as a result of that exchange will
be equal to the cash amount received for the fractional share of Simmons Common
Stock reduced by the proportion of the holder's tax basis in shares of NBCBC
common stock exchanged and allocable to the fractional share of Simmons Common
Stock.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. THUS, NBCBC
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS,
THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER APPLICABLE TAX
LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
<PAGE>
The tax opinion of Williams & Anderson LLP described in the first
sentence under "Tax Opinion" has been filed as an exhibit to the
Registration Statement of which this Proxy Statement/Prospectus is a part.
ACCOUNTING TREATMENT
Simmons intends to treat the merger as a pooling for accounting purposes.
Consequently, in accordance with generally accepted accounting principles,
Simmons anticipates that the asset and liability accounts of the NBCBC will not
be adjusted, but will be combined with the corresponding accounts of Simmons.
RIGHT OF DISSENT
HOLDERS OF NBCBC COMMON STOCK WILL BE ENTITLED TO EXERCISE DISSENTER'S
RIGHTS UNDER THE 1965 ACT.
Under Arkansas law, holders of NBCBC common stock are entitled to
dissenters' rights pursuant to Ark. Code Ann. Section 4-26-1007 of the 1965 Act.
However, if a holder of shares of NBCBC common stock chooses to follow the
procedure under the 1965 Act, he shall only be entitled to such rights if he
complies with that statute. The following summary does not purport to be a
complete statement of the method of compliance with Section 4-26-1007 and is
qualified by reference to those statutory sections which are attached, hereto in
Annex II.
A holder of NBCBC stock who wishes to perfect his dissenter's rights in the
event that the Merger is approved must:
(a) File with the corporation, prior to or at the meeting of stockholders
at which the vote on the Agreement is to be made, written objection to the
Agreement; and
(b) Not have voted in favor of the Agreement.
Any written notice of objection to the Agreement pursuant to clause (a) of
the immediately proceeding paragraph should be mailed or delivered to NBC Bank
Corp., 100 West Grove St., P. O. Box 992, El Dorado, Arkansas 71730, Attention:
John F. Dews, President and Chief Executive Officer. Because the written
objection must be delivered prior to or at the stockholder vote on the
Agreement, it is recommended, although not required, that a stockholder using
the mail should use certified or registered mail, return receipt requested, to
confirm that he has made timely delivery.
Within ten (10) days after the shareholder vote approving the Merger, any
stockholder objecting to the Merger must make a written demand on Simmons for
payment of the fair value of his shares as of the day before the vote on the
Agreement was taken. This second notice should be mailed to Simmons First
National Corporation, 501 Main Street, P. O. Box 7009, Pine Bluff, Arkansas,
71611, Attention: Barry L. Crow, Executive Vice President and Chief Financial
Officer. The demand must state the number and class of shares owned. If a demand
is not made within the 10-day period, the stockholder is bound by the Agreement.
Within ten (10) days after the Merger is effected, Simmons shall give
notice to each dissenting stockholder who made demand as provided above for the
payment of the value of his shares. If the dissenting stockholder and Simmons
agree upon the value of the shares within thirty (30) days after the date of the
Merger, then payment shall be made within ninety (90) days of the Merger.
Simultaneously with the payment, the dissenting stockholder shall surrender the
certificates representing his shares.
If within the thirty-day period no agreement is reached as to the value of
the dissenting stockholder's shares, the dissenting stockholder must file a
petition in Jefferson County Circuit Court within 60 days after the expiration
of the 30-day period asking for a determination of the fair value of his shares.
The judgment will be final and is payable only upon and simultaneously with the
surrender of the certificates representing the shares to Simmons. If a
dissenting stockholder fails to file a petition within the 60-day period, he and
all persons claiming under him shall be bound by the terms of the Agreement.
<PAGE>
EXCHANGE RATIO FOR THE MERGER
The exchange ratio for the Merger is fixed in the Merger Agreement to be
785,000 divided by the number of shares of NBCBC common stock outstanding on the
Effective Date. At this time, NBCBC has 188,529 shares of common stock
outstanding. The Exchange Ratio based upon the current number of NBCBC shares
outstanding is 4.1638. It is not anticipated that any additional shares of NBCBC
common stock will be issued prior to the Effective Date.
EXPENSES OF THE MERGER
Simmons and NBCBC will bear their own expenses incident to preparing for,
entering into and carrying out the Agreement and the consummation of the Merger,
except that Simmons will pay all expenses incident to the preparation of this
Proxy Statement and its printing and distribution and for the filing of
necessary applications for approval of the Merger with the Federal Reserve.
PRO FORMA UNAUDITED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements assume a
business combination between Simmons and NBCBC (in the form of a merger)
accounted for on a pooling-of-interests basis. The pro forma combined balance
sheets combine Simmons' December 31, 1998, consolidated balance sheets with
NBCBC's December 31, 1998, consolidated balance sheets giving effect to the
merger as if such transaction had occurred as of December 31, 1998. The pro
forma combined statements of income combine Simmons' historical consolidated
statements of income for the three fiscal years ended December 31, 1998, 1997
and 1996, with the corresponding historical consolidated statements of income of
NBCBC for such periods, giving effect to the merger as if such transaction had
happened at the beginning of the respective periods.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the actual operating results or financial
position of the combined entity that would have been achieved had the merger
been consummated at the dates presented, nor is it necessarily indicative of the
combined entity's future operating results or financial position. The unaudited
pro forma combined financial statements do not incorporate any benefits from
costs savings or synergies of operations of the combined entity that may occur.
Simmons and NBCBC anticipate incurring direct transaction costs and integration
costs related to the merger. Such anticipated costs are not reflected in the pro
forma information.
The pro forma combined financial statements are based on the historical
consolidated financial statements of Simmons and NBCBC and the notes thereto,
and should be read in conjunction with the financial statements of Simmons and
NBCBC included elsewhere in this document and incorporated by reference herein.
The Simmons financial statements have been restated for the merger with
Lincoln Bankshares, Inc. on January 15, 1999, accounted for as a
pooling-of-interests. See Note 19 in the Simmons 1998 annual report (Form 10-K).
<PAGE>
<TABLE>
<CAPTION>
SIMMONS FIRST NATIONAL CORPORATION
PRO FORMA COMBINED BALANCE SHEET
December 31, 1998
(In Thousands)
Simmons First
Simmons First National
National NBC Corporation
Corporation Bank Corp. Adjustments Pro Forma
------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 129,840 $ 9,443 $ 139,283
Investment securities 351,594 64,813 416,407
Net loans 952,492 65,158 1,017,650
Other earning assets 12,719 -- 12,719
Other assets 93,827 7,124 100,951
-------------- --------------- ------------- ---------------
Total assets $ 1,540,472 $ 146,538 $ -- $ 1,687,010
============== =============== ============= ===============
Liabilities
Deposits $ 1,256,754 $ 124,249 $ 1,381,003
Other liabilities 146,684 8,939 155,623
-------------- --------------- ------------- ---------------
Total liabilities 1,403,438 133,188 -- 1,536,626
-------------- --------------- ------------- ---------------
Equity Capital
Common stock 6,454 210 575 7,239
Surplus 45,791 3,883 (1,403) 48,271
Undivided profits 83,261 10,122 93,383
Treasury stock -- (828) 828 --
Accumulated other
comprehensive income 1,528 (37) 1,491
-------------- ---------------- ------------- ---------------
Total stockholders' equity 137,034 13,350 -- 150,384
-------------- --------------- ------------- ---------------
$ 1,540,472 $ 146,538 $ -- $ 1,687,010
============= ============== ============ ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMMONS FIRST NATIONAL CORPORATION
PRO FORMA COMBINED INCOME STATEMENTS
For the Year Ended December 31, 1998
(In Thousands, Except Per Share Data)
Simmons First
Simmons First National
National NBC Corporation
Corporation Bank Corp. Pro Forma
------------------- ------------------ ------------------
<S> <C> <C> <C>
Interest income
Loans $ 86,249 $ 6,041 $ 92,290
Investment securities 21,002 3,733 24,735
Other interest income 4,931 84 5,015
------------------- ------------------ ------------------
Total interest income 112,182 9,858 122,040
------------------- ------------------ ------------------
Interest expense
Deposits 49,779 4,463 54,242
Other interest expense 7,049 283 7,332
------------------- ------------------ ------------------
Total interest expense 56,828 4,746 61,574
------------------- ------------------ ------------------
Net interest income 55,354 5,112 60,466
Provision for loan losses 8,229 80 8,309
------------------- ------------------ ------------------
Net interest income after provision for loan losses 47,125 5,032 52,157
------------------- ------------------ ------------------
Non-interest income
Trust 3,357 680 4,037
Service charges on deposit accounts 6,308 512 6,820
Other service charges and fees 1,511 253 1,764
Credit card fees 9,484 -- 9,484
Mortgage servicing and mortgage-related fees 5,208 -- 5,208
All other non-interest income 6,372 -- 6,372
------------------- ------------------ ------------------
Total non-interest income 32,240 1,445 33,685
------------------- ------------------ ------------------
Non-interest expense
Salaries and employee benefits 29,828 2,005 31,833
Occupancy expense, net 3,531 615 4,146
Other non-interest expense 25,238 1,472 26,710
------------------- ------------------ ------------------
Total non-interest expense 58,597 4,092 62,689
------------------- ------------------ ------------------
Income before income taxes 20,768 2,385 23,153
Provision for income taxes 5,929 737 6,666
------------------- ------------------ ------------------
Net income $ 14,839 $ 1,648 $ 16,487
================== ================= =================
Basic earnings per share $ 2.30 $ 8.77 $ 2.28
================== ================= =================
Diluted earnings per share $ 2.26 $ 8.77 $ 2.24
================== ================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMMONS FIRST NATIONAL CORPORATION
PRO FORMA COMBINED INCOME STATEMENTS
For the Year Ended December 31, 1997
(In Thousands, Except Per Share Data)
Simmons First
Simmons First National
National NBC Corporation
Corporation Bank Corp. Pro Forma
------------------- ----------------- -------------------
<S> <C> <C> <C>
Interest income
Loans $ 68,038 $ 6,285 $ 74,323
Investment securities 18,984 3,516 22,500
Other interest income 3,628 189 3,817
------------------- ------------------ ------------------
Total interest income 90,650 9,990 100,640
------------------- ------------------ ------------------
Interest Expense
Deposits 39,597 4,550 44,147
Other interest expense 4,437 220 4,657
------------------- ------------------ ------------------
Total interest expense 44,034 4,770 48,804
------------------- ------------------ ------------------
Net interest income 46,616 5,220 51,836
Provision for loan losses 5,035 180 5,215
------------------- ------------------ ------------------
Net interest income after provision for loan losses 41,581 5,040 46,621
------------------- ------------------ ------------------
Non-interest income
Trust 2,536 650 3,186
Service charges on deposit accounts 4,852 526 5,378
Other service charges and fees 1,460 339 1,799
Credit card fees 9,433 -- 9,433
Mortgage servicing and mortgage-related fees 7,766 -- 7,766
All other non-interest income 2,633 20 2,653
------------------- ------------------ ------------------
Total non-interest income 28,680 1,535 30,215
------------------- ------------------ ------------------
Non-interest expense
Salaries and employee benefits 26,210 2,016 28,226
Occupancy expense, net 3,213 576 3,789
Other non-interest expense 21,930 1,330 23,260
------------------- ------------------ ------------------
Total non-interest expense 51,353 3,922 55,275
------------------- ------------------ ------------------
Income before income taxes 18,908 2,653 21,561
Provision for income taxes 5,642 949 6,591
------------------- ------------------ ------------------
Net income $ 13,266 $ 1,704 $ 14,970
================== ================= =================
Basic earnings per share $ 2.06 $ 9.13 $ 2.08
================== ================= =================
Diluted earnings per share $ 2.04 $ 9.13 $ 2.05
================== ================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMMONS FIRST NATIONAL CORPORATION
PRO FORMA COMBINED INCOME STATEMENTS
For the Year Ended December 31, 1996
(In Thousands, Except Per Share Data)
Simmons First
Simmons First National
National NBC Corporation
Corporation Bank Corp. Pro Forma
------------------- ------------------ ------------------
<S> <C> <C> <C>
Interest income
Loans $ 52,942 $ 5,456 $ 58,398
Investment securities 15,993 3,915 19,908
Other interest income 3,688 168 3,856
------------------- ------------------ ------------------
Total interest income 72,623 9,539 82,162
------------------- ------------------ ------------------
Interest expense
Deposits 31,236 4,544 35,780
Other interest expense 2,035 166 2,201
------------------- ------------------ ------------------
Total interest expense 33,271 4,710 37,981
------------------- ------------------ ------------------
Net interest income 39,352 4,829 44,181
Provision for loan losses 2,564 -- 2,564
------------------- ------------------ ------------------
Net interest income after provision for loan losses 36,788 4,829 41,617
------------------- ------------------ ------------------
Non-interest income
Trust 2,166 568 2,734
Service charges on deposit accounts 3,845 439 4,284
Other service charges and fees 1,231 323 1,554
Credit card fees 9,601 -- 9,601
Mortgage servicing and mortgage-related fees 7,095 -- 7,095
All other non-interest income 2,349 62 2,411
------------------- ------------------ ------------------
Total non-interest income 26,287 1,392 27,679
------------------- ------------------ ------------------
Non-interest expense
Salaries and employee benefits 23,966 2,213 26,179
Occupancy expense, net 2,649 588 3,237
Other non-interest expense 19,815 1,055 20,870
------------------- ------------------ ------------------
Total non-interest expense 46,430 3,856 50,286
------------------- ------------------ ------------------
Income before income taxes 16,645 2,365 19,010
Provision for income taxes 4,929 742 5,671
------------------- ------------------ ------------------
Net income $ 11,716 $ 1,623 $ 13,339
================== ================= =================
Basic earnings per share $ 1.82 $ 8.75 $ 1.85
================== ================= =================
Diluted earnings per share $ 1.80 $ 8.75 $ 1.83
================== ================= =================
</TABLE>
<PAGE>
ELECTION BY NBC BANK CORP. UNDER THE 1987 ACT
ELECTION INCIDENTAL TO THE MERGER
THE ELECTION BY THE STOCKHOLDERS OF NBCBC TO BE GOVERNED BY THE ARKANSAS
BUSINESS CORPORATION ACT OF 1987 IS INCIDENTAL TO THE MERGER PROPOSAL AND
APPROVAL OF SUCH ELECTION WILL HAVE NO FORCE OR EFFECT UNLESS THE MERGER IS
LIKEWISE APPROVED.
REASON FOR THE ELECTION
NBCBC is an Arkansas corporation organized under the Arkansas Business
Corporation Act of 1965, codified at Ark. Code Ann. Section 4-26-101 et. seq.
The Arkansas Business Corporation Act of 1987 ("1987 Act") is applicable to
corporations that were incorporated on or after January 1, 1988 or those "1965
Act" corporations that elect to be governed by the 1987 Act by amending their
Articles of Incorporation to adopt the 1987 Act. The stockholders of Simmons
elected to be governed by the 1987 Act by amending its Articles of Incorporation
during 1994.
The 1965 Act and 1987 Act have statutory merger procedures that must be
followed in order to legally consummate a merger. Although both acts contain
similar provisions, it is advisable for NBCBC to elect to be governed by the
1987 Act in order to facilitate compliance with the applicable statutory
requirements.
RESULT OF THE ELECTION
The affirmative vote of two-thirds of all outstanding shares of NBCBC
common stock will authorize NBCBC to amend its Articles of Incorporation and
thereby elect to be governed by the 1987 Act. Simmons is governed by the 1987
Act and shares of Simmons Common Stock received by NBCBC stockholders upon
consummation of the Merger will entitle such stockholders to rights under the
1987 Act. The following discussion is a summary analysis of the material
differences between the 1965 and 1987 Act with respect to Stockholders' rights.
Powers of Directors in Setting Preferences, Rights and Limitation of
Classes and Series of Stocks. The 1965 Act states that the preferences, rights
and limitations of classes of stock must be specified in the Articles, and that
the power to establish certain limited rights and preferences for a series may
be delegated to the Board. The 1987 Act, authorizes the inclusion of a provision
in the Articles granting the Board the power to set the preferences, rights and
limitations of any class or series of stock before issuance of any shares of the
class or series. The power so granted is exercised by the adoption by the Board
and the filing with the Secretary of State of Articles of Amendment, specifying
the terms of such class or series of stock.
Preemptive Rights. The 1987 Act denies stockholders preemptive rights
(i.e., the right of existing stockholders to acquire newly-issued shares of
stock on a pro rata basis of current ownership interest) unless the Articles
specifically authorize preemptive rights. In contrast, the 1965 Act grants
certain preemptive rights unless denied by the Articles.
Restrictions On Distributions. The 1987 Act allows a corporation to elect
in its Articles to restrict its ability to make distributions. The 1965 Act has
no such provision.
Quorum. The 1987 Act, like the 1965 Act, provides that a quorum, for
purposes of a stockholders meeting, will be a majority of the shares entitled to
vote unless the Articles provide otherwise. The 1965 Act provides that a quorum
may not be less that one-third of the shares entitled to vote, but the 1987 Act
does not provide a minimum size for the quorum.
<PAGE>
Cumulative Voting. Cumulative voting is a method of voting for directors in
which each share entitled to vote is granted as many votes as there are board
positions being voted on. The shareholder may "cumulate" his votes by casting
all such votes for a one or more directors, rather than spreading his votes
among all available directors. The 1987 Act does not allow cumulative voting for
directors unless the Articles of Incorporation so provide. However, the 1965 Act
grants stockholders absolute cumulative voting rights.
<PAGE>
Removal of Directors. The 1987 Act allows the Articles to provide that
directors may be removed only for cause. The 1965 Act provides generally that
directors may be removed with or without cause by a majority of the shares
entitled to vote.
Vacancy on Board of Directors. Unless the Articles provide otherwise, the
1987 Act grants authority to either the stockholders or the directors to fill
any vacancy on the Board, the 1965 Act only authorizes the Board to fill any
such vacancy.
Amendment of By-Laws. The 1987 Act provides that the Articles may reserve
to the stockholders the power to amend a corporation's by-laws. If the power is
not so reserved, both the board and the stockholders are authorized to amend the
by-laws. The 1965 Act grants the sole power to amend the by-laws to the board of
directors unless the Articles specifically reserve this power to the
stockholders.
By-Law Increasing Quorum or Voting Requirements for Stockholders. The 1987
Act allows the adoption of a by-law by the shareholders that fixes a greater
quorum or voting requirement for stockholder action than the statutory
requirement if such by-law is authorized by the Articles of Incorporation. The
1965 Act does not contain any such provision.
Voting to Adopt Merger. The 1987 Act sets the voting requirement for
approval of mergers at a majority of the shares entitled to vote, and further
provides that the Articles may establish a greater voting requirement for
mergers than the statutory minimum requirement. The 1965 Act requires two-thirds
of the votes entitled to be cast to approve a merger.
Notice of Stockholder Meetings. Both the 1987 Act and the 1965 Act requires
notice of the date, time, and place of each annual or special meeting of the
stockholders. The Arkansas Constitution requires that corporations give notice
to shareholders of a meeting, no less than 60 days nor more than 75 days, if a
proposal to increase the authorized capital stock or bonded indebtedness of the
corporation, is to be considered at the meeting. Under the 1987 Act, in all
other cases the notice must be given no fewer than 10 and no more than 60 days
before the meeting date. Under the 1965 Act in all other cases, notice cannot be
given fewer than 10 nor more than 50 days prior to the meeting.
Proxies. Both the 1965 Act and the 1987 Act allows a stockholder to vote by
proxy under the same procedures.
Voting. The 1987 Act, unlike the 1965 Act, does not count abstaining votes
in determining whether there are sufficient affirmative votes to approve a
measure. The 1965 Act states that (unless a greater number is required by
statute or by the Articles) approval by stockholders takes the affirmative vote
of a majority of the shares represented at the meeting and entitled to vote on
the subject matter. The 1987 Act, however, provides that the action is approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action.
Dissenting Stockholders. Those transactions giving rise to dissenters'
rights under the 1965 Act are as follows:
1. Consummation of a sale of all, or substantially all, of the assets
of a corporation, other than in the usual or ordinary course of its business.
2. Consummation of a merger or consolidation to which the corporation
is a party unless on the date the Articles of Merger are filed the surviving
corporation wholly owns the other corporations that are parties to the Merger.
<PAGE>
Under the 1987 Act, a stockholder is entitled to dissent from the following
corporate actions:
1. Consummation of a plan of merger to which the corporation is a
party if stockholder approval is required or if the corporation is a subsidiary
that is merged with its parent;
2. Consummation of a plan of share exchange to which the corporation is
a party and which requires stockholder approval;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course of
business, if stockholder approval is required;
4. An amendment of the Articles of Incorporation that materially and
adversely affects the rights of dissenters' shares; or
5. Any other corporate action taken pursuant to a stockholder vote to
the extend the Articles of Incorporation, the By-Laws, or a resolution of the
board of directors provides that stockholders are entitled to dissent.
For a summary of the procedure that would be followed in order to
exercise dissenters' rights under the 1965 Act, See "The Merger - Right to
Dissent"
SIMMONS FIRST NATIONAL CORPORATION
GENERAL
Simmons is a multi-bank holding company incorporated in 1968 for the
purpose of holding all of the outstanding stock of Simmons First National Bank.
Subsequently, Simmons has acquired additional banks and now operates six
additional banks as summarized below
<TABLE>
<CAPTION>
Bank Location Acquisition Date
<S> <C> <C>
Simmons First Bank of Jonesboro Jonesboro, Arkansas 1984
Simmons First Bank of South Arkansas Lake Village, Arkansas 1984
Simmons First Bank of Dumas Dumas, Arkansas 1995
Simmons First Bank of Northwest Arkansas Rogers, Arkansas 1995
Simmons First Bank of Russellville Russellville, Arkansas 1997
Simmons First Bank of Searcy Searcy, Arkansas 1997
</TABLE>
Each of the banks is wholly-owned by Simmons.
Simmons is an Arkansas corporation which has registered with the Federal
Reserve as a bank holding company pursuant to the Bank Holding Company Act of
1956, as amended, and is regulated by the Federal Reserve. Simmons First
National Bank is organized under the laws of the United States and is regulated
by the Office of the Comptroller of the Currency. Simmons First Bank of
Jonesboro, Simmons First Bank of South Arkansas, Simmons First Bank of Dumas and
Simmons First Bank of Northwest Arkansas are organized under the laws of the
State of Arkansas and are regulated by the Arkansas Bank Department and the
Federal Deposit Insurance Corporation. Simmons First Bank of Russellville and
Simmons First Bank of Searcy are organized under the laws of the State of
Arkansas and are regulated by the Arkansas Bank Department and as Federal
Reserve member banks are regulated by the Board of Governors of the Federal
Reserve System.
<PAGE>
Below are the assets, deposits and stockholders' equity as of December 31,
1998 for Simmons on a consolidated basis and separately for its seven bank
subsidiaries:
<TABLE>
<CAPTION>
Assets Deposits Stockholders Equity
($ in thousands
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Simmons (1) $1,540,472 $1,256,754 $137,034
SFNB (Pine Bluff) 733,245 575,768 61,484
SFB Jonesboro 139,360 121,555 10,139
SFB South Arkansas 59,381 53,857 4,976
SFB Dumas 32,940 28,991 3,410
SFB Northwest Arkansas 90,498 83,654 6,326
SFB Russellville 233,939 190,755 43,184
SFB Searcy 112,713 92,994 12,766
American State Bank (2) 89,619 73,708 9,492
Bank of Lincoln (3) 75,965 68,995 6,117
<FN>
(1) Financial information has been restated for the merger with Lincoln
Bankshares, Inc. accounted for as a pooling-of-interests.
(2) American State Bank was merged into SFNB (Pine Bluff) during the first
quarter of 1999.
(3) Bank of Lincoln was merged into SFB Northwest Arkansas during the second
quarter of 1999.
</FN>
</TABLE>
The banks offer customary services of banks of similar size and similar
markets, including interest bearing and non interest bearing deposit accounts;
credit card, commercial, real estate and personal loans; trust services;
mortgage banking; securities brokerage; correspondent banking services and safe
deposit box activities.
The financial services and banking industry are highly competitive. The
subsidiary banks of Simmons actively compete with national and state banks,
savings and loan associations, credit unions, securities dealers, mortgage
bankers, finance companies and insurance companies.
REGULATION
Simmons is a registered bank holding company pursuant to the Bank Holding
Company Act of 1956, as amended (the "Act"), and as such, is subject to
regulation and examination by the Federal Reserve and is required to file with
the Federal Reserve annual reports and other information regarding its business
operations and those of its subsidiaries. The Act provides that a bank holding
company may be required to obtain Federal Reserve Board approval for the
acquisition of more than 5% of the voting securities of, or substantially all of
the assets of, any bank or bank holding company, unless it already owns a
majority of the voting securities of such bank or bank holding company. The Act
prohibits Simmons and its subsidiaries from engaging in any business other than
banking or activities closely related to banking specifically allowed by the
Federal Reserve. The Act also prohibits Simmons and its subsidiaries from
engaging in certain tie-in arrangements in connection with the extension of
credit, the lease or sale of property or the provision of any services.
As a registered bank holding company, Simmons is subject to the Federal
Reserve's position that a bank holding company should serve as a "source of
strength" for its bank subsidiaries. In an early application of the doctrine the
Federal Reserve Board announced that failure to assist a troubled bank
subsidiary when its holding company was in a position to do so was an unsafe and
unsound practice and the Federal Reserve Board claimed the authority to order a
bank holding company to capitalize its subsidiary banks.
In 1991, Congress modified the source of strength doctrine by creating a
system of prompt corrective actions under which the federal banking agencies are
required to take certain actions to resolve the problems of depository
institutions based on their level of capitalization. In a bank holding company
organization, an undercapitalized insured depository institution must submit a
capital restoration plan to the appropriate agency which may not accept the plan
unless the company controlling the institution has guaranteed that the
institution will comply with the plan until the institution has been adequately
capitalized on average during each of four
<PAGE>
consecutive calendar quarters. The aggregate liability to the guaranteeing
companies is the lesser of an amount equal to 5 percent of the institution's
total assets at the time the institution became undercapitalized, or the amount
Which is necessary to bring the institution into compliance with applicable
capital standards.
For a significantly undercapitalized institution, the appropriate agency
must prohibit a bank holding company from making any capital distribution
without prior Federal Reserve approval. The agency also may require a bank
holding company to divest or liquidate the institution.
