As filed with the Securities and Exchange Commission on
December 9, 1994
Registration No. 33-_____
- ---------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
Registration Statement Under the Securities Act of 1933
FOURTH FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
KANSAS 48-0761683
(State or other jurisdiction (I.R.S. Employer Identi-
of incorporation) fication Number)
6021
(Primary Standard Industrial Classification Code Number)
100 North Broadway
Wichita, Kansas 67202
316/292-5339
(Address, Including ZIP Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive
Offices)
WILLIAM J. RAINEY
Fourth Financial Corporation
Post Office Box 4, 100 North Broadway
Wichita, Kansas 67201
316/292-5339
(Name, Address, Including ZIP Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
BENJAMIN C. LANGEL ROBERT J. ROUTH
Foulston & Siefkin Knudsen,Berkheimer,
Richardson & Endacott
700 Fourth Financial Center 1000 NBC Center
Wichita, Kansas 67202 Lincoln, Nebraska 68508-1474
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE
SECURITIES TO THE PUBLIC: As soon as practicable after this
Registration Statement becomes effective.
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. [ ]
CALCULATION OF REGISTRATION FEE
======================================================================================
Title of each class Amount to be Proposed maximum Proposed maximum Amount of reg-
of securities to be registered (1) offering price aggregate offering istration fee
registered per unit (2) price (2)
___________________________________________________________________________________________
Common Stock, 317,730 shares $12.55 $3,988,837 $1,376.00
$5 Par Value
============================================================================================
<FN>
(1) Maximum number of shares to be issued.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) based on the
book value at November 30, 1994 of the common stock and preferred stock of Standard Bancorporation,
Inc. being canceled in the transaction, less the estimated amount of cash to be paid by Registrant in lieu of
issuing fractional shares.
------------------------
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 this Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
FOURTH FINANCIAL CORPORATION
Cross Reference Sheet
Required by Item 501(b) of Regulation S-K
Item in Location or Heading
Form S-4 Caption in Prospectus
- -------- ------- -------------------
1. Forepart of Registration State-
ment and Outside Front Cover Page
of Prospectus . . . . . . . . . . Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . Inside Front Cover Page
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other Infor-
mation . . . . . . . . . . . . . Summary
4. Terms of the Transaction . . . . The Agreement and
Proposed Merger
5. Pro Forma Financial Information. . Pro Forma Financial
Statements
6. Material Contacts with the Company
Being Acquired . . . . . . . . . The Agreement and
Proposed Merger --
Background and Reasons
for the SBI Merger;
Recommendation of the
SBI Board of Directors;
-- Interests of Certain
Persons in the SBI
Merger, -- Management
after the SBI Merger
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Underwriters. Not Applicable
8. Interests of Named Experts and
Counsel . . . . . . . . . . . . . Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . Not Applicable
10. Information with Respect to S-3
Registrants . . . . . . . . . . . Information Concerning
Fourth Financial;
Financial Statements and
Related Information
11. Incorporation of Certain Information
by Reference . . . . . . . . . . Information Incorporated
by Reference
12. Information with Respect to S-2 or
S-3 Registrants . . . . . . . . . Not Applicable
13. Incorporation of Certain Information
by Reference . . . . . . . . . . Not Applicable
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants . . . . . . . . . . . Not Applicable
15. Information with Respect to S-3
Companies . . . . . . . . . . . . Not Applicable
16. Information with Respect to S-2
or S-3 Companies . . . . . . . . Not Applicable
17. Information with Respect to Companies
Other than S-3 or S-2 Companies. . Selected Financial Data;
The Special Meeting;
Information Concerning
SBI and the Bank; Price
Range of and Dividends
on Fourth Stock and SBI
Stock; Financial
Statements and Related
Information
18. Information if Proxies, Consents
or Authorizations are to be
Solicited. . . . . . . . . . . . . Cover Page; Summary; The
Special Meeting;
Information Incorporated
by Reference; The
Agreement and Proposed
Merger -- Interests of
Certain Persons in the
SBI Merger, -- Appraisal
Rights of Dissenting SBI
Stockholders, --
Expenses; Deadline for
Submission of Fourth
Financial Stockholders'
Proposals for the 1995
Annual Meeting of
Stockholders
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer . . . . . . . . . . . . . . Not Applicable
Standard Bancorporation, Inc.
10725 Independence Avenue
Independence, Missouri 64054
December __, 1994
Dear Stockholder:
You are cordially invited to attend a special meeting of the
stockholders of Standard Bancorporation, Inc. ("SBI") to be held at the
offices of Standard Bank and Trust at 10725 Independence Avenue,
Independence, Missouri, on January __, 1995, at 10:00 a.m., Central
Standard Time.
At the meeting, stockholders will be asked to approve and adopt an
Agreement and Plan of Reorganization, dated as of September 2, 1994 (as
amended December 7, 1994, the "Agreement"), among SBI, Fourth Financial
Corporation ("Fourth Financial"), and all of the stockholders of SBI
including Chris J. Murphy and a related Agreement and Articles of Merger
between SBI and Fourth Financial (the "SBI Merger Agreement"). The
Agreement and the SBI Merger Agreement provide for, among other things,
the merger of SBI into Fourth Financial (the "SBI Merger"), the conversion
of Standard Bank and Trust (the "Bank") into a national banking
association to be called "BANK IV Missouri, National Association", and the
conversion of each of the presently outstanding shares of capital stock of
SBI into the right to receive shares of common stock, par value $5 per
share, of Fourth Financial ("Fourth Stock") as follows:
Number of Shares of
Fourth Stock to be Issued
Class of SBI Capital Stock if Closing is
-------------------------- -------------------------
On or before After
2/15/95 2/15/95
------- --------
Class A Voting Common Stock ............... 53.9974 54.4654
Class B Non-voting Common Stock ........... 53.9971 54.4654
Preferred Stock ........................... 3.4487 3.4786
The Board of Directors of SBI has carefully reviewed and considered the
terms and conditions of the Agreement and the SBI Merger Agreement. THE
BOARD OF DIRECTORS OF SBI HAS CONCLUDED THAT THE PROPOSED TRANSACTIONS ARE
IN THE BEST INTERESTS OF THE STOCKHOLDERS OF SBI AND RECOMMENDS THAT SBI
STOCKHOLDERS VOTE "FOR" THE AGREEMENT AND THE SBI MERGER AGREEMENT.
The accompanying Notice of Special Meeting of Stockholders and Proxy
Statement-Prospectus and the attached Form 10-K and Form 10-Q of Fourth
Financial contain a detailed description of these transactions and other
important information relating to Fourth Financial, SBI, the Bank, and the
combined companies. If the SBI Merger becomes effective, stockholders
will be instructed promptly as to the procedures to be followed in
exchanging their stock certificates for certificates of Fourth Stock.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
We urge you to review the enclosed materials carefully and to date,
sign, and return to SBI the accompanying Proxy in the enclosed envelope as
soon as possible so that your shares will be represented at the Special
Meeting. Sending in your Proxy now will not interfere with your rights to
attend the meeting or to vote your shares personally at the meeting if you
wish to do so.
Sincerely,
Chairman of the Board
Standard Bancorporation, Inc.
10725 Independence Avenue
Independence, Missouri 64054
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held January __, 1995
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of
Standard Bancorporation, Inc., a Nebraska corporation ("SBI"), will be held
at the offices of Standard Bank and Trust, 10725 Independence Avenue,
Independence, Missouri on January __, 1995, at 10:00 a.m., Central Standard
Time, for the following purposes:
1. To approve and adopt an Agreement and Plan of Reorganization,
dated as of September 2, 1994 (as amended December 7, 1994, the
"Agreement"), among SBI, Fourth Financial Corporation, a Kansas
corporation ("Fourth Financial"), and all of the stockholders of SBI,
including Chris J. Murphy, a related Agreement and Articles of Merger
between SBI and Fourth Financial (the "SBI Merger Agreement"), and the
transactions contemplated by the Agreement and the SBI Merger Agreement,
all as more fully described below and in the attached Proxy
Statement-Prospectus; and
2. To transact any other business that may properly come before the
Special Meeting.
As more fully described in the Agreement and the attached Proxy Statement-
Prospectus, the Agreement and the SBI Merger Agreement, copies of which are
attached as Annex I to the attached Proxy Statement-Prospectus, provide for,
among other things, (i) the merger of SBI into Fourth Financial (the "SBI
Merger"), and (ii) the conversion of each of the then outstanding shares of
each class of capital stock of SBI into the right to receive shares of common
stock, par value $5 per share, of Fourth Financial ("Fourth Stock") as
follows:
Number of Shares of
Fourth Stock to be Issued
Class of SBI Capital Stock if Closing is
-------------------------- -------------------------
On or before After
2/15/95 2/15/95
------- -------
Class A Voting Common Stock................. 53.9974 54.4654
Class B Non-voting Common Stock............. 53.9971 54.4654
Preferred Stock ............................ 3.4487 3.4786
All rights of holders of SBI Preferred Stock to receive accrued but unpaid
dividends will be extinguished in the SBI Merger.
In order to approve the Agreement and the SBI Merger Agreement, the
affirmative vote of the holders of at least two-thirds of each class of SBI
capital stock is required.
Only stockholders of record at the close of business on December __, 1994,
are entitled to notice of and to vote at the meeting and any adjournments
thereof.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO DATE, SIGN,
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS SOON AS
POSSIBLE. Sending in your proxy now will not interfere with your rights to
attend the meeting or to vote your shares personally at the meeting if you
wish to do so.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors.
Independence, Missouri _________________________
December __, 1994 W. Grant Gregory
Chairman of the Board
PLEASE DO NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
PROSPECTUS
317,730 SHARES
FOURTH FINANCIAL CORPORATION
Common Stock, $5 Par Value
____________________
Standard Bancorporation, Inc.
PROXY STATEMENT
This Proxy Statement-Prospectus is being furnished in connection with the
solicitation of proxies by the Board of Directors of Standard Bancorporation,
Inc., a Nebraska corporation ("SBI"), in connection with a Special Meeting
of Stockholders of SBI (the "Special Meeting") to be held at 10:00 a.m. on
January __, 1995, at the offices of Standard Bank and Trust ("Standard" or
the "Bank") at 10725 Independence Avenue, Independence, Missouri, and all
adjournments or postponements thereof.
At the Special Meeting, the stockholders of SBI will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of
Reorganization, dated as of September 2, 1994, among Fourth Financial
Corporation, a Kansas corporation ("Fourth Financial"), SBI, and all the
stockholders of SBI, including Chris J. Murphy (as amended as of December 7,
1994, the "Agreement"). The stockholders of SBI will also vote on a related
Agreement and Articles of Merger (the "SBI Merger Agreement") pursuant to
which SBI would be merged into Fourth Financial (the "SBI Merger").
A copy of the Agreement as amended, with Exhibits "A" and "D", is attached
to this Proxy Statement-Prospectus as Annex I. A copy of the SBI Merger
Agreement is attached to the Agreement as Exhibit "A".
This Proxy Statement-Prospectus also pertains to the maximum of 317,730
shares of common stock, par value $5 per share, of Fourth Financial ("Fourth
Stock"), expected to be issued in connection with the SBI Merger.
Fourth Financial has filed a Registration Statement on Form S-4 (including
all exhibits and amendments thereto, the "Registration Statement") with the
Securities and Exchange Commission ("Commission") pursuant to the Securities
Act of 1933, as amended, covering the shares of Fourth Stock to be issued in
connection with the SBI Merger. This Proxy Statement-Prospectus constitutes
both the Proxy Statement of SBI relating to the solicitation of proxies for
use at the Special Meeting and the Fourth Financial Prospectus filed as part
of the Registration Statement. All information contained herein with respect
to Fourth Financial and its subsidiaries has been provided by Fourth
Financial and all information herein with respect to SBI and the Bank has
been provided by SBI. See "AVAILABLE INFORMATION".
This Proxy Statement-Prospectus is first being sent to stockholders of SBI
on or about December __, 1994.
The last reported sale price of Fourth Stock as reported on the NASDAQ
National Market System on December _, 1994, was $__ per share.
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT-PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement-Prospectus is December __, 1994.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus in connection
with the matters contained in this Proxy Statement-Prospectus, and, if given
or made, such information should not be relied upon. This Proxy
Statement-Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities other than the Fourth Stock offered
hereby. This Proxy Statement-Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, the securities offered hereby,
or the solicitation of a proxy, in any jurisdiction to or from any person to
or from whom it is unlawful to make such offer, or solicitation of an offer,
or proxy solicitation in such jurisdiction. Neither the delivery of this
Proxy Statement-Prospectus nor any distribution of the securities offered
pursuant to this Proxy Statement-Prospectus shall, under any circumstances,
create an implication that there has been no change in the affairs of Fourth
Financial or SBI since the date of this Proxy Statement-Prospectus.
------------------
AVAILABLE INFORMATION
This Proxy Statement-Prospectus does not contain all of the information
set forth in the Registration Statement and exhibits thereto which Fourth
Financial has filed with the Commission under the Securities Act of 1933 and
to which reference is hereby made. Fourth Financial is subject to the
informational requirements of the Securities Exchange Act of 1934 and, in
accordance therewith, files reports, proxy statements, and other information
with the Commission. The Registration Statement, including the exhibits
thereto, as well as such reports, proxy statements, and other information
filed by Fourth Financial can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and at
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60621-2511 except that copies of the exhibits may not be available at certain
of the Regional Offices. Copies of such material can be obtained by mail
from the Public Reference Section of the Commission, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST. COPIES OF THESE DOCUMENTS (NOT INCLUDING EXHIBITS
TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE) WILL
BE PROVIDED WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER,
TO WHOM A PROXY STATEMENT-PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST OF WILLIAM J. RAINEY, SECRETARY, FOURTH FINANCIAL CORPORATION, P.O.