Simmons and its subsidiaries are also subject to various federal banking
laws including the Financial Institutions, Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") which, among other things, made substantive changes to the
deposit insurance system. As a part of the reorganization of the deposit
insurance funds, the deposit premiums for insurance of Bank Insurance Fund
members were significantly increased. FIRREA also authorized bank holding
companies to acquire savings and thrift institutions without tandem operation
restrictions. Furthermore, FIRREA expanded the authority of regulatory agencies
to assess severe penalties ranging from $5,000 per day to $1,000,000 per day, on
persons or institutions that the agency finds in violation of a broad range of
activities.
Simmons and its subsidiaries are also subject to the provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991, which provided
for industry-wide standards in such areas as real estate lending, further
restrictions on brokered deposits and insider lending, establishment of a
risk-based deposit insurance system, enhanced examinations and audits of banking
institutions, the adoption of a Truth-in-Savings Act, various
merger-and-acquisitions related provisions, and the implementation of
legislation on foreign bank operations in the United States.
The provisions of the Community Reinvestment Act of 1977, as amended, are
applicable to the subsidiaries of Simmons. Federal regulators are required to
consider performance under the Community Reinvestment Act before approving an
application to establish a branch or acquire another financial institution. The
Federal Reserve has promulgated regulations governing compliance with the
Community Reinvestment Act in Regulation BB. Recent regulatory and statutory
developments show that compliance with the Community Reinvestment Act is subject
to strict scrutiny and is often grounds for denial of an application to federal
regulators. Simmons's subsidiary banks are all rated "satisfactory" for CRA
purposes.
On January 19, 1989, the Federal Reserve issued final guidelines to
implement risk-based capital requirements for bank holding companies. The
guidelines establish a framework that makes regulatory capital requirements more
sensitive to differences in risk profiles among banking organizations,
incorporates off-balance sheet exposures into the assessment of capital
adequacy, and minimizes disincentives to holding liquid, low-risk assets. The
guidelines provided for phasing in risk-based capital standards through the end
of 1992, at which time the standards became fully effective. The Company's
December 31, 1998 Tier I capital ratio of 12.4% and Total risk-based capital
ratio of 13.7% exceed the current minimum regulatory requirements of 6.00% and
10.00%, respectively, for classification as a well-capitalized institution.
The table below illustrates all of the capital requirements applicable to
Simmons and its subsidiaries.
<TABLE>
<CAPTION>
REGULATORY COMPARISON OF CAPITAL RATIOS
SIMMONS FIRST NATIONAL CORPORATION
December 31, Regulatory
1998 Minimum
----------------- ------------------
<S> <C> <C>
Total Risk-Based Capital 13.7% 8.00%
Tier 1 Capital 12.4% 4.00%
Leverage Ratio 8.2% 4.00%
</TABLE>
Simmons's Subsidiary Banks are subject to a variety of regulations
concerning the maintenance of reserves against deposits, limitations on the
rates that can be charged on loans or paid on deposits, branching, restrictions
on the nature and amounts of loans and investments that can be made and limits
on daylight overdrafts.
<PAGE>
The Subsidiary Banks are limited in the amount of dividends they may
declare. Prior approval must be obtained from the appropriate regulatory
authorities before dividends can be paid by the Banks to Simmons if the amount
of adjusted capital, surplus and retained earnings is below defined regulatory
limits. Simmons's subsidiary banks had available for payment of dividends
without regulatory approval, approximately $7 million of undistributed earnings
as of December 31, 1998. The Subsidiary Banks are also restricted from extending
credit or making loans to or investments in Simmons and certain other affiliates
as defined in the Act. Furthermore, loans and extensions of credit are subject
to certain other collateral requirements.
OFFICES
Simmons' executive offices are located in the offices of Simmons First
National Bank, 501 Main Street, Pine Bluff, Arkansas 71601.
EMPLOYEES
As of December 31, 1998, Simmons and its subsidiary banks had approximately
745 full-time equivalent employees, which are employed by Simmons and its
subsidiaries as set forth below:
<TABLE>
<CAPTION>
Entity Employees
------------------- ---------------
<S> <C>
Simmons 35
SFNB (Pine Bluff) (1) 471
SFB Jonesboro 52
SFB South Arkansas 19
SFB Dumas 11
SFB Northwest Arkansas 31
SFB Russellville 86
SFB Searcy 40
<FN>
(1) Includes 34 employees employed by American State Bank which was merged
into SFNB on March 26, 1999.
</FN>
</TABLE>
DESCRIPTION OF SIMMONS COMMON STOCK
The following summary of the terms of Simmons Common Stock does not purport
to be complete and is qualified in its entirety by reference to the Arkansas
Business Corporation Act of 1987 and Simmons's Amended and Restated Articles of
Incorporation. Simmons' Amended and Restated Articles of Incorporation
authorizes the issuance of 30,000,000 shares of Common Stock, $1.00 par value.
As of March 31, 1999, there are 6,521,088 fully paid and non-assessable shares
of Simmons Common Stock issued and outstanding.
Each share of Simmons Common Stock is entitled to one vote on all matters
to be voted on by stockholders, and to dividends when and if declared from time
to time by the Board of Directors. There are no rights of preemption or
cumulative voting associated with the Simmons Common Stock. Upon liquidation,
each share would be entitled to share pro rata in all of the assets of Simmons
available for distribution to the holders of Common Stock. The transfer agent
for Simmons Common Stock is Simmons First National Bank. Simmons Common Stock is
traded on NASDAQ-National Market System over-the-counter under the symbol of
"SFNCA."
RESALE OF SIMMONS COMMON STOCK
The shares of Simmons Common Stock to be issued to NBCBC stockholders in
the Merger have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), thereby allowing such shares to be freely traded without
restriction by persons who will not be "affiliates" of Simmons and who were not
affiliates of NBCBC, as that term is defined in the Securities Act.
<PAGE>
Directors and certain officers and stockholders of NBCBC may be deemed to
be "affiliates" of NBCBC within the meaning of the Securities Act. Accordingly,
resales by such persons of any shares of Simmons Common Stock received by them
in the Merger are restricted and may be made only if such stock is registered
under the Securities Act or an exemption from the registration requirements of
the Securities Act is available.
All such persons should carefully consider the limitations imposed by Rules
144 and 145 promulgated under the Securities Act ("Rule 144" and "Rule 145")
prior to effecting any resales of such Simmons Common Stock. Pursuant to Rule
145, the sale of Simmons Common Stock held by those persons who are affiliates
of NBCBC will be subject to certain restrictions. For one year following the
Effective Date, such persons may sell the Simmons First Stock only if (i)
Simmons has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), during the
preceding twelve months, (ii) such Simmons Common Stock is sold in "brokers'
transactions" as that term is defined in Section 4(4) of the Securities Act,
(iii) the person selling such Simmons Common Stock does not solicit or arrange
for the solicitation of orders to buy such Simmons Common Stock in anticipation
of or in connection with such transaction nor make any payment in connection
with the offer or sale of such Simmons Common Stock to any person other than the
broker who executes the order to sell, and (iv) sales made by such person within
the preceding three months do not exceed 1% of the outstanding shares of that
class. Shares of the Simmons Common Stock held for more than one year but less
than two years after the Effective Date of the Merger may be sold freely if
Simmons is in compliance with the above discussed Exchange Act reporting
requirements. Once the shares of Simmons Common Stock have been held for two
years after the Effective Date, they may be sold free from the restrictions of
Rules 144 and 145.
It is a condition of Simmons' obligation to consummate the Merger that
Simmons shall have received an agreement in form and substance satisfactory to
it, executed and delivered by each holder of NBCBC Stock who is determined to be
an affiliate of NBCBC, providing, among other things, that such holder (i) will
not sell, transfer or in any way reduce his risk with respect to his shares of
Simmons Common Stock until such time as Simmons shall have published financial
results covering at least 30 days of post-Merger combined operations, and (ii)
has no present intent to sell, transfer or otherwise dispose of any of his
shares of Simmons Common Stock.
NO SHAREHOLDER APPROVAL REQUIRED
The Board of Directors of Simmons approved the Merger on March 22, 1999.
The shareholders of Simmons are not required to approve the merger.
Consequently, no proxies will be solicited from shareholders of Simmons for
approval of this transaction. No dissenter's rights with respect to holders of
shares of Simmons Common Stock will arise due to the Merger.
NBC BANK CORP.
DESCRIPTION OF BUSINESS
NBCBC is a one-bank holding company which owns 100% of the common stock of
National Bank of Commerce of El Dorado, El Dorado, Arkansas ("NBC"). NBCBC may
engage, directly or through subsidiaries, in those activities closely related to
banking which are specifically permitted under the Bank Holding Company Act of
1956, as amended.
NBCBC was organized as an Arkansas bank holding company in 1981. The
primary asset of NBCBC is the stock it holds in its bank subsidiary. The
subsidiary bank grants commercial, installment, real estate and personal loans
to customers principally in Union County, Arkansas. As of December 31, 1998,
this subsidiary had a total of $66,052,000 of loans outstanding and a loan loss
reserve of $895,000.
<PAGE>
NBC BANK CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF NBC BANK CORP.
Overview
NBC Bank Corp. ("NBCBC" ) recorded earnings for the year ended December 31,
1998, of $1,648,000 or a decrease of $56,000 compared to December 31, 1997
earnings of $1,704,000. Basic earnings per share for the year were $8.77, a
decrease of 3.94% from $9.13 in 1997. Return on average assets and return on
average
<PAGE>
stockholders' equity for the year ended December 31, 1998 was 1.17% and
12.24%, compared to 1.23% and 13.29%, respectively, for 1997.
Total assets for the Corporation at December 31, 1998, were $146.5 million,
an increase of $5.7 million over the same figure at December 31, 1997.
Stockholders' equity at the end of 1998 was $13.4 million, a $663,000, or 5.2%,
increase over the year ended December 31, 1997.
Asset quality remains strong with the allowance for loan losses as a
percent of total loans at 1.35% as of December 31, 1998, compared to 1.47% for
the same date in 1997. As of December 31, 1998, non-performing loans equaled
1.45% of total loans, while the allowance for loan losses equaled 93.2% of
non-performing loans.
NBC Bank Corp. is a one-bank holding company incorporated March 20, 1981.
At year-end NBCBC had one community bank in El Dorado, Arkansas. NBCBC's bank is
conducting financial operations from 3 locations in El Dorado, Arkansas, and one
in Huttig, Arkansas.
Earnings Review For The Years 1998, 1997, and 1996
In 1998, NBCBC reported net income of $1,648,000 and earnings per share of
$8.77. This compares to net income of $1,704,000 and $1,622,000 and earnings per
share of $9.13 and $8.75, in 1997 and 1996, respectively. The earnings for 1998
were predominantly influenced by a decline in the loan portfolio and a realized
loss on the sale of available-for-sale securities.
Net Interest Income
Net interest income, NBCBC's principal source of earnings, is the
difference between the interest income generated by earning assets and the total
interest cost of the deposits and borrowings obtained to fund those assets.
Factors that determine the level of net interest income include the volume of
earning assets and interest bearing liabilities, yields earned and rates paid,
the level of non-performing loans and the amount of non-interest bearing
liabilities supporting earning assets. Net interest income is analyzed in the
discussion and tables below on a fully taxable equivalent basis. The adjustment
to convert certain income to a fully taxable equivalent basis consists of
dividing tax-exempt income by one minus the income tax rate (34% for 1998
through 1996).
For the year ended December 31, 1998, net interest income on a fully
taxable equivalent basis was $5.40 million, a decrease of approximately $6,000,
or .11%, from 1997 net interest income. The decrease in net interest income
resulted primarily from to a decrease in the loan portfolio. Some of the
decrease was offset by an increase of $299,000 in income from non-taxable
investments. The net interest margin was 4.11% in 1998, compared to 4.18% in
1997 and 3.96% in 1996. For the year ended December 31, 1997, net interest
income on a fully taxable equivalent basis was $5.40 million, an increase of
approximately $441,000, or 8.9%, from 1996. The increase in 1997 in net interest
income resulted primarily from the growth in earning assets. The tables below
reflect an analysis of net interest income on a fully taxable equivalent basis
for the years ended December 31, 1998, 1997 and 1996, respectively, as well as
changes in fully taxable equivalent net interest income for the years 1998
versus 1997 and 1997 versus 1996.
<PAGE>
<TABLE>
<CAPTION>
Analysis of Net Interest Income
(FTE =Fully Taxable Equivalent)
Years Ended December 31
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $ 9,858 $ 9,990 $ 9,538
FTE adjustment 285 183 135
--------- --------- -------
Interest income - FTE 10,143 10,173 9,673
Interest expense 4,746 4,770 4,710
--------- --------- -------
Net interest income - FTE $ 5,397 $ 5,403 $ 4,963
======== ======== =======
Yield on earning assets - FTE 7.73% 7.86% 7.71%
Cost of interest bearing liabilities 4.32% 4.44% 4.47%
Net interest spread - FTE 3.41% 3.42% 3.24%
Net interest margin - FTE 4.11% 4.18% 3.96%
</TABLE>
<TABLE>
<CAPTION>
Changes in Fully Taxable Equivalent Net Interest Margin
(In thousands) 1998 vs. 1997 1997 vs.1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase due to change in earning assets $ 140 $ 557
Decrease due to change in earning asset yields (169) (56)
Increase due to change in interest rates paid on interest bearing liabilities 74 108
Decrease due to change in interest bearing liabilities (51) (168)
--------- --------
Increase (decrease) in net interest income $ (6) $ 441
========= =======
</TABLE>
<PAGE>
The following table shows, for each major category of earning assets and
interest bearing liabilities, the average amount outstanding, the interest
earned or expensed on such amount and the average rate earned or expensed for
each of the years in the three-year period ended December 31, 1998. The table
also shows the average rate earned on all earning assets, the average rate
expensed on all interest bearing liabilities, the net interest spread and the
net interest margin for the same periods. The analysis is presented on a fully
taxable equivalent basis utilizing an effective income tax rate of 34%.
Non-accrual loans were included in average loans for the purpose of calculating
the rate earned on total loans.
<TABLE>
<CAPTION>
Average Balance Sheets and Net Interest Income Analysis
Years Ended December 31
----------------------------------------------------------------------------------
1998 1997 1996
--------------------------- ------------------------- --------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/Yield/
(In thousands) Balance Expense Rate(%) Balance Expense Rate(%) Balance ExpenseRate(%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Interest bearing balances
due from banks $ 537 $ 30 5.59 $ 1,958 $ 106 5.41 $ 2,954 $ 158 5.35
Federal funds sold 1,572 84 5.34 3,428 189 5.51 3,046 168 5.52
Investment securities - taxable 51,359 3,151 6.14 47,400 3,055 6.45 54,509 3,494 6.41
Investment securities - non-taxable 11,006 838 7.61 6,545 539 8.23 4,707 398 8.45
Loans 66,717 6,041 9.06 70,088 6,285 8.97 60,259 5,456 9.05
--------- -------- -------- ------- -------- ------
Total interest earning assets 131,191 10,144 7.73 129,419 10,174 7.86 125,475 9,674 7.71
-------- ------- ------
Non-earning assets 10,050 8,635 9,059
--------- -------- --------
Total assets $ 141,241 $138,054 $ 134,534
======== ======= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing transaction
and savings accounts $ 37,949 $ 1,014 2.67 $ 35,274 $ 970 2.75 $ 37,102 $1,020 2.75
Time deposits 65,835 3,449 5.24 67,214 3,580 5.33 64,720 3,524 5.45
---------- ------- -------- ------- -------- ------
Total interest bearing deposits 103,784 4,463 102,488 4,550 101,822 4,544
Federal funds purchased and
securities sold under agreement
to repurchase 5,174 218 4.21 3,870 158 4.08 2,623 117 4.46
Other borrowed funds
Short-term debt 538 30 5.57 574 28 4.88 764 49 6.41
Other interest 448 37 8.04 463 34 7.34 -- -- --
bearing liabilities ---------- ------- -------- ------ -------- ------
Total interest 109,944 4,748 4.32 107,395 4,770 4.44 105,209 4,710 4.47
bearing liabilities ------- ------ ------
Non-interest bearing liabilities
Non-interest bearing deposits 17,248 17,359 16,554
Other liabilities 584 476 1,019
---------- -------- --------
Total liabilities 127,776 125,230 122,782
---------- -------- --------
Stockholders' equity 13,465 12,824 11,752
---------- -------- --------
Total liabilities and
stockholders' equity $ 141,241 $138,054 $134,534
========= ======= =======
Net interest margin $ 5,396 4.11 $5,404 4.18 $4,963 3.96
======= ===== =====
</TABLE>
<PAGE>
The following table shows changes in interest income and interest expense,
resulting from changes in volume and changes in interest rates for each of the
years ended December 31, 1998 and 1997 as compared to prior years. The changes
in interest rate and volume have been allocated to changes in average volume and
changes in average rates, in proportion to the relationship of absolute dollar
amounts of the changes in rates and volume.
<TABLE>
<CAPTION>
Volume/Rate Analysis
Years Ended December 31
1998 over 1997 1997 over 1996
Yield/ Yield/
(In thousands) Volume Rate Total Volume Rate Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
Interest income
Interest earning deposits $ (77) $ 1 $ (76) $ (53) $ 1 $ (52)
Federal funds sold (102) (3) (105) 21 -- 21
Investment securities - taxable 255 (159) 96 (456) 17 (439)
Investment securities - non-taxable 367 (68) 299 155 (14) 141
Loans (303) 60 (243) 890 (60) 830
--------- ------- ------- ------- ----- ------
Total 140 (169) (29) 557 (56) 501
--------- ------- ------- ------- ----- ------
Interest expense
Interest bearing transaction and
savings accounts $ (73) 29 (44) 46 4 50
Time deposits 72 59 131 (136) 80 (56)
Federal funds purchased
and securities sold under
agreements to repurchase (53) (7) (60) (56) 15 (41)
Other borrowed funds
Short-term debt 2 (4) (2) 12 9 21
Other interest bearing liabilities 1 (3) (2) (34) -- (34)
--------- ------- ------- ------ ------ ------
Total (51) 74 23 (168) 108 (60)
--------- ------- ------- ------ ------ ------
Increase (decrease) in
net interest income $ 89 $ (95) $ (6) $ 389 $ 52 $ 441
======== ====== ====== ===== ===== ======
</TABLE>
Provision For Loan Losses
The provision for loan losses represents management's determination of the
amount necessary to be charged against the current period's earnings, in order
to maintain the allowance for loan losses at a level which is considered
adequate, in relation to the estimated risk inherent in the loan portfolio. The
provision for 1998, 1997 and 1996 was $80,000, $180,000 and $0, respectively.
The decrease from 1997 to 1998 is attributable to (1) the overall
appropriateness of the allowance as of December 31, 1998, considering the risks
in the portfolio and the resulting smaller provision that was necessary during
the year to attain the appropriate level as compared to the similar provision
necessary to attain the appropriate level during the year ended December 31,
1997, (2) the decrease in non-performing loans and, to a lesser degree, (3) the
reduction in the loan portfolio. The increase from 1996 to 1997 is due to a
growth in loans and to the increase in non-performing loans. No provisions were
made in 1996 due to recoveries of previously charged off loans exceeding current
year charged off loans.
<PAGE>
Non-Interest Income
Total non-interest income was $1.45 million in 1998, compared to $1.53
million in 1997 and $1.39 million in 1996. Non-interest income is principally
derived from service charges on deposit accounts and trust fees.
The table below shows non-interest income for the years ended December 31,
1998, 1997 and 1996, respectively, as well as changes in 1998 from 1997 and in
1997 from 1996.
<TABLE>
<CAPTION>
Non-Interest Income
1998 1997
Years Ended December 31 Change from Change from
(In thousands) 1998 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust income $ 680 $ 650 $ 567 $ 30 4.62% $ 83 14.64%
Service charges on deposit accounts 512 526 439 (14) (2.66) 87 19.82
Other income 253 359 386 (106) (29.53) (27) (6.99)
-------- --------- -------- ------ ------
Total non-interest income $ 1,445 $ 1,535 $ 1,392 $ (90) (5.86)% $ 143 10.27%
======= ======== ======= ====== ======
</TABLE>
In 1998, trust fees increased $30,000 from the 1997 level, while service
charges on deposit accounts decreased $14,000. In 1997, trust fees increased
$83,000 from the 1996 level, while service charges on deposit accounts increased
$87,000. The increase in trust fees for 1998 and 1997 is primarily the result of
growth in the number of trust relationships. The decrease in service charges on
deposit accounts for 1998 is the result of changes in account features,
primarily minimum balance requirements; the increase from 1996 to 1997 is the
result of rate increases on certain account features during 1997.
Non-Interest Expense
Non-interest expense consists of salaries and employee benefits, occupancy,
equipment and other expenses necessary for the operation of NBCBC. Management
remains committed to controlling the level of non-interest expense, through the
continued use of expense control measures that have been installed. NBCBC
utilizes an extensive profit planning and reporting system. Annual profit plans
are developed, including manpower and capital expenditure budgets, based on a
needs assessment of the business plan for the upcoming year. These profit plans
are subject to extensive initial reviews and monitored by management on a
monthly basis. Variances from the plan are reviewed monthly and, when required,
management takes corrective action intended to ensure financial goals are met.
Non-interest expense for 1998 was $4.09 million, an increase of $170,000,
or 4.33%, from 1997. Non-interest expense for 1997 was $3.92 million, an
increase of $66,000, or 1.72%, from 1996. The increase in non-interest expense
in 1998, compared to 1997 and 1996, primarily reflects NBCBC's realized loss on
the sale of available-for-sale securities of $215,000 and $122,000 in 1998 and
1997, respectively. The increase in professional services from 1997 to 1998 was
due to outsourcing, certain services previously performed internally. The
increase in 1997 from 1996 in professional services is due to NBCBC retaining a
firm to perform a strategic profitability study.
<PAGE>
The table below shows non-interest expense for the years ended December 31,
1998, 1997 and 1996, respectively, as well as changes to 1998 from 1997 and 1997
from 1996, respectively.
<TABLE>
<CAPTION>
Non-Interest Expense
1998 1997
Years Ended December 31 Change from Change from
(In thousands) 1998 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $ 2,005 $ 2,016 $ 2,213 $ (11) (.55)%$ (197) (8.90)%
Occupancy expense, net 615 576 588 39 6.77 (12) (2.21)
Loss on sale of AFS securities 215 122 -- 93 76.23 122 100.00
Loss on foreclosed assets 43 5 12 38 760 (7) (58.33)
Other operating expenses
Professional services 181 182 45 (1) (.55) 137 304.44
Postage 73 71 63 2 2.82 8 12.70
Telephone 59 41 43 18 43.90 (2) (4.65)
Advertising 121 121 125 -- -- (4) (3.20)
Operating supplies 155 139 125 16 11.51 14 11.20
FDIC insurance 14 14 2 -- 12 600
Other expenses 611 635 640 (24) (3.78) (5) (.63)
-------- --------- ------- ------- --------
Total non-interest expense $ 4,092 $ 3,922 $ 3,856 $ 170 4.33% $ 66 1.71%
======= ======== ======= ====== =======
</TABLE>
Income Taxes
The provision for income taxes for 1998 was $737,000 compared to $950,000
in 1997 and $742,000 in 1996. The effective income tax rates for the years ended
1998, 1997 and 1996 were 30.9%, 35.8% and 31.4%, respectively.
Loan Portfolio
NBCBC's loan portfolio averaged $66.7 million during 1998 and $70.1 million
during 1997. As of December 31, 1998, total loans were $65.2 million, compared
to $69.4 million on December 31, 1997. The most significant components of the
loan portfolio were commercial real estate loans, loans to individuals, and
single family residential real estate loans.
NBCBC seeks to manage its credit risk by diversifying its loan portfolio,
determining that borrowers have adequate sources of cash flow for loan repayment
without liquidation of collateral, obtaining and monitoring collateral,
providing an adequate allowance for loan losses and regularly reviewing loans
through the internal loan review process. The loan portfolio is diversified by
borrower, purpose, and industry. NBCBC seeks to use diversification within the
loan portfolio to reduce credit risk, thereby minimizing the adverse impact on
the portfolio, if weaknesses develop in either the economy or a particular
segment of borrowers. Collateral requirements are based on credit assessments of
borrowers and may be used to recover the debt in case of default. NBCBC uses the
allowance for loan losses as a method to value the loan portfolio at its
estimated collectable amount. Loans are regularly reviewed to facilitate the
identification and monitoring of deteriorating credits.
<PAGE>
Consumer loans consist of single pay and consumer installment loans.
Consumer loans were $9.4 million at December 31, 1998, or 14.2% of total loans,
compared to $10.5 million, or 14.9% of total loans at December 31, 1997. Real
estate loans consist of construction loans, single family residential loans and
commercial loans. Real estate loans were $42.8 million at December 31, 1998, or
64.9% of total loans, compared to $44.2 million, or 62.8% of total loans at
December 31, 1997. Commercial loans consist of commercial loans and agricultural
loans. Commercial loans were $13.8 million at December 31, 1998, or 21.0% of
total loans, compared to $15.7 million, or 22.2% of total loans at December 31,
1997.
The amounts of loans outstanding at the indicated dates are reflected in
the following table, according to type of loan.
<TABLE>
<CAPTION>
Loan Portfolio
Years Ended December 31
(In thousands) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer Loans $ 9,356 $ 10,509 $ 9,053 $ 9,329 $ 8,064
Real Estate
Construction 2,550 2,503 1,849 3,151 298
Single family residential 20,405 21,330 19,286 17,042 17,056
Commercial 19,889 20,416 22,231 15,700 17,148
Commercial
Commercial 13,745 15,518 15,822 10,430 9,866
Agricultural 45 104 101 57 31
Other 62 64 49 28 128
---------- ---------- ---------- ---------- ---------
Total loans $ 66,052 $ 70,444 $ 68,391 $ 55,737 $ 52,591
========= ========= ========== ========= =========
</TABLE>
The following table reflects the remaining maturities and interest rate
sensitivity of loans at December 31, 1998.
<TABLE>
<CAPTION>
Maturity and Interest Rate Sensitivity of Loans
Over 1
year
1 year through Over
(In thousands) or less 5 years 5 years Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Consumer $ 2,106 $ 6,609 $ 641 $ 9,356
Real estate 18,920 18,520 5,404 42,844
Commercial 8,959 3,758 1,073 13,790
Other 22 40 -- 62
---------- ---------- -------- ----------
Total $ 30,007 $ 28,927 $ 7,118 $ 66,052
========== ========= ======== =========
Predetermined rate $ 19,202 $ 25,107 $ 7,118 $ 51,427
Floating rate 10,805 3,820 -- 14,625
----------- ---------- --------- ----------
Total $ 30,007 $ 28,927 $ 7,118 $ 66,052
========== ========= ======== =========
</TABLE>
<PAGE>
Asset Quality
Non-performing loans are comprised of (a) nonaccrual loans, (b) loans that
are contractually past due 90 days and (c) other loans for which terms have been
restructured to provide a reduction or deferral of interest or principal,
because of deterioration in the financial position of the borrower. The
subsidiary bank recognizes income principally on the accrual basis of
accounting. When loans are classified as nonaccrual, the accrued interest is
charged off and no further interest is accrued. Loans are placed on a nonaccrual
basis either: (1) when there are serious doubts regarding the collectability of
principal or interest, or (2) when payment of interest or principal is 90 days
or more past due and either (i) the loan is not fully secured or (ii) the loan
is not in the process of collection. If a loan is determined by management to be
uncollectable, the portion of the loan determined to be uncollectable is then
charged to the allowance for loan losses. Litigation accounts are placed on
nonaccrual until such time as deemed uncollectable.
The following tables present information concerning non-performing assets,
including nonaccrual and restructured loans and other real estate owned.
<TABLE>
<CAPTION>
Non-Performing Assets
Years Ended December 31
(In thousands) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 826 $ 790 $ 548 $ 576 $ 1109
Loans past due 90 days or more
(principal or interest payments) 15 156 227 41 58
Restructured 118 343 -- 281 --
--------- ------- -------- -------- -------
Total non-performing loans $ 959 $ 1,289 $ 775 $ 898 $ 1,167
-------- ------- ------- ------- -------
Other non-performing assets
Foreclosed assets held for sale 546 193 94 144 85
Other non-performing assets -- -- -- -- --
--------- -------- -------- -------- -------
Total other non-performing assets $ 546 $ 193 $ 94 $ 144 $ 85
-------- ------- ------- ------- -------
Total non-performing assets $ 1,505 $ 1,482 $ 869 $ 1,042 $ 1,252
======== ======= ======== ======== =======
Allowance for loan losses to
non-performing loans 93.2% 80.3% 146.5% 106.5% 85.2%
Non-performing loans to total loans 1.45% 1.83% 1.13% 1.61% 2.22%
Non-performing assets to total assets 1.03% 1.05% .64% .77% .99%
</TABLE>
Approximately $45,500, $54,400 and $52,000 of interest income would have
been recorded for the periods ended December 31, 1998, 1997 and 1996,
respectively, if the nonaccrual loans had been accruing interest in accordance
with their original terms. Interest income on the nonaccrual loans for the
periods ended December 31, 1998, 1997 and 1996 was immaterial.
Foreclosed assets held for sale increased from $193,000 to $546,000
primarily resulting from receipt of rental property in partial settlement of
several loans to one borrower.
<PAGE>
Allowance For Loan Losses
An analysis of the allowance for loan losses for the last five years is
shown in the table below:
<TABLE>
<CAPTION>
(In thousands) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $ 1,036 $ 1,136 $ 956 $ 994 $ 1,204
-------- ------ ------- ------ ------
Loans charged off
Consumer 89 69 62 35 37
Real estate 225 140 3 138 70
Commercial 172 254 10 13 452
-------- ------ ------- ------ ------
Total loans charged off 486 463 75 186 559
-------- ------- ------- ------ ------
Recoveries of loans previously charged off
Consumer 23 25 9 20 4
Real estate 81 101 37 63 35
Commercial 160 57 209 15 193
-------- ------- ------- ------ ------
Total recoveries 264 183 255 98 232
-------- ------- ------- ------ ------
Net loans charged off (recoveries) 221 280 (180) 88 327
Additions to reserve charged to
expense 80 180 -- 50 117
-------- ------- ------- ------ ------
Balance, end of year $ 894 $ 1,036 $ 1,136 $ 956 $ 994
======== ====== ======= ====== ======
Net charge-offs (recoveries) to average loans .33% .40% (.30)% .16% .63%
Allowance for loan losses to total loans 1.35% 1.47% 1.66% 1.72% 1.89%
Allowance for loan losses to net charge-offs 404.52% 369.64% --% 1086.36% 303.97%
</TABLE>
The amounts of additions to the allowance during the year 1998 were based
on management's judgment, with consideration given to the composition of the
portfolio, historical loan loss experience, assessment of current economic
conditions, past due loans and net losses from loans charged off for the last
five years. It is management's practice to review the allowance on a monthly
basis to determine whether additional provisions should be made to the allowance
after considering the items noted above and any other pertinent factors.
NBCBC allocates the allowance for loan losses according to the amount
deemed to be reasonably necessary to provide for the losses within the
categories of loans set forth in the table below:
<TABLE>
<CAPTION>
Allocation of Allowance for Loan Losses
December 31
1998 1997 1996 1995 1994
Allowance % of Allowance % of Allowance % of Allowance % of Allowance % of
(In thousands) Amount loans* Amount loans* Amount loans* Amount loans* Amount loans*
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer $ 160 14% 195 15% 183 13% 126 17% 91 15%
Real Estate 352 65% 332 63% 494 63% 270 64% 481 66%
Commercial 155 21% 281 22% 421 24% 266 19% 167 19%
Unallocated 227 228 38 294 255
------- ------- ------ ------- ------
Total $ 894 100% $ 1,036 100% $1,136 100% $ 956 100% $ 994 100%
====== ====== ===== ====== =====
<FN>
* Percentage of loans in each category to total loans
</FN>
</TABLE>
The unallocated reserve generally serves to compensate for losses inherent
in the portfolio and the uncertainty in estimating loan losses, including the
possibility of improper risk ratings and specific reserve allocations. The
unallocated reserve has decreased from 1997 to 1998 as a response to a decline
in risk factors.
<PAGE>
Investments and Securities
NBCBC's securities portfolio is the second largest component of earning
assets and provides a significant source of revenue. Securities within the
portfolio are classified as either held-to-maturity or available-for-sale.
Held-to-maturity securities, which include any security for which
management has the positive intent and ability to hold until maturity, are
carried at historical cost, adjusted for amortization of premiums and accretion
of discounts. Premiums and discounts are amortized and accreted, respectively,
to interest income using the constant yield method over the period to maturity.
Available-for-sale securities, which include any security for which
management has no immediate plans to sell, but which may be sold in the future,
are carried at fair value. Realized gains and losses, based on amortized cost of
the specific security, are included in other income. Unrealized gains and losses
are recorded, net of related income tax effects, in stockholders' equity, as
other comprehensive income. Premiums and discounts are amortized and accreted,
respectively, to interest income, using the level yield method over the period
to maturity.
The carrying value of held-to-maturity and available-for-sale investment
securities were $29.0 million and $35.8 million, respectively, at December 31,
1998, compared to the held-to-maturity amount of $22.9 million and
available-for-sale amount of $33.5 million at December 31, 1997. Investments in
the held-to-maturity portfolio include mortgage-backed securities and municipal
securities. In the available-for-sale securities, $7.3 million, or 20.4% were in
U.S. Treasury and U.S. government agency securities, 86.1% of which will mature
in less than five years. In order to reduce NBCBC's income tax burden, an
additional $10.7 million, or 36.9%, of the held-to-maturity securities portfolio
and $4.4 million, or 12.3% of the available-for-sale securities, was invested in
tax-exempt obligations of state and political subdivisions. There are no
securities of any one issuer exceeding ten percent of NBCBC's stockholders'
equity at December 31, 1998. NBCBC has approximately $17.4 million, or 60.00%,
in mortgaged-backed securities in the held-to-maturity portfolio and $24.1
million, or 67.3%, of the available-for-sale portfolio. The remaining $.9
million, or 3.1% of NBCBC's held-to-maturity portfolio, was comprised of other
securities at December 31, 1998. NBCBC's general policy is not to invest in
derivative type investments, except for collateralized mortgage-backed
securities for which collection of principal and interest is not subordinated to
significant superior rights held by others.
As of December 31, 1998, the held-to-maturity investment portfolio had
gross unrealized gains of $517,000 and gross unrealized losses of $183,000. Net
realized losses from called or sold available-for-sale securities for 1998 were
$215,000, compared to net realized losses of $122,000 in 1997.
Interest and dividends on investments in debt and equity securities are
included in income when earned.
<PAGE>
The table below presents the carrying value and fair value of investment
securities for each of the years indicated.
<TABLE>
<CAPTION>
Investment Securities
Years Ended December 31
---------------------------------------------------------------------------------------
1998 1997
--------------------------------------------- -----------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains (Losses) Value Cost Gains (Losses) Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity
Mortgage-backed
securities 17,408 95 157 17,346 15,847 157 77 15,927
State and political
subdivisions 10,711 409 25 11,095 6,561 330 1 6,890
Other securities 901 13 1 913 459 1 2 458
--------- ------ ----- --------- --------- ------ ------ ---------
$ 29,020 $ 517 $ 183 $ 29,354 $ 22,867 $ 488 $ 80 $ 23,275
========= ====== ===== ========= ========= ====== ====== =========
Available-for-Sale
U.S. Treasury $ 750 $ 2 $ -- $ 752 $ 3,985 $ 10 $ 4 $ 3,991
U.S. Government
agencies 6,469 68 5 6,532 9,349 30 19 9,360
Mortgage-backed
Securities 24,260 59 229 24,090 17,609 69 94 17,584
State and political
subdivisions 4,376 53 9 4,420 2,069 16 3 2,082
Other securities -- -- -- -- 750 0 221 529
--------- ------ ----- --------- --------- ------ ------ ---------
$ 35,855 $ 182 $ 243 $ 35,794 $ 33,762 $ 125 $ 341 $ 33,546
========= ====== ===== ========= ========= ====== ====== =========
</TABLE>
The following table reflects the amortized cost and estimated fair value of
debt securities at December 31, 1998, by contractual maturity, the weighted
average yields (for tax-exempt obligations on a fully taxable basis, assuming a
34% tax rate) of such securities and the taxable equivalent adjustment used in
calculating yields. Expected maturities will differ from contractual maturities,
because borrowers may have the right to call or prepay obligations, with or
without call or prepayment penalties.
<PAGE>
<TABLE>
<CAPTION>
Maturity Distribution of Investment Securities
December 31, 1998
Over Over
1 year 5 years Total
1 year through through Over No fixed Carrying Par Fair
(In thousands) or less 5 years 10 years 10 years maturity Value Value Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity
Mortgage-backed
securities 17,408 17,408 14,831 17,346
State and political
subdivisions 144 2,211 6,558 1,798 -- 10,711 10,719 11,095
Other securities 400 29 -- 472 -- 901 929 913
-------- ------- -------- ------- -------- -------- -------- --------
Total $ 544 $ 2,240 $ 6,558 $ 2,270 $ 17,408 $ 29,020 $ 26,479 $ 29,354
======== ======= ======== ======= ======== ======== ======== ========
Percentage of total 2% 8% 22% 8% 60% 100%
======= ====== ======= ====== ======= =======
Weighted average yield 5.51% 7.35% 7.04% 7.45% 6.14% 6.58%
======= ====== ======= ====== ======= =======
Available-for-Sale
U.S. Treasury $ 750 $ -- $ -- $ -- $ -- $ 750 $ 750 $ 752
U.S. Government 801 4,668 1,000 -- -- 6,469 6,470 6,532
agencies
Mortgage-backed -- -- -- -- 24,260 24,260 23,660 24,090
Securities
State and political
subdivisions -- 1,612 1,187 1,577 -- 4,376 4,380 4,420
--------- -------- --------- -------- --------- --------- --------- ---------
Total $ 1,551 $ 6,280 $ 2,187 $ 1,577 $ 24,260 $ 35,855 $ 35,260 $ 35,794
======== ======= ======== ======= ======== ======== ======== ========
Percentage of total 4% 18% 6% 4% 68% 100%
======= ====== ======= ====== ======= =======
Weighted average yield 5.23% 6.30% 6.71% 7.28% 5.88% 6.04%
======= ====== ======= ====== ======= =======
</TABLE>
Deposits
Total average deposits for 1998 were $121.0 million, compared to $119.8
million in 1997. The year-end balances of time deposits over $100,000 were $21.7
million in 1998, compared to $25.2 million in 1997.
<PAGE>
The following table reflects the classification of the average deposits and
the average rate paid on each deposit category for the three years ended
December 31, 1998.
<TABLE>
<CAPTION>
Average Deposits Balances and Rates
December 31
1998 1997 1996
---------------------- ----------------------- ------------------------
Average Average Average Average Average Average
(In thousands) Amount rate paid Amount rate paid Amount rate paid
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand
deposits $ 17,248 -- $ 17,359 -- $ 16,554 --
Interest bearing transaction and
savings deposits 37,949 2.67% 35,274 2.75% 37,102 2.75%
Time deposits
$100,000 or more 22,160 5.22% 24,335 5.27% 22,470 5.42%
Other time deposits 43,675 5.25% 42,879 5.36% 42,250 5.46%
---------- ----------- ---------
Total $ 121,032 $ 119,847 $ 118,376
========= ========== =========
</TABLE>
<TABLE>
<CAPTION>
Maturities of Large Denomination Time Deposits
Time Certificates of Deposit
($100,000 or more)
December 31
--------------------------------------------------------
1998 1997
--------------------------- ---------------------------
(In thousands) Balance Percent Balance Percent
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maturing
Three months or less $ 10,046 46.3% $ 11,502 45.6%
Over 3 months to 6 months 4,514 20.9% 6,536 25.9%
Over 6 months to 12 months 4,325 19.9% 4,179 16.6%
Over 12 months 2,805 12.9% 3,017 11.9%
---------- ----------
Total $ 21,690 100.0% $ 25,234 100.0%
========== ==========
</TABLE>
Short-Term Borrowings
Securities sold under agreements to repurchase were $6.9 million at
December 31, 1998, as compared to $3.2 million at December 31, 1997. The only
other borrowing resulted from the Bank's guarantee of the Employee Stock
Ownership Plan debt totaling $50,000 at December 31, 1997.
NBCBC has historically funded its growth in earning assets through the use
of core deposits, large certificates of deposits from local markets and federal
funds purchased. Management anticipates that these sources will provide
necessary funding in the foreseeable future. NBCBC's general policy is to avoid
the use of brokered deposits.
<PAGE>
Capital
At December 31, 1998, the total stockholders' equity was $13.4 million. At
year-end 1998, NBCBC's equity to asset ratio was 9.11% compared to 9.01% at
year-end 1997.
The Federal Reserve Board's risk-based guidelines established a
risk-adjusted ratio, relating capital to different categories of assets and
off-balance sheet exposures, such as loan commitments and standby letters of
credit. These guidelines place a strong emphasis on tangible stockholders'
equity as the core element of the capital base, with appropriate recognition of
other components of capital. At December 31, 1998, the Tier 1 capital ratio was
17.31%, while NBCBC's total risk-based capital ratio was 18.97%, both of which
exceed the capital minimums established in the risk-based capital requirements.
NBCBC's risk-based capital ratios at December 31, 1998 and 1997 are
presented below.
<TABLE>
<CAPTION>
Risk-Based Capital
December 31
(In thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tier 1 capital
Stockholders' equity $ 13,387 $ 12,821
Unrealized loss on
available-for-sale securities (37) (133)
----------- ----------
Total Tier 1 capital 13,350 12,688
----------- ----------
Tier 2 capital
Qualifying allowance for loan losses 894 1,035
----------- ----------
Total Tier 2 capital 894 1,035
----------- ----------
Total risk-based capital $ 14,244 $ 13,723
========== =========
Risk weighted assets $ 146,533 $ 140,782
========== =========
Ratios at end of year
Leverage ratio 9.11% 9.01%
Tier 1 capital 17.31% 16.73%
Total risk-based capital 18.97% 18.10%
Minimum guidelines
Leverage ratio 4.00% 4.00%
Tier 1 capital 4.00% 4.00%
Total risk-based capital 8.00% 8.00%
</TABLE>
Liquidity and Market Risk Management
Parent Company
NBCBC depends upon the dividends paid to it, as the sole shareholder of the
subsidiary bank, as a principal source of funds. At December 31, 1998, undivided
profits of NBCBC's subsidiary were approximately $9.39 million, of which
approximately $2.0 million was available for the payment of dividends to NBCBC
without regulatory approval.
<PAGE>
Banking Subsidiary
Generally speaking, NBCBC's banking subsidiary relies upon net inflows of
cash from financing activities, supplemented by net inflows of cash from
operating activities, to provide cash used in investing activities. Typical of
most banking companies, significant financing activities include deposit
gathering and the use of short-term borrowing facilities, such as federal funds
purchased and repurchase agreements; and the issuance of long-term debt. The
banks' primary investing activities include loan originations and purchases of
investment securities, offset by loan payoffs and investment maturities.
Liquidity represents an institution's ability to provide funds to satisfy
demands from depositors and borrowers, by either converting assets into cash or
accessing new or existing sources of incremental funds. A major responsibility
of management is to maximize net interest income within prudent liquidity
constraints. Internal corporate guidelines have been established to constantly
measure liquid assets, as well as relevant ratios concerning earning asset
levels and purchased funds. The management and board of directors of the bank
subsidiary monitors these same indicators and makes adjustments as needed. At
year-end, the subsidiary bank was within established guidelines and total
corporate liquidity remains strong. At December 31, 1998, cash and cash
equivalents, and available-for-sale securities were 30.9% of total assets, as
compared to 30.2% at December 31, 1997.
Market Risk Management
Market risk arises from changes in interest rates. NBCBC has risk
management policies to monitor and limit exposure to market risk. In asset and
liability management activities, policies are in place that are designed to
minimize structural interest rate risk. The measurement of market risk
associated with financial instruments is meaningful only when all related and
offsetting on- and off-balance-sheet transactions are aggregated, and the
resulting net positions are identified. Disclosures about fair value of
financial instruments, which reflect changes in market prices and rates, can be
found in Note 14 of Notes to Consolidated Financial Statements.
Interest Rate Sensitivity
Management continually reviews NBCBC's exposure to changes in interest
rates. Among the factors considered during its evaluations are changes in the
mix of earning assets, growth of earning assets, interest rate spreads and
repricing periods. Management forecasts and models the impact that various
interest rate fluctuations would have on net interest income. One such model
measures the interest rate sensitivity GAP, which presents, at a particular
point in time, the matching of interest rate sensitive assets with interest rate
sensitive liabilities.
<PAGE>
The following schedule presents the ratios of cumulative rate sensitive assets
to rate sensitive liabilities.
<TABLE>
<CAPTION>
Interest Rate Sensitivity
Interest Rate Sensitivity Period
0-30 31-90 91-180 181-365 1 to 2 2-5 Over 5
(In thousands, except ratios) Days Days Days Days Years Years Years Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Short-term investments $ 2,933 $ -- $ -- $ -- $ -- $ -- $ -- $ 2,933
Investment securities 8,544 10,726 5,696 8,982 5,143 8,378 18,093 65,562
Loans 10,653 4,423 4,421 10,510 18,970 9,957 7,118 66,052
--------- --------- --------- --------- --------- --------- --------- ---------
Total earning assets 22,130 15,149 10,117 19,492 24,113 18,335 25,211 134,547
--------- --------- --------- --------- --------- --------- --------- ---------
Interest bearing liabilities
Interest bearing transaction
and savings accounts 40,773 -- -- -- -- -- -- 40,773
Time deposits 11,609 10,291 13,775 13,720 8,193 7,486 61 65,135
Short-term borrowings 7,115 -- -- -- -- -- -- 7,115
--------- --------- --------- --------- --------- --------- --------- ---------
Total interest bearing
liabilities 59,497 10,291 13,775 13,720 8,193 7,486 61 113,023
--------- --------- --------- --------- --------- --------- --------- ---------
Interest rate $ (37,367) $ 4,858 $ (3,658) $ 5,772 $ 15,920 $ 10,849 $ 25,150 $ 21,524
sensitivity GAP ========= ======== ======== ======= ======== ======== ======== ========
Cumulative interest rate
sensitivity GAP $ (37,367) $ (32,509) $ (36,167) $ (30,395) $(14,475) $ (3,626) $ 21,524
Cumulative rate sensitive assets
to rate sensitive liabilities 37.2% 53.4% 56.7% 68.8% 86.3% 96.8% 119.0%
Cumulative GAP as a % of
earning assets (28.0)% (24.2)% (26.9)% (22.6)% (10.8)% (2.7)% 16.0%
</TABLE>
Impact of the Year 2000 Issue
General
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Many computer
systems, software, and embedded computer chips may be unable to distinguish
between 1900 and 2000. If not corrected, this problem could create system errors
and failure resulting in the disruption of normal business operations.
State of Readiness
NBCBC has identified the following three key phases for addressing the Year
2000 issues: analysis, testing, and remediation. NBCBC has completed the Year
2000 analysis by identification of mission critical systems, vendors, large
borrowers and large depositors and non information technology matters requiring
assessment and testing. NBCBC is utilizing both internal and external resources
to test its software systems for Year 2000 compliance. At December 31, 1998,
NBCBC's internal mission critical testing was approximately 90% complete.
Management believes the completion of internal mission critical testing will be
completed by March 31, 1999. The testing with vendors, payment system providers
and third-party suppliers will be completed by June 30, 1999. The replacement of
non-compliant mission critical systems was completed at December 31, 1998. NBCBC
expects to complete all phases by June 30, 1999, in accordance with guidelines
established by the Federal Financial Institutions Examination Council (FFIEC).
NBCBC is expected to convert to Simmons First National Corporation's systems;
this conversion is not expected until first quarter of 2000.
<PAGE>
Costs
During the year ended December 31, 1998, NBCBC had costs of $175,000 for
software testing and hardware replacement related to the Year 2000 issues. NBCBC
is utilizing internal personnel to complete all work associated with the Year
2000 project. Therefore, management believes completion of the Year 2000
modifications and subsequent testing will not have a material effect on NBCBC's
future consolidated results of operations or financial position.
Risks
Although NBCBC's Year 2000 readiness is directed at reducing its exposure,
there can be no assurance that these efforts will fully mitigate the effect of
Year 2000 issues. In the event NBCBC fails to identify or correct a material
Year 2000 problem, there could be disruptions in normal business operations,
which could have material adverse effect on NBCBC's results of operations,
liquidity or financial condition. Additionally, NBCBC is subject to credit risk
to the extent borrowers fail to adequately address Year 2000 issues and to
liquidity risk to the extent of deposit withdrawals and to the extent its
lenders are unable to provide NBCBC with funds due to Year 2000 issues. Although
it is not possible to quantify the potential impact of these risks at this time,
in the future, there may be increases in problem loans, credit losses, and
liquidity problems, as well as the risk of litigation and potential losses from
litigation related to the foregoing.
Contingency Plans
NBCBC has existing disaster recovery plans that address its response to
disruptions to business due to natural disasters, utility outages or other
occurrences. NBCBC's contingency plans were completed March 31, 1999. During the
remainder of 1999, the contingency plans will be tested and validated.
Quarterly Results
Selected unaudited quarterly financial information for the last eight
quarters is shown in the table below.
<TABLE>
<CAPTION>
Quarter
------------------------------------------
(In thousands, except per share data) First Second Third Fourth Total
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998
Net interest income $ 1,299 $ 1,273 $ 1,277 $ 1,263 $ 5,112
Provision for loan losses 10 -- 70 -- 80
Non-interest income 384 368 308 385 1,445
Non-interest expense 882 926 977 1,092 3,877
Loss on sale of securities, net -- -- 61 154 215
Net income 509 476 371 292 1,648
Earnings per common share 2.70 2.53 1.97 1.57 8.77
1997
Net interest income $ 1,250 $ 1,337 $ 1,332 $ 1,302 $ 5,221
Provision for loan losses -- -- 30 150 180
Non-interest income 396 398 410 331 1,535
Non-interest expense 942 968 967 923 3,800
Loss on sale of securities, net -- -- -- 122 122
Net income 501 500 452 251 1,704
Earnings per common share 2.66 2.65 2.40 1.42 9.13
</TABLE>
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS OF NBCBC WILL BE DISSOLVED AND POSITIONS HELD BY
EXECUTIVE OFFICERS OF NBCBC WILL NO LONGER EXIST UPON THE CONSUMMATION OF THE
MERGER. IT IS ANTICIPATED THAT JERRY WATKINS, CURRENTLY A DIRECTOR OF NBCBC AND
NBC WILL BECOME A DIRECTOR OF SIMMONS UPON THE COMPLETION OF THE MERGER. THE
DIRECTORS OF NBC BANK CORP. AND ITS SUBSIDIARY ARE SET FORTH BELOW:
DIRECTORS AND EXECUTIVE OFFICERS OF NBC BANK CORP.
<TABLE>
<CAPTION>
NBCBC Common Stock
Owned Beneficially on
Director(1) December 31, 1998
Name Age Since Principal Occupation Shares and Pct.of Class
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John Lee Anthony 58 1998 President, Anthony 100 (2) *
Forest Products, Inc.
James D. Cook 67 1969 Chairman of Board, Retired 6,614 (3) 3.51%
CEO of NBCBC and NBC
Steve Cosse 52 1998 Senior Vice President and 100 *
General Counsel,
Murphy Oil Corp.
Benny F. Cox 67 1992 Certified Public Accountant, 225 (4) *
Cox, Gober & Co., Ltd.
John F. Dews 43 1993 President and CEO, NBCBC 1,732 (5) *
and NBC
Sarah P. Kinnard 64 1997 Investments 1,788 *
Denny McConathy 55 1996 President and CEO, Cross Oil 200 *
& Refining Co., Inc.
Hutton Nobles 47 1987 Independent Oil and 6,375 3.38%
Gas Producer
Kenneth Oliver, Jr. 58 1991 President and Manager, 3,079 (6) 1.63%
El Dorado Glass & Mirror Co.
William I. Prewett 71 1973 Attorney at Law, Compton, 2,541 1.35%
Prewett, Thomas & Hickey, P.A.
Jack Reynolds 47 1995 Vice President, El Dorado & 200 *
Wesson Railroad Co.
Jerry W. Watkins 68 1993 Retired President, ODECO 500 *
(Offshore Oil drilling; Former
General Counsel and Executive
Vice President Murphy Oil Corp.
<PAGE>
John R. Williamson, M.D. 57 1995 General Opthamology, South 450
Arkansas Eye Clinic
Larkin M. Wilson,Jr., M.D. 66 1975 Physician, South Arkansas 700
Diagnostic Clinic
- -------------------
<FN>
(1) This column represents the year in which the directorship commenced.
(2) Mr. Anthony owns 50 shares and 50 shares are owned by his spouse.