BOX 4, 100 NORTH BROADWAY, WICHITA, KANSAS 67201 (TELEPHONE NUMBER
316-292-5339). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY JANUARY __, 1995.
SUMMARY
The following is a brief summary of certain information with respect to
matters to be considered at the Special Meeting. This summary is necessarily
incomplete and is qualified in its entirety by the more detailed information
and financial statements and notes thereto appearing elsewhere in this Proxy
Statement-Prospectus and in the Annexes, the documents accompanying this
Proxy Statement-Prospectus, and the documents referred to herein, to which
reference is made for a complete statement of the matters discussed below.
The Companies
Fourth Financial
Fourth Financial Corporation ("Fourth Financial"), a Kansas corporation,
is the largest bank holding company headquartered in Kansas, based on both
assets and deposits, and, at September 30 1994, had total consolidated assets
of $7.5 billion, total deposits of $5.7 billion, and stockholders' equity of
$597.4 million. Fourth Financial, headquartered in Wichita, Kansas, offers
a broad range of bank and bank-related services through its subsidiaries,
BANK IV Kansas, National Association ("BANK IV Kansas") and BANK IV Oklahoma,
National Association ("BANK IV Oklahoma"). BANK IV Kansas is the largest
bank in Kansas and BANK IV Oklahoma is the second-largest bank in Oklahoma.
Fourth Financial's principal executive offices are located at 100 North
Broadway, P.O. Box 4, Wichita, Kansas 67201; its telephone number is (316)
292-5339. See "Information Concerning Fourth Financial."
SBI
Standard Bancorporation, Inc. ("SBI") is a bank holding company
incorporated under the laws of the State of Nebraska. Its principal asset
is its subsidiary, Standard Bank and Trust. At September 30, 1994, SBI had
consolidated total assets of $80.7 million, total deposits of $73.0 million,
and stockholders' equity of $3.9 million. SBI's principal executive offices
are located at 10725 Independence Avenue, Independence, Missouri 64054. Its
telephone number is (816) 836-0200. See "Information Concerning SBI and the
Bank."
The Bank
Standard Bank and Trust ("Standard" or the "Bank") is a banking
corporation chartered under the laws of Missouri. The Bank's principal
executive offices are located at 10725 Independence Avenue, Independence,
Missouri 64054. The Bank operates two branches in Independence, Missouri.
Its telephone number is (816) 836-0200. See "Information Concerning SBI and
the Bank."
The Special Meeting
Times, Date, and Place
The Special Meeting of Stockholders of SBI (the "Special Meeting") will
be held on January __, 1995, at 10:00 a.m., Central Standard Time, at the
offices of the Bank at 10725 Independence Avenue, Independence, Missouri.
See "The Special Meeting".
Purpose of the Special Meeting
The Special Meeting has been called to consider and vote upon a proposal
to approve and adopt an Agreement and Plan of Reorganization, dated as of
September 2, 1994 (as amended as of December 7, 1994, the "Agreement"), among
SBI, Fourth Financial, and all of the stockholders of SBI, including Chris
J. Murphy and the related Agreement and Articles of Merger between SBI and
Fourth Financial (the "SBI Merger Agreement"), which provide for the merger
of SBI into Fourth Financial (the "SBI Merger") and the conversion of the
Bank into a national banking association called "BANK IV Missouri, National
Association".
Vote Required for the SBI Merger
The affirmative vote of the holders of at least two thirds of each class
of capital stock of SBI is required to approve the Agreement and the SBI
Merger Agreement. As of December __, 1994, the issued and outstanding
capital stock of SBI consisted of 2,340 shares of Class A Voting Common
Stock, par value $1 per share ("Class A Common Stock"), 3,120 shares of Class
B Non-voting Common Stock, par value $1 per share ("Class B Common Stock"),
and 5,850 shares of 9% Cumulative Preferred Stock, par value $100 per share
("Preferred Stock"). The Class A Common Stock, Class B Common Stock, and
Preferred Stock are sometimes referred to herein collectively as "SBI Stock".
All of the stockholders of SBI and Chris J. Murphy (collectively the
"Stockholders") have agreed to vote all of their shares of SBI Stock in favor
of the Agreement and the SBI Merger Agreement. As of the date hereof,
directors and executive officers of SBI and their affiliates beneficially
owned all of the issued and outstanding capital stock of all classes of SBI.
No executive officer or director of Fourth Financial or any of their
affiliates beneficially owns any SBI Stock.
No Appraisal Rights
The stockholders of SBI have no right under Nebraska law to dissent from
the SBI Merger and have their shares of SBI Stock appraised and to receive
cash payment for the fair value of such shares.
The SBI Merger
Terms of the SBI Merger
The stockholders of SBI are being asked to approve and adopt the Agreement
which provides for Fourth Financial to acquire 100% of the issued and
outstanding capital stock of SBI in exchange for shares of Fourth Financial
common stock, par value $5.00 per share ("Fourth Stock"), to be issued in the
SBI Merger.
Subject to the terms, conditions, and procedures set forth in the
Agreement, each share of each class of SBI Stock will be converted into the
right to receive shares of Fourth Stock as follows:
Number of Shares of
Fourth Stock to be Issued
Class of SBI Capital Stock if Closing is
-------------------------- -------------------------
On or before After
2/15/95 2/15/95
-------- ---------
Class A Common Stock ..................... 53.9974 54.4654
Class B Common Stock ..................... 53.9971 54.4654
Preferred Stock .......................... 3.4487 3.4786
Certain Federal Income Tax Consequences
Knudsen, Berkheimer, Richardson & Endacott, special counsel to SBI, has
delivered its opinion to SBI and the Stockholders to the effect that,
assuming the SBI Merger occurs in accordance with the SBI Merger Agreement
and conditioned on the accuracy of certain representations made by Fourth
Financial and SBI, the SBI Merger will constitute a "reorganization" for
federal income tax purposes and that, accordingly, no gain or loss will be
recognized by SBI stockholders who exchange their shares of SBI Stock solely
for shares of Fourth Stock in the SBI Merger. However, the receipt of cash
in lieu of fractional shares may give rise to taxable gain or loss. Each SBI
stockholder is urged to consult his own tax advisor to determine the specific
tax consequences of the SBI Merger to him, including the applicability of
various state, local, and foreign tax laws. See "The Agreement and Proposed
Merger -- Certain Federal Income Tax Consequences."
Regulatory Approvals
The approvals of the Comptroller of the Currency ("OCC") and the Board of
Governors of the Federal Reserve System (the "Board") and the Missouri
Division of Finance are required in order to effect the SBI Merger.
Applications for such approvals have been filed. A 15-day statutory waiting
period for antitrust review by the United States Department of Justice
follows OCC approval. A community coalition based in Wichita, Kansas has
filed a protest with the Board and the OCC claiming that the pending
applications should be denied because the record of community service of BANK
IV Kansas in its Wichita market is allegedly unsatisfactory. BANK IV Kansas
and Fourth Financial have filed a response to the protest denying the
coalition's assertions. Fourth Financial expects that the OCC, the Board,
and the Missouri Division of Finance will approve the pending applications.
Recommendation of Board of Directors of SBI
The Board of Directors of SBI has unanimously concluded that the SBI
Merger is in the best interests of the SBI stockholders and recommends that
SBI stockholders vote FOR approval of the Agreement and the SBI Merger
Agreement. The directors and executive officers of SBI, who beneficially own
all of the issued and outstanding SBI Stock of all classes, have all agreed
to vote all of their shares of SBI Stock in favor of the Agreement and the
SBI Merger Agreement. See "The Agreement and Proposed Merger--Background and
Reasons for Merger; Recommendation of the SBI Board of Directors."
Accounting Treatment
It is anticipated that the SBI Merger will be treated as a pooling of
interests for accounting and financial reporting purposes.
SELECTED FINANCIAL DATA
Fourth Financial Corporation
Nine Months Ended Year Ended
September 30, December 31,
---------------------- --------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(In thousands, except per share data)
(1) (1) (1) (1) (1) (1)
Interest income . . . . . . . . . . $ 352,158 $ 331,299 $ 443,913 $ 438,888 $ 492,036 $ 482,193 $ 414,080
Net interest income . . . . . . . . 206,457 196,459 264,411 241,357 213,755 183,123 164,309
Provision for credit losses . . . . 275 6,326 6,965 21,358 43,926 49,527 28,326
Net income. . . . . . . . . . . . . 61,065 56,663 77,292 65,200 33,163 9,204 21,393
Net income applicable to common
and common-equivalent shares . . . 55,815 51,413 70,292 59,249 33,163 9,204 21,393
Period-end assets . . . . . . . . . 7,547,903 6,967,902 6,886,063 6,712,696 5,790,555 5,899,188 4,783,022
Period-end long-term debt . . . . . 5,099 21,136 20,283 36,072 53,348 23,887 32,737
Per common share data:
Primary earnings per common share:
Before extraordinary items and
cumulative effect of change
in accounting principle . . . 2.07 1.56 2.27 2.19 1.27 .23 .98
Extraordinary items and
cumulative effect of a change
in accounting principle. . . . -- .40 .40 .10 .06 .17 --
Applicable to common and
common-equivalent shares . . . 2.07 1.96 2.67 2.29 1.33 .40 .98
Fully diluted earnings per
common share:
Before extraordinary items and
cumulative effect of change
in accounting principle. . . . 2.01 1.52 2.20 2.13 1.24 .23 .98
Extraordinary items and
cumulative effect of a change
in accounting principle. . . . -- .35 .35 .08 .06 .17 --
Net income. . . . . . . . . . . 2.01 1.87 2.55 2.21 1.30 .40 .98
Common dividend (2) . . . . . . . .78 .72 .98 .88 .88 .88 .82
Book value at period-end. . . . . 18.51 17.82 18.73 16.65 15.29 14.68 15.31
<FN>
(1) Notes 2 and 3 of the Notes to the Fourth Financial 1993 and 1992 Consolidated Financial Statements
describe the business combinations and deposit assumption transactions completed during 1993, 1992, and
1991. Note 2 of the Notes to the Fourth Financial Consolidated Financial Statements for the period
ended September 30, 1994 describes the business combinations consummated during 1994 through September
30, 1994. Prior year financial statements have been restated to reflect poolings of interests
consummated through September 30, 1994. During 1990, Fourth Financial assumed core deposits totaling
$937.1 million and purchased loans totaling $244.8 million.
(2) Historical dividends declared without adjustment for poolings of interests.
Market value of Fourth Stock
on day preceding announcement
of proposed merger
(September 7, 1994) . . . . . . $30.25 per share
SELECTED FINANCIAL DATA (Cont'd.)
Standard Bancorporation, Inc. (1)
Nine Months Ended Year Ended
September 30, December 31,
--------------------- --------------------
1994 1993 1993 1992
---- ---- ---- ----
(In thousands, except per share data)
Interest income . . . . . . . . . . $ 4,208 $ 4,160 $ 5,552 $ 5,807
Net interest income . . . . . . . . 2,716 2,715 3,649 3,485
Provision for credit losses . . . . 65 72 72 75
Net income. . . . . . . . . . . . . 562 542 818 717
Net income applicable to
common stock . . . . . . . . . . . 523 502 765 664
Period-end assets . . . . . . . . . 80,686 78,138 80,366 81,185
Period-end long-term debt . . . . . 3,077 3,077 3,077 3,357
Per common share data:
Earnings per common share . . . . 95.73 92.00 140.16 121.59
Common dividend . . . . . . . . . -- -- -- --
Book value at period-end. . . . . 609.76 486.48 537.04 387.24
<FN>
(1) SBI's business began on December 15, 1991 and its wholly-owned subsidiary, Standard, formed when it acquired
certain assets and assumed certain liabilities of a predecessor bank.
Market value of SBI common stock
on day preceding announcement of
proposed merger (September 7, 1994)
Historical. . . . . . . . . . . . . No quoted market price
Equivalent. . . . . . . . . . . . . $1,647.57
COMPARATIVE PER SHARE DATA
APPLICABLE TO SBI COMMON SHAREHOLDERS
Pro Forma Fourth Financial, Recent Acquisitions, and SBI
Nine Months Ended Year Ended December 31,
----------------- -----------------------
September 30, 1994 1993 1992
------------------ ----------------------
Primary earnings before extraordinary
items and change in accounting principle:
Fourth Financial historical. . . . . . . . . . . $ 2.07 $ 2.27 $ 2.19
Fourth Financial pro forma (1). . . . . . . . . . 2.08 2.35 2.20
SBI historical. . . . . . . . . . . . . . . . . . 95.73 140.16 121.59
SBI pro forma (2) . . . . . . . . . . . . . . . . 113.29 127.99 119.82
Fully diluted earnings before extraordinary
items and change in accounting principle:
Fourth Financial historical. . . . . . . . . . . $ 2.01 $ 2.20 $ 2.13
Fourth Financial pro forma (1). . . . . . . . . . 2.02 2.28 2.14
SBI historical. . . . . . . . . . . . . . . . . . 95.73 140.16 121.59
SBI pro forma (2) . . . . . . . . . . . . . . . . 110.02 124.18 116.56
Common dividends:
Fourth Financial historical . . . . . . . . . . $ .78 $ .98 $ .88
SBI historical. . . . . . . . . . . . . . . . . . -- -- --
Historical pro forma equivalent (3) . . . . . . . 42.48 53.38 47.93
Book value per share of common stock:
Fourth Financial historical . . . . . . . . . . . $18.51 $18.73
Fourth Financial pro forma (1). . . . . . . . . . 18.44 18.65
SBI historical. . . . . . . . . . . . . . . . . . 609.76 537.04
SBI pro forma (2) . . . . . . . . . . . . . . . . 1,004.33 1,015.77
<FN>
__________________
(1) Pro forma data includes the combination of Fourth Financial, Equity Bank for Savings, F.A.