(3) Mr. Cook owns, 4,418 shares outright; 2,096 are held in his IRA and 100
are owned by his spouse.
(4) Mr. Cox owns 50 shares outright; 175 are held in his SEP-IRA.
(5) Mr. Dews owns 783 shares in his IRA; 1,154 shares in his fully vested
ESOP account and 795 shares are owned by his wife.
(6) Mr. Oliver owns 1,924 shares through an agency account and 1,155 shares
are held in his revocable trust.
</FN>
</TABLE>
NBCBC has designated John F. Dews, President and CEO, and L. S. Brown,
Senior Vice President, A. J. Lockwood, Jr., Senior Vice President, Melissa
Jerry, Senior Vice President and Chief Financial Officer, Sabrina Lamkin, Vice
President and Jeanne Cunningham, Vice President as its executive officers.
During 1998, the Board of Directors of NBCBC held 17 meetings and all the
incumbent directors then in office were in attendance at more than seventy-five
percent of the meetings.
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of NBCBC and its subsidiary, their
associates and members of their immediate families were customers of and had
transactions including loans and commitments to lend with subsidiaries of NBCBC
in the ordinary course of business during 1998. All such loans and commitments
were made by the subsidiary on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk of
collectability or present other unfavorable features. Similar transactions may
be expected to take place in the ordinary course of business in the future. On
December 31, 1998, the aggregate of these related party loans was approximately
$2,261,057, or approximately 3.42% of total loans outstanding of the subsidiary
and 1.50% of pro forma consolidated capital accounts.
PRINCIPAL STOCKHOLDERS OF NBC BANK CORP.
The following table sets forth, as of December 31, 1998, the only persons
who were known by NBCBC to own of record or beneficially more than five (5%) of
NBCBC Common Stock and the number of shares owned beneficially by each of them.
<TABLE>
<CAPTION>
Shares Owned Aggregate
Name Directly Indirectly Pct of Class
---------- ----------------------------- ---------------
<S> <C> <C> <C>
H. D. Reynolds, Jr. 2,303 16,318(1) 9.88%
- -------------
<FN>
(1) 600 shares are owned by Arkansas-Sagebrush Ltd., 9,056 shares are owned by
Natural resources, Inc.; 5,362 shares are owned by El Dorado & Wesson Railway
Co. and 1,300 shares are owned by Triangle Industries, Inc. Mr. Reynolds is
president of and has a substantial ownership interest in each of the foregoing
entities.
</FN>
</TABLE>
<PAGE>
All directors and executive officers of NBCBC and its subsidiary as a group
(19 persons) as of December 31, 1998 owned 29,233 shares or 15.51% of the
outstanding shares of NBCBC Common Stock. No director or executive officer of
NBCBC owns any shares of Simmons Common Stock. Neither Simmons nor any of its
subsidiaries nor any director or executive officer of Simmons owns any shares of
NBCBC Common Stock.
COMPETITION
The banking subsidiary of NBCBC competes actively with national and state
banks, savings and loan associations, credit unions, securities dealers,
mortgage bankers, finance companies and insurance companies.
LITIGATION
There is no material pending litigation in which NBCBC or its subsidiaries
is a party.
OFFICES
NBC's executive offices are located in the offices of NBCBC, at 100 West
Grove Street, El Dorado, Arkansas 71730.
EMPLOYEES
As of December 31, 19980, NBCBC and its subsidiary had 70 employees.
DESCRIPTION OF NBC BANK CORP. STOCK
NBCBC has one class of common stock issued and outstanding. As of December
31, 1998, NBCBC had 188,529 shares of common stock outstanding, held by 192
stockholders.
<TABLE>
<CAPTION>
Dividends Paid Per Share
1998 1997 1996
----------------------------------------------------------------
<S> <C> <C> <C>
Common Stock $6.00 $6.00 $3.00
</TABLE>
COMPARISON OF RIGHTS OF HOLDERS OF NBC BANK CORP.
COMMON STOCK AND SIMMONS COMMON STOCK
NBCBC is a corporation organized and existing under the laws of the State
of Arkansas, i.e., the Arkansas Business Corporation Act of 1965. Simmons is a
corporation organized and existing under the laws of the State of Arkansas,
i.e., the Arkansas Business Corporation Act of 1987. Holders of NBCBC common
stock have the rights, privileges and duties provided by the 1965 Act, while the
holders of Simmons Common Stock have the rights, privileges and duties provided
by the 1987 Act. For a detailed discussion of all material differences between
the rights of security holders of NBCBC, and the rights of security holders of
Simmons, see "Election by NBC Bank Corp. under the 1987 Act - Result of
Election".
The holders of NBCBC common stock are entitled to cumulative voting for
directors. The holders of Simmons Common Stock are not entitled to cumulative
voting for directors. The By-Laws of Simmons and NBCBC state that the number of
directors of the corporation may not be less than five nor more than
twenty-five. Furthermore, neither holders of NBCBC common stock nor holders of
Simmons Common Stock have preemptive rights with respect to issuance of
additional securities.
<PAGE>
Both NBCBC and Simmons have corporate power to indemnify their officers and
directors with respect to certain liabilities. Under the 1987 Act, the ability
to indemnify officers and directors with respect to liabilities incurred by them
in their conduct and good faith of the business of the corporation is broader
than under the 1965 Act. Such power is limited, however, by applicable federal
laws and regulations including federal banking laws and regulations and the
applicable state law. Further, pursuant to the 1987 Act Simmons has adopted a
provision in its Articles of Incorporation which limits the liability of its
directors for certain breaches of their fiduciary duties. NBCBC has not adopted
such a liability limitation provision since such provisions are not authorized
by the 1965 Act under which the corporate activities of NBCBC are governed.
Simmons' Articles of Incorporation contain several paragraphs that may have
the effect of operating as anti-takeover provisions. Article ELEVENTH contains a
restriction upon the ability of a stockholder owning more than 10% of Simmons
Common Stock to acquire any additional shares except through a cash tender offer
at a pricenot less than the highest closing price of Simmons Common Stock during
the most recent 24 months, unless such shareholder is excepted from the
application of the Article by the board of directors prior to becoming a 10%
shareholder. Further, Article ELEVENTH requires the approval of 80% of the
shareholders of Simmons for any acquisition of Simmons by merger or
consolidation or by asset acquisition unless approved by the affirmative vote of
80% of the directors who were in office prior to the proponent of the
acquisition acquiring 10% or more of Simmons Common Stock. Article THIRTEENTH of
the Articles of Incorporation of Simmons requires the Board to consider the
following matters in addition to any other matters required to be considered
prior to making any recommendation concerning a proposed business combination in
which Simmons will not be the surviving corporation: 1) the impact on the
corporation, its subsidiaries, shareholders and employees and the communities
served by the corporation, 2) the timeliness of the proposed transaction
considering the business climate and strategic plans of the Company, 3) the
existence of any legal defects or regulatory issues involved in the proposed
transaction, 4) the lack of non-consummation of the transaction due to lack of
financing, regulatory issues or identified issues, 5) current market price of
Simmons Common Stock and its consolidated assets, 6) book value of Simmons
Common Stock, 7) the relationship of the offered price for Simmons Common Stock
to the Board's opinion of the current value of Simmons in a negotiated
transaction, 8) the relationship of the offered price for Simmons Common Stock
to the Board's opinion of the future value of Simmons as an independent entity,
and 9) such other criteria as the Board may determine are appropriate. Article
FOURTEENTH, requires the affirmative vote of 80% of the shareholders to amend,
repeal or modify any provision of the Articles of Incorporation unless such
revision is approved by 80% of the directors who were in office prior to the
proponent of any business combination acquiring 10% or more of Simmons Common
Stock. The NBCBC Articles of Incorporation do not contain a similar provisions.
However, under the 1965 Act, NBCBC must have a two-thirds (2/3) majority vote of
all votes entitled to be cast to adopt a merger or business combination.
LEGAL MATTERS AND EXPERTS
LEGAL OPINIONS
The legality of the Simmons Common Stock to be issued after the Merger has
been consummated by and between Simmons and NBCBC and certain tax matters
relating to the Merger will be passed upon by Williams & Anderson LLP, 111
Center St., 22nd Floor, Little Rock, Arkansas 72201.
EXPERTS
The consolidated financial statements of Simmons First National Corporation
as of December 31, 1998 and 1997 and for each of the years in the three-year
period ended December 31, 1998 are incorporated by reference in this Proxy
Statement and have been audited by Baird, Kurtz and Dobson, independent public
accountants, as indicated in their reports with respect thereto, and such
consolidated financial statements of Simmons have been incorporated by reference
herein in reliance upon the report of said firm given upon the authority of said
firm as experts in accounting and auditing.
<PAGE>
The consolidated financial statements of NBC Bank Corp. as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998, included in this proxy statement/prospectus have been audited by Deloitte
& Touche LLP independent auditors, as stated in their report appearing herein,
and are so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
GENERAL
As of the date of this Proxy Statement, the board of directors of NBCBC
does not intend to present, and has not been informed that another person
intends to present, any matter for action at the meeting of stockholders other
than as discussed in this Proxy Statement. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
NBC Bank Corp.
We have audited the accompanying consolidated statements of financial condition
of NBC Bank Corp. (the "Company") and its subsidiary as of December 31, 1998 and
1997, and the related consolidated statements of income and comprehensive
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NBC Bank Corp. and
its subsidiary at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Little Rock, Arkansas
February 5, 1999
(March 2, 1999 as to Note 15)
<PAGE>
<TABLE>
<CAPTION>
NBC BANK CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 and 1997
1998 1997
ASSETS
<S> <C> <C>
Cash and due from banks $ 6,518,366 $ 5,434,733
Federal funds sold 2,925,000 3,605,000
-------------- --------------
Cash and cash equivalents 9,443,366 9,039,733
Investment securities available for sale 35,793,849 33,546,227
Investment securities held to maturity 29,019,537 22,866,645
(fair value as of December 31, 1998 and 1997
of $29,354,121 and $ 23,274,582 respectively)
Loans, net of allowance at December 31, 1998 and 1997 65,157,918 69,408,534
of $894,065 and $1,035,557, respectively
Bank premises and equipment, net 2,563,071 2,325,713
Accrued interest receivable 1,134,938 1,111,628
Other assets 3,425,200 2,483,720
-------------- ---------------
TOTAL ASSETS $ 146,537,879 $ 140,782,200
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest bearing $ 19,133,402 $ 17,366,431
Interest bearing 105,116,196 104,716,772
Securities sold under agreements to repurchase 6,935,331 3,235,306
Notes payable -- 50,000
Accrued expenses and other liabilities 2,002,696 2,726,153
-------------- ---------------
Total liabilities 133,187,625 128,094,662
-------------- ---------------
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 300,000 shares authorized;
210,000 shares issued; 188,529 shares outstanding 210,000 210,000
Additional paid-in capital 3,883,013 3,883,013
Accumulated other comprehensive loss (37,272) (133,360)
Reduction for ESOP debt guaranty -- (50,000)
Retained earnings 10,121,728 9,605,100
-------------- ---------------
14,177,469 13,514,753
Less cost of 21,471 shares of treasury stock (827,215) (827,215)
-------------- ---------------
Total stockholders' equity 13,350,254 12,687,538
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 146,537,879 $ 140,782,200
============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NBC BANK CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $ 6,040,588 $ 6,284,673 $ 5,455,828
Investment securities
Taxable 3,108,561 3,160,055 3,651,880
Nontaxable 552,883 356,225 262,952
Federal funds sold 84,219 189,462 167,800
------------- ------------ ------------
Total interest income 9,858,251 9,990,415 9,538,460
------------- ------------- ------------
INTEREST EXPENSE:
Deposits 4,462,995 4,549,617 4,544,303
Other borrowings 283,265 219,923 165,537
------------- ------------- -------------
Total interest expense 4,746,260 4,769,540 4,709,840
------------- ------------- ------------
NET INTEREST INCOME 5,111,991 5,220,875 4,828,620
PROVISION FOR LOAN LOSSES 80,000 180,000 --
------------ ------------- ------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 5,031,991 5,040,875 4,828,620
------------ ------------- -------------
OTHER INCOME:
Service charges on deposit accounts 511,806 525,487 438,771
Trust fees 680,004 650,000 567,551
Other 253,482 359,262 385,725
------------ ------------- ------------
Total other income 1,445,292 1,534,749 1,392,047
------------ ------------- ------------
OTHER EXPENSES:
Salaries and employee benefits 2,004,815 2,016,374 2,212,854
Occupancy and equipment 615,224 576,129 587,715
Realized loss on sales of available for sale securities 215,129 122,311 --
Regulatory assessments 61,040 63,866 47,953
Other 1,195,981 1,143,569 1,007,380
------------ ------------- ------------
Total other expenses 4,092,189 3,922,249 3,855,902
------------ ------------- ------------
INCOME BEFORE INCOME TAXES 2,385,094 2,653,375 2,364,765
INCOME TAXES 737,293 949,752 742,333
------------- ------------- -------------
NET INCOME $ 1,647,801 $ 1,703,623 $ 1,622,432
------------ ------------ ------------
COMPREHENSIVE INCOME, Net of tax Unrealized loss on securities:
Unrealized holding gain (loss) arising during period $ (36,647) $ 952 $ (162,503)
Reclassification adjustment for loss included in net income 132,735 75,466
------------- ------------- -------------
Total other comprehensive income 96,088 76,418 (162,503)
------------- ------------- --------------
COMPREHENSIVE INCOME $ 1,743,889 $ 1,780,041 $ 1,459,929
============ ============ ============
PER SHARE INFORMATION -
Weighted average number of shares 187,900 186,642 185,384
============= ============= =============
Basic earnings per share $ 8.77 $ 9.13 $ 8.75
============ =========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NBC BANK CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
Accumulated
Additional Other
Common Paid-In Comprehensive ESOP Retained Treasury
Stock Capital Income (Loss) Guaranty Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ 210,000 $ 3,883,013 $ (47,275) $ -- $ 7,975,805 $ (827,215) $ 11,194,328
Net change in unrealized gain (loss) on
securities available for sale, net (162,503) (162,503)
Guaranty of Employee Stock Ownership (200,000) (200,000)
Plan loan
Dividends ($3 per share) (565,587) (565,587)
Net income 1,622,432 1,622,432
---------- ----------- --------- --------- ----------- ---------- ------------
BALANCE, DECEMBER 31, 1996 210,000 3,883,013 (209,778) (200,000) 9,032,650 (827,215) 11,888,670
Net change in unrealized gain (loss) on
securities available for sale, net 76,418 76,418
Guaranty of Employee Stock Ownership
Plan loan (100,000) (100,000)
Repayment of Employee Stock
Ownership Plan loan 250,000 250,000
Dividends ($6 per share) (1,131,173) (1,131,173)
Net income 1,703,623 1,703,623
---------- ----------- --------- ---------- ----------- --------- ------------
BALANCE, DECEMBER 31, 1997 210,000 3,883,013 (133,360) (50,000) 9,605,100 (827,215) 12,687,538
Net change in unrealized gain (loss)
on securities available for sale, net 96,088 96,088
Repayment of Employee Stock
Ownership Plan loan 50,000 50,000
Dividends ($6 per share) (1,131,173) (1,131,173)
Net income 1,647,801 1,647,801
---------- ----------- --------- ---------- ----------- --------- ------------
BALANCE, DECEMBER 31, 1998 $ 210,000 $ 3,883,013 $ (37,272) $ -- $10,121,728 $(827,215) $ 13,350,254
========= ========== ======== ========= ========== ======== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NBC BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,647,801 $ 1,703,623 $ 1,622,432
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Loss on sale of investment securities 215,129 122,311 --
Net amortization of premium on investment securities 195,373 5,511 47,139
Loss on disposal of equipment -- 9,045 14,752
Depreciation 277,098 225,758 227,843
Deferred tax expense 63,000 39,505 (140,627)
Provision for loan losses 80,000 180,000 --
(Gain) loss on sales of other real estate owned 34,411 (8,100) 652
Gain on sale of mortgage loans originated to sell (56,777) (49,402) --
Proceeds from sales of mortgage loans originated to sell 3,074,765 2,284,256 --
Change in accrued interest receivable (23,310) (7,731) 43,774
Change in other assets (1,649,639) (213,543) 43,455
Change in accrued expenses and other liabilities (786,457) 348,468 494,464
------------- ------------- -------------
Net cash provided (used) by operating activities 3,071,394 4,639,701 2,353,884
------------ ------------- -------------
INVESTING ACTIVITIES:
Net decrease in interest bearing deposits in
financial institutions -- -- 99,000
Proceeds from sales, maturities, repayments, and calls of
investment securities available for sale 17,429,203 11,202,960 10,119,434
Proceeds from maturities, repayments, and calls of
investment securities held to maturity 5,658,010 5,858,329 5,095,924
Purchases of investment securities available for sale (19,883,578) (16,398,410) (8,103,386)
Purchases of investment securities held to maturity (11,858,916) (480,674) (4,768,718)
Purchase of Federal Home Loan Bank stock (24,600) (38,600) (29,400)
Loan origination, net of repayments 1,665,718 (5,180,425) (12,541,526)
Purchases of bank premises and equipment (514,456) (322,251) (300,677)
Proceeds from sales of other real estate owned 125,611 520,234 115,498
------------- ------------- -------------
Net cash used by investing activities (7,403,008) (4,838,837) (10,313,851)
-------------- -------------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NBC BANK CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Net increase (decrease) in deposits $ 2,166,395 $ 4,369,460 $ (2,805,025)
Repayments of notes payable -- -- (590,525)
Net increase (decrease) in securities sold under
Agreement to repurchase 3,700,025 (969,562) 3,240,983
Dividends paid (1,131,173) (754,116) (329,926)
-------------- -------------- --------------
Net cash provided by financing activities 4,735,247 2,645,782 (484,493)
------------ ------------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 403,633 2,446,646 (8,444,460)
CASH AND CASH EQUIVALENTS:
Beginning of year 9,039,733 6,593,087 15,037,547
------------- ------------ -------------
End of year $ 9,443,366 $ 9,039,733 $ 6,593,087
============ ============ =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid for:
Interest $ 4,786,260 $ 4,764,128 $ 4,789,483
============ ============ =============
Income taxes $ 642,300 $ 936,770 $ 898,955
============ ============ =============
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Loans foreclosed $ 513,090 $ 690,882 $ 66,173
============ ============ =============
Net reduction of note payable guaranty for ESOP plan $ (50,000) $ (150,000) $ 200,000
============= ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NBC BANK CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations-
NBC Bank Corp. (the "Company") is a bank holding company headquartered in
El Dorado, Arkansas, that provides retail and commercial banking services
through the National Bank of Commerce(the "Bank"), its nationally chartered bank
subsidiary. The Bank provides a broad line of financial products and services to
small and medium-sized businesses and consumers through its community banking
offices in El Dorado.
Basis of Presentation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, the Bank. 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Cash Equivalents - Cash equivalents include cash on hand, amounts due from banks
and federal funds sold. Generally, federal funds are purchased and sold for
one-day periods.
Investment Securities - Investment securities held to maturity are carried at
cost, adjusted for the amortization of premiums and the accretion of discounts.
Management has the positive intent and the Bank has the ability to hold these
assets as long-term investments until their estimated maturities. Under certain
circumstances, securities may be sold or transferred to another portfolio.
Investment securities available for sale are carried at fair value. Unrealized
gains and losses are excluded from earnings and reported net of tax as a
component of accumulated other comprehensive income until realized. Securities
within the available for sale portfolio may be used as part of the Bank's
asset/liability management strategy and may be sold in response to changes in
interest rate risk, prepayment risk, and other similar economic factors.
Premiums and discounts are amortized and accreted to operations using the
level-yield method of accounting, adjusted for prepayments as applicable. The
specific identification method of accounting is used to compute gains and losses
on the sales of these assets.
Loans - Loans are stated at the principal amount outstanding, less the allowance
for loan losses and unearned discount. Mortgage loans held for sale are not
material. Unearned discount relates principally to consumer installment loans.
Interest on loans is credited to income based on the principal amount
outstanding using the interest method. Loan fees are not material.
Nonperforming Loans and Past Due Loans - Included in the nonperforming loan
category are loans which have been categorized by management as nonaccrual
because collection of interest is doubtful and loans which have been
restructured to provide a reduction in the interest rate or a deferral of
interest or principal payments. When the payment of principal or interest on a
loan is delinquent for 90 days, or earlier in some cases, the loan is placed on
nonaccrual status unless the loan is in the process of collection and the
underlying collateral fully supports the carrying value of the loan plus accrued
but unpaid interest. If the decision is made to continue accruing interest on
the loan, periodic reviews are made to confirm the accruing status of the loan.
When a loan is placed on nonaccrual status, interest accrued during the current
year prior to the judgment of uncollectability is charged to operations.
<PAGE>
Interest accrued during prior periods is charged to allowance for loan losses.
Generally, any payments received on nonaccrual loans are applied first to
outstanding loan amounts and next to the recovery of charged-off loan amounts.
Any excess is treated as recovery of lost interest.
Restructured loans are those loans on which concessions in terms have been
granted because of a borrower's financial difficulty. Interest is generally
accrued on such loans in accordance with the new terms.
Allowance for Loan Losses - The allowance for loan losses is a valuation
allowance to provide for incurred but not yet realized losses. The Company
reviews its loans for impairment on a quarterly basis. Impairment is determined
by assessing the probability that the borrower will not be able to fulfill the
contractual terms of the agreement. If a loan is determined to be impaired, the
amount of the impairment is measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or by use of
the observable market price of the loan or fair value of collateral if the loan
is collateral dependent. Throughout the year management estimates the level of
probable losses to determine whether the allowance for loan losses is
appropriate considering the estimated losses existing in the portfolio. Based on
these estimates, an amount is charged to the provision for loan losses and
credited to the allowance for loan losses in order to adjust the allowance to a
level determined by management to be appropriate relative to losses. The
allowance for loan losses is increased by charges to income (provisions) and
decreased by charge-offs, net of recoveries.
Management's periodic evaluation of the appropriateness of the allowance is
based on the Company's past loan loss experience, known and inherent risks in
the portfolio, adverse situations that may affect the borrower's ability to
repay, the estimated value of any underlying collateral and current economic
conditions.
Homogeneous loans are those that are considered to have common characteristics
that provide for evaluation on an aggregate or pool basis. The Company considers
the characteristics of single family residential first mortgage loans and
installment loans to permit consideration of the appropriateness of the
allowance for losses of each group of loans on a pool basis. The primary
methodology used to determine the appropriateness of the allowance for losses
includes segregating certain specific, poorly performing loans based on their
performance characteristics from the pools of loans as to type and then applying
a loss factor to the remaining pool balance based on several factors including
classification of the loans as to grade, past loss experience, inherent risks,
economic conditions in the primary market areas and other factors which usually
are beyond the control of the Company. Those segregated specific loans are
evaluated using the present value of future cash flows, usually determined by
estimating the fair value of the loan's collateral reduced by any cost of
selling and discounted at the loan's effective interest rate if the estimated
time to receipt of monies is more than three months.
Non-homogeneous loans are those loans that can be included in a particular loan
type, such as commercial loans and multi-family and commercial first mortgage
loans, but which differ in other characteristics to the extent that valuation on
a pool basis is not valid. After segregating specific, poorly performing loans
and applying the methodology as noted in the preceding paragraph for such
specific loans, the remaining loans are evaluated based on payment experience,
known difficulties in the borrowers business or geographic area, loss
experience, inherent risks and other factors usually beyond the control of the
Company. These loans are then graded and a factor, based on experience, is
applied to estimate the probable loss.
Estimates of the probability of loan losses involve an exercise of judgment.
While it is possible that in the near term the Company may sustain losses which
are substantial in relation to the allowance for loan losses, it is the judgment
of management that the allowance for loan losses reflected in the consolidated
statements of financial condition is appropriate considering the estimated
probable losses in the portfolio.
Bank Premises and Equipment - Bank premises and equipment are stated at cost,
less accumulated depreciation. Depreciation, which is provided over the
estimated useful lives of the assets, is computed principally by the
straight-line method for buildings and by accelerated methods for equipment for
both financial statement and income tax reporting purposes.
<PAGE>
Other Real Estate Owned - Real estate properties acquired through, or in lieu
of, loan foreclosure, which are presented as a component of other assets, are to
be sold and are initially recorded at fair value at the date of foreclosure
establishing a new cost basis. After foreclosure, valuations are periodically
performed by management and the real estate is carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from operations of
real estate owned and changes in the valuation allowance are included in other
expenses.
Securities Sold Under Repurchase Agreements - Securities sold under agreements
to repurchase are generally due within three months. These agreements are
carried at their contractual amounts.
Income Taxes - The Company files its income tax returns on a consolidated basis
with the Bank. Deferred income taxes are accounted for by applying statutory tax
rates in effect at the balance sheet dates to differences between the book bases
and the tax bases of assets and liabilities. The resulting deferred tax assets
and liabilities are adjusted to reflect changes in enacted tax laws or rates.
Recently Adopted Accounting Standards - In 1998, the Company adopted Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"). SFAS 130 establishes standards for reporting and displaying comprehensive
income and its components in the financial statements. In addition, SFAS 130
requires the Company to classify items of other comprehensive income by their
nature in a financial statement and display the accumulated balance of other
comprehensive income separately in the stockholders' equity section of the
statement of financial condition.
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information during 1998.
The Company operates in only one segment as defined.
Also in 1998, the Company adopted Statement of Financial Accounting Standards
No. 132, Employer's Disclosures about Pensions and Other Postretirement
Benefits, an amendment of FASB Statements No. 87, 88, and 106 ("SFAS 132"). The
statement revises employers' disclosure about pension and other postretirement
benefit plans. It does not change the measurement or recognition of those plans.
It standardizes the disclosure requirements for pension and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no longer as
useful as they were when FASB Statements No. 87, 88, and 106 were issued.
Accounting Standards Issued but Not Yet Adopted - In June 1998, the FASB issued
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"). SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as "derivatives"), and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial condition and measure those
instruments at fair value. SFAS 133 is effective for fiscal years beginning
after June 15, 1999. Management has not yet made a determination as to the
effect, if any, the adoption of SFAS 133 will have on the Company's financial
position or results of operations.
Earnings Per Share - Earnings per share of common stock has been computed on the
basis of weighted-average shares of common stock outstanding.
Reclassifications - Certain amounts in the 1997 financial statements have been
reclassified to conform with the 1998 presentation.
2. CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank. Cash and due from banks in the consolidated statements of
financial condition includes amounts so restricted of $800,000 and $400,000 at
December 31, 1998 and 1997, respectively. At December 31, 1998 and 1997, cash
and cash equivalents included interest-bearing demand deposits of approximately
$8,000 and $538,000, respectively.
<PAGE>
3. INVESTMENT SECURITIES
The carrying value and estimated fair values of investment securities are as
follows:
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Loses Value
<S> <C> <C> <C> <C>
Securities available for sale:
U. S. Government securities $ 749,314 $ 2,248 $ -- $ 751,562
U. S. Government agency securities 6,469,225 68,398 (4,987) 6,532,636
Mortgage-backed securities 24,259,501 59,157 (229,106) 24,089,552
State and municipal securities,
Nontaxable 4,376,215 52,429 (8,545) 4,420,099
------------- ------------ -------------- -------------
$ 35,854,255 $ 182,232 $ (242,638) $ 35,793,849
============ =========== ============= ============
Securities held to maturity:
State and municipal securities,
nontaxable $ 10,710,575 $ 408,801 $ (24,543) $ 11,094,833
Mortgage-backed securities 17,408,119 94,745 (157,317) 17,345,547
Other securities 900,843 13,556 (658) 913,741
------------- ------------ -------------- -------------
$ 29,019,537 $ 517,102 $ (182,518) $ 29,354,121
============ =========== ============= ============
</TABLE>
<TABLE>
<CAPTION>
1997
-------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Loses Value
<S> <C> <C> <C> <C>
Securities available for sale:
U. S. Government securities $ 3,985,402 $ 9,953 $ (3,636) $ 3,991,719
U. S. Government agency securities 9,348,612 30,083 (19,041) 9,359,654
Mortgage-backed securities 17,609,005 68,756 (93,773) 17,583,988
Marketable equity securities 750,023 -- (220,766) 529,257
State and municipal securities,
Nontaxable 2,069,326 15,645 (3,362) 2,081,609
------------- ------------ -------------- -------------
$ 33,762,368 $ 124,437 $ (340,578) $ 33,546,227
============ =========== ============= ============
Securities held to maturity:
State and municipal securities,
nontaxable $ 6,513,511 $ 330,272 $ (1,352) $ 6,842,431
State and municipal securities,
taxable 46,959 117 -- 47,076
Mortgage-backed securities 15,846,803 157,400 (77,331) 15,926,872
Other securities 459,372 625 (1,794) 458,203
------------- ------------ -------------- -------------
$ 22,866,645 $ 488,414 $ (80,477) $ 23,274,582
============ =========== ============= ============
</TABLE>
Investment securities with carrying values of $21,463,542 and $15,361,828 and
estimated fair values of $21,421,594 and $15,423,060 at December 31, 1998 and
1997, respectively, were pledged as collateral for public and trust deposits.
<PAGE>
The scheduled maturities of securities held to maturity and securities available
for sale at December 31, 1998, were as follows:
<TABLE>
<CAPTION>
Securities Securities
Held To Maturity Available For Sale
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one year or less $ 1,109,229 $ 1,109,815 $ 2,300,727 $ 2,306,176
Due from one to five years 2,502,473 2,577,747 5,529,639 5,588,035
Due from five to ten years 6,613,366 6,864,449 2,186,835 2,228,830
Due after ten years 1,386,350 1,456,563 1,577,553 1,581,256
Mortgage-backed securities 17,408,119 17,345,547 24,259,501 24,089,552
---------------- ------------- ------------- -------------
$ 29,019,537 $ 29,354,121 $ 35,854,255 $ 35,793,849
=============== ============ ============ ============
</TABLE>
Gross proceeds from sales of investments in debt securities totaled $746,285,
$59,567 and $80,000 in 1998, 1997 and 1996 respectively. Gross proceeds from
sales of investments in equity securities totaled $750,023 and $750,013,
resulting in $215,129 and $122,311 of realized losses for 1998 and 1997,
respectively. There we no gains or losses in 1996.
4. LOANS
Loans consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Commercial, financial, and agricultural $ 13,851,983 $ 15,685,091
Real estate:
Single Family 20,405,000 21,330,000
Commercial 19,889,000 20,417,000
Construction 2,550,000 2,503,000
Installment 9,356,000 10,509,000
--------------- ----------------
66,051,983 70,444,091
Less allowance for loan losses (894,065) (1,035,557)
---------------- -----------------
$ 65,157,918 $ 69,408,534
============== ===============
</TABLE>
Most of the Company's business activity is with customers located within Union
County, Arkansas. The Bank grants commercial, real estate mortgage, and consumer
loans. The loan portfolio is diversified with no industry comprising greater
than 10% of the total outstanding, except for real estate, which is generally
dependent on the local economy. The local economy is significantly affected by
the oil and gas and agriculture industries.
Certain of the Company's and Bank's directors and officers, and companies in
which they have significant interests, are customers of and have transactions
with the Bank in the ordinary course of business. In the opinion of management,
all loans and commitments to loan included in such transactions were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons. Total
loans to officers, directors, and their related interests at December 31, 1998
and 1997, were $2,261,057 and $2,235,172, respectively.
There was no recorded investment in impaired loans at December 31, 1998 or
1997 nor during the years then ended.
<PAGE>
A summary of the activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
BALANCE, BEGINNING OF YEAR $ 1,035,557 $ 1,135,739 $ 955,601
Provision charged to income 80,000 180,000 --
Recoveries 264,359 182,360 254,339
Loans charged-off (485,851) (462,542) (74,201)
----------------- ---------------- -----------------
BALANCE, END OF YEAR $ 894,065 $ 1,035,557 $ 1,135,739
=============== ============== ===============
</TABLE>
5. BANK PREMISES AND EQUIPMENT
Bank premises and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Land $ 333,765 $ 333,765
Buildings and improvements 3,117,702 3,067,601
Furniture and equipment 2,451,224 1,986,869
--------------- ----------------
5,902,691 5,388,235
Accumulated depreciation (3,339,620) (3,062,522)
--------------- ----------------
$ 2,563,071 $ 2,325,713
============== ===============
</TABLE>
6. DEPOSITS
Deposits consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Noninterest-bearing demand $ 18,341,480 $ 16,567,391
NOW and money-market accounts 28,544,819 25,489,099
Time deposits greater than$100,000 21,690,004 25,234,395
Time deposits less than $100,000 43,445,206 43,379,488
Savings 12,228,089 11,412,830
--------------- ----------------
$ 124,249,598 $ 122,083,203
============== ===============
</TABLE>
At December 31, 1998, the Bank had no brokered deposits and there are no major
concentrations of deposits.
<PAGE>
7. NOTES PAYABLE
Notes payable at December 31, 1997, consisted of a note guaranteed by the Bank
in the amount of $50,000 which is a debt of the Employee Stock Ownership Plan.
The note bears interest at the rate of 7.875% and is collateralized by 5,000
shares of Company stock.
8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Balance outstanding at December 31 $ 6,935,331 $ 3,235,306
Average balance during the year 4,897,501 3,869,724
Average interest rate during the year 4.16% 4.10%
Maximum month-end balance during the year 6,935,331 4,833,900
Investment securities underlying the agreements at year-end:
Carrying value 8,641,740 5,631,746
Estimated market value 8,617,344 5,687,694
</TABLE>
9. INCOME TAXES
The consolidated provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Currently payable $ 674,293 $ 910,247 $ 882,960
Deferred expense (benefit) 63,000 39,505 (140,627)
--------------- --------------- ----------------
$ 737,293 $ 949,752 $ 742,333
============== ============== ===============
</TABLE>
The provision for federal income taxes is less than that computed by applying
the federal statutory rate of 34% in 1998, 1997 and 1996 as indicated in the
following analysis:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Taxes at the statutory rate $ 810,932 $ 902,148 $ 804,020
Increase (decrease) resulting from:
State income taxes, net 62,836 60,648 --
Effect of tax-exempt income (188,089) (126,105) (89,663)
Interest and other nondeductible expenses 29,146 23,541 17,564
Other, net 22,468 89,520 10,412
--------------- --------------- ----------------
$ 737,293 $ 949,752 $ 742,333
============== ============== ===============
</TABLE>
<PAGE>
The components of the net deferred income tax liability are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Deferred tax assets:
Net unrealized depreciation of securities available for sale $ 23,134 $ 82,782
Allowance for loan losses 16,209
Other real estate 130,129 127,073
Deferred compensation 183,827 186,750
--------------- ----------------
Total deferred tax assets 353,299 396,605
--------------- ----------------
Deferred tax liabilities:
Allowance for loan losses 14,431
Pension liability 269,275 235,651
Other, net 297,577 237,429
--------------- ----------------
Total deferred tax liabilities 566,852 487,511
--------------- ----------------
Net deferred tax liability $ (213,553) $ (90,906)
=============== ================
</TABLE>
10. OTHER COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1998
Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding gains (losses) arising
during period $ (59,395) $ 22,748 $ (36,647)
Add: reclassification adjustment for losses
Realized in net income 215,129 (82,394) 132,735
--------------- ---------------- ----------------
Other comprehensive income $ 155,734 $ (59,646) $ 96,088
============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding gains (losses) arising
during period $ 1,543 $ (591) $ 952
Add: reclassification adjustment for losses
Realized in net income 122,311 (46,845) 75,466
--------------- ---------------- ----------------
Other comprehensive income $ 123,854 $ (47,436) $ 76,418
============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding gains (losses) arising
during period $ (263,376) $ 100,873 $ (162,503)
--------------- -------------- ----------------
Other comprehensive income $ (263,376) $ 100,873 $ (162,503)
=============== ============== ================
</TABLE>
<PAGE>
11. EMPLOYEE BENEFIT PLANS
The Company has a noncontributory defined benefit pension plan (the "Plan") for
the benefit of all full-time employees who have completed one year of service.
Benefits are based on years of service and the employee's final average monthly
compensation, as defined. The Company's funding policy is to contribute annually
at least the minimum amount necessary to retain the Plan's qualified status
under applicable provisions of the Internal Revenue Code (the "Code").
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future. For
1998, 1997 and 1996 no contributions were permitted due to full funding
limitations of the Code.
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 3,468,712 $ 3,273,545 $ 3,156,640
Service cost 90,020 96,022 84,327
Interest cost 233,251 228,076 215,176
Actuarial (gain)/loss 88,334 81,648 (32,051)
Benefits paid (228,431) (198,994) (150,547)
Expenses paid (13,244) (11,585) --
-------------- -------------- -------------
Benefit obligation at end of year $ 3,638,642 $ 3,468,712 $ 3,273,545
============ ============ ============
Change in plan assets
Fair value of plan assets at end of prior year $ 3,820,285 $ 3,456,383 $ 3,187,651
Actual return 471,521 574,481 419,279
Benefits paid (228,431) (198,994) (150,547)
Expenses paid (13,244) (11,585) --
-------------- -------------- -------------
Fair value of plan assets of end of year $ 4,050,131 $ 3,820,285 $ 3,456,383
============ ============ ============
Funded status $ 411,489 $ 351,573 $ 182,838
Unrecognized net actuarial loss 297,126 328,242 528,892
Unrecognized prior service cost -- 103 205
Unrecognized net transition obligation/ (asset) -- (64,641) (129,283)
------------- -------------- --------------
Prepaid benefit cost $ 708,615 $ 615,277 $ 582,652
============ ============ ============
Components of net periodic benefit income
Service cost $ 90,020 $ 96,022 $ 84,327
Interest cost 233,251 228,076 215,176
Expected return on plan assets (352,071) (317,673) (291,656)
Transition (asset)/obligation recognition (64,641) (64,642) (64,642)
Prior service costs amortization 102 102 102
Net (gain)/loss recognition -- 25,490 40,430
------------- ------------- -------------
Net periodic benefit cost/(income) $ (93,339) $ (32,625) $ (16,263)
============= ============= =============
</TABLE>
<PAGE>
Weighted-average assumptions as of December 31 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Discount rate 6.75% 7.00% 7.00%
Expected return on plan assets 9.50 9.50 9.50
Rate of compensation increase 4.50 4.50 4.50
</TABLE>
The Company also has an Employee Stock Ownership Plan. To qualify for
participation in the Plan, an employee must have completed one year of service,
worked a minimum of 1,000 hours, and attained the age of 21. Benefits are fully
vested upon completion of seven years of service. The amount of the employer
contribution is at the discretion of the board of directors, limited by the
maximum deduction allowable for income tax purposes. Contributions to this Plan
for each of the three years ended in the period ended December 31, 1998 were
approximately $80,000.
12. COMMITMENTS AND CONTINGENCIES AND INTEREST RATE RISK
In the normal course of business there are various commitments outstanding and
contingent liabilities, such as guarantees and commitments to extend credit,
including standby letters of credit to assure performance or to support debt
obligations, which are not reflected in the accompanying consolidated financial
statements. These arrangements have credit risk essentially the same as that
involved in extending loans to customers.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments. Financial
instruments whose contract amounts represent credit risk at December 31, 1998,
are as follows:
<TABLE>
<CAPTION>
<S> <C>
Commitments to extend credit $ 8,641,311
Standby letters of credit 557,750
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
credit worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral held varies but
may include accounts receivable, inventory, property, plant, and equipment, and
income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements and
similar transactions. The terms of these standby letters of credit are generally
less than five years.
The Company's asset base is exposed to risk including the risk resulting from
changes in interest rates and changes in the timing of cash flows. The Company
monitors the effect of such risks by considering the mismatch of the maturities
of its assets and liabilities in the current interest rate environment and the
sensitivity of assets and liabilities to changes in interest rates. The
Company's management has considered the effect of significant increases and
decreases in interest rates and believes such changes, if they occurred, would
be manageable and would not affect the ability of the Company to hold its assets
to maturity.
<PAGE>
In addition, the Company is a defendant in certain claims and legal actions
arising in the ordinary course of business. In the opinion of management, after
consultation with legal counsel, the ultimate disposition of these matters is
not expected to have a material adverse effect on the consolidated financial
position of the Company.
13. REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective actions, the
Company and the Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities, and certain off-balance
sheet items as calculated under regulatory accounting practices. The Company's
and the Bank's capital amounts and the Bank's classification under the
regulatory framework for prompt corrective action are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of total and Tier I Capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I Capital (as
defined) to adjusted assets (as defined). Management believes, as of December
31, 1998, that the Company and the Bank meet all capital adequacy requirements
to which they are subject.
As of December 31, 1998 and 1997, the most recent notification from the Office
of the Comptroller of the Currency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based, Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institution's category.
<PAGE>
<TABLE>
<CAPTION>
Required To Be Categorized
Required as Well Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
---------------- ----------------- --------------------------
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998:
Tier 1 Capital
(to Adjusted Total Assets)
NBC Bank Corp. $ 13,350,254 9.11% $ 5,859,689 4.00% N/A
NBC Bank $ 13,271,826 9.06% $ 5,861,329 4.00% $ 7,326,662 5.00%
Total Capital
(to Risk-Weighted Assets)
NBC Bank Corp. $ 14,244,639 18.97% $ 6,169,579 8.00% N/A
NBC Bank $ 14,165,890 18.36% $ 6,172,885 8.00% $ 7,716,106 10.00%
Tier 1 Capital
(to Risk-Weighted Assets)
NBC Bank Corp. $ 13,350,254 17.31% $ 3,084,789 4.00% N/A
NBC Bank $ 13,271,826 17.20% $ 3,086,442 4.00% $ 4,629,664 6.00%
As of December 31, 1997:
Tier 1 Capital
(to Adjusted Total Assets)
NBC Bank Corp. $ 12,687,538 9.01% $ 5,631,288 4.00% N/A
NBC Bank $ 12,562,588 8.92% $ 5,631,288 4.00% $ 7,039,110 5.00%
Total Capital
(to Risk-Weighted Assets)
NBC Bank Corp. $ 13,723,095 18.10% $ 6,066,623 8.00% N/A
NBC Bank $ 13,598,144 17.93% $ 6,065,911 8.00% $ 7,582,389 10.00%
Tier 1 Capital
(to Risk-Weighted Assets)
NBC Bank Corp. $ 12,687,538 16.73% $ 3,033,312 4.00% N/A
NBC Bank $ 12,562,588 16.57% $ 3,032,956 4.00% $ 4,549,433 6.00%
</TABLE>
<PAGE>
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of Statement of Financial Accounting
Standards No. 107, Disclosures About Fair Value of Financial Instruments. The
estimated fair value amounts have been determined by the Company using available
market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. The carrying amounts and estimated fair values of financial instruments
at December 31, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------ --------------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Assets:
Cash and due from banks $ 6,518,366 $ 6,518,366 $ 5,434,733 $ 5,434,733
Federal funds sold 2,925,000 2,925,000 3,605,000 3,605,000
Investment securities:
Available for sale 35,793,849 35,793,849 33,546,227 33,546,227
Held to maturity 29,019,537 29,354,121 22,866,645 23,274,582
Federal Reserve Bank stock 117,600 117,600 117,600 117,600
Federal Home Loan Bank stock 570,400 570,400 545,800 545,800
Loans 65,157,918 67,848,049 69,408,534 67,109,110
Accrued interest receivable 1,134,938 1,134,938 1,111,628 1,111,628
Liabilities:
Demand deposits 59,114,388 59,114,388 53,469,320 53,469,320
Time deposits 65,135,210 71,834,136 68,613,883 70,325,972
Securities sold under agreements
to repurchase 6,935,331 6,935,331 3,235,306 3,235,306
Notes payable -- -- 50,000 50,000
Accrued interest payable 308,351 308,351 348,170 348,170
Commitments -- -- -- --
</TABLE>
Cash and Cash Equivalents and Federal Funds Sold - For cash and cash equivalents
and interest bearing deposits, the carrying amount is a reasonable estimate of
fair value as amounts are readily redeemable.
Investment Securities - For investment securities, fair values are based on
quoted market prices or dealer quotes. Federal Home Loan Bank and Federal
Reserve Bank stock are valued at par value, the redemption value.
Loans - The fair value of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities and
anticipated prepayment speeds.
Accrued Interest Receivable and Payable - For accrued interest receivable and
payable, the carrying amount is a reasonable estimate of fair value.
<PAGE>
Demand Deposits and Time Deposits - The fair value of demand deposits, savings
accounts, and certain money market deposits is the amount payable on demand at
the reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using discounted cash flow analysis considering the rates currently
offered for deposits of similar remaining maturities.
Notes Payable and Securities Sold Under Agreements to Repurchase - Rates
currently available for debt with similar terms and remaining maturities are
used to estimate fair value of existing debt.
Commitments To Extend Credit and Standby Letters of Credit - The fair value of
commitments is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
present credit worthiness of the counterparties.For fixed-rate loan commitments,
fair value also considers the difference, if any, between current levels of
interest rates and the committed rates. The fair value of guarantees and letters
of credit is based on fees currently charged for similar agreements or on the
estimated cost to terminate them or otherwise settle the obligations with the
counterparties at the reporting date. The fair value estimate at December 31,
1998, revealed no material differences between the committed or guaranteed
amounts and the fair value of such items.
15. SUBSEQUENT EVENT
On March 22, 1999, the Board of Directors of NBC Bank Corp. approved the sale of
the Company to Simmons First National Corporation ("SFNC") of Pine Bluff. Under
the terms of the Agreement and Plan of Merger, the Company will receive 785,000
shares of SFNC stock for all outstanding shares of the Company.
<PAGE>
16. PARENT COMPANY ONLY FINANCIAL INFORMATION
The following is the parent company only condensed statement of financial
condition as of December 31, 1998, and condensed statement of income and cash
flow for the year then ended:
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1998 and 1997
1998 1997
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 46,544 $ 53,662
Investment in subsidiary bank 13,271,825 12,649,994
Dividends receivable from subsidiary bank 745,378 745,378
Other assets 2,716 4,039
Equipment 1,912 3,292
Advance due from bank subsidiary 35,995 35,289
--------------- ---------------
TOTAL ASSETS $ 14,104,370 $ 13,491,654
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES -
Notes payable $ -- $ 50,000
Dividends payable 754,116 754,116
--------------- ---------------
TOTAL LIABILITIES $ 754,116 $ 804,116
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 210,000 210,000
Additional paid-in capital 3,883,013 3,883,013
Unrealized loss on securities available for sale, net of tax (37,272) (133,360)
Retained earnings 10,121,728 9,555,100
--------------- ---------------
14,177,469 13,514,753
Less treasury stock, at cost (827,215) (827,215)
---------------- ----------------
Total stockholders' equity 13,350,254 12,687,538
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,104,370 $ 13,491,654
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998 and 1997
1998 1997 1996
<S> <C> <C> <C>
Dividends from bank subsidiary $ 1,123,208 $ 1,092,364 $ 776,222
Other income 154 150,372 --
------------- ------------- --------------
Total income 1,123,362 1,242,736 776,222
Other expenses 2,011 142,966 22,548
------------- ------------- --------------
Income before equity in undistributed earnings of
subsidiaries and benefit for income taxes 1,121,351 1,099,770 753,674
Equity in undistributed earnings of subsidiaries 525,743 603,605 861,091
Benefit for income taxes 707 248 7,667
------------- ------------- --------------
NET INCOME $ 1,647,801 $ 1,703,623 $ 1,622,432
============ ============ =============
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998 and 1997
1998 1997 1996
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,647,801 $ 1,703,623 $ 1,622,432
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in undistributed earnings of subsidiaries (525,743) (603,605) (861,091)
Depreciation 1,377 1,147 --
Change in dividends receivable from
bank subsidiary -- (367,548) 210,321
Change in other assets 1,326 24,939 --
Change in accrued interest payable and other liabilities -- (13,968) 202,004
Change in advance from subsidiary (706) 36,124 (7,667)
-------------- ------------- ---------------
Net cash provided by operating activities 1,124,055 780,712 1,165,999
------------- ------------- --------------
FINANCING ACTIVITIES -
Repayment of notes payable -- -- 590,525
Dividends paid (1,131,173) (754,116) 565,587
-------------- -------------- --------------
Net cash used in financing activities (1,131,173) (754,116) 1,156,112
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (7,118) 26,596 9,887
CASH AND CASH EQUIVALENTS:
Beginning of year 53,662 27,066 17,179
------------- ------------- --------------
End of year $ 46,544 $ 53,662 $ 27,066
============ ============ =============
</TABLE>
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), is made as of the 22nd day
of March, 1999, by and among Simmons First National Corporation, an Arkansas
corporation ("SFNC") and NBC Bank Corp., an Arkansas corporation ("NBCBC").
ARTICLE I
RECITALS
Section 1.01 SFNC. SFNC has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Arkansas,
with its principal executive offices located in Pine Bluff, Arkansas. SFNC is
registered as a bank holding company with the Board of Governors of the Federal
Reserve System ("FRB") under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). As of the date hereof, SFNC has 30,000,000 authorized shares of
Class A common stock, par value $1.00 per share ("SFNC Stock"), of which
6,209,318 were outstanding as of December 31, 1998. No shares of the other
classes of SFNC's authorized capital stock are outstanding.
Section 1.02 SFNB. SFNB has been duly incorporated and is a validly
existing banking association in good standing under the laws of the United
States of America, with its principal executive offices located in Pine Bluff,
Arkansas.
Section 1.03 NBCBC. NBCBC has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Arkansas,
with its principal executive offices located in El Dorado, Arkansas. NBCBC is
registered as a bank holding company with the FRB under the BHC Act. As of the
date hereof, NBCBC has 300,000 authorized shares of common stock, par value
$1.00 per share ("NBCBC Stock"), of which 188,529 shares are outstanding as of
December 31, 1998. No other class of capital stock being authorized.
Section 1.04 NBC. National Bank of Commerce ("NBC") has been duly
incorporated and is a validly existing banking association in good standing
under the laws of the United States of America, with its principal executive
offices located in El Dorado, Arkansas. As of the date hereof, NBC has 300,000
authorized shares of common stock, par value $5.00 per share ("NBC Stock"), of
which 257,027 shares are outstanding as of December 31, 1998, no other class of
capital stock being authorized. All of the outstanding shares of NBC stock are
owned by NBCBC.
Section 1.05 Compensatory Stock Options. SFNC has reserved 297,000 shares
of SFNC Stock ("Option Stock") for issuance pursuant to the terms of the stock
option and bonus share grants under the Simmons First National Corporation
Incentive and Non-qualified Stock Option Plan and the Simmons First National
Corporation Executive Stock Incentive Plan (collectively "Option Plans"), of
which options for 230,350 shares have been granted to various executive officers
of SFNC and its subsidiaries and are currently outstanding.
Section 1.06 Rights; Voting Debt. Except for (i) the Option Plans, and (ii)
the transactions contemplated under this Agreement, neither SFNC nor NBCBC has
any shares of its capital stock reserved for issuance, any outstanding option,
call or commitment relating to shares of its capital stock or any outstanding
securities, obligations or agreements convertible into or exchangeable for, or
giving any person any right (including, without limitation, preemptive rights)
to subscribe for or acquire from it, any shares of its capital stock
(collectively, "Rights"). Neither NBCBC nor SFNC nor any of their respective
subsidiaries have any bonds, debentures, notes or other indebtedness issued and
outstanding, having the right to vote, or convertible into securities having the
right to vote, on any matters on which shareholders may vote ("Voting Debt").
<PAGE>
Section 1.07 Materiality. Unless the context otherwise requires, any
reference in this Agreement to materiality with respect to either party shall,
as to NBCBC, be deemed to be with respect to NBCBC and its wholly owned
subsidiary, NBC, taken as a whole and as to SFNC shall be deemed to be with
respect to SFNC and its subsidiaries, taken as a whole.
Section 1.08 Merger. The Board of Directors of SFNC and the Board of
Directors of NBCBC have each determined that it is desirable and in the best
interests of the corporation and its shareholders that NBCBC merge with and into
SFNC ("Merger") on the terms and subject to the conditions set forth in this
Agreement.
In consideration of their mutual promises and obligations hereunder, and
intending to be legally bound hereby, SFNC and NBCBC adopt and make this
Agreement and prescribe the terms and conditions hereof and the manner and basis
of carrying it into effect, which shall be as follows:
ARTICLE II
MERGER
Section 2.01 Merger. On the Effective Date, as defined in Section 8.01,
NBCBC will merge with and into SFNC, with SFNC being the surviving corporation
("Surviving Corporation"), pursuant to the provisions of, and with the effects
provided in, the Arkansas Business Corporation Act ("ABCA"). At the Effective
Time, the articles of incorporation and bylaws of SFNC, as the Surviving
Corporation, shall be the articles of incorporation and bylaws of SFNC in effect
immediately prior to the Effective Time; the directors and officers of SFNC
shall be the directors and officers of the Surviving Corporation; SFNC shall
continue to possess all of the rights, privileges and franchises possessed by it
and shall become vested with and possess all rights, privileges and franchises
possessed by NBCBC; and SFNC shall be responsible for all of the liabilities and
obligations of NBCBC in the same manner as if SFNC had itself incurred such
liabilities or obligations, and the Merger shall not affect or impair the rights
of the creditors or of any persons dealing with SFNC or NBCBC.