("Equity"), Emprise Bank, National Association ("Emprise"), and SBI. See "Pro Forma Financial
Statements."
(2) Pro forma data multiplied by the 54.465 shares of Fourth Stock expected to be received for each
share of SBI common stock.
(3) Fourth Financial historical dividends multiplied by the 54.465 shares of Fourth Stock expected
to be received for each share of SBI common stock.
COMPARATIVE PER SHARE DATA
APPLICABLE TO SBI COMMON SHAREHOLDERS
Pro Forma Fourth Financial, Recent Acquisitions, SBI, and Pending Acquisitions
Nine Months Ended Year Ended
----------------- ----------
September 30, 1994 December 31, 1993
------------------ -----------------
Primary earnings before extraordinary
items and change in accounting principle:
Fourth Financial historical. . . . . . . . . . . $ 2.07 $ 2.27
Fourth Financial pro forma (1). . . . . . . . . . 2.11 2.35
SBI historical. . . . . . . . . . . . . . . . . . 95.73 140.16
SBI pro forma (2) . . . . . . . . . . . . . . . . 114.92 127.99
Fully diluted earnings before extraordinary
items and change in accounting principle:
Fourth Financial historical. . . . . . . . . . . $ 2.01 $ 2.20
Fourth Financial pro forma (1). . . . . . . . . . 2.05 2.28
SBI historical. . . . . . . . . . . . . . . . . . 95.73 140.16
SBI pro forma (2) . . . . . . . . . . . . . . . . 111.65 124.18
Common dividends:
Fourth Financial historical . . . . . . . . . . $ .78 $ .98
SBI historical. . . . . . . . . . . . . . . . . . -- --
Historical pro forma equivalent (3) . . . . . . . 42.48 53.38
Book value per share of common stock:
Fourth Financial historical . . . . . . . . . . . $18.51 $18.73
Fourth Financial pro forma (1). . . . . . . . . . 18.58 18.91
SBI historical. . . . . . . . . . . . . . . . . . 609.76 537.04
SBI pro forma (2) . . . . . . . . . . . . . . . . 1,011.96 1,029.93
<FN>
__________________
(1) Pro forma data includes the combination of Fourth Financial, Equity, Emprise, SBI, and the pending
acquisitions of Blackwell Security Banchares, Inc. ("BSB") and Oklahoma Savings, Inc. ("OSI").
See "Financial Statements and Related Information."
(2) Pro forma data multiplied by the 54.465 shares of Fourth Stock expected to be received for each
share of SBI common stock.
(3) Fourth Financial historical dividends multiplied by the 54.465 shares of Fourth Stock expected
to be received for each share of SBI common stock.
THE SPECIAL MEETING
General
This Proxy Statement-Prospectus is being furnished to
holders of SBI Stock in connection with the solicitation of
proxies by the SBI Board of Directors for use at the
Special Meeting to be held on January __, 1995, and any
adjournments or postponements thereof. At the Special
Meeting, the stockholders of SBI will be asked to consider
and vote upon the approval and adoption of the Agreement
and the SBI Merger Agreement and the transactions
contemplated thereby, and to transact such other business
as may properly come before the Special Meeting or any
adjournments or postponements thereof.
Voting and Revocation of Proxies
Only SBI stockholders of record at the close of
business on December __, 1994, will be entitled to notice
of or to vote at the Special Meeting or any adjournments
thereof. At the close of business on such date, there were
5,850 shares of Preferred Stock, 2,340 shares of Class A
Common Stock, and 3,120 shares of Class B Common Stock
outstanding.
As of December __, 1994, there were three record
holders of Class A Common Stock, three record holders of
Class B Common Stock, and three record holders of Preferred
Stock. The holders of SBI Stock are all entitled to one
vote per share at the Special Meeting.
The affirmative vote by the holders of at least two-
thirds of each class of the issued and outstanding SBI
Stock is required to approve the Agreement and the SBI
Merger Agreement. Approval and adoption of the Agreement
and the SBI Merger Agreement and the related transactions
are being submitted as a single proposal at the Special
Meeting and may not be voted upon other than as a single
proposal.
All of the Stockholders have agreed in the Agreement to
vote all of their shares of SBI Stock in favor of the
Agreement and the SBI Merger Agreement, so approval at the
meeting is assured.
Shares represented by properly executed proxies will,
unless such proxies have been revoked, be voted at the
Special Meeting in accordance with the instructions
indicated on such proxies. In the absence of instructions
to the contrary, such shares will be voted FOR approval and
adoption of the Agreement and the related SBI Merger
Agreement, and in the discretion of the proxy holders as to
any other matter which may properly come before the Special
Meeting. SBI does not anticipate that any other matters
will come before the Special Meeting.
A majority of the outstanding SBI Stock entitled to
vote at the Special Meeting present in person or by proxy
will constitute a quorum for the transaction of business at
the Special Meeting.
Failure to return a properly executed proxy or to vote
in person at the Special Meeting, and abstentions will all
have the practical effect of a vote against the Agreement
and the SBI Merger Agreement.
A stockholder who has given a proxy may revoke it at
any time prior to its exercise at the Special Meeting by
giving written notice of revocation, giving a duly executed
proxy bearing a later date to the Secretary of SBI, or
revoking the proxy and voting in person at the Special
Meeting. Attendance at the Special Meeting will not in and
of itself constitute a revocation of a proxy.
THE AGREEMENT AND PROPOSED MERGER
General
The descriptions of the Agreement and the SBI Merger
Agreement contained in this Proxy Statement-Prospectus are
qualified in their entirety by reference to such
agreements, the full texts of which are contained in Annex
I to this Proxy Statement-Prospectus and are incorporated
herein by reference.
The Agreement and the SBI Merger Agreement have been
approved by the Boards of Directors of Fourth Financial and
SBI. Although approval of the Agreement and the SBI Merger
Agreement by the stockholders of SBI is required, Fourth
Financial does not need to obtain approval of its
stockholders to consummate the Agreement and the SBI Merger
Agreement.
The Agreement provides for the merger of SBI into
Fourth Financial and the conversion of the Bank into a
national bank called "BANK IV Missouri, National
Association." Upon consummation of the SBI Merger, SBI
will cease to exist separately. The time and date on which
the SBI Merger will be consummated is referred to herein
and in the Agreement as the "Effective Time".
Background and Reasons for the SBI Merger; Recommendation
of the SBI Board of Directors
Senior management officials of Fourth Financial first
began discussing the possible acquisition of SBI with the
stockholders of SBI ("Stockholders") in February, 1994. A
period of negotiations between SBI and Fourth Financial
followed, and on July 28, 1994, Fourth Financial and the
stockholders entered into a letter of intent. On September
2, 1994, the parties, including Chris J. Murphy, who has a
contractual right to acquire Mr. Harper's SBI Stock,
entered into the Agreement. The Agreement was amended as
of December 7, 1994, to extend the deadline for closing
from January 31, 1995 to February 28, 1995 and to provide
for the issuance in the SBI Merger of an additional 2,730
shares of Fourth Stock if the Effective Time is after
February 15, 1995.
In deciding to enter into the Agreement, the
Board of Directors of SBI, after considering various
alternatives and the outlook for independent banks in
Missouri, concluded that the Agreement was in the best
interests of SBI and Standard and SBI's stockholders
because it will permit stockholders to exchange on
favorable terms their ownership interest in SBI for
participation in the ownership of a substantially larger
enterprise operating a multistate banking system.
The Board of Directors also concluded that the
stockholders of SBI would benefit additionally from the SBI
Merger in that they would obtain greater liquidity in their
investment by obtaining shares of stock of a corporation
whose securities are more widely held and are publicly
traded.
Among the factors considered by the Board of Directors
of SBI in deciding to approve and recommend the terms of
the Agreement were the respective earnings and dividend
records, financial conditions, historical stock prices,
managements, and assets and liabilities of SBI and
Standard, on the one hand, and of Fourth Financial, on the
other hand, the position of each in the banking industry,
and the outlook for each in the banking industry.
The Board of Directors of Fourth Financial approved
the Agreement because it believes the acquisition by Fourth
Financial of a financial institution serving the
Independence, Missouri market is in the best interests of
Fourth Financial and its stockholders.
The Board of Directors of SBI has unanimously approved
the Agreement and the transactions contemplated thereby and
recommends that SBI stockholders vote FOR approval and
adoption of the Agreement and the related SBI Merger
Agreement.
Exchange Ratios
Upon consummation of the SBI Merger, all of the shares
of SBI Stock outstanding at the time the SBI Merger is
effected will cease to exist, and each share of SBI Stock
will automatically be converted into the right to receive
shares of Fourth Stock as follows:
Number of Shares of
Fourth Stock to be Issued
Class of SBI Capital Stock if Closing is
-------------------------- -------------------------
On or before After
2/15/95 2/15/95
------- -------
Class A Common Stock ................. 53.9974 54.4654
Class B Common Stock ................. 53.9971 54.4654
Preferred Stock ...................... 3.4487 3.4786
SBI Preferred Stock Dividend Rights Extinguished
Holders of SBI Preferred Stock are entitled to receive
$9.00 per share on December 31 of each year if declared by
the SBI board of directors. Such dividends accumulate if
not declared and paid. No dividends on SBI Preferred Stock
have ever been declared or paid. Such accrued dividends
presently amount to $108,900 or $18.62 per share, and will
increase to $161,550 or $27.62 per share on December 31,
1994. The Agreement provides that the right to receive
such dividends will be extinguished so such dividends will
never be paid.
Interests of Certain Persons in the SBI Merger
The Agreement provides that Fourth Financial will
provide directors' and officers' liability insurance to
the officers and directors of SBI and the Bank comparable
to that presently maintained by SBI. Such insurance
coverage is to be furnished from the Effective Time until
the expiration of the indemnification period described
below. The Agreement also provides that Fourth Financial
will replace or repay SBI's existing credit facility at the
Effective Time.
Conditions to and Abandonment of the SBI Merger; Amendment
The respective obligations of Fourth Financial and SBI
to effect the SBI Merger are subject to the satisfaction
and continuance in effect as of the Effective Time of a
number of conditions, among which are the following: (i)
the representations and warranties made by each party shall
be true in all material respects; (ii) the requisite
approvals of the stockholders of SBI shall have been
obtained; (iii) all necessary governmental approvals shall
have been obtained; (iv) absence of litigation or judicial
decree or order preventing the SBI Merger; (v) receipt of
certain legal opinions and certificates; (vi) receipt of
certain agreements from "affiliates" of SBI concerning
future sales of the Fourth Stock to be received by them in
the SBI Merger; (vii) the performance by the parties of
their respective covenants contained in the Agreement;
(viii) the Bank having a minimum net worth of at least
$6,500,000, calculated in accordance with generally
accepted accounting principles excluding any adjustments
required by Financial Accounting Standard No. 115 to adjust
the Bank's available-for-sale investment securities
portfolio to market value; (ix) receipt of a letter from
Fourth Financial's independent public accountants to the
effect that the SBI Merger can properly be treated for
accounting purposes as a "pooling of interests"; (x) SBI
having acquired all of the ten shares of capital stock of
the Bank held as directors' qualifying shares in accordance
with existing agreements with such directors; (xi) Fourth
Financial having received satisfactory environmental
reports on the Bank's real properties; and (xii) SBI having
delivered to Fourth Financial the written resignations of
those officers and directors of the Bank as Fourth
Financial shall have requested prior to the Effective Time.
It is contemplated that all of the closing conditions
will be satisfied prior to consummation of the SBI Merger,
but the Agreement specifically permits any party to waive
occurrence of any of such conditions other than those
required by law, such as obtaining stockholder and
governmental approvals. No waiver of a condition will be
made that would be materially adverse to SBI stockholders.
Subject to applicable law, either before or after
stockholder approval, the Agreement may only be amended by
written instrument executed by both parties.
Termination
The Agreement may be terminated and the SBI Merger
abandoned at any time prior to the Effective Time, before
or after approval of the Agreement by the stockholders of
SBI, either by mutual consent of the parties or by either
Fourth Financial or SBI in the event of a material breach
of a covenant or representation or warranty by the other
which is not remedied within 30 days of delivery of written
notice thereof. The Agreement will terminate automatically
if the conditions to closing and the closing have not
occurred on or before February 28, 1995.
Effective Time
The Agreement provides that, unless otherwise agreed,
the Effective Time will be on a date no later than the last
day of the month in which the last required regulatory
approval is received and the latest legally required
waiting period expires but not later than February 28,
1995. The parties had originally agreed to exert their
best efforts to cause the Effective Time to be on or before
December 31, 1994 but it is presently anticipated that the
Effective Time will be on about February 15, 1995. The
closing could be delayed because of the pending protest
filed by a community coalition described above in the
Summary section of this Proxy Statement-Prospectus.
Dividends
The Agreement provides that without the prior written
consent of Fourth Financial neither SBI nor the Bank may
declare or pay any cash dividends prior to the Effective
Time other than as required to make required payments on
SBI's existing indebtedness and to pay normal operating
expenses and expenses associated with the Agreement and the
SBI Merger.
Indemnification and Other Agreements of the Stockholders
The Stockholders have agreed, among other things, to
vote all of their shares in favor of the Agreement and the
SBI Merger Agreement at the Special Meeting; not to dispose
of or pledge any of their shares of SBI Stock prior to the
Effective Time; not to enter into any negotiations with
anyone concerning a sale of a controlling interest in SBI
or the Bank; to sign, if requested, an "affiliate's
agreement" as described below; and to severally indemnify
Fourth Financial against any loss in excess of an aggregate
of $100,000 (net of any tax effect and after taking into
account all available insurance proceeds, net recoveries on
other real estate owned and other non-ledger assets)
sustained by them by reason of a breach by the Stockholders
of any representations, warranties, or covenants contained
in the Agreement, subject to limitations set forth in the
Agreement.
Covenants
The Agreement contains certain covenants to which SBI,
the Stockholders, and Fourth Financial have agreed. Among
those covenants are agreements that, without the prior
written consent of Fourth Financial, neither the Bank nor
SBI will: amend any of its charter documents; issue any
capital stock; dispose of any of its assets other than in
the usual course of business; enter into any material
contract not in the ordinary course of business; or enter
into any transaction or take any other action which would
constitute a breach of any of the representations,
warranties, or covenants contained in the Agreement. SBI
has also agreed to conduct its and the Bank's businesses in
the ordinary course as previously conducted, to take all
necessary actions to assist in obtaining governmental
approvals and to cause the SBI Merger to be consummated in
accordance with the Agreement, to cooperate with Fourth
Financial in obtaining title insurance policies, "Phase I"
environmental reports, and surveys covering certain of the
Bank's real property, and to exert its best efforts to
acquire all shares of capital stock of the Bank not owned
by SBI prior to the Effective Time. SBI and the
Stockholders have also agreed to cooperate with Fourth
Financial in causing the Bank, effective at the Effective
Time, to be converted to a national banking association.
In addition to customary covenants by Fourth Financial that
it will utilize its best efforts to effect the SBI Merger
in accordance with the terms and conditions of the
Agreement, Fourth Financial has agreed to replace or
completely repay SBI's existing credit facility at the
Effective Time and to provide directors' and officers'
liability insurance as described above.
Exchange of Certificates; Fractional Shares
As soon as practicable following the consummation of
the SBI Merger, SBI stockholders will be notified by
Fourth Financial of the procedure to be followed to
exchange their stock certificates for certificates of
Fourth Stock.
Until surrendered for exchange, each currently
outstanding SBI stock certificate will be deemed to
represent the right to receive the Fourth Stock into which
such stock has been converted in the SBI Merger. No
dividends or other form of distribution declared by Fourth
Financial will be paid to former SBI stockholders until the
SBI stock certificates are surrendered and exchanged for
Fourth Stock certificates. Upon surrender and exchange of
SBI stock certificates, there will be paid to the record
holders of the Fourth Stock certificates issued in exchange
the amount, without interest thereon, of dividends and
other distributions, if any, which would otherwise have
become payable on or after the Effective Time with respect
to the number of full shares of Fourth Stock represented
thereby.
No fractional shares of Fourth Stock will be issued in
the SBI Merger. Each person otherwise entitled to a
fractional share will be paid the cash value for such
fractional share, without interest, based on the closing
sales price for Fourth Stock in the NASDAQ National Market
System two trading days preceding the Effective Time as
reported in the Southwest Edition of The Wall Street
Journal.
Management After the SBI Merger
The Agreement provides that the current officers and
directors of Fourth Financial will continue to be the
officers and directors of Fourth Financial after the SBI
Merger. Information concerning the executive officers of
Fourth Financial is contained in Item 1 of the Form 10-K of
Fourth Financial for the year ended December 31, 1993
("Fourth 10-K") under the caption "Executive Officers of
the Registrant" and information concerning the directors of
Fourth Financial is contained in the revised proxy
statement for Fourth Financial's annual meeting of
stockholders held on April 21, 1994, under the caption
"Election of Directors", both of which descriptions are
hereby incorporated by reference.
Accounting Treatment
Fourth Financial anticipates that it will treat the
SBI Merger as a "pooling of interests" for accounting and
financial reporting purposes. Consequently, Fourth
Financial anticipates that it will, in accordance with
generally accepted accounting principles, restate its
consolidated financial statements to include the assets,
liabilities, stockholders' equity, and results of
operations of SBI as reflected in SBI's historical
consolidated financial statements, subject to appropriate
adjustments, if any, to conform accounting principles of
the two companies. Financial Statements prior to January
1, 1992 will not be restated as the assets, liabilities,
stockholders' equity, and results of operations of SBI are
not material to Fourth Financial.
Certain Federal Income Tax Consequences
The following discussion is a general summary of the
material federal income tax consequences of the SBI Merger
to SBI stockholders and does not purport to be a complete
analysis or listing of all potential tax considerations or
consequences relevant to a decision whether to vote for the
approval of the SBI Merger. The discussion does not
address all aspects of federal income taxation that may be
applicable to SBI stockholders subject to special federal
income tax treatment including (without limitation) foreign
persons, insurance companies, tax-exempt entities,
retirement plans, dealers in securities, and persons who
acquired their SBI Stock pursuant to the exercise of
employee stock options or otherwise as compensation. The
discussion addresses neither the effect of any applicable
state, local, or foreign tax laws, nor the effect of any
federal tax laws other than those pertaining to the federal
income tax. In view of the individual nature of federal
income tax consequences, each SBI stockholder is urged to
consult his or her own tax advisor to determine the
specific tax consequences of the SBI Merger to him or her.
The discussion is based on the Internal Revenue Code
of 1986, as amended (the "Code"), regulations and rulings
now in effect or proposed thereunder, current
administrative rulings and practice, and judicial
precedent, all of which are subject to change. Any such
change, which may or may not be retroactive, could alter
the tax consequences discussed herein. The discussion is
also based on certain assumptions and representations
regarding the factual circumstances that will exist at the
Effective Time, including certain representations of Fourth
Financial, SBI, and the Stockholders. If any of these
factual assumptions or representations is inaccurate, the
tax consequences of the SBI Merger could differ from those
described herein. The discussion assumes that shares of
SBI Stock are held as capital assets (within the meaning of
Section 1221 of the Code).
Tax Opinion
- -----------
Knudsen, Berkheimer, Richardson & Endacott, counsel to
SBI and the Stockholders, have delivered their opinion to
SBI and the Stockholders to the effect that:
Taxation of Shares Exchanged in the SBI Merger
----------------------------------------------
1. The SBI Merger will be treated as a
reorganization under Section 368(a)(1)(A) of the Code.
Fourth and SBI will both be "a party to a
reorganization" within the meaning of Section 368(b)
of the Code.
2. No gain or loss will be recognized by SBI
shareholders upon the exchange of their SBI Stock
(including fractional share interests that they might
otherwise be entitled to receive) solely for Fourth
Stock.
3. The basis of Fourth Stock (including
fractional share interests that they might otherwise
be entitled to receive) received by the shareholders
of SBI should be the same as the basis of the SBI
Stock exchanged therefor.
4. The holding period of the Fourth Stock
(including fractional interests that they might
otherwise be entitled to receive) received by the SBI
shareholders should include the holding period of the
SBI Stock surrendered in the exchange, provided the
SBI Stock was held as a capital asset on the date of
the exchange.
Taxation of Cash Received in the SBI Merger
-------------------------------------------
1. Cash received by a shareholder of SBI
otherwise entitled to receive a fractional share of
Fourth Stock in exchange for his SBI Stock should be
treated as if the fractional shares were distributed
as part of the exchange and then were redeemed by
Fourth Financial. These cash payments should be
treated as having been received as distributions in
full payment in exchange for the stock redeemed as
provided in Section 302(a) of the Code. This receipt
of cash should result in gain or loss measured by the
difference between the basis of such fractional share
interest and the cash received. Such gain or loss
should be capital gain or loss to the SBI shareholder,
provided the SBI Stock was a capital asset in such
shareholder's hands.
Such opinion is subject to the conditions stated therein
and relies on various representations made by Fourth, SBI,
and the Stockholders. An opinion of counsel, unlike a
private letter ruling from the Internal Revenue Service
(the "Service"), has no binding effect on the Service. The
Service could take a position contrary to Knudsen,
Berkheimer, Richardson & Endacott's opinion and, if the
matter is litigated, a court may reach a decision contrary
to the opinion. No ruling from the Service with respect to
any federal income tax consequences of the SBI Merger has
been or will be requested.
Withholding
- -----------
Under federal backup withholding rules, unless an
exemption applies under the applicable law and regulations,
Fourth Financial or the exchange agent engaged by it will
be required to withhold 31% of all cash payments of $20 or
more made in exchange for fractional shares unless the SBI
stockholder or other payee provides his or her taxpayer
identification number (social security number in the case
of an individual, employer identification number in the
case of other taxpayers) and certifies that such number is
correct. Each SBI stockholder and, if applicable, each
other payee should complete and sign the Substitute W-9
form that will be included as part of the letter of
transmittal mailed to SBI stockholders after the Effective
Time so as to provide the information and certification
necessary to avoid backup withholding, unless an applicable
exemption exists and is proved in a manner satisfactory to
Fourth Financial.
THE FOREGOING IS A GENERAL SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE SBI MERGER AND IS INCLUDED
FOR GENERAL INFORMATION ONLY. THE FOREGOING SUMMARY DOES
NOT TAKE INTO ACCOUNT THE PARTICULAR FACTS AND
CIRCUMSTANCES OF EACH SBI STOCKHOLDER'S FEDERAL INCOME TAX
STATUS AND ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX
CONSEQUENCES ADDRESSED IN THE FOREGOING SUMMARY MAY NOT
APPLY TO EACH SBI STOCKHOLDER. EACH SBI STOCKHOLDER SHOULD
CONSULT HIS OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE SBI MERGER TO HIM, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND
OTHER TAX LAWS.
Resales of Fourth Stock Issued in the SBI Merger;
Affiliates
Shares of Fourth Stock received by persons who are deemed
to be "affiliates", as such term is defined in the rules of
the Commission promulgated under the Securities Act of
1933, as amended (the "Securities Act"), of SBI prior to
the SBI Merger may be resold by them during the two years
after the Effective Time only in transactions permitted by
the resale provisions of Rule 145 promulgated under the
Securities Act or as otherwise permitted under the
Securities Act. The Agreement provides that SBI will
furnish Fourth Financial a list of its affiliates and such
persons are required to execute and deliver a written
agreement to the effect that they will not offer or sell
shares of Fourth Stock received in the SBI Merger in
violation of the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
All certificates evidencing Fourth Stock issued in the
SBI Merger to affiliates of SBI will bear a legend
restricting transfer of such shares as described above.
Expenses
Each party to the Agreement is to pay its own expenses
incurred in connection therewith and in connection with the
consummation of the SBI Merger whether or not the SBI
Merger is effected. It is anticipated that SBI's expenses
will be approximately $________, and that Fourth
Financial's expenses will be approximately $_______. The
costs of preparing and mailing these proxy solicitation
materials and other costs attributable to the Special
Meeting are to be borne by SBI regardless of whether the
Agreement and the SBI Merger Agreement are approved at the
Special Meeting.
Appraisal Rights of Dissenting SBI Stockholders
The Nebraska Business Corporation Act provides that
shareholders of bank holding companies, such as SBI, do not
have any dissenters' rights with respect to the Agreement
and the SBI Merger.
Comparative Rights of Stockholders
The rights of the stockholders of SBI are different from
the rights of stockholders of Fourth Financial with respect
to several significant matters:
1. The board of directors of Fourth Financial is
classified into three classes and only one-third of its
members are elected annually, thereby reducing the benefits
of cumulative voting. All of the directors of SBI are
elected annually.
2. All holders of Fourth Stock are entitled to one vote
per share. The holders of SBI's Class B Common Stock and
Preferred Stock do not have any voting rights except as
specifically provided by the Nebraska Business Corporation
Act.
3. The holders of SBI's Preferred Stock are entitled to
payment of a $9.00 per share dividend each December 31.
Such dividend is cumulative and must be paid before the
holders of either class of SBI's common stock can receive
any dividend. Holders of Fourth Stock are only entitled to
receive dividends when, as, and if declared by the Fourth
Financial board of directors.
4. The holders of SBI's Preferred Stock are also
entitled to receive, upon any liquidation of SBI, $100 per
share of Preferred Stock held by them before SBI can make
any distribution with respect to its common stock. They
will not retain that liquidation preference after the SBI
Merger is effected.
5. A two-thirds stockholder vote is required to approve
a merger, consolidation, or similar transaction in which
SBI is a party. Under Fourth Financial's Restated Articles
of Incorporation, an 80% vote is required in certain
circumstances, thereby making it more difficult to effect
a change in control of Fourth Financial than of SBI.