Section 2.02 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of SFNC, NBCBC or the holders of
any of the following securities:
(a) Each share of NBCBC Stock issued and outstanding immediately prior
to the Effective Time (excluding any Dissenting Shares, as defined in Section
2.05) shall be converted into shares of SFNC Stock pursuant to the Exchange
Ratio. The Exchange Ratio shall equal 785,000 divided by the number of shares of
NBCBC outstanding on the Effective Date; provided, however, that, in any event,
if between the date of this Agreement and the Effective Time the outstanding
shares of SFNC Stock shall have been changed into a different number of shares
or a different class, by reason of any stock issuance, stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Exchange Ratio shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares. No adjustment of the Exchange Ratio shall
occur by reason of issuance of any Option Shares under the Option Plans or any
other merger transaction. At the Effective Time, all such shares of NBCBC Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate previously evidencing any such
shares shall thereafter represent the right to receive the Merger Consideration
(as defined in Section 2.03(b)). The holders of such certificates previously
evidencing such shares of NBCBC Stock; outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
NBCBC Stock except as otherwise provided herein or by law. Such certificates
previously evidencing shares of NBCBC Stock shall be exchanged for certificates
evidencing whole shares of SFNC Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section
2.03, without interest. No fractional shares of SFNC Stock shall be issued, and,
in lieu thereof, a cash payment shall be made pursuant to Section 2.02(b).
<PAGE>
(b) (1) No certificates or scrip evidencing fractional shares of SFNC
Stock shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of SFNC. In lieu of any such fractional shares, each
holder of NBCBC Stock upon surrender of a Certificate for exchange pursuant to
Section 2.03 shall be paid an amount in cash, without interest, rounded to the
nearest cent, determined by multiplying (a) the SFNC Average Stock Price by (b)
the fractional interest to which such holder would otherwise be entitled, after
taking into account all shares of NBCBC Stock then held of record by such
holder.
(2) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of NBCBC Stock with respect to any
fractional share interests, the Transfer Agent shall promptly pay such amounts
to such holders of NBCBC Stock subject to and in accordance with the terms of
Section 2.03(c).
(c) The SFNC Average Stock Price shall be the average (arithmetic mean)
of the closing price per share of SFNC Stock reported by the NASDAQ during the
period of ten (10) trading days on which one or more trades actually occurs,
which ends immediately prior to the fifth trading day preceding the Effective
Date.
(d) Each share of NBCBC Stock held in the treasury of NBCBC and each
share of NBCBC Stock owned by any direct or indirect wholly owned subsidiary of
NBCBC immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(e) At the Closing, NBCBC shall certify to SFNC the number of shares of
NBCBC Stock then outstanding and SFNC shall compute the Exchange Ratio for the
transaction.
Section 2.03 Exchange of Certificates. (a) Promptly after consummation of
the Merger, SFNC shall deposit, or shall cause to be deposited, with SFNB
("Transfer Agent"), for the benefit of the holders of shares of NBCBC Stock, for
exchange in accordance with this Article II, through the Transfer Agent, (i)
certificates evidencing such 785,000 shares of SFNC Stock and (ii) cash in the
amount of $8,000.00 ("Fractional Share Fund"). As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of NBCBC
Stock with respect to any fractional share interests, the Transfer Agent shall
promptly pay such amounts to such holders of NBCBC Stock subject to and in
accordance with the terms of Section 2.03(c). In the event the initial sum
deposited into the fractional Share Fund is insufficient to satisfy all payments
required to be paid from such fund, then SFNC shall immediately deposit funds to
remedy such deficiency.
(b) Promptly after the Effective Time, SFNC will instruct the Transfer
Agent to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of NBCBC
Stock (other than Dissenting Shares) ("Certificates"), (1) 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 proper delivery of the
Certificates to the Transfer Agent and shall be in such form and have such other
provisions as SFNC may reasonably specify) and (2) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
evidencing shares of SFNC Stock. Upon surrender of a Certificate for
cancellation to the Transfer Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor (A) certificates evidencing that number of whole shares of
SFNC Stock which such holder has the right to receive in respect of the shares
of NBCBC Stock formerly evidenced by such Certificate in accordance with Section
2.02 and (B) cash in lieu of fractional shares of SFNC Stock to which such
holder is entitled pursuant to Section 2.02(b), and (C) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.03(c), (the
shares of SFNC Stock, dividends, distributions and cash described in clauses
(A), (B), and (C) being collectively, the "Merger Consideration") and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of NBCBC Stock which is not registered in the
transfer records of NBCBC, a certificate evidencing the proper number of shares
of SFNC Stock may be issued and cash paid in accordance with this Article II to
a transferee if the Certificate evidencing such shares of NBCBC Stock is
presented to the Transfer Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.03, each Certificate shall be
<PAGE>
deemed at any time after the Effective Time to evidence only the right to
receive upon such surrender the Merger Consideration.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to SFNC Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of SFNC Stock evidenced thereby, and no other part of the Merger
Consideration shall be paid to any such holder, until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates evidencing whole shares of SFNC Stock
issued in exchange therefor, without interest, (1) promptly, the amount of any
cash payable with respect to a fractional share of SFNC Stock to which such
holder is entitled pursuant to Section 2.03(b) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of SFNC Stock, and (2) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of SFNC Stock. No
interest shall be paid on the Merger Consideration.
(d) All shares of SFNC Stock issued and cash paid in lieu of fractional
shares of NBCBC Stock in accordance with the terms hereof shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to such
shares of NBCBC Stock.
(e) Any portion of the Fractional Share Fund which remains
undistributed to the holders of NBCBC Stock on the date six months following the
Effective Time shall be delivered to SFNC, upon demand, and any holders of NBCBC
Stock who have not theretofore complied with this Article II shall thereafter
look directly to SFNC for the Merger Consideration to which they are entitled.
(f) SFNC shall not be liable to any holder of shares of NBCBC Stock for
any such shares of SFNC Stock, cash in lieu of fractional shares (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(g) SFNC shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of NBCBC Stock such amounts as SFNC is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code, or
any provision of state, local or foreign tax law. To the extent that amounts are
so withheld by SFNC, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of NBCBC Stock in
respect of which such deduction and withholding was made by SFNC.
Section 2.04 Stock Transfer Books. At the Effective Time, the stock
transfer books of NBCBC shall be closed and there shall be no further
registration of transfers of shares of NBCBC Stock thereafter on the records of
NBCBC. On or after the Effective Time, any certificates presented to the
Transfer Agent or SFNC for any reason shall be converted into the Merger
Consideration.
Section 2.05 Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of NBCBC Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares
(collectively, the "Dissenting Shares") in accordance with Section 10 of the
Arkansas Business Corporation Act (A.C.A. 4-27-1301 et seq.) shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the fair value of such
shares of NBCBC Stock held by them in accordance with such provisions of such
statute, except that all Dissenting Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to judicial determination of the value of the shares of NBCBC Stock under such
statute shall have been converted into and to have become exchangeable, as of
the Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration, as if such shares of NBCBC Stock, upon surrender, in the
manner provided in Section 2.03, of the certificate or certificates that
formerly evidenced such shares of NBCBC Stock.
<PAGE>
Section 2.06 Lost NBCBC Stock Certificates. In the event any Certificate
for NBCBC Stock shall have been lost, stolen or destroyed, upon receipt of
appropriate evidence as to such loss, theft or destruction and to the ownership
of such Certificate by the person claiming such Certificate to be lost, stolen
or destroyed and the receipt by SFNC of appropriate and customary
indemnification, SFNC will issue in exchange for such lost, stolen or destroyed
Certificate, a certificate of shares of SFNC Stock and the cash payment, if any,
deliverable in respect thereof as determined in accordance with this Article II.
Section 2.07 Options and Rights. There are no options or rights granted by
NBCBC to purchase shares of NBCBC Stock, which are outstanding and unexercised
and there are no outstanding securities issued by NBCBC, or any other party,
convertible into NBCBC Stock.
ARTICLE III
ACTIONS PENDING MERGER
Section 3.01 Required Actions Pending Merger. NBCBC hereby covenants and
agrees with SFNC that prior to the Effective Time, unless the prior written
consent of SFNC shall have been obtained, and except as otherwise contemplated
herein, NBCBC will and will cause each of its subsidiaries to:
(a) upon the direction of SFNC, give all required notices, make all
necessary amendments (including an amendment to terminate the accrual of
benefits and allocate surplus or excess funds as it may determine) and cause its
Board of Directors to adopt a resolution terminating the Retirement Plan for
Employees of National Bank of Commerce of El Dorado contingent upon the
consummation of the Merger Transaction to be effective on or before the
Effective Date and, to pay any and all termination, early withdrawal penalties
or similar fees with respect to the termination of the plan and take all
reasonable steps to discontinue the accrual of additional benefits under the
plan after the Effective Date and to preclude SFNC from having any liability
under the plan;
(b) upon the direction of SFNC, give all required notices, make all
necessary amendments and cause its Board of Directors to adopt a resolution
merging the National Bank of Commerce of El Dorado Employees Stock Ownership
Plan with and into the Simmons First National Corporation Employee Stock
Ownership Plan contingent upon the consummation of the Merger Transaction to be
effective on or immediately following the Effective Date, and upon terms which
at least maintain and protect the accrued rights and participation of all NBC
employees (including rights to any unallocated funds or shares) as of the
Effective Date, to pay any and all termination, early withdrawal penalties or
similar fees with respect to the termination of the plan and take all reasonable
steps to preclude SFNC from having any liability to or under the plan, other
than liabilities which arise from its actions related to the merger of the
National Bank of Commerce of El Dorado Employees Stock Ownership Plan with and
into the Simmons First National Corporation Employee Stock Ownership Plan;
(c) use reasonable efforts to preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their officers and key employees, except that they shall have the
right to lawfully terminate the employment of any officer or key employee if
such termination is in accordance with NBCBC's existing employment procedures;
(d) use reasonable efforts to maintain and keep their properties in as
good repair and condition as at present, except for depreciation due to ordinary
wear and tear;
(e) use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now maintained;
(f) perform in all material respects all obligations required to be
performed by them under all material contracts, leases, and documents relating
to or affecting their assets, properties, and business;
(g) give SFNC notice of all board of directors meetings of NBCBC and
each of its subsidiaries, allow SFNC to have a non-voting representative at each
such meeting provided however such representative shall be
<PAGE>
subject to exclusion from any portion of any such meeting during any discussion
or action concerning the Merger or to the extent that NBCBC's legal counsel
advises the directors that permitting SFNC's presence would constitute a
breach of their fiduciary duties, and provide SFNC with all written materials
and communications provided to the directors in connection with such meetings;
and
Section 3.02 Prohibited Actions Pending Merger. Except as specifically
contemplated by this Agreement, from the date hereof until the earlier of the
termination of the Agreement or the Effective Time, NBCBC shall not do, and
NBCBC will cause each of its subsidiaries not to do, without the prior written
consent of SFNC which consent shall not be unreasonably withheld, any of the
following:
(a) make, declare or pay any dividend on NBCBC Stock, other than
dividends consistent with historic practices or declare or make any distribution
on, or directly or indirectly combine, redeem, reclassify, purchase or otherwise
acquire, any share of its capital stock (other than in a fiduciary capacity or
in respect of a debt previously contracted in good faith) or authorize the
creation or issuance of or issue or sell or permit any subsidiary to issue or
sell any additional shares of NBCBC's capital stock or the capital stock of any
subsidiary, or any options, calls or commitments relating to its capital stock
or the capital stock of any subsidiary, or any securities, obligations or
agreements convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire, shares of its capital stock or the capital stock of
any of its subsidiaries;
(b) hire any additional staff, except for personnel hired at an hourly
rate to fill vacancies or for seasonal part time staff in accordance with past
practices;
(c) enter into or permit any subsidiary to enter into any employment
contracts with, pay any bonus to, or increase the rate of compensation of, any
of its directors, officers or employees, except in the ordinary course of
business consistent with the past practice or existing plans, including the NBC
Incentive Compensation Plan;
(d) except as directed by SFNC consistent with the terms of this
Agreement, enter into or modify or permit any subsidiary to enter into or modify
(except as may be required by applicable law and except for the renewal of any
existing plan or arrangement in the ordinary course of business consistent with
past practice) any pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or other employees;
(e) except as contemplated by Section 5.01(l), substantially modify the
manner in which it and its subsidiaries have heretofore conducted their
business, taken as a whole, or amend its articles of incorporation or by-laws;
(f) except in the ordinary course of business, acquire any assets or
business or take any other action, that considered as a whole is material to
NBCBC on a consolidated basis;
(g) acquire any investment securities other than U.S. Treasury
Securities, Arkansas municipal securities, U.S. Agency securities which are
traditional fixed rate debt securities, and floating rate mortgage-backed
securities and shall not include any SBA pools, mutual funds or derivative
securities that would be considered high-risk;
(h) except in their fiduciary capacities, purchase any shares of
SFNC Stock;
(i) change any method of accounting in effect at December 31, 1998, or
change any method of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending December 31, 1997, except as may be required
by law or generally accepted accounting principles;
(j) knowingly take any action which would or is reasonably likely to
(1) adversely affect the ability of either of SFNC or NBCBC to obtain any
necessary approvals of governmental authorities required for the
<PAGE>
transactions contemplated hereby; (2) adversely affect NBCBC's ability to
perform its covenants and agreements under this Agreement; or (3) result
in any of the conditions to the Merger set forth herein not being satisfied;
(k) make any single new loan or series of loans, not in accordance with
existing loan policies, to one borrower or a related group of borrowers in an
aggregate amount greater than $150,000.00;
(l) sell or dispose of any real estate or other assets having a value
in excess of $75,000.00, other than properties acquired in foreclosure or
otherwise in the ordinary collection of indebtedness to NBCBC or its
subsidiaries;
(m) knowingly take any action which would in the opinion of Baird,
Kurtz & Dobson, preclude the Merger from qualifying for the pooling of interest
method of accounting; or
(n) directly or indirectly agree to take any of the foregoing actions.
Section 3.03 Conduct of NBCBC to Date. Except as contemplated by this
Agreement or as disclosed on Schedule 3.03, from and after December 31, 1998
through the date of this Agreement:
(a) NBCBC and NBC have carried on their respective businesses in the
ordinary and usual course consistent with past practices,
(b) neither NBCBC nor NBC have issued or sold any capital stock or
issued or sold any corporate debt securities which would be classified as long
term debt on the balance sheet of NBCBC or NBC,
(c) NBCBC has not declared, set aside, or paid any cash or stock
dividend or distribution in respect of its capital stock (other than dividends
declared and paid in accordance with past practices),
(d) neither NBCBC nor NBC have incurred any material obligation or
liability (absolute or contingent), except normal trade or business obligations
or liabilities incurred in the ordinary course of business, or in conjunction
with this Agreement, or mortgaged, pledged, or subjected to lien, claim,
security interest, charge, encumbrance or restriction any of its assets or
properties,
(e) neither NBCBC nor NBC has discharged or satisfied any material
lien, mortgage, pledge, claim, security interest, charges, encumbrance, or
restriction or paid any material obligation or liability (absolute or
contingent), other than in the ordinary course of business,
(f) neither NBCBC nor NBC has, since December 31, 1998, sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any of its properties
or assets other than for a fair consideration in the ordinary course of
business,
(g) except as disclosed to SFNC in the Disclosure Letter, neither NBCBC
nor NBC increased the rate of compensation of, or paid any bonus to, any of its
directors, officers, or other employees, except merit or promotion increases, in
accordance with existing policy; entered into any new, or amended or
supplemented any existing, employment, management, consulting, deferred
compensation, severance, or other similar contract; adopted, entered into,
terminated, amended or modified any employee benefit plan in respect of any of
present or former directors, officers or other employees; or agreed to do any of
the foregoing,
(h) neither NBCBC nor NBC has suffered any material damage,
destruction, or loss, whether as the result of flood, fire, explosion,
earthquake, accident, casualty, labor trouble, requisition or taking of property
by any government or any agency of any government, windstorm, embargo, riot, act
of God, or other similar or dissimilar casualty or event or otherwise, whether
or not covered by insurance,
<PAGE>
(i) except as disclosed to SFNC in the Disclosure Letter, neither NBCBC
nor NBC has canceled or compromised any debt to an extent exceeding $50,000.00
owed to it or any of its subsidiaries or any claim to an extent exceeding
$50,000.00 asserted by NBCBC or any of its subsidiaries,
(j) neither NBCBC nor NBC has entered into any transaction, contract,
or commitment outside the ordinary course of its business,
(k) neither NBCBC nor NBC has entered, or agreed to enter, into any
agreement or arrangement granting any preferential right to purchase any of its
material assets, properties or rights or requiring the consent of any party to
the transfer and assignment of any such material assets, properties or rights,
(l) there has not been any change in the method of accounting or
accounting practices of NBCBC or any of its subsidiaries, and
(m) NBCBC and NBC have kept all records substantially in accordance
with its record retention policy and has not received any comment, notice or
criticism by any bank regulatory agency which would lead a reasonable person to
believe that such policy is not substantially in compliance with regulatory and
statutory requirements and customary industry standards and have retained such
records for the periods required by its policy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties. Except as disclosed in the
Disclosure Letter, SFNC and its subsidiaries, to the extent applicable to such
subsidiaries, represent and warrant to NBCBC, and NBCBC and NBC, to the extent
applicable to NBC, represent and warrant to SFNC, that:
(a) The facts set forth in Article I of this Agreement with respect to
it are true and correct.
(b) All of the outstanding shares of capital stock of it and its
subsidiaries are duly authorized, validly issued and outstanding, fully paid and
non-assessable, and are subject to no preemptive rights.
(c) Each of it and its subsidiaries has the power and authority, and is
duly qualified in all jurisdictions, except for such qualifications the absence
of which will not have a Material Adverse Effect, as hereinafter defined, where
such qualification is required, to carry on its business as it is now being
conducted and to own all its material properties and assets, and it has all
federal, state, local, and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now being conducted, except for such powers and authorizations the absence of
which, either individually or in the aggregate, would not have a Material
Adverse Effect.
(d) the shares of capital stock of each of its subsidiaries are owned
by it free and clear of all liens, claims, encumbrances and restrictions on
transfer and there are no Rights with respect to such capital stock.
(e) The Board of Directors of each SFNC and NBCBC have, by all
appropriate action, approved this Agreement and the Merger. Subject, in the case
of NBCBC, to the receipt of approval of its shareholders and, subject to receipt
of required regulatory approvals, this Agreement is a valid and binding
agreement of it enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(f) The execution, delivery and performance of this Agreement by it
does not, and the consummation of the transactions contemplated hereby by it
will not, constitute (1) a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or its subsidiaries or to
which it or its subsidiaries (or any of their respective properties) is subject,
which breach, violation or default is reasonably likely to have a material
adverse effect on the condition, financial or
<PAGE>
otherwise, properties, results of operations or business of it and its
subsidiaries, taken as a whole or on its ability to perform its obligations
hereunder and to consummate the transactions contemplated hereby
("Material Adverse Effect"), or enable any person to enjoin any of the
transactions contemplated hereby or (2) a breach or violation of, or
a default under, the articles of incorporation or by-laws of it or any of its
subsidiaries; and the consummation of the transactions contemplated hereby will
not require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument,
other than the required approvals of applicable regulatory authorities referred
to in Section 6.01(b) and (c) and the approval of the shareholders of NBCBC
referred to in Section 4.01(e) and any consents and approvals the absence of
which will not have a Material Adverse Effect.
(g) In the case of SFNC, as of their respective dates, neither its
Annual Report on form 10-K for the fiscal year ended December 31, 1997, nor any
other document filed subsequent to December 31, 1997 under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
each in the form, including exhibits, filed with the SEC, and the Statements of
Condition filed on behalf of its subsidiaries with the state and federal banking
agencies during 1996, 1997 and 1998, (collectively, the "SFNC Reports"), did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. Each
of the balance sheets in or incorporated by reference into the SFNC Reports,
including the related notes and schedules, fairly presents the financial
position of the entity or entities to which it relates as of its date and each
of the statements of operations and retained earnings and of cash flow and
changes in financial position or equivalent statements in or incorporated by
reference into the SFNC Reports, including any related notes and schedules,
fairly presents the results of operations, retained earnings and cash flows and
changes in financial position, as the case may be, of the entity or entities to
which it relates for the periods set forth therein, subject, in the case of
unaudited interim statements or reports to normal year-end audit adjustments
that are not material in amount or effect, in each case in accordance with
generally accepted accounting principles applicable to bank holding companies
consistently applied during the periods involved, except as may be noted
therein. It has no material obligations or liabilities, contingent or otherwise,
except as disclosed in the SFNC Reports, and its consolidated allowance for loan
and lease losses, as shown on its most recent balance sheet or statement of
condition contained in the SFNC Reports was adequate, as of the date thereof,
within the meaning of generally accepted accounting principles and safe and
sound banking practices.
(h) In the case of NBCBC, its balance sheet for the fiscal year ended
December 31, 1997, and the Statements of Condition filed on behalf of its
subsidiaries with the state and federal banking agencies during 1997 and 1998,
and in the case of NBC, its Statements of Condition filed with the state and
federal bank agencies during 1997 and 1998 and its unaudited monthly financial
reports prepared subsequent to March 31, 1998 (collectively, the "NBCBC
Reports"), did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Each of the balance sheets in the NBCBC Reports, including
the related notes and schedules, fairly presents the financial position of the
entity or entities to which it relates as of its date and each of the statements
of operations and retained earnings or equivalent statements in the NBCBC
Reports, including any related notes and schedules, fairly presents the results
of operations and retained earnings, as the case may be, of the entity or
entities to which it relates for the periods set forth therein in each case in
accordance with generally accepted accounting principles applicable to bank
holding companies consistently applied during the periods involved, except as
may be noted therein. It has no material obligations or liabilities, contingent
or otherwise, except as disclosed in the NBCBC Reports, and its consolidated
allowance for loan and lease losses, as shown on its most recent balance sheet
or statement of condition contained in its NBCBC Reports was adequate, as of the
date thereof, within the meaning of generally accepted accounting principles and
safe and sound banking practices to absorb reasonably expected losses in the
loan portfolio of NBC. In the case of NBCBC and its subsidiaries, the unaudited
monthly financial reports prepared subsequent to March 31, 1998 fairly present
the results of operations and the financial conditions of the entity or entities
to which it relates, subject to normal year-end adjustments that are not
material in amount or effect.
<PAGE>
(i) Since December 31, 1997, in the case of SFNC and NBCBC, there has
been no material adverse change in the financial condition of either SFNC and
its subsidiaries, taken as a whole, or NBCBC and its subsidiaries, taken as a
whole.
(j) All material federal, state, local, and foreign tax returns
required to be filed by or on behalf of it or any of its subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such returns
filed are complete and accurate in all material respects. All taxes shown on
returns filed by it have been paid in full or adequate provision has been made
for any such taxes on its balance sheet in accordance with generally accepted
accounting principles. As of the date of this Agreement, there is no audit
examination, deficiency, or refund litigation with respect to any taxes of it
that would result in a determination that would have a Material Adverse Effect.
All taxes, interest, additions, and penalties due with respect to completed and
settled examinations or concluded litigation relating to it have been paid in
full or adequate provision has been made for any such taxes on its balance sheet
in accordance with generally accepted accounting principles. It has not executed
an extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect.
(k) (1) No material litigation, proceeding or controversy before any
court or governmental agency is pending, and there is no pending claim, action
or proceeding against it or any of its subsidiaries, which in its reasonable
judgment is likely to have a Material Adverse Effect or to prevent consummation
of the transactions contemplated hereby, and, to the best of its knowledge, no
such litigation, proceeding, controversy, claim or action has been threatened or
is contemplated, and (2) neither it nor any of its subsidiaries is subject to
cease and desist order, written agreement or memorandum of understanding with,
or a party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request of, federal or
state governmental authorities charged with the supervision or regulation of
banks or bank holding companies or engaged in the insurance of bank deposits
("Bank Regulators"), nor has it been advised by any Bank Regulator that it is
contemplating issuing or requesting, or is considering the appropriateness of
issuing or requesting, any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter, board
resolution or similar understanding.
(l) Except for this Agreement, and arrangements made in the ordinary
course of business, neither NBCBC nor NBC is bound by any material contract, as
defined in Item 601(b)(10)(i) and (ii) of Regulation S-K, to be performed after
the date hereof that has not been disclosed to SFNC.
(m) All "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), that cover any of its
or its subsidiaries' employees, comply in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws; neither it
nor any of its subsidiaries has engaged in a "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any
such plan which is likely to result in any material penalties or taxes under
Section 502(i) of ERISA or Section 4975 of the Code; no material liability to
the Pension Benefit Guaranty Corporation has been or is expected by it or them
to be incurred with respect to any such plan which is subject to Title IV of
ERISA ("pension plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or formerly maintained by it,
them or any entity which is considered one employer with it under Section 4001
of ERISA or Section 414 of the Code; no pension plan had an "accumulated funding
deficiency", as defined in Section 302 of ERISA (whether or not waived), as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each pension plan exceeds the
present value of the "benefit liabilities", as defined in Section 4001(a)(16) of
ERISA, under such pension plan as of the end of the most recent plan year with
respect to the respective plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such pension plan as of the date hereof; no notice of a
"reportable event", as defined in Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived has been required to be filed for any
pension plan within the 12-month period ending on the date hereof; neither it
nor any of its subsidiaries has provided, or is required to provide, security to
any pension plan pursuant to Section 401(a)(29) of the Code; it and its
subsidiaries have not contributed to a "multiemployer plan", as defined in
Section
<PAGE>
3(37) of ERISA, on or after September 26, 1980; and it and its
subsidiaries do not have any obligations for retiree health and life benefits
under any benefit plan, contract or arrangement.
(n) Each of it and its subsidiaries has good title to its properties
and assets, other than property as to which it is lessee, free and clear of any
liens, security interests, claims, charges, options or other encumbrances not
set forth in the Reports, except such defects in title which would not, in the
aggregate, have a Material Adverse Effect and in the case of NBCBC substantially
all of the buildings and equipment in regular use by NBCBC and each of its
subsidiaries have been reasonably maintained and are in good and serviceable
condition, reasonable wear and tear excepted.