The foregoing discussion of certain similarities and
material differences between the rights of SBI and Fourth
Financial stockholders under their respective charter
documents and state laws is only a summary of certain
provisions and does not purport to be a complete
description of such similarities and differences, and is
qualified in its entirety by reference to the Nebraska
Business Corporation Act, the General Corporation Code of
Kansas, the common law under such statutes, and the full
texts of the Articles of Incorporation of SBI, the Restated
Articles of Incorporation of Fourth Financial, the
respective Bylaws of SBI and Fourth Financial, and all
amendments thereto.
PRO FORMA FINANCIAL STATEMENTS
FOURTH FINANCIAL CORPORATION,
AND STANDARD BANCORPORATION, INC. (Pending Acquisition)
The following unaudited pro forma condensed consolidated statement
of condition as of September 30, 1994 combines (1) the amounts shown in
the historical consolidated statement of condition of Fourth Financial
and (2) the amounts shown in the historical consolidated statement of
condition of SBI, both as of September 30, 1994. The combination of
SBI is based on the pooling-of-interests method of accounting. The pro
forma condensed consolidated statement of condition is not necessarily
indicative of the combined financial position as it may be in the
future or as it might have been had the acquisition been consummated on
September 30, 1994. The following notes describe the assumptions used
in this pro forma condensed consolidated statement of condition. This
pro forma condensed consolidated statement should be read in
conjunction with the other pro forma and historical financial
statements and notes thereto appearing elsewhere herein.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONDITION
September 30, 1994
(Unaudited)
(Dollars in thousands, except per share amounts)
Fourth Pro Forma
--------------------------
Financial SBI Adjustments Combined
------------------------------------------------
ASSETS:
Cash and due from banks. . . . . . $ 339,595 $ 1,881 $ -- $ 341,476
Interest-bearing deposits in other
financial institutions. . . . . . . . . . . . 1,591 -- -- 1,591
Investment securities. . . . . . . . . . . . . 3,051,791 21,589 -- 3,073,380
Trading account securities . . . . . . . . . . 1,898 -- -- 1,898
Federal funds sold and securities purchased
under agreements to resell. . . . . . . . . . 4,900 -- (3,102) B 1,798
Loans and leases . . . . . . . . . . . . . . . 3,819,895 54,399 -- 3,874,294
Allowance for credit losses. . . . . . . . . . (72,815)) (599) -- (73,414)
----------- --------- --------- -----------
Net loans and leases . . . . . . . . . . . . 3,747,080 53,800 -- 3,800,880
Bank premises and equipment. . . . . . . . . . 157,121 2,585 -- 159,706
Income receivable and other assets . . . . . . 148,964 831 -- 149,795
Intangible assets, net . . . . . . . . . . . . 94,963 -- -- 94,963
----------- --------- ---------- -----------
Total assets . . . . . . . . . . . . $7,547,903 $ 80,686 $ (3,102) $7,625,487
=========== ========= ========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Deposits . . . . . . . . . . . . . . . . . . . $5,658,108 $ 72,963 $ -- $5,731,071
Other borrowings . . . . . . . . . . . . . . . 1,224,507 -- -- 1,224,507
Accrued interest, taxes, and other liabilities 62,743 732 (25) B 63,450
Long-term debt . . . . . . . . . . . . . . . . 5,099 3,077 (3,077) B 5,099
----------- --------- ---------- ----------
Total liabilities . . . . . . . . . . . . . 6,950,457 76,772 (3,102) 7,024,127
----------- --------- ---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock. . . . . . . . . . . . . . . . 100,000 585 (585) A 100,000
Common stock . . . . . . . . . . . . . . . . . 136,156 5 1,583 A 137,744
Capital surplus. . . . . . . . . . . . . . . . 106,949 1,360 (998) A 107,311
Retained earnings. . . . . . . . . . . . . . . 279,646 2,129 -- 281,775
Less: Stock option loans and ESOP loans. . . (2,030) -- -- (2,030)
Treasury stock. . . . . . . . . . . . . . . (10,019) -- -- (10,019)
Unrealized gains (losses) on available-for-sale
securities. . . . . . . . . . . . . . . . . . (13,256) (165) -- (13,421)
---------- --------- --------- -----------
Total stockholders' equity. . . . . . . . . 597,446 3,914 -- 601,360
---------- --------- --------- -----------
Total liabilities and stockholders' equity $7,547,903 $ 80,686 $ (3,102) $7,625,487
=========== ========= ========== ===========
Book value per share of common stock . . . . . $18.51 $18.44
======= ======
Risk-based capital ratios:
Tier I (regulatory minimum 4%) . . . . . . 11.30% 11.25%
Total (regulatory minimum 8%) . . . . . . 12.55 12.50
Leverage capital ratio (regulatory minimum 3%) 7.02 7.00
Pro forma adjustments and notes to the condensed consolidated
statement of condition are as follows (dollars in thousands):
(A) To record the issuance of an estimated 317,730 shares of
Fourth Stock in exchange for all the shares of SBI in a
transaction accounted for as a pooling of interests.
(B) To record Fourth Financial's repayment of debt and accrued
interest of SBI.
Pro forma book value per share of common stock is based on the
26,875,640 outstanding shares of common stock of Fourth Financial at
September 30, 1994 and the 317,730 shares estimated to be issued in the
pending SBI acquisition.
PRO FORMA FINANCIAL STATEMENTS
FOURTH FINANCIAL CORPORATION,
EQUITY BANK FOR SAVINGS, F.A., AND EMPRISE BANK, NATIONAL ASSOCIATION
(Recent Acquisitions), AND STANDARD BANCORPORATION, INC. (Pending
Acquisition)
The following unaudited pro forma condensed consolidated
statements of income for the nine months ended September 30, 1994 and
1993 and for the years ended December 31, 1993 and 1992 combine (1) the
amounts shown in the historical consolidated statements of income of
Fourth Financial, which have been restated for pooling-of-interest
transactions consummated prior to September 30, 1994, (2) the amounts
shown in the historical consolidated statements of income of Equity
(acquired May 26, 1994 and not presented separately herein), (3) the
amounts shown in the historical consolidated statements of income of
Emprise (acquired May 31, 1994 and not presented separately herein),
and (4) the amounts shown in the historical consolidated statements of
income of SBI. The combinations of Equity and Emprise are based on the
purchase method of accounting assuming, for pro forma purposes only,
the acquisitions had been consummated at January 1, 1993, and other
assumptions described in the following notes. The combination of SBI
is based on the pooling-of-interests method of accounting assuming the
acquisition had been consummated at the beginning of the periods
presented and other assumptions also described in the following notes.
The pro forma results for the year ended December 31, 1993 are not
necessarily indicative of the results as they may be in the future.
The pro forma results for the nine months ended September 30, 1994 and
1993 also are not necessarily indicative of the results for a full
year. The pro forma condensed consolidated statements of income should
be read in conjunction with the other pro forma and historical
financial statements and notes thereto appearing elsewhere herein.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Nine Months Ended Year Ended
September 30, December 31,
----------------------------------------------------
1994 1993 1993 1992
---------- ---------- -------------------------
Interest income:
Interest and fees on loans . . . . . $233,923 $220,142 $296,565 $273,275
Interest on short-term investments . 1,099 2,525 2,946 4,789
Interest and dividends on
investment securities . . . . . . . 138,189 144,903 192,833 166,409
Interest and dividends on trading
account securities. . . . . . . . . 72 95 135 222
---------- ---------- ---------- ---------
Total interest income. . . . . . . 373,283 367,665 492,479 444,695
---------- ---------- ---------- ---------
Interest expense:
Interest on deposits . . . . . . . . 122,258 134,839 177,658 185,577
Interest on other borrowings . . . . 32,940 16,403 24,098 10,395
Interest on long-term debt . . . . . 1,035 1,993 2,453 3,881
---------- ---------- ---------- ---------
Total interest expense . . . . . . 156,233 153,235 204,209 199,853
---------- ---------- ---------- ---------
Net interest income. . . . . . . . . . 217,050 214,430 288,270 244,842
Provision for credit losses. . . . . . 880 7,960 9,139 21,433
---------- ---------- ---------- ---------
Net interest income after
provision for credit losses . . . . . 216,170 206,470 279,131 223,409
Noninterest income . . . . . . . . . . 83,603 79,997 109,074 85,402
Noninterest expense. . . . . . . . . . 206,741 223,887 295,992 225,497
---------- ---------- ---------- ---------
Income before income taxes
and cumulative change in
accounting principle. . . . . . . . . 93,032 62,580 92,213 83,314
Income taxes . . . . . . . . . . . . . 31,059 14,134 22,312 19,770
---------- ---------- ---------- ---------
Income before cumulative change
in accounting principle . . . . . . . $ 61,973 $ 48,446 $ 69,901 $ 63,544
========== ========== ========== =========
Income before cumulative change
in accounting principle
applicable to common and
common-equivalent shares. . . . . . . $ 56,723 $ 43,196 $ 62,901 $ 57,593
========== ========== ========== =========
Earnings before cumulative change
in accounting principle per
common share:
Primary. . . . . . . . . . . . . . . $2.08 $1.62 $2.35 $2.20
====== ====== ====== ======
Fully diluted. . . . . . . . . . . . $2.02 $1.58 $2.28 $2.14
====== ====== ====== ======
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1994
(Unaudited)
(In thousands, except per share amounts)
Equity
and Emprise
Fourth (Recent Pro Forma
----------------------------
Financial Acquisitions) SBI Adjustments Combined
----------- -------------------------- ----------- ----------
Interest income:
Interest and fees on loans . . . . . . $219,171 $13,165 $ 3,281 $ (687) A $ 233,923
(756) C
(251) D
Interest on short-term investments . . 792 417 70 1,763 B 1,099
(1,801) D
(142) E
Interest and dividends on
investment securities . . . . . . . . 132,123 5,034 857 175 C 138,189
Interest and dividends on trading
account securities. . . . . . . . . . 72 -- -- -- 72
---------- ---------- ---------- ---------- ----------
Total interest income. . . . . . . . 352,158 18,616 4,208 (1,699) 373,283
---------- ---------- ---------- ---------- ----------
Interest expense:
Interest on deposits . . . . . . . . . 113,479 7,148 1,350 281 C 122,258
Interest on other borrowings . . . . . 31,329 1,600 -- (1) A 32,940
(142) G
154 C
Interest on long-term debt . . . . . . 893 -- 142 -- 1,035
---------- ---------- ---------- ---------- ----------
Total interest expense . . . . . . . 145,701 8,748 1,492 292 156,233
---------- ---------- ---------- ---------- ----------
Net interest income. . . . . . . . . . . 206,457 9,868 2,716 (1,991) 217,050
Provision for credit losses. . . . . . . 275 540 65 -- 880
---------- ---------- ---------- ---------- ----------
Net interest income after provision
for credit losses . . . . . . . . . . . 206,182 9,328 2,651 (1,991) 216,170
Noninterest income . . . . . . . . . . . 76,966 7,910 527 (1,800) A 83,603
Noninterest expense. . . . . . . . . . . 190,895 12,798 2,365 662 A 206,741
21 C
---------- ---------- ---------- ---------- ----------
Income before income taxes
and cumulative change in
accounting principle. . . . . . . . . . 92,253 4,440 813 (4,474) 93,032
Income taxes . . . . . . . . . . . . . . 31,188 535 251 (46) A 31,059
688 B
(756) C
(801) D
---------- ---------- ---------- ---------- ----------
Income before cumulative
change in accounting principle. . . . . $ 61,065 $ 3,905 $ 562 $ (3,559) $ 61,973
========== ========== ========== ========== ==========
Income before cumulative
change in accounting principle
applicable to common and
common-equivalent shares. . . . . . . . $ 55,815 $ 56,723
========== ==========
Earnings before cumulative
change in accounting principle
per common share:
Primary. . . . . . . . . . . . . . . . $2.07 $2.08
====== ======
Fully diluted. . . . . . . . . . . . . $2.01 $2.02
====== ======
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1993
(Unaudited)
(In thousands, except per share amounts)
Equity
and Emprise
Fourth (Recent Pro Forma
---------------------------
Financial Acquisitions) SBI Adjustments Combined
----------- ------------------------- ----------- ----------
Interest income:
Interest and fees on loans . . . . . . $194,687 $26,104 $ 3,046 $ (1,947) A $ 220,142
(1,381) C
(367) D
Interest on short-term investments . . 1,894 518 64 2,793 B 2,525
(2,744) D
Interest and dividends on
investment securities . . . . . . . . 134,623 8,814 1,050 416 C 144,903
Interest and dividends on trading
account securities. . . . . . . . . . 95 -- -- -- 95
---------- ---------- ---------- ---------- -----------
Total interest income. . . . . . . . 331,299 35,436 4,160 (3,230) 367,665
---------- ---------- ---------- ---------- -----------
Interest expense:
Interest on deposits . . . . . . . . . 120,252 14,254 1,309 (976) C 134,839
Interest on other borrowings . . . . . 12,731 3,499 -- (2) A 16,403
175 C
Interest on long-term debt . . . . . . 1,857 -- 136 -- 1,993
---------- ---------- ---------- ---------- -----------
Total interest expense . . . . . . . 134,840 17,753 1,445 (803) 153,235
---------- ---------- ---------- ---------- -----------
Net interest income. . . . . . . . . . . 196,459 17,683 2,715 (2,427) 214,430
Provision for credit losses. . . . . . . 6,326 1,562 72 -- 7,960
---------- ---------- ---------- ---------- -----------
Net interest income after
provision for credit losses . . . . . . 190,133 16,121 2,643 (2,427) 206,470
Noninterest income . . . . . . . . . . . 66,563 16,320 528 (3,414) A 79,997
Noninterest expense. . . . . . . . . . . 196,104 24,157 2,427 1,993 A 223,887
(794) C