(o) It knows of no reason why the regulatory approvals referred to in
Sections 6.01(b) and (c) should not be obtained without the imposition of any
condition of the type referred to in the proviso following Sections 6.01(b) and
(c).
(p) It and each of its subsidiaries have all permits, licenses,
certificates of authority, orders, and approvals of, and have made all filings,
applications, and registrations with, federal, state, local, and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently conducted and the absence of which
would have a Material Adverse Effect; all such permits, licenses, certificates
of authority, orders, and approvals are in full force and effect, and to the
best knowledge of it no suspension or cancellation of any of them is threatened.
(q) In the case of SFNC, the shares of SFNC Stock to be issued pursuant
to this Agreement, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable and
subject to no preemptive rights.
(r) Neither it nor any of its subsidiaries is a party to, or is bound
by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
subsidiaries the subject of a proceeding asserting that it or any such
subsidiary has committed an unfair labor practice or seeking to compel it or
such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its subsidiaries pending or threatened.
(s) Except for the employment of Brown Burke Capital Partners, neither
NBCBC nor any of its subsidiaries, nor any of their respective officers,
directors, or employees, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees, and no broker or finder has acted directly or indirectly for it
or any of its subsidiaries, in connection with this Agreement or the
transactions contemplated hereby.
(t) The information to be supplied by it for inclusion in (1) the
Registration Statement on Form S-4 and/or such other form(s) as may be
appropriate to be filed under the Securities Act of 1933, as amended
("Securities Act"), with the SEC by SFNC for the purpose of, among other things,
registering or obtaining an exemption from registration for, the SFNC Stock to
be issued to the shareholders of NBCBC in the Merger ("Registration Statement"),
or (2) the proxy statement to be distributed in connection with NBCBC's meeting
of its shareholders to vote upon this Agreement, as amended or supplemented from
time to time ("Proxy Statement"), and together with the prospectus included in
the Registration Statement, as amended or supplemented from time to time,
("Proxy Statement/Prospectus") will not at the time such Registration Statement
becomes effective, and in the case of the Proxy Statement/Prospectus at the time
it is mailed and at the time of the meeting of stockholders contemplated under
this Agreement, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
(u) For purposes of this section, the following terms shall have the
indicated meaning:
"Environmental Law" means any federal, state or local laws
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction
or agreement
<PAGE>
with any governmental entity relating to (1) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface soil, plant and animal life or any other
natural resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term Environmental Law
includes without limitation (1) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. 9601,
et seq., the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901, et seq., the Clean Air Act, as amended, 42 U.S.C. 7401, et
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.
1251, et seq., the Toxic Substances Control Act, as amended, 15 U.S.C.
9601, et seq., the Emergency Planning and Community Right to Know Act,
42 U.S.C. 11001, et seq., the Safe Drinking Water Act, 42 U.S.C. 300f,
et seq., all comparable state and local laws, and (2) any common law,
including without limitation common law that may impose strict
liability, that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law, whether
by type or by quantity, including any material containing any such
substance as a component. Hazardous Substances include without
limitation petroleum or any derivative or by-product thereof, asbestos,
radioactive material, and polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means
those properties owned or operated by SFNC or NBCBC or any of their
subsidiaries.
(1) To the best knowledge of it and its subsidiaries, neither
it nor any of its subsidiaries has been or is in violation of or liable
under any Environmental Law, except any such violations or liabilities
which would not reasonably be expected to singly or in the aggregate
have a Material Adverse Effect;
(2) To the best knowledge of it and its subsidiaries, none of
the Loan Portfolio Properties and Other Properties Owned by it or its
subsidiaries has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which
singly or in the aggregate will not have a Material Adverse Effect; and
(3) To the best knowledge of it and its subsidiaries, there
are no actions, suits, demands, notices, claims, investigations or
proceedings pending or threatened relating to the liability of the Loan
Portfolio Properties and Other Properties Owned by it or its
subsidiaries under any Environmental Law, including without limitation
any notices, demand letters or requests for information from any
federal or state environmental agency relating to any such liabilities
under or violations of Environmental Law, except such which will not
have, result in or relate to a Material Adverse Effect. (v) NBCBC does
not and is not required to file reports pursuant to the Exchange Act.
(w) It and its subsidiaries have complied in all material respects with
the provisions of the Community Reinvestment Act ("CRA") and the rules and
regulations thereunder, has a CRA rating of not less than "satisfactory," and
has received no material criticism from regulators with respect to
discriminatory lending practices.
(x) neither SFNC nor any of its subsidiaries know of any fact, event,
circumstance or occurrence concerning SFNC or any of its subsidiaries which it
reasonably believes would, in the opinion of Baird, Kurtz & Dobson, preclude the
Merger from qualifying for the pooling of interest method of accounting.
Section 4.02 Representations and Warranties of NBCBC. Except as disclosed
in writing in the Disclosure Letter, NBCBC and NBC, to the extent applicable to
NBC, to the best of their knowledge, represent and warrant to SFNC, that none of
NBCBC's executive management, consisting of John Dews, President and Chief
Executive Officer, and Melissa Jerry, Chief Financial Officer, knows of any
circumstances, events, commitments, instruments or facts that are known to be
misrepresented or intentionally omitted from any instrument, file, or other
<PAGE>
record of NBCBC or any of its subsidiaries, with respect to loans to borrowers
which are payable to NBCBC or any of its subsidiaries either directly or as a
participant and, to the best knowledge of it and its subsidiaries and except
for such imperfections in documentation which when considered as a whole would
not have a material adverse effect on the business, operations or financial
condition of any of NBCBC or NBC:
(a) All loans were made for good, valuable and adequate consideration
in the normal and ordinary course of business, and the notes and other evidences
of indebtedness and any loan agreements or security documents executed in
connection therewith are true and genuine and constitute the valid and legally
binding obligations of the borrowers to whom the loans were made and are legally
enforceable against such borrowers in accordance with their terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium, and similar
debtor relief laws from time to time in effect, as well as general principles of
equity applied by a court of proper jurisdiction, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(b) The amounts represented to SFNC as the balances owing on the loans
are the correct amounts actually and unconditionally owing, are undisputed, and
are not subject to any offsets, credits, deductions or counterclaims;
(c) The collateral securing each loan as referenced in a loan officer
worksheet, loan summary report or similar interoffice loan documentation is in
fact the collateral held by NBCBC or NBC to secure each loan;
(d) NBCBC or its subsidiaries have possession of all loan document
files and credit files for all loans held by them containing promissory notes
and other relevant evidences of indebtedness with original signatures of their
borrowers and guarantors;
(e) NBCBC or its subsidiaries hold validly perfected liens or security
interests in the collateral granted to them to secure all loans as referenced in
the loan officer worksheets, loan summary reports or similar interoffice loan
documentation and the loan or credit files contain the original security
agreements, mortgages, or other lien creation and perfection documents unless
originals of such documents are filed of public record;
(f) Each lien or security interest of NBCBC or its subsidiaries in the
collateral held for each loan is properly perfected in the priority described as
being held by NBCBC or its subsidiaries in the loan officer worksheets, loan
summary reports or similar interoffice loan documentation contained in the loan
document or credit files;
(g) NBCBC and its subsidiaries are in possession of all collateral that
the loan document files or credit files indicate they have in their possession;
(h) All guaranties granted to NBCBC or its subsidiaries to insure
payment of loans constitute the valid and legally binding obligations of the
guarantors and are enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, and similar
debtor relief laws from time to time in effect, as well as general principles of
equity applied by a court of proper jurisdiction, regardless of whether in a
proceeding in equity or at law;
(i) With respect to any loans in which NBCBC or any of its subsidiaries
have sold participation interests to another bank or financial institution, none
of the buyers of such participation interests are in default under any
participation agreements.
(j) NBCBC and NBC have adopted and tested a compliance plan for Year
2000 computer hardware and software issues, are proceeding with implementation
of such plan so as to timely comply with such plan and NBC has disclosed to SFNC
the results of its most recent Year 2000 examination from its respective federal
regulators.
<PAGE>
ARTICLE V
COVENANTS
Section 5.01 Covenants. SFNC hereby covenants with and to NBCBC,
and NBCBC hereby covenants with and to SFNC, that:
(a) It shall use its best efforts in good faith to take or cause to be
taken all action necessary or desirable under this Agreement on its part as
promptly as practicable so as to permit the consummation of the transactions
contemplated by this Agreement at the earliest reasonable date and cooperate
fully with the other party hereto to that end;
(b) In the case of NBCBC, it shall (1) take all steps necessary to duly
call, give notice of, convene and hold a meeting of its shareholders for the
purpose of approving this Agreement as soon as is reasonably practicable; (2) in
each case subject to the fiduciary duties of its directors, recommend as a Board
by a majority vote to its shareholders that they approve this Agreement and use
its best efforts to obtain such approval; (3) distribute to its shareholders the
Proxy Statement/Prospectus in accordance with applicable federal and state law
(except, in the case of SFNC, for state securities laws and "Blue Sky" permits
which are covered by Section 5.01(e)); and (4) cooperate and consult with SFNC
with respect to each of the foregoing matters;
(c) SFNC will file a Registration Statement on form S-4 for the shares
to be issued pursuant to the Merger and use its best efforts to have the
Registration Statement declared effective. NBCBC and SFNC will cooperate in the
preparation and filing of the Proxy Statement/Prospectus and Registration
Statement in order to consummate the transactions contemplated by this Agreement
as soon as is reasonably practicable;
(d) SFNC will advise NBCBC, promptly after SFNC receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of the shares of SFNC Stock issuable pursuant to
this Agreement for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information;
(e) In the case of SFNC, it shall use its best efforts to obtain, prior
to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement;
(f) Subject to its disclosure obligations imposed by law, unless
approved by the other party hereto in advance, it will not issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby;
(g) It shall promptly furnish the other party with copies of written
communications received by it, or any of its respective subsidiaries, Affiliates
or Associates, (as such terms are defined in Rule 12b-2 under the Exchange Act
as in effect on the date hereof, from, or delivered by any of the foregoing to,
any governmental body or agency in connection with or material to the
transactions contemplated hereby;
(h) (1) Upon reasonable notice, it shall, and shall cause each of its
subsidiaries to, afford the other party hereto, and its officers, employees,
counsel, accountants and other authorized representatives (collectively, such
party's "Representatives") access, during normal business hours, to all of its
and its subsidiaries' properties, books, contracts, commitments and records; it
shall enable the other party's Representatives to discuss its business affairs,
condition, financial and otherwise, assets and liabilities with such third
persons, including, without limitation, its directors, officers, employees,
accountants, counsel and creditors, as the other party considers necessary or
appropriate; and it shall, and it shall cause each of its subsidiaries to,
furnish promptly to the other party hereto (a) a copy of each report, schedule
and other document filed by it pursuant to the requirements of federal or state
securities or banking laws since December 31, 1997, and (b) all other
information concerning its business properties and personnel as the other party
hereto may reasonably request, provided that no investigation
<PAGE>
pursuant to this Paragraph (h) shall affect or be deemed to modify any
representation or warranty made by, or the conditions to the obligations to
consummate this Agreement of, the other party hereto;(2) it will, upon request,
furnish the other party with all information concerning it, its subsidiaries,
directors, officers, partners and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy Statement/
Prospectus, the Registration Statement or any other statement or application
made by or on behalf of SFNC, NBCBC or any of their respective subsidiaries to
any governmental body or agency in connection with or material to the Merger
and the other transactions contemplated by this Agreement; and (3) it will not
use any information obtained pursuant to this Paragraph (h) for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement and, if this Agreement is not consummated, it will hold all
information and documents obtained pursuant to this Paragraph (h) in
confidence unless and until such time as such information or documents
otherwise become publicly available or as it is advised by counsel that any
such information or document is required by law to be disclosed, and in the
event of the termination of this Agreement, it will deliver to the other party
hereto all documents so obtained by it and any copies thereof,
(i) It shall notify the other party hereto as promptly as practicable
of (1) any material breach of any of its warranties, representations or
agreements contained herein and (2) any change in its condition (financial or
otherwise), properties, business, results of operations or prospects that could
have a Material Adverse Effect.
(j) It shall cooperate and use its best efforts to promptly prepare and
file all documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all necessary permits,
consents, approvals and authorizations of all third parties and governmental
agencies, including, in the case of SFNC, submission of applications for
approval of this Agreement and the transactions contemplated herein to the FRB
in accordance with the provisions of the BHC Act, and to any other regulatory
agencies as required by law,
(k) It shall (1) permit the other to review in advance and, to the
extent practicable, will consult with the other party on all characterizations
of the information relating to the other party and any of its respective
subsidiaries, which appear in any filing made with, or written materials
submitted to, any third party or any governmental body or agency in connection
with the transactions contemplated by this Agreement; and (2) consult with the
other with respect to obtaining all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies or agencies
necessary or advisable to consummate the transactions contemplated by this
Agreement and will keep the other party informed of the status of matters
relating to completion of the transactions contemplated herein;
(l) Prior to the Effective Date and contingent on the consummation of
the Merger Transaction, NBCBC shall, consistent with generally accepted
accounting principles, cause NBC to modify and change its loan, litigation and
real estate valuation policies and practices, including loan classifications and
levels of reserves and other pertinent accounting entries, so as to be applied
consistently on a mutually satisfactory basis with those of SFNC; provided,
however, that no such action pursuant to this subsection (l) need be taken
unless and until SFNC acknowledges that all conditions to its obligation to
consummate the Merger have been satisfied and no such accrual or other
adjustment made by NBCBC pursuant to the provisions of this subsection (l) shall
constitute an acknowledgment by NBCBC or create any implication for any purpose,
that such accrual or other adjustment was necessary for any purpose other than
to comply with the provisions of this subsection (l);
(m) From and after the Effective Date, SFNC shall cause its
subsidiaries, including NBC, to offer to all persons who were employees of NBCBC
or NBC (as reflected in the payroll records of such institutions) immediately
prior to the Effective Date and who become employees of SFNC or any of its
subsidiaries, including those who remain as employees of NBC immediately
following the Effective Date, the right to participate in the employee benefits
of SFNC and its subsidiaries (including but not limited to the Simmons First
National Corporation Employee Stock Ownership Plan, Simmons First National
Corporation 401(k) Plan, and such other benefits as are set forth in the Simmons
First National Corporation Personnel Policy Manual) on the same terms as the
employees of the other subsidiaries of SFNC. To the extent permitted by such
plans and policies and SFNC's prior administration of such plans and policies,
(1) prior service of employees of NBCBC and its subsidiaries will be credited
for purposes of eligibility to participate, vesting, and benefit accrual under
such plans and policies and (2) any waiting periods or exclusions pre-existing
conditions shall be waived;
<PAGE>
(n) In the case of NBCBC, immediately following the Effective Date, it
shall pay to Brown Burke Capital Partners all amounts owing to it pursuant to
that certain letter agreement, dated November 11, 1998, between Brown Burke
Capital Partners and NBCBC; and
(o) In the case of SFNC, neither it nor any of its subsidiaries will
take any action which, in the opinion of Baird, Kurtz & Dobson, would preclude
the Merger from qualifying for the pooling of interest method of accounting.
ARTICLE VI
CONDITIONS TO CONSUMMATION
Section 6.01 Mutual Conditions. The respective obligations of SFNC and
NBCBC to effect the Merger shall be subject to the satisfaction prior to the
Effective Time of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the requisite votes of the shareholders of NBCBC in accordance
with applicable law;
(b) The procurement by SFNC of approval of this Agreement and the
transactions contemplated hereby by the FRB and the expiration of any statutory
waiting periods;
(c) Procurement of all other regulatory consents and approvals,
including, without limitation, any required consents or approvals from the
United States Treasury, Office of the Comptroller of the Currency and state
banking authorities, which are necessary to the consummation of the transactions
contemplated by this Agreement; provided, however, that no approval or consent
described in Sections 6.01(b) and (c) shall be deemed to have been received if
it shall include any conditions or requirements which would reduce the benefits
of the transactions contemplated hereby to such a degree that SFNC or NBCBC
would not have entered into this Agreement had such conditions or requirements
been known at the date hereof;
(d) The receipt from Baird, Kurtz & Dobson of its opinion that the
Merger upon consummation may properly be accounted for under the pooling of
interest method pursuant to Generally Accepted Accounting Principles and the
accounting rules of the Securities Exchange Commission;
(e) The satisfaction of all other requirements prescribed by law which
are necessary to the consummation of the transactions contemplated by this
Agreement;
(f) No party hereto shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger;
(g) No statute, rule, regulation, order, injunction or decree shall
have been enacted entered, promulgated or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger; and
(h) The Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC or an exemption from registration shall be effective.
(i) NBCBC shall cause each director, executive officer and other person
who is an "affiliate" (for purposes of Rule 145 under the Securities Act) to
deliver to SFNC as soon as practicable after the date hereof, but in no event
after the date of the NBCBC shareholders meeting called to approve the Merger, a
letter agreement satisfactory to SFNC providing, among other matters, that such
person will not sell, pledge (other than the continuation of existing pledges),
transfer or otherwise dispose of any shares of NBCBC Stock held by such
"affiliate" or the shares of SFNC Stock to be received by such "affiliate" in
the Merger in the case of shares of
<PAGE>
SFNC Stock only, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder and upon terms and
conditions which will not adversely affect the qualification of the Merger for
the pooling of interest method of accounting.
Section 6.02 Additional Conditions for SFNC. The obligation of SFNC to
effect the Merger shall be subject to the satisfaction prior to the Effective
Time of the following additional conditions:
(a) SFNC shall have received an opinion, dated the Effective Date, of
NBCBC's counsel in the form and to the effect customarily received in
transactions of this type;
(b) Each of the representations, warranties and covenants herein of
NBCBC shall, in all material respects, be true on, or complied with by, the
Effective Date as if made on such date, or on the date when made in the case of
any representation or warranty which specifically relates to an earlier date,
and SFNC shall have received a certificate signed by the Chief Executive Officer
and the Treasurer of NBCBC, dated the Effective Date, to such effect;
(c) Phase I environmental audits of all real property owned by NBCBC or
any of its subsidiaries shall have been conducted at SFNC's expense and shall,
to SFNC's satisfaction, reflect no material problems under Environmental Laws;
(d) SFNC shall have received all state securities laws and "Blue Sky"
permits and other authorizations necessary to consummate the transactions
contemplated hereby;
(e) No litigation or proceeding is pending which (1) has been brought
against SFNC or NBCBC or any of their subsidiaries by any governmental agency
seeking to prevent consummation of the transactions contemplated hereby or (2)
in the reasonable judgment of the Board of Directors of SFNC is likely to have a
Material Adverse Effect on NBCBC or SFNC;
Section 6.03 Additional Conditions for NBCBC. The obligation of NBCBC to
effect the Merger shall be subject to the satisfaction prior to the Effective
Time of the following additional conditions:
(a) NBCBC shall have received an opinion, dated the Effective Date, of
SFNC's counsel in the form and to the effect customarily received in
transactions of this type;
(b) Each of the representations, warranties and covenants contained
herein of SFNC shall, in all material respects, be true on, or complied with by,
the Effective Date as if made on such date, or on the date when made in the case
of any representation or warranty which specifically relates to an earlier date,
and NBCBC shall have received a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of SFNC, dated the Effective Date, to
such effect;
(c) No litigation or proceeding is pending which (1) has been brought
against SFNC or NBCBC or any of their subsidiaries by any governmental agency,
seeking to prevent consummation of the transactions contemplated hereby or (2)
in the reasonable judgment of the Board of Directors of NBCBC is likely to have
a Material Adverse Effect on NBCBC or SFNC;
(d) NBCBC shall have received the written opinion of Brown Burke
Capital Partners, LLC, or such other advisor selected by NBCBC and approved by
SFNC, to the effect that the Merger Consideration to be paid to the holders of
the shares of NBCBC Stock pursuant to this Agreement is fair to the holders of
the NBCBC Stock which opinion shall be re-affirmed not more than five (5) days
prior to the Effective Date;
(e) Williams & Anderson, LLP shall have delivered its opinion to SFNC
and NBCBC, dated as of the Effective Date, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that,
<PAGE>
accordingly:(1) no gain or loss will be recognized by the shareholders of NBCBC
who exchange their shares of NBCBC Stock for shares of SFNC Stock pursuant to
the Merger (except with respect to cash received in lieu of a fractional
share interest in SFNC Stock); (2) the tax basis of the shares of SFNC Stock
received by shareholders who exchange their shares of NBCBC Stock for shares
of SFNC Stock in the Merger will be the same as the tax basis of the shares of
NBCBC Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received);
(3) the holding period of the shares of SFNC Stock received in the Merger
will include the period during which the shares of NBCBC Stock surrendered
in exchange therefor were held, provided such shares of NBCBC Stock were held
as capital assets at the Effective Time; and (4) satisfactorily addresses any
other significant federal income tax issues concerning the Merger. In
rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of NBCBC and others. The opinion shall be
in form and substance reasonably satisfactory to NBCBC.
Section 6.04 Effect of Required Adjustments. Any effect on NBCBC as a
result of action taken by NBCBC pursuant to Sections 3.01(a), 3.01(b) and
5.01(l) shall be disregarded for purposes of determining the truth or
correctness of any representation or warranty of NBCBC and for purposes of
determining whether any conditions are satisfied.
ARTICLE VII
TERMINATION
Section 7.01 Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Date, whether before or after the
approval by the stockholders of NBCBC:
(a) By the mutual consent of SFNC and NBCBC, by action of their
respective boards of directors;
(b) By SFNC or NBCBC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of the failure of
the shareholders of NBCBC to approve this Agreement at its meeting called to
consider such approval, or a material breach by the other party hereto of any
representation, warranty or agreement contained herein which is not cured or not
curable within 60 days after written notice of such breach is given to the party
committing such breach by the other party hereto;
(c) By SFNC or NBCBC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event that the Merger
is not consummated by September 30, 1999, unless the failure to so consummate by
such time is due to the breach of this Agreement by the party seeking to
terminate;
(d) By SFNC, in the event Baird, Kurtz & Dobson notifies SFNC that it
will be unable to give the opinion described in Section 6.01(d),
(e) By NBCBC, in the event Williams & Anderson LLP notifies the parties
that it will be unable to give the opinion described in Section 6.03(e).
Section 7.02 Effect of Termination. In the event of the termination of this
Agreement by either SFNC or NBCBC, as provided above, this Agreement shall
thereafter become void and there shall be no liability on the part of any party
hereto or their respective officers or directors, except that any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach by any other party of any covenant or willful
misrepresentation contained herein.
ARTICLE VIII
EFFECTIVE DATE AND EFFECTIVE TIME
Section 8.01 Effective Date and Effective Time. On the last business day of
the month during which the expiration of all applicable waiting periods in
connection with governmental approvals occurs and all conditions to the
consummation of this Agreement are satisfied or waived, or on such earlier or
later date as may be agreed by the parties, Articles of Merger shall be executed
in accordance with all appropriate legal requirements and shall be filed
<PAGE>
as required by law, and the Merger provided for herein shall become effective
upon such filing or on such date as may be specified in such Articles of Merger,
herein called the "Effective Date". The "Effective Time" of the Merger shall be
6:01 P.M. in the State of Arkansas on the Effective Date, or such other time on
the Effective Date as may be agreed by the parties.
<PAGE>
ARTICLE IX
OTHER MATTERS
Section 9.01 Survival. Except as hereinafter provided, the representations
and warranties contained in this Agreement and all other terms, covenants and
conditions hereof shall merge in the closing documents and shall not survive the
Effective Date or, after the Effective Date be the basis for any action by any
party, except as to any matter which is based upon willful fraud by a party with
respect to which the representations, warranties, terms, covenants and
conditions set forth in this Agreement shall expire only upon expiration of the
applicable statute of limitations. If this Agreement shall be terminated, the
agreements of the parties in Sections 5.01(h)(3), 7.02, 9.05 and 9.06 shall
survive such termination.
Section 9.02 Amendment; Modification; Waiver. Prior to the Effective Date,
any provision of this Agreement may be waived by the party benefited by the
provision or by both parties or amended or modified at any time, including the
structure of the transaction by an agreement in writing between the parties
hereto approved by their respective Boards of Directors, to the extent allowed
by law, except that, after the vote by the shareholders of NBCBC, Sections
2.02(a)-(d) shall not be amended or revised.
Section 9.03 Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
Section 9.04 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Arkansas.
Section 9.05 Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
Section 9.06 Disclosure. Each of the parties and its respective agents,
attorneys and accountants will maintain the confidentiality of all information
provided in connection herewith which has not been publicly disclosed unless it
is advised by counsel that any such information is required by law to be
disclosed.
Section 9.07 Notices. All notices, acknowledgments, requests and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram or telex
(confirmed in writing) to such party at its address set forth below or such
other address as such party may specify by notice to the other party hereto:
If to NBCBC and NBC, to: NBC Bank Corp.
Attn: John Dews
P. O. Box 992
El Dorado, Arkansas 71730-5642
With a Copy to: Mr. William I. Prewett
P. O. Box 1917
El Dorado, Arkansas 71731
If to SFNC, to: SIMMONS FIRST NATIONAL CORPORATION
J. Thomas May, Chairman & CEO
P. O. Box 7009
Pine Bluff, Arkansas 71611-7009
<PAGE>
With a Copy to: WILLIAMS & ANDERSON LLP
ATTN: Patrick A. Burrow
111 Center St., 22nd Floor
Little Rock, Arkansas 72201
Section 9.08 No Third Party Beneficiaries. All terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as expressly provided
for herein, nothing in this Agreement is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 9.09 Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made.
Section 9.10 Assignment. This Agreement may not be assigned by any party
hereto without the written consent of the other parties.
Section 9.11 No Interference with Legal or Fiduciary Duty. Nothing herein
is intended to prohibit, restrict, or interfere with, any action by any
director, officer, or employee that is reasonably believed by such person to be
required by law or fiduciary duty, and no person shall have liability under this
agreement for any action taken in good faith belief that it is required by law
or fiduciary duty.
Section 9.12 Expenses. Whether or not the merger is consummated, all costs
and expenses incurred in connection with this Agreement and the merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense except to the extent specifically stated otherwise in
this Agreement.
ARTICLE X
EXPENSES, INDEMNIFICATION, INSURANCE
Section 10.01 Indemnification. In the event the Merger Transaction is
consummated, NBCBC and SFNC shall indemnify and hold harmless each present and
former director and officer of NBCBC and of NBC against any cost or expenses
(including reasonable attorney's fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit,
proceeding, or investigation arising out of or pertaining as to matters related
to this Agreement and/or to the merger. They shall jointly and severally advance
expenses as incurred provided the person to whom expenses are advanced provides
a satisfactory undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification.