---------- ---------- ---------- --------- -----------
Income before income taxes
and cumulative change in
accounting principle. . . . . . . . . . 60,592 8,284 744 (7,040) 62,580
Income taxes . . . . . . . . . . . . . . 14,511 695 202 (354) A 14,134
1,089 B
(796) C
(1,213) D
---------- ---------- ---------- --------- -----------
Income before cumulative
change in accounting principle. . . . . $ 46,081 $ 7,589 $ 542 $ (5,766) $ 48,446
========== ========== ========== ========== ===========
Income before cumulative
change in accounting principle
applicable to common and
common-equivalent shares. . . . . . . . $ 40,831 $ 43,196
========== ===========
Earnings before cumulative
change in accounting principle
per common share:
Primary. . . . . . . . . . . . . . . . $1.56 $1.62
====== ======
Fully diluted. . . . . . . . . . . . . $1.52 $1.58
====== ======
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1993
(Unaudited)
(In thousands, except per share amounts)
Equity
and Emprise
Fourth (Recent Pro Forma
-----------------------------
Financial Acquisitions) SBI Adjustments Combined
----------- -------------------------- ----------- ----------
Interest income:
Interest and fees on loans . . . . . . $262,866 $ 34,651 $ 4,094 $ (2,659) A $ 296,565
(1,856) C
(531) D
Interest on short-term investments . . 2,098 668 83 3,843 B 2,946
(3,746) D
Interest and dividends on
investment securities . . . . . . . . 178,814 12,097 1,375 547 C 192,833
Interest and dividends on trading
account securities. . . . . . . . . . 135 -- -- -- 135
---------- ---------- ---------- ---------- -----------
Total interest income. . . . . . . . 443,913 47,416 5,552 (4,402) 492,479
---------- ---------- ---------- ---------- -----------
Interest expense:
Interest on deposits . . . . . . . . . 158,078 18,930 1,723 (1,073) C 177,658
Interest on other borrowings . . . . . 19,151 4,700 -- (3) A 24,098
250 C
Interest on long-term debt . . . . . . 2,273 -- 180 -- 2,453
---------- ---------- ---------- ---------- -----------
Total interest expense . . . . . . . 179,502 23,630 1,903 (826) 204,209
---------- ---------- ---------- ---------- -----------
Net interest income. . . . . . . . . . . 264,411 23,786 3,649 (3,576) 288,270
Provision for credit losses. . . . . . . 6,965 2,102 72 -- 9,139
---------- ---------- ---------- ---------- -----------
Net interest income after provision
for credit losses . . . . . . . . . . . 257,446 21,684 3,577 (3,576) 279,131
Noninterest income . . . . . . . . . . . 90,621 22,248 754 (4,549) A 109,074
Noninterest expense. . . . . . . . . . . 258,681 32,694 3,209 2,243 A 295,992
(835) C
---------- ---------- ---------- --------- -----------
Income before income taxes
and cumulative change in
accounting principle. . . . . . . . . . 89,386 11,238 1,122 (9,533) 92,213
Income taxes . . . . . . . . . . . . . . 22,676 1,016 304 (361) A 22,312
1,499 B
(1,154) C
(1,668) D
---------- ---------- ---------- --------- -----------
Income before cumulative
change in accounting principle. . . . . $ 66,710 $ 10,222 $ 818 $ (7,849) $ 69,901
========== ========== ========== ========== ===========
Income before cumulative change in
accounting principle applicable
to common and common-
equivalent shares . . . . . . . . . . . $ 59,710 $ 62,901
========== ===========
Earnings before cumulative change
in accounting principle per
common share:
Primary. . . . . . . . . . . . . . . . $2.27 $2.35
====== ======
Fully diluted. . . . . . . . . . . . . $2.20 $2.28
====== ======
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1992
(Unaudited)
(In thousands, except per share amounts)
Fourth Pro Forma
-----------------------------
Financial SBI Adjustments Combined
------------ ------------ ----------- ----------
Interest income:
Interest and fees on loans . . . . . . . . . . . . . $269,257 $ 4,018 $ -- $ 273,275
Interest on short-term investments . . . . . . . . . 4,730 59 -- 4,789
Interest and dividends on
investment securities . . . . . . . . . . . . . . . 164,679 1,730 -- 166,409
Interest and dividends on trading
account securities. . . . . . . . . . . . . . . . . 222 -- -- 222
---------- ---------- ---------- -----------
Total interest income. . . . . . . . . . . . . . . 438,888 5,807 -- 444,695
---------- ---------- ---------- -----------
Interest expense:
Interest on deposits . . . . . . . . . . . . . . . . 183,461 2,116 -- 185,577
Interest on other borrowings . . . . . . . . . . . . 10,395 -- -- 10,395
Interest on long-term debt . . . . . . . . . . . . . 3,675 206 -- 3,881
---------- ---------- ---------- -----------
Total interest expense . . . . . . . . . . . . . . 197,531 2,322 -- 199,853
---------- ---------- ---------- -----------
Net interest income. . . . . . . . . . . . . . . . . . 241,357 3,485 -- 244,842
Provision for credit losses. . . . . . . . . . . . . . 21,358 75 -- 21,433
---------- ---------- ---------- -----------
Net interest income after provision
for credit losses . . . . . . . . . . . . . . . . . . 219,999 3,410 -- 223,409
Noninterest income . . . . . . . . . . . . . . . . . . 84,649 753 -- 85,402
Noninterest expense. . . . . . . . . . . . . . . . . . 222,403 3,094 -- 225,497
---------- ---------- ---------- -----------
Income before income taxes
and cumulative change in
accounting principle. . . . . . . . . . . . . . . . . 82,245 1,069 -- 83,314
Income taxes . . . . . . . . . . . . . . . . . . . . . 19,418 352 -- 19,770
---------- ---------- ---------- -----------
Income before cumulative
change in accounting principle. . . . . . . . . . . . $ 62,827 $ 717 $ -- $ 63,544
========== ========== ========== ==========
Income before cumulative change in
accounting principle applicable
to common and common-
equivalent shares . . . . . . . . . . . . . . . . . . $ 56,876 $ 57,593
========== ==========
Earnings before cumulative change
in accounting principle per
common share:
Primary. . . . . . . . . . . . . . . . . . . . . . . $2.19 $2.20
====== ======
Fully diluted. . . . . . . . . . . . . . . . . . . . $2.13 $2.14
====== ======
Pro forma adjustments and notes to the condensed consolidated statements of income are as follows:
Nine Months Ended Year Ended
September 30, December 31,
---------------------- -----------------------
1994 1993 1993 1992
------ ------ ------ ------
(In thousands)
(A) To reflect the effect of the sale of non-banking
assets of Equity to LSB Industries, Inc., its
parent, at book value:
Interest and fees on loans and leases . . . . . 687 1,947 2,659 --
Interest on other borrowings. . . . . . . . . . 1 2 3 --
Non-interest income . . . . . . . . . . . . . . 1,800 3,414 4,549 --
Non-interest expense. . . . . . . . . . . . . . 662 1,993 2,243 --
Income taxes. . . . . . . . . . . . . . . . . . 46 354 361 --
(B) To reflect interest income earned on proceeds
from the sale of Equity's non-bank assets and
the related income tax effects:
Interest on short-term investments. . . . . . . 1,763 2,793 3,843 --
Income taxes. . . . . . . . . . . . . . . . . . 688 1,089 1,499 --
(C) To reflect adjustments resulting from the purchase
method of accounting for Equity and Emprise:
Interest and fees on loans and leases . . . . . 756 1,381 1,856 --
Interest and dividends on investment
securities. . . . . . . . . . . . . . . . . . 175 416 547 --
Interest on deposits. . . . . . . . . . . . . . 281 (976) (1,073) --
Interest on other borrowings. . . . . . . . . . 154 175 250 --
Noninterest expense:
Purchased mortgage servicing rights
amortization. . . . . . . . . . . . . . . . 50 120 152 --
Purchased credit card relationships
amortization. . . . . . . . . . . . . . . . 486 1,062 1,393 --
Cost in excess of net assets
acquired amortization . . . . . . . . . . . (525) (1,991) (2,401) --
Net occupancy . . . . . . . . . . . . . . . . 10 15 21 --
------ ------ ------
Total effect on noninterest expense . . . . 21 (794) (835) --
Income taxes. . . . . . . . . . . . . . . . . . (756) (796) (1,154) --
(D) To reflect the foregone interest income on short-
term investments converted to cash and used for
the purchase of Equity and Emprise, and the
related income tax effects:
Interest and fees on loans and leases . . . . . 251 367 531 --
Interest on short-term investments. . . . . . . 1,801 2,744 3,746 --
Income taxes. . . . . . . . . . . . . . . . . . 801 1,213 1,668 --
(E) To eliminate intercompany income/expense:
Interest on short-term investments/
Interest on other borrowings. . . . . . . . . 142 -- -- --
Pro forma earnings per common share are based on the following weighted average number of shares outstanding:
Nine Months Ended
September 30, Year Ended December 31,
---------------------- --------------------------
1994 1993 1993 1992
----- ----- ----- -----
(In thousands)
Primary . . . . . . . . . . . . . . . . . 27,243,249 26,557,938 26,642,279 26,218,916
Fully diluted . . . . . . . . . . . . . . 30,691,524 30,631,825 30,672,993 29,806,409
The difference between the interest expense on SBI's debt, which
will be repaid at consummation, and the interest earned by Fourth
Financial on the short-term investments which will fund the debt
payment is not material and has not been reflected in the pro forma
condensed consolidated statements of income.
Primary earnings per common share were computed by dividing income
applicable to common and common-equivalent shares by the weighted
average common and common-equivalent shares outstanding during the
period. Fully diluted earnings per common share were computed by
adjusting income before the cumulative change in accounting principle
for interest expense (net of income taxes) associated with convertible
debt. The adjusted income was then divided by the weighted average of
common and common-equivalent shares outstanding plus the number of
shares which would have been outstanding during the year had
convertible securities been converted in accordance with their
respective governing instruments. Note 17 to the Fourth Financial 1993
Consolidated Financial Statements more fully describes Fourth
Financial's common stock equivalents and convertible securities.
The adjustment of income for convertible debt interest expense (net
of income taxes) was as follows:
Nine Months Ended
September 30, Year Ended December 31,
---------------------- --------------------------
1994 1993 1993 1992
------ ------ ------ ------
(In thousands)
Interest expense adjustment . . . . . . . -- 4 4 85
INFORMATION CONCERNING FOURTH FINANCIAL
General
Fourth Financial is a bank holding company
headquartered in Wichita, Kansas, which offers a broad
range of bank and bank-related services through its
subsidiaries, BANK IV Kansas and BANK IV Oklahoma. Fourth
Financial is the largest bank holding company headquartered
in Kansas, based on both assets and deposits. At September
30, 1994, Fourth Financial had total consolidated assets of
$7.5 billion, total deposits of $5.7 billion, and
stockholders' equity of $597.4 million. BANK IV Kansas,
whose predecessor was originally organized in 1887, is the
largest commercial bank in Kansas and, at December 31,
1993, had approximately 11% of all insured deposits in
Kansas. BANK IV Kansas, the only major statewide bank in
Kansas, has 88 offices in 36 communities. BANK IV
Oklahoma, the second-largest bank in Oklahoma, has 51
offices in 19 Oklahoma communities.
Recent and Pending Acquisitions
Information about various recent and pending
acquisitions is contained in Item 1 of the Annual Report of
Fourth Financial on Form 10-K for the year ended December
31, 1993 (the "Fourth 10-K") under the caption "Pending
Acquisitions" and in the Quarterly Report of Fourth
Financial on Form 10-Q for the quarter ended September 30,
1994 (the "Fourth 10-Q") in Note 2 to the Consolidated
Financial Statements and Item 5. The following discussion
is intended to supplement the information contained in the
Fourth 10-K and the Fourth 10-Q.
Two potential acquisitions referred to in the Fourth
10-K have been abandoned. On June 17, 1994, Fourth
Financial and Great Southern Bancorp, Inc. mutually
terminated their agreement to merge. Fourth Financial is
no longer negotiating the acquisition of the automobile
leasing company referred to in the Fourth 10-K.
Fourth Financial is presently considering or
participating in discussions concerning additional
acquisitions. However, as of the date of this Proxy
Statement-Prospectus, except for the pending transactions
described above and in the Fourth 10-Q, Fourth Financial
had no binding commitments, agreements, or understandings
to acquire any additional financial institutions, but
additional acquisition agreements may be negotiated or
entered into at any time.
Recently Enacted Federal Legislation
The recently enacted federal Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 will increase
the ability of Fourth Financial and other bank holding
companies to make interstate acquisitions and to operate
their subsidiary banks. Commencing on September 29, 1995,
adequately capitalized and adequately managed bank holding
companies will be permitted to make acquisitions of banks
located anywhere in the United States without regard to the
provisions of any state laws that may presently prohibit
such acquisitions. Interstate acquisitions will not be
permitted, however, if the potential acquiror would control
more than ten percent of the insured deposits in the United
States or more than 30 percent of insured deposits in the
home state of the bank to be acquired or in any state in
which such bank has a branch. States may enact statutes
increasing the 30 percent limit and may also lower such
limit if they do so on a non-discriminatory basis. States
will also be permitted to prohibit acquisitions of banks
that have been established for fewer than five years. The
Board of Governors of the Federal Reserve System is
required to consider the applicant's record under the
federal Community Reinvestment Act in determining whether
to approve an interstate banking acquisition.