Section 10.02 D&O Insurance. Directors and officers liability insurance for
acts and omissions occurring prior to the Effective Date will be continued
through existing policies or provided by SFNC through its blanket policy in an
amount not less than the coverage provided by NBCBC prior to the consummation of
the Merger Transaction. Coverage for acts and omissions occurring after the
Effective Date, will be provided to directors and officers of NBC on the same
basis as provided to the other subsidiary banks of SFNC.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers as of the day and
year first above written.
SIMMONS FIRST NATIONAL CORPORATION
By /s/ J. Thomas May
------------------------------------
J. Thomas May, Chairman, President &
Chief Executive Officer
NBC BANK CORP.
By /s/ John F. Dews
------------------------------------
John F. Dews, President and
Chief Executive Officer
<PAGE>
ANNEX II
BROWN, BURKE CAPITAL PARTNERS, INC.
ATLANTA, GEORGIA
April 21, 1999
Board of Directors
NBC Bank Corp.
NBC Plaza
100 West Grove
El Dorado, AR 71730
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the shareholders
of NBC Bank Corp. (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 Agreement and Plan of Merger (the "Merger Agreement") dated
March 22, 1999 between the Company and Simmons First National Corporation
("SFNC"). The Merger Agreement provides for a merger (the "Merger") of the
Company and SFNC pursuant to which the common shareholders of the Company will
receive 785,000 SFNC common shares.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to SFNC and the Company. We have also
reviewed certain other information, including financial forecasts and budgets,
provided to us by SFNC 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 SFNC 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 SFNC's and the Company's
managements as to the future financial performance of SFNC and the Company. In
addition, we have not made an independent evaluation or appraisal of the assets
of SFNC or the Company, and we have assumed that the aggregate allowances for
loan losses for SFNC and the Company are adequate to cover such losses.
<PAGE>
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 SFNC common stock necessarily will be when
the SFNC common stock is issued to the stockholders 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 fixed fee for our services, which will be due upon delivery
of the fairness opinion.
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,
/s/ Brown, Burke Capital Partners, Inc.
BROWN, BURKE CAPITAL PARTNERS, INC.
<PAGE>
ANNEX III
4-26-1007. Rights of dissenting shareholders.
(a) If a shareholder of a corporation which is a party to a merger or
consolidation files with the corporation, prior to or at the meeting of
shareholders at which the plan of merger or consolidation is submitted to a
vote, a written objection to the plan of merger or consolidation and does not
vote in favor thereof, and the shareholder within ten (10) days after the date
on which the vote was taken makes written demand on the surviving or new
domestic or foreign corporation for payment of the fair value of his shares as
of the day prior to the date on which the vote was taken approving the merger or
consolidation, then, if the merger or consolidation is effected, the surviving
or new corporation shall pay to the shareholder, upon surrender of his
certificate or certificates representing the shares, the fair value thereof.
(b) The demand shall state the number and class of the shares owned by the
dissenting shareholder.
(c) Any shareholder failing to make demand within the ten-day period shall be
bound by the terms of the merger or consolidation.
(d) Within ten (10) days after the merger or consolidation is effected, the
surviving or new corporation, as the case may be, shall give notice to each
dissenting shareholder who has made demand as herein provided for the payment of
the fair value of his shares.
(e)(1) If within thirty (30) days after the date on which the merger or
consolidation was effected the value of such shares is agreed upon between the
dissenting shareholder and the surviving or new corporation, payment shall be
made within ninety (90) days after the date on which such merger or
consolidation was effected, upon the surrender of his certificate or
certificates representing those shares.
(2) Upon payment of the agreed value, the dissenting shareholder shall cease
to have any interest in those shares or in the corporation.
(f)(1) If within the period of thirty (30) days the shareholder and the
surviving or new corporation do not so agree, then the dissenting shareholder,
within sixty (60) days after the expiration of the thirty-day period, may file a
petition in the circuit court of the county in which the registered office of
the surviving corporation is located, if the surviving corporation is a domestic
corporation or in the Pulaski County Circuit Court if the surviving corporation
is a foreign corporation, asking for a finding and determination of the fair
value of the shares and shall be entitled to judgment against the surviving or
new corporation for the amount of the fair value as of the day prior to the date
on which the vote was taken approving such merger or consolidation, together
with interest thereon to the date of the judgment.
(2) The judgment shall be payable only upon and simultaneously with the
surrender to the surviving or new corporation of the certificate or certificates
representing the shares.
(3) Upon payment of the judgment, the dissenting shareholder shall cease to
have any interest in the shares or in the surviving or new corporation.
(4) Unless the dissenting shareholder files the petition within the time
herein limited, the shareholder and all persons claiming under him shall be
bound by the terms of the merger or consolidation.
(g) Shares acquired by the surviving or new corporation pursuant to the
payment of the agreed value thereof or to payment of the judgment entered, as in
this section provided, may be held and disposed of by the corporation as in the
case of other treasury shares.
<PAGE>
(h) The provisions of this section shall not apply to a merger if, on the date
of the filing of the articles of merger, the surviving corporation is the owner
of all the outstanding shares of the other domestic or foreign corporations that
are parties to the merger.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Arkansas Code Annotated Section 4-27-850 ("Arkansas Code") provides as follows:
SECTION 4-27-850 - INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS - INSURANCE.
A. A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation) by
reason of the 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 of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
B. A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the 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 of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue, or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the court of chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court of chancery
or such other court shall deem proper.
C. To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in subsections A. and B. of this
section, or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
D. Any indemnification under subsections A. and B. of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections A. and B. of this
section. Such determination shall be made:
<PAGE>
(1) By the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding; or
(2) If such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion; or
(3) By the stockholders.
E. Expenses incurred by an officer or director in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit, or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
F. The indemnification and advancement of expenses provided by or granted
pursuant to the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
G. A corporation shall have power to purchase and maintain insurance on
behalf of any person who 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 of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
H. For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee, or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, shall stand in the same
position under the provisions of this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
I. For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
J. The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
<PAGE>
Further, the Arkansas Code Section 4-27-202 provides as follows:
SECTION 4-27-202. ARTICLES OF INCORPORATION.
A. The articles of incorporation must set forth:
* * *
B. The articles of incorporation may set forth:
* * *
3. A provision eliminating or limiting the personal liability of a director
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision shall not eliminate
or limit the liability of a director:
(i) For any breach of the director's duty of loyalty to the corporation or
its stockholders;
(ii) For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(iii) Under Section 4-27-833 of this chapter;
(iv) For any transaction from which the director derived an improper
personal benefit; or
(v) For any action, omission, transaction, or breach of a director's duty
creating any third-party liability to any person or entity other than the
corporation or stockholder.
No such provision shall eliminate or limit the liability of a director
for any act or omission occurring prior to the date when such provision becomes
effective. All references in this subsection to a director shall also be deemed
to refer to a member of the governing body of a corporation which is not
authorized to issue capital stock.
THE REGISTRANT'S ARTICLES OF INCORPORATION AND BYLAWS PROVISIONS
The Registrant's Articles of Incorporation and Bylaws extend
indemnification rights to the fullest extent authorized by the Arkansas Code to
its directors and officers. In addition, the Articles of Incorporation and
Bylaws permit the Registrant to maintain insurance to protect itself and any of
its directors, officers or representatives against any liability assessed
against such person and incurred in any such capacity or arising out of such
status whether or not the Registrant would have the power to indemnify such
person under the Arkansas Code.
The Registrant's Articles of Incorporation include the following
provision, in reliance on Section 4-27-202 of the Arkansas Code:
SIXTEENTH: To the fullest extent permitted by the Arkansas Business
Corporation Act, as it now exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director.
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
Exhibit
Number Description
- ------ -----------
2 Agreement and Plan of Merger by and
between the Company and NBC Bank Corp.,
dated March 22, 1999. (Included as Annex I
to Part I of the Registration Statement).
5 Opinion of Williams & Anderson LLP
(To be filed by amendment.)
8 Opinion of Williams & Anderson LLP
23(a) Consent of Baird, Kurtz & Dobson,
independent public accountants
regarding information from Simmons First
National Corporation 10-K for the year
ended 12/31/98
23(b) Consent of Deloitte & Touche LLP
independent public accountants
regarding inclusion of their independent
auditors' report on the audited
financial statements of NBC Bank Corp.
*23(c) Consent of Williams & Anderson LLP will
be included in that firm's opinion filed
as Exhibit 5 hereto.
99(a) Letter to NBC Bank Corp. Shareholders
99(b) Notice of Special Shareholders Meeting
99(c) Form of Proxy
99(d) Form of Affiliate Letter
*To be supplied or filed by amendment.
<PAGE>
ITEM 22. UNDERTAKINGS
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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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) The undersigned registrant hereby undertakes as follows that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(4) The registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (3) 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 (Section 230.415 of this chapter),
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.
(5) The undersigned registrant undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(6) The undersigned registrant hereby undertakes to supply by means of a
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pine Bluff, State of Arkansas, on the 21st day of
April, 1999.
SIMMONS FIRST NATIONAL CORPORATION
By /s/ Barry L. Crow
_________________________________________
Barry L. Crow, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on the 21st day of April, 1999.
Signature Title
__________ _______
/s/ J. Thomas May
- ------------------------- Chairman of the Board, Chief Executive Officer
J. Thomas May and President (Principal Executive Officer)
/s/ Barry L. Crow
- ------------------------- Chief Financial Officer
Barry L. Crow (Principal Financial and Accounting Officer)
/s/ W. E. Ayres
- ------------------------- Director
W. E. Ayres
/s/ Ben V. Floriani
- ------------------------- Director
Ben V. Floriani
/s/ Lara F. Hutt, III
- ------------------------- Director
Lara F. Hutt, III
- ------------------------- Director
George Makris, Jr.
/s/ David R. Perdue
- ------------------------- Director
David R. Perdue
/s/ Harry L. Ryburn
- ------------------------- Director
Harry L. Ryburn
- ------------------------- Director
Donald W. Stone
/s/ Henry F. Trotter, Jr.
- ------------------------- Director
Henry F. Trotter, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints J.
Thomas May and Barry L. Crow, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
re-substitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form S-4 of Simmons First
National Corporation (the "Company") pertaining to the registration of up to
785,000 shares of the Company's Class A Common Stock, $1.00 par value per share,
to be issued upon consummation of a merger with NBC Bank Corp. and to sign any
and all amendments (including post-effective amendments) to the 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 such 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, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Signature Title
/s/ J. Thomas May
- ------------------------- Director
J. Thomas May
/s/ W. E. Ayres
- ------------------------ Director
W. E. Ayres
/s/ Ben V. Floriani
- ------------------------- Director
Ben V. Floriani
/s/ Lara F. Hutt, III
- ------------------------- Director
Lara F. Hutt, III
- ------------------------- Director
George Makris, Jr.
/s/ David R. Perdue
- ------------------------- Director
David R. Perdue
/s/ Harry L. Ryburn
- ------------------------- Director
Harry L. Ryburn
- ------------------------- Director
Donald W. Stone
/s/ Henry F. Trotter, Jr.
- ------------------------- Director
Henry F. Trotter, Jr.
<PAGE>
Exhibit 8
WILLIAMS & ANDERSON, LLP
111 Center Street
Twenty-Second Floor
Little Rock, Arkansas 72201
(501) 372-0800
April __, 1999
Simmons First National Corporation
P. O. Box 7009
Pine Bluff, Arkansas 71611
NBC Bank Corp.
100 West Grove St.
El Dorado, Arkansas 71730
Re: Simmons First National Corporation Registration Statement on Form S-4
Gentlemen:
We have acted as counsel to Simmons First National Corporation, an
Arkansas corporation ("Simmons"), in connection with the proposed merger (the
"Merger") of NBC Bank Corp., an Arkansas corporation ("NBCBC") with and into
Simmons, pursuant to the terms of the Agreement and Plan of Merger, dated as of
March 22, 1999 (the "Agreement") by and between Simmons and NBCBC as described
in the Registration Statement on Form S-4 to be filed by Simmons with the
Securities and Exchange Commission (the "Registration Statement"). This opinion
is being rendered pursuant to the requirements of Item 21(a) of Form S-4 under
the Securities Act of 1933, as amended.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, (ii) the Registration Statement and (iii) such other
documents as we have deemed necessary or appropriate in order to enable us to
render the opinions below. In our examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such copies. This
opinion is subject to the receipt by counsel prior to the Effective Date of
certain written representations and covenants of Simmons and NBCBC.
Based upon and subject to the foregoing, the discussion contained in
the prospectus included as part of the Registration Statement (the "Prospectus")
under the caption "Certain
<PAGE>
Federal Income Tax Consequences", except as otherwise indicated, expresses our
opinion as to the material Federal income tax consequences applicable to
holders of NBCBC Common Stock. You should be aware, however, that the
discussion under the caption "Certain Federal Income Tax Consequences" in
the Prospectus represents our conclusions as to the application of existing law
to the instant transactions. There can be no assurance that contrary
positions may not be taken by the Internal Revenue Service.
This opinion is furnished to you solely for use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. We also consent to the references to
Williams & Anderson LLP under the heading "Certain Federal Income Tax
Consequences" in the Registration Statement and the Prospectus.
Very truly yours,
WILLIAMS & ANDERSON LLP
/s/ Patrick A. Burrow
------------------------
Patrick A. Burrow
PAB/ms
Exhibit 23 (a)
CONSENT OF BAIRD, KURTZ & DOBSON, INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement (Form
S-4) and the related Prospectus for the registration of 785,000 shares of common
stock of Simmons First National Corporation of our report dated February 2,
1999, with respect to the consolidated financial statements of Simmons First
National Corporation as of December 31, 1998 and 1997, and for each of the years
in the three-year period ended December 31, 1998, included in its Annual Report
(Form 10-K) for the year ended December 31, 1998. We also consent to the
reference to our firm under the caption "Experts" appearing in the Registration
Statement.
/s/ Baird, Kurtz & Dobson CPAs
Pine Bluff, Arkansas
April 21, 1999
Exhibit 23 (b)
INDEPENDENT AUDITORS' CONSENT
We consent to use in this Registration Statement of Simmons First National
Corporation on Form S-4 for the registration of 785,000 shares of common stock
of Simmons First National Corporation of our report dated February 5, 1999
(March 22, 1999, as to Note 15), appearing in the Proxy Statement/Prospectus,
which is part of this Registration Statement.
We also consent to the reference to us under the heading "Selected Financial
Data" and "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Little Rock, Arkansas
April 21, 1999
Exhibit 99 (a)
NBC BANK CORP.
100 West Grove Street
El Dorado, Arkansas 71730
__________, 1999
Dear Stockholder:
You are cordially invited to attend a special meeting of the
shareholders of NBC Bank Corp. (the "Company") to be held at the offices of the
Company, 100 West Grove Street, El Dorado, Arkansas 71730, on June __, 1999, at
10:00 a.m., as set forth in the attached Notice of Special Meeting of
Shareholders, for the purposes of voting upon a proposed merger of NBC Bank
Corp. with and into Simmons First National Corporation (the"Merger") pursuant to
the terms of an Agreement and Plan of Merger, dated March 22, 1999 and the
proposal to adopt the Arkansas Business Corporation Act of 1987. Pursuant to the
Merger, shareholders of the Company will receive 4.1638 shares of the Class A
common stock of Simmons First National Corporation for each share of the common
stock of the Company held, other than shares held by dissenting shareholders and
the payment of cash in lieu of the issuance of fractional shares of Simmons
stock. Consummation of the Merger will terminate the existence of the Company.
The election to be governed by the Arkansas Business Corporation Act of 1987
will be effective only if the Merger is approved.
Accompanying this letter is a Notice of Shareholders Meeting, Proxy
Statement (which includes in Annex III, A.C.A. ss.4-26-1007, a part of the
Arkansas Business Corporation Act of 1987 concerning dissenter's rights) and
Proxy. You are urged to read these materials carefully and promptly. The Proxy
Statement contains descriptions of the Merger and the merger agreement,
financial information about the Simmons and the Company and other related
information. Only by reading the entire Proxy Statement will you be able to
obtain sufficient information to enable you to make an informed decision about
how to vote on the Merger.
The owners of at least a two-thirds of the shares of common stock of
the Company outstanding on April __, 1999 must be voted in favor of the Plan and
the Amendment in order for this action to be approved. In view of the importance
of the meeting, it is highly recommended that your shares be represented,
whether or not you are able to attend in person.
The Company's board of directors has approved the Merger and the
Agreement and recommends voting FOR approval of the Merger and FOR the adoption
of the Arkansas Business Corporation Act of 1987. You are urged to vote FOR
these propositions and to complete, date, sign and return the enclosed proxy in
the envelope provided.
I look forward to visiting with you at the meeting.
Very truly yours,
James D. Cook
Chairman of the Board
Exhibit 99 (b)
NBC BANK CORP.
100 West Grove Street
El Dorado, Arkansas 71730
(870) 862-8161
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the shareholders of NBC Bank Corp.:
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of
NBC Bank Corp. (the "Company") will be held at 10:00 a.m. on June __, 1999, at
the offices of the Company, 100 West Grove St., El Dorado, Arkansas 71730. A
Proxy Statement relating to the business to be conducted at the meeting is
enclosed.
The meeting is for the purpose of considering and acting upon:
1. A proposal for the shareholders to approve the merger of the
Company with and into Simmons First National Corporation
("Simmons") pursuant to the terms of the Agreement and Plan of
Merger, dated March 22, 1999 under the terms of which Simmons
will issue 4.1638 shares of its Class A common stock for each
share of the Company's stock outstanding, all as more fully
set forth in the accompanying Proxy Statement.
2. A proposal to amend the articles of incorporation to adopt the
Arkansas Business Corporation Act of 1987 as the corporate law
to govern the affairs of this corporation: (This proposal may
only be adopted if Proposal (1) above is also adopted.)
3. Such other business as may properly come before the meeting or
any adjournment thereof. NOTE: The board of directors is not
aware of any other business to come before the meeting.
Any shareholder of the Company who is opposed to the proposed action
described in Item #1 is entitled to dissent and obtain payment of the fair value
of his shares, by following the procedures set forth in Arkansas Business
Corporation Act of 1965, A.C.A. ss.4-26-1007, a copy of which is included in the
Proxy Statement delivered herewith.
Any action may be taken at the meeting on the date specified or on any
date or dates to which the meeting may be adjourned. The close of business on
April ___, 1999, has been fixed as the record date for determining the
shareholders entitled to notice of and vote at the meeting.
You are requested to complete and sign the enclosed proxy, which is
solicited by the board of directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the meeting in
person. EACH SHAREHOLDER IS ENCOURAGED TO READ THE ENCLOSED PROXY STATEMENT
CAREFULLY PRIOR TO VOTING.
BY ORDER OF THE BOARD OF DIRECTORS.
El Dorado, Arkansas
May __, 1999 _________________________
Secretary
================================================================================
Important: The prompt return of proxies will save the Company the expense of
further requests for proxies in order to ensure a quorum. A pre-addressed
postage-paid envelope is enclosed for your convenience.
================================================================================
Exhibit 99 (c)
PROXY
SPECIAL MEETING OF SHAREHOLDERS
NBC BANK CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James D. Cook and John F. Dews and each
of them proxies, with full power of substitution to vote for the undersigned all
shares of the common stock of NBC Bank Corp. which the undersigned would be
entitled to vote if personally present at the Special Meeting of Shareholders to
be held on __________, June __, 1999, at 10:00 A.M., and at any adjournment or
adjournments thereof, upon the matters described in the accompanying Proxy
Statement and upon any other business that may properly come before the meeting
or any adjournment thereof. Said proxies are directed to vote or refrain from
voting upon the following matters as indicated below, and otherwise to vote in
their discretion:
(1) PROPOSAL TO APPROVE THE MERGER OF THE COMPANY WITH AND INTO SIMMONS
FIRST NATIONAL CORPORATION: (mark only one box)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(2) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO ADOPT THE ARKANSAS
BUSINESS CORPORATION ACT OF 1987 AS THE CORPORATE LAW TO GOVERN THE
AFFAIRS OF THE COMPANY: (This proposal may only be adopted if Proposal
(1) above is also adopted.) (Mark only one box)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(3) Upon such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS (1) and (2).
The undersigned acknowledge(s) receipt with this proxy of a copy of the
Notice of Special Meeting and Proxy Statement.
Dated: _________________, 1999. ___________________________________
___________________________________
Signature(s) of Shareholders(s)
IMPORTANT: Please date this proxy and sign your name exactly as your name
appears. If stock is held jointly, both should sign. Persons signing in a
representative or fiduciary capacity (executors, administrators, trustees,
guardians, etc.) should so indicate, giving full title.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED.
Exhibit 99 (d)
Simmons First National Corporation
P. O. Box 7009
Pine Bluff, Arkansas 71611
Gentlemen:
I may presently be considered to be an Aaffiliate", as defined in
paragraph (a) of Rule 144 of the Rules and Regulations of the Securities and
Exchange commission (ASEC") under the Securities Act of 1933, as amended (the
AAct"), of NBC Bank Corp., El Dorado, Arkansas, a bank holding company
(ANBCBC"). Pursuant to the merger (the AMerger") of NBCBC with and into Simmons
First National Corporation (ASimmons"), I will acquire _________ shares of the
common stock, par value $1 per share (ACommon Stock"), of Simmons. I represent
and warrant that I will not make any sale, transfer or other disposition of the
Shares in violation of the Act or the General Rules and Regulations promulgated
thereunder by the SEC.
I have been advised that the Shares issued to me pursuant to the Merger
have been registered under the Act in the Registration Statement on SEC Form
S-4, as amended, Registration No. 333-_______ (ARegistration Statement") as
filed with the SEC, and have received a copy of the proxy/prospectus filed as
part of the Registration Statement. However, I have also been advised that any
public offering or sale by me of any of the Shares will, under current law,
require either (i) the further registration (by amendment of such Form S-4 or
otherwise) under the Act of the Shares to be sold or (ii) compliance with Rule
145 promulgated under the Act or (iii) the availability of another exemption
from such registration.
I agree that notwithstanding any provision herein or contained in the
Agreement and Plan of Reorganization that I will not sell, transfer, or
otherwise dispose of any of the Shares unless Simmons has made public disclosure
of financial results reflecting 30 days' of post-Merger combined operations of
NBCBC and Simmons within the meaning of Section 201.01 of the SEC's Codification
of Financial Reporting Policies. Simmons has agreed to make the required public
disclosure of financial results as set out above as soon as feasible after the
Merger is consummated. In addition, I hereby represent and warrant to Simmons
that I have not made any sales of NBCBC or Simmons common stock during the
30-day period immediately preceding the date hereof and I further agree not to
engage in any such sales prior to the Merger, nor have I pledged or will I
pledge any Simmons or NBCBC common stock to secure any obligation during such
period (other than the continuation of any pledge existing as of the date
hereof).
I represent and warrant to Simmons that:
1. I have carefully read this letter and discussed its requirements and
other applicable limitations upon the sale, transfer or other disposition of the
Shares, to the extent I felt necessary, with my counsel or counsel for NBCBC.
2. I have been informed by Simmons that any distribution by me of the
Shares has not been registered under the Act and that the Shares must be held by
me indefinitely until (i) such distribution of the Shares has been registered
under the Act, (ii) a sale of the Shares is made in conformity with the volume
and other limitations of Rule 145 promulgated by the SEC under the Act, or (iii)
some other exemption from registration is available with respect to any such
proposed sale, transfer or other disposition of the Shares.
3. I have been informed by Simmons that it is required to file periodic
reports with the SEC and the NASDAQ and that certain sales of the Shares by me
may not be required to be registered under the Act by virtue of Rule 145
promulgated by the SEC under the Act, provided that such sales are made in
accordance with all of the terms and conditions of such Rules, including among
other things the following:
<PAGE>
(a) The amount of Simmons Common Stock sold by me pursuant to
Rule 145 during any period of three months cannot exceed the greater of (i) one
percent of the total outstanding Simmons Common Stock or (ii) the average
reported weekly trading volume on NASDAQ during the four week period immediately
preceding receipt of the order by the broker to execute the transaction. In
computing the foregoing quantity limit it is necessary to count sales not only
by me but also by certain immediate family members and other related persons and
others with whom I may act in concert.
(b) Sales must be made in brokers' transactions as
defined by the SEC Rule 144 (certain provisions of which are incorporated by
reference into Rule 145).
(c) No sales may be made under the Rule unless Simmons
has filed all SEC reports required to be filed by Simmons.
4. I understand that Simmons is under no obligation to register the
sale, transfer or other disposition of the Shares by me or on my behalf.
5. I understand and agree that stop transfer instruction will be issued
with respect to the Shares and there will be placed on the certificates
representing such Shares, or any certificate delivered in substitution therefor,
a legend stating in substance:
AThe shares represented by this Certificate have been issued to the
registered holder as a result of a transaction to which Rule 145 under
the Securities Act of 1933, as amended, (the A1933 Act") applies. The
shares represented by this certificate may not be sold, transferred or
assigned, and the issuer shall not be required to give effect to any
attempted sale, transfer or assignment, except pursuant to (i) a
registration statement then in effect under the 1933 Act, (ii) a
transaction permitted by Rule 145 as to which the issuer has received
evidence of compliance with the provisions of said Rule 145 reasonably
satisfactory to it or (iii) a transaction which, in the opinion of
counsel for the Affiliate or as described in a Ano-action" or
interpretive letter from the staff of the Securities and Exchange
Commission, in each case reasonably satisfactory in form and substance
to the issuer, is exempt from the registration requirements of the 1933
Act. The restrictions of this paragraph shall become null and void and
this paragraph shall have no effect on and after [date 2 years after
merger closing].@
6. I have been informed by Simmons that if I propose to sell to any of
these Shares pursuant to Rule 145, and if such sale would be permitted under the
terms of this letter, Simmons will, upon my written request, supply me with the
following:
(a) A statement as to whether Simmons has complied with the provisions of
Rule 145 regarding filing of SEC reports as a condition to sales made pursuant
to that Rule;
(b) A confirmation as to the number of shares of Simmons Common Stock
outstanding as shown by the most recent report or statement published by it; and
(c) Simmons' taxpayer identification number and SEC file number.
I have carefully read this letter and have had an adequate opportunity
to review the Merger Agreement and understand the requirements and the
limitations imposed upon the distribution, sale, transfer, or other disposition
of NBCBC common stock or Shares of Simmons.
Sincerely,