The new statute also permits, after June 1, 1997,
interstate branch banking in all states by adequately
capitalized and adequately managed banks, but a state may
enact specific legislation before June 1, 1997 prohibiting
interstate branch banking in that state, in which event
banks headquartered in the state will not be permitted to
branch into other states. A state may also enact
legislation permitting non-discriminatory interstate branch
banking in such state before June 1, 1997. Applications
for interstate branching authority will be subjected to
regulatory scrutiny of compliance with both federal and
state community reinvestment statutes with respect to all
of the banks involved in the proposed transaction.
Fourth Financial is unable to predict the effect, if
any, of such new legislation on it.
Additional Information
In order to help assure management stability, Fourth
Financial entered into change-in-control employment and
severance agreements in October of 1994 with 18 executive
officers of either Fourth Financial or one of its
subsidiary banks. Such officers include Fourth Financial's
five most highly compensated executive officers in 1993:
Darrell G. Knudson, Chairman of the Board of Fourth
Financial; K. Gordon Greer, Chairman of the Board of BANK
IV Kansas; Edward F. Keller, Chairman of the Board of BANK
IV Oklahoma; Michael R. Ritchey, President, Trusts &
Investments of Fourth Financial; and David L. Strohm,
Treasurer of Fourth Financial. The agreements provide that
the officers will continue in the employment of Fourth
Financial following the commencement of a tender or
exchange offer or the execution of a merger agreement which
would result in a change in control (as defined) of Fourth
Financial until the transaction is either completed or
abandoned. In consideration of this commitment, these
agreements also provide for severance benefits in the event
of either involuntary termination of employment (other than
by reason of death, disability, or for cause, as defined)
or termination of employment by the officer for good cause
(as defined) within two years following a change in control
of Fourth Financial. Upon any such termination of
employment, in addition to compensation and benefits
already earned, the officer will be entitled to receive:
(a) a lump sum severance payment equal to 1.5 times (two
times in the cases of Mr. Knudson, Mr. Greer, and Mr.
Keller) the sum of such officer's highest base salary
during the 12-month period preceding the change in control
and his three-year average bonus percentage multiplied by
his target bonus then in effect, (b) continuation in effect
for 18 months (2 years in the case of Mr. Knudson, Mr.
Greer, and Mr. Keller) of all medical insurance, life
insurance, and disability benefit plans then in effect, (c)
full vesting of all outstanding stock options and, at the
executive's option, purchase of options granted within the
preceding six months, (d) the present value of his enhanced
benefit under Fourth Financial's Supplemental Executive
Retirement Plan with his age and credited service each
increased by 1.5 years (two years in the cases of Mr.
Knudson, Mr. Greer, and Mr. Keller), (e) the amount of all
accrued vacation pay, and (f) the value of any unvested
employer contributions to Fourth Financial's defined
contribution plan; provided, however, that no such payment
can exceed the amount deductible for income tax purposes
under the Internal Revenue Code. The agreements are for
terms of two years renewable annually on a year-to-year
basis unless terminated by Fourth Financial at least 90
days prior to the anniversary date, except they continue in
effect automatically for a period of 24 months following a
change in control of Fourth Financial. Fourth Financial
estimates that, if a change in control occurred as of
September 30, 1994, the estimated aggregate amount payable
under these agreements if the employment of Messrs.
Knudson, Greer, Keller, Ritchey, and Strohm were terminated
would be approximately $4,000,000.
Additional information concerning Fourth Financial's
business, and information concerning the principal holders
of Fourth Stock, the directors and executive officers of
Fourth Financial, executive compensation, and certain
relationships and related transactions is contained in the
Fourth 10-K and the Fourth 10-Q, both of which are attached
to this Proxy Statement-Prospectus. All of such
information is hereby incorporated into this Proxy
Statement-Prospectus by reference.
INFORMATION CONCERNING SBI AND THE BANK
Financial Information
Financial information, including audited financial
information and management's discussion and analysis of the
consolidated financial condition and results of operations
of SBI and the Bank, is included in the financial
statements appearing elsewhere in this Proxy Statement-
Prospectus.
SBI
SBI is a one-bank holding company incorporated in 1991
under the laws of Nebraska and registered as a bank holding
company under the Bank Holding Company Act of 1956. On
December 15, 1991, SBI acquired all of the outstanding
capital stock of the Bank and presently owns all of the
outstanding capital stock of the Bank, except for
Directors' qualifying shares, as to which shares SBI holds
repurchase agreements. SBI has no employees. The
executive officers and directors of SBI are as follows;
Name Position
---- --------
W. Grant Gregory Chairman and Director
Chris J. Murphy President and Director
James Stuart, III Treasurer and Director
E. Dean Gall Secretary and Advisory Director
Karen Gregory Advisory Director
Charles M. Harper Advisory Director
James Stuart Advisory Director
THE BANK
General
The Bank was chartered by the State of Missouri on
December 13, 1991, and on December 15, 1991, the Bank
acquired substantially all of the assets and assumed
substantially all of the liabilities of Standard State Bank
and Trust. Standard State Bank and Trust was a bank
chartered by the State of Missouri in 1921.
As of September 30, 1994, the Bank had total deposits
of $73.0 million, total assets of $80.9 million, and
stockholders' equity of $6.9 million.
Banking Facilities
- ------------------
The Bank owns and operates the following facilities
located in Independence, Missouri:
Address Approximate Square Footage
------- --------------------------
10725 Independence Avenue 7,540
10801 East 23rd Street 9,400
3901 Noland Road 2,400
Management
The executive officers and directors of the Bank are
as follows;
Name Position
---- --------
W. Grant Gregory Chairman and Director
E. Dean Gall President, Chief Executive
Officer and Director
Jo Ann Shatwell Executive Vice President,
Cashier, and Chief Operating
Officer
Ronald E. Henke Executive Vice President and
Compliance Officer
Eugene Browning Director
Frank Byam Director
Martin Gerber Director
Michael McGraw Director
Chris J. Murphy Director
Hugh Stewart Director
James Stuart, III Director
Lee Vaughan Director
Employees
At November 30, 1994, there were approximately 51
full-time equivalent employees of the Bank. The Bank is
not a party to any collective bargaining agreement and its
employee relations are considered to be good by the Bank's
management.
Competition
The Bank provides a full range of banking services to
individuals and to small and medium size firms in
Independence, Missouri, and in the greater Kansas City
area. The services include loans, checking and savings
accounts, time deposits and NOW accounts, deposit
facilities, wire transfer services, travelers checks, money
orders, night depository facilities, and other financial
services. The Bank also offers trust services to its
customers.
Banks encounter intense competition in all of their
banking activities. As lenders, they compete not only with
other banks but also with savings and loan associations,
production credit associations, credit unions, finance
companies, factoring companies, insurance companies,
governmental agencies and other financial institutions.
They compete for deposits with other banks, savings and
loan associations, credit unions, mutual funds (including
money market funds), issuers of commercial paper, the stock
markets, municipalities, and other government agencies.
The principal competitive factors and the markets for
deposits and loans are, respectively, interest rates paid
and interest rates charged.
Litigation
The Bank is a defendant in various claims and lawsuits
which arose in the ordinary course of business, including
claims by three former employees of the Bank alleging
either gender or disability discrimination, among other
things. In the opinion of management, the amount of
ultimate liability with respect to these actions will not
materially affect the financial position of SBI or the
Bank.
DESCRIPTION OF CAPITAL STOCK OF SBI
The Articles of Incorporation of SBI (the "Articles")
provide that SBI has authority to issue 500,000 shares of
Class A Common Stock, par value $1.00 ("Class A Common
Stock"), 500,000 shares of Class B Common Stock, par value
$1.00 ("Class B Common Stock"), and 6,000 shares of 9%
Cumulative Preferred Stock, par value $100.00 ("Preferred
Stock"). As of December 1, 1994, there were a total of
2,340 shares of Class A Common Stock, 3,120 shares of Class
B Common Stock, and 5,850 shares of Preferred Stock issued
and outstanding.
Each share of Class A Common Stock entitles the holder
thereof to one vote per share on all matters on which
shareholders are entitled to vote, including the election
of Directors. Cumulative voting is permitted in voting for
the election of Directors. Neither the Class B Common
Stock nor the Preferred Stock entitles the holder thereof
to any voting rights except as otherwise provided or
required by law. Holders of Preferred Stock are entitled
to receive $9.00 per share annually on December 31 if
declared by the Board of Directors and unpaid Preferred
Stock dividends are payable on a cumulative basis before
any dividend can be declared or paid with respect to the
Class A Common Stock and the Class B Common Stock. Upon
liquidation of SBI, holders of Preferred Stock are entitled
to payment of $100.00 per share plus all unpaid dividends
before any payment can be made with respect to either the
Class A or the Class B Common Stock. Holders of Class A
Common Stock and Class B Common Stock are entitled to
receive dividends thereon when, as, and if declared by the
Board of Directors out of funds legally available for such
purpose, and upon liquidation, to share ratably in any
assets available for distribution after payment of
liabilities and amounts payable with respect to Preferred
Stock.
PRICE RANGE OF AND DIVIDENDS ON FOURTH STOCK AND SBI
STOCK
Fourth Stock
Fourth Stock is traded in the over-the-counter market
and is reported under the National Association of
Securities Dealers Automated Quotation ("NASDAQ") symbol
FRTH.
The following table sets forth the high and low
closing sales prices of Fourth Stock as reported on the
NASDAQ National Market System and the cash dividends paid
per share of common stock for the periods indicated.
Calendar Year High Low Dividends
- ------------- ---- --- ---------
1991:
First Quarter $21 1/4 $16 1/2 $ .22
Second Quarter 20 1/2 18 .22
Third Quarter 21 1/4 18 1/4 .22
Fourth Quarter 24 1/2 19 1/4 .22
1992:
First Quarter 26 1/4 22 1/2 .22
Second Quarter 28 1/2 24 1/2 .22
Third Quarter 27 1/4 24 .22
Fourth Quarter 31 1/2 25 .22
1993:
First Quarter 31 1/4 28 1/2 .22
Second Quarter 30 7/8 26 7/8 .24
Third Quarter 31 1/4 28 1/2 .24
Fourth Quarter 30 3/8 26 .26
1994:
First Quarter 28 3/4 25 3/8 .26
Second Quarter 30 3/4 26 5/8 .26
Third Quarter 30 1/2 27 3/4 .26
Fourth Quarter 33 29 1/4 .26
(through December _)
A public announcement of the proposed Merger was made on
September 8, 1994. The reported closing sales price of
Fourth Stock on September 7, 1994, was $30.25.
Information concerning a recent reported price of Fourth
Stock is set forth on the cover page of this Proxy
Statement-Prospectus.
Holders of Fourth Stock are entitled to receive dividends
thereon when, as, and if declared by the Board of Directors
out of funds legally available for such purpose, and, upon
liquidation, to share ratably in any assets available for
distribution after payment of liabilities. Information
about restrictions on the ability of Fourth Financial to
pay dividends is contained in Item 1 of the Fourth 10-K,
under the caption "Regulation and Supervision".
SBI Stock
There has been no sale of any class of SBI Stock since
SBI's formation.
SBI has never declared nor paid cash dividends on its
common stock or its Preferred Stock. Cumulative but unpaid
dividends at December 1, 1993 totaled $108,900 and will
total $161,550 at December 31, 1994. Such dividends will
not be paid if the SBI Merger is effected. Holders of
Preferred Stock are entitled to receive $9.00 per share
annually on December 31 if declared by the Board of
Directors and unpaid preferred stock dividends are payable
on a cumulative basis before any dividend can be declared
or paid with respect to either class of SBI common stock.
Upon liquidation of SBI, holders of SBI Preferred Stock are
entitled to payment of $100 per share plus all unpaid
dividends before any payment can be made with respect to
either class of SBI common stock. Holders of SBI common
are entitled to receive dividends thereon when, as, and if
declared by the Board of Directors out of funds legally
available for such purpose, and, upon liquidation, to share
ratably in any assets available for distribution after
payment of liabilities and amounts payable with respect to
Preferred Stock. SBI is dependent on receiving dividends
from the Bank in order for SBI to be able to pay dividends
on SBI Stock. See Note L to the consolidated financial
statements of SBI for a discussion of certain restrictions
on SBI's ability to redeem its Preferred Stock and to pay
dividends.
Neither Fourth Financial nor any of its executive
officers or directors or their affiliates owned any shares
of capital stock of SBI on the date of this Proxy
Statement-Prospectus and neither SBI nor any of its
executive officers or directors beneficially owned any
shares of Fourth Stock on such date.
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information
regarding the beneficial ownership of SBI Stock as of
December __, 1994 by each SBI stockholder.
Number of Shares
of Fourth Stocks
Amounts and to be Beneficially
Nature of Owned After the SBI
Name and Address Beneficial Percent Merger If the
of Beneficial Owner Ownership of Class Effective Time is
------------------- ---------- -------- --------------------
On or Before After
2/15/95 2/15/95
------- -------
Preferred Stock
---------------
Charles M. Harper 1,950 33 1/3% 6,725 6,783
James Stuart 1,950 33 1/3 6,725 6,783
W. Grant Gregory 1,950(1) 33 1/3 6,725(1) 6,783(1)
Class A Common Stock
--------------------
W. Grant Gregory 780 33 1/3% 42,118 42,483
Charles M. Harper 780 33 1/3 42,118 42,483
James Stuart 780(2) 33 1/3 42,118(2) 42,483(2)
Class B Common Stock
--------------------
Charles M. Harper 1,040 33 1/3% 56,157 56,644
James Stuart 1,040(2) 33 1/3 56,157(2) 56,644(2)
W. Grant Gregory 1,040(1) 33 1/3 56,157(1) 56,644(1)
______________
<FN>
(1) The indicated shares of SBI are owned by Southwest Company and the shares of Fourth Stock will be owned
by Southwest Company after the SBI Merger. Mr. Gregory disclaims beneficial ownership of the shares
except to the extent of his pecuniary interest therein. Southwest Company is a one-bank holding
company incorporated under the laws of the State of Iowa, and owns a controlling stock interest in the
Fremont County Savings Bank, Sidney, Iowa. Mr. Gregory owns 72% of the issued and outstanding shares
of Southwest Company.
(2) The indicated shares of SBI are owned by The Stuart Kansas City Limited Partnership and the shares of
Fourth Stock will be owned by The Stuart Kansas City Limited Partnership after the SBI Merger. Mr.
Stuart disclaims beneficial ownership of the shares except to the extent of his pecuniary interest
therein. The Stuart Kansas City Limited Partnership is a Nebraska limited partnership formed for the
purpose of acquiring the subject shares of SBI. Mr. Stuart owns all of the Class A Preferred Limited
Partnership Units in the Partnership. James Stuart, III is the sole general partner, and owns all of
the general partnership units. James Stuart, III is Mr. Stuart's grandson. Six of Mr. Stuart's
grandchildren own all of the Class B Limited Partnership Units.
Chris J. Murphy has the contractual right to acquire all
of Mr. Harper's SBI Stock and may therefore be deemed to be
the beneficial owner of all of such SBI Stock.
None of such persons will beneficially own as much as 1%
of the Fourth Stock that will be outstanding upon
consummation of the SBI Merger.
EXPERTS
The consolidated financial statements of Fourth Financial
Corporation appearing in Fourth Financial Corporation's
Annual Report (Form 10-K) for the year ended December 31,
1993, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included
therein and incorporated herein by reference, as to the
year 1992 are based in part on the reports of Arthur
Andersen LLP, Sartain Fischbein & Co., and GRA, Thompson,
White & Co., P.A., independent auditors, and as to the year
1991 are based in part on the reports of Arthur Andersen
LLP, Sartain Fischbein & Co., Grant Thornton, and Deloitte
& Touche LLP, independent auditors. The financial
statements referred to above are included in reliance upon
such reports given upon the authority of such firms as
experts in accounting and auditing.
The consolidated financial statements of Standard
Bancorporation, Inc. for the years ended December 31, 1993
and 1992 included in this Proxy Statement-Prospectus have
been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is included in
this Proxy Statement-Prospectus, and has been so included
in reliance upon such report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Fourth Stock to be issued in the SBI
Merger is being passed upon for Fourth Financial by
Foulston & Siefkin, Wichita, Kansas. As of December 1,
1994, three of the lawyers in such law firm participating
in the SBI Merger for Foulston & Siefkin beneficially owned
an aggregate of 14,164 shares of Fourth Stock. Certain
legal matters in connection with the SBI Merger will be
passed upon for SBI and the Stockholders by Knudsen,
Berkheimer, Richardson & Endacott, Lincoln, Nebraska,
counsel to SBI and the Stockholders.
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed with the
Securities and Exchange Commission by Fourth Financial
(File No. 0-4170) are incorporated herein by reference:
1. The annual report of Fourth Financial on Form 10-K for
the year ended December 31, 1993.
2. The quarterly report of Fourth Financial on Form 10-Q
for the quarter ended March 31, 1994.
3. The quarterly report of Fourth Financial on Form 10-Q
for the quarter ended June 30, 1994.
4. The quarterly report of Fourth Financial on Form 10-Q
for the quarter ended September 30, 1994.
5. The revised definitive proxy statement of Fourth
Financial used in connection with its 1994 Annual
Meeting of Stockholders held on April 21, 1994.
6. The description of the capital stock of Fourth
Financial contained in its quarterly report on Form
10-Q for the quarter ended June 30, 1992.
7. All documents filed by Fourth Financial pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Securities
and Exchange Act of 1934, as amended, after the date
hereof and before the date of the Special Meeting
shall be deemed to be incorporated by reference herein
and made a part hereof from the date any such document
is filed.
Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a
statement contained herein or in any other subsequently
filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to
constitute a part of this Proxy Statement-Prospectus except
as so modified or superseded.
The Annual Report of Fourth Financial on Form 10-K for
the year ended December 31, 1993, and the Quarterly Report
of Fourth Financial on Form 10-Q for the quarter ended
September 30, 1994 are attached to this Proxy Statement-
Prospectus as Annexes II and III, respectively.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers,
and employees of SBI, who will not be specifically paid for
such services, may solicit proxies from SBI stockholders,
personally or by telephone, facsimile, mail, or other form
of communication.
DEADLINE FOR SUBMISSION OF FOURTH FINANCIAL STOCKHOLDERS'
PROPOSALS FOR
THE 1995 ANNUAL MEETING OF STOCKHOLDERS
Any proposals to be submitted by Fourth Financial
stockholders pursuant to Rule 14a-8 of the Securities and
Exchange Commission, other than proposed nominees for
election as directors, at Fourth Financial's 1995 Annual
Meeting of Stockholders must have been received by Fourth
Financial at its principal executive offices at 100 North
Broadway, Post Office Box 4, Wichita, Kansas 67201, by
November 16, 1994, for inclusion in Fourth Financial's
proxy statement and form of proxy. If the date of the 1995
Annual Meeting is changed to a date more than thirty days
earlier or later than April 21, 1995, Fourth Financial
shall, in a timely manner, inform its stockholders of such
change and the date by which proposals of stockholders must
be received for such inclusion.
Fourth Financial's Bylaws provide that nominations for
directors, together with certain information specified by
the Bylaws, must be submitted in writing not later than
fourteen days nor earlier than fifty days prior to the date
of the Annual Meeting of Stockholders, except that if fewer
than twenty-one days' written notice of the meeting is
given to stockholders, such nominations may be made during
the seven days following the date the notice was made.
INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION
Standard Bancorporation, Inc. and
Subsidiary Page
-----
Independent Auditors' Report. . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Financial Condition,
December 31, 1993 and 1992. . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Earnings for the
years ended December 31, 1993 and 1992 . . . . . . . . . . . F-5
Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1993 and 1992 . . . . F-6
Consolidated Statements of Cash Flows for the
years ended December 31, 1993 and 1992 . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements for
the years ended December 31, 1993 and 1992. . . . . . . . . . F-8
Consolidated Interim Statements of Financial Condition,
September 30, 1994 and December 31, 1993 (unaudited). . . . . F-22
Consolidated Interim Statements of Earnings for the nine
months ended September 30, 1994 and 1993 (unaudited). . . . . F-23
Consolidated Interim Statements of Changes in Shareholders'
Equity for the nine months ended September 30, 1994 and
1993 (unaudited). . . . . . . . . . . . . . . . . . . . . . . F-24
Consolidated Condensed Interim Statements of Cash Flows for
the nine months ended September 30, 1994 and 1993
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . F-25
Notes to Consolidated Interim Financial Statements for
the nine months ended September 30, 1994 (unaudited). . . . . F-26
Management's Discussion and Analysis of Financial Condition
and Results of Operations and other financial information . . F-27
Quarterly Financial Data . . . . . . . . . . . . . . . . . . . F-42
INDEX TO FINANCIAL STATEMENTS AND RELATED INFORMATION
Fourth Financial Corporation, Standard
Bancorporation, Inc., Blackwell Security
Bancshares, Inc., and Oklahoma Savings, Inc.,
(Pending Acquisitions) Page
----
Pro forma Condensed Consolidated Statement of Condition
as of September 30, 1994 (unaudited). . . . . . . . . . . . . F-44
Fourth Financial Corporation, Equity Bank for Savings, F. A., and
Emprise Bank, National Association (Recent Acquisitions), and
Standard Bancorporation, Inc., Blackwell Security Bancshares, Inc.,
and Oklahoma Savings, Inc. (Pending Acquisitions)
Pro forma Condensed Consolidated Statements of Income for the
nine months ended September 30, 1994 and 1993 (unaudited) and
for years ended December 31, 1993 (unaudited) . . . . . . . . F-47
Pro forma Condensed Consolidated Statement of Income for the
nine months ended September 30, 1994 (unaudited). . . . . . . F-48
Pro forma Condensed Consolidated Statement of Income for the
nine months ended September 30, 1993 (unaudited). . . . . . . F-49
Pro forma Condensed Consolidated Statement of Income for the
year ended December 31, 1993 (unaudited). . . . . . . . . . . F-50
INDEPENDENT AUDITORS' REPORT
Board of Directors
Standard Bancorporation, Inc.
Independence, Missouri
We have audited the accompanying consolidated
statements of financial condition of Standard
Bancorporation, Inc. and subsidiary as of December 31,
1993 and 1992, and the related consolidated statements
of earnings, changes in shareholders' equity, and cash
flows for the years then ended. 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, such consolidated financial statements
present fairly, in all material respects, the financial
position of Standard Bancorporation, Inc. and
subsidiary as of December 31, 1993 and 1992, and the
results of their operations and their cash flows for
the years then ended in conformity with generally
accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
March 16, 1994
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1993 AND 1992
- -------------------------------------------------------------------------------------
1993 1992
ASSETS
Cash and due from banks (Note B) $2,942,752 $3,469,792
Federal funds sold 4,100,000 2,500,000
------------ ------------
Total cash and cash equivalents 7,042,752 5,969,792
Securities available for sale (estimated market value of
$6,473,267) (Note C) 6,467,610 -
Investment securities, at cost (estimated market value
of $17,627,598 and $28,441,645) (Note C) 17,515,107 28,384,686
Loans (Note D) 46,360,842 43,394,848
Less allowance for loan loss (609,848) (612,899)
------------ ------------
Net loans 45,750,994 42,781,949
Premises and equipment, net (Note E) 2,682,496 2,793,297
Repossessed assets (Note F) 275,178 471,500
Accrued interest receivable 395,797 531,994
Other assets 236,534 252,086
------------ ------------
$80,366,468 $81,185,304
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing $14,133,604 $13,197,077
Interest bearing 58,903,088 61,088,734
------------ ------------
Total deposits 73,036,692 74,285,811
Long-term debt (Note G) 3,077,000 3,357,000
Accrued interest payable 432,026 450,484
Other liabilities 303,486 392,657
------------ ------------
Total liabilities 76,849,204 78,485,952
Commitments and contingencies (Note J)
Shareholders' equity (Notes G and L):
Cumulative 9% preferred stock, $100 par value; 6,000
shares authorized, 5,850 shares issued and outstanding 585,000 585,000
Common stock, Class A, $1 par value, 500,000
shares authorized, 2,340 issued and outstanding 2,340 2,340
Common stock, Class B, $1 par value, 500,000
shares authorized, 3,120 issued and outstanding 3,120 3,120
Paid in capital 1,359,540 1,359,540
Retained earnings 1,567,264 749,352
------------ ------------
Total shareholders' equity 3,517,264 2,699,352
------------ ------------
$80,366,468 $81,185,304
============ ============
<FN>
See notes to consolidated financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
- -------------------------------------------------------------------------------------
1993 1992
Interest income:
Loans, including fees $4,093,837 $4,018,192
Investment securities and securities available for sale 1,375,306 1,729,724
Short-term investments 82,844 59,051
------------ ------------
Total interest income 5,551,987 5,806,967
Interest expense:
Deposits 1,723,038 2,116,119
Long-term debt 179,570 205,594
------------ ------------
Total interest expense 1,902,608 2,321,713
------------ ------------
Net interest margin 3,649,379 3,485,254
Provision for loan losses 72,000 75,000
------------ ------------
Net interest margin after provision for loan losses 3,577,379 3,410,254
Noninterest income:
Service charges and fees to customers 472,834 499,534
Gain on sale of investment securities 68,818 66,529
Other 211,973 186,531
------------ ------------
Total noninterest income 753,625 752,594
------------ ------------
Noninterest expense:
Salaries and employee benefits 1,522,435 1,635,405
Net occupancy expense 224,907 209,008
Furniture and equipment expense 89,437 82,802
FDIC insurance assessment 178,080 174,940
Data processing fees 132,487 131,780
Advertising 107,903 125,098
Legal and professional fees 132,431 58,125
Office supplies 50,955 46,149
Loss from operation and sale of repossessed assets 122,544 13,494
Other 647,913 617,517
------------ ------------
Total noninterest expense 3,209,092 3,094,318
------------ ------------
Earnings before income taxes 1,121,912 1,068,530
Provision for income taxes (Note H) 304,000 352,000
------------ ------------
Net earnings $817,912 $716,530
============ ============
Average common shares outstanding 5,460 5,460
============ ============
Net earnings per common share $140.16 $121.59
============ ============
<FN>
See notes to consolidated financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
- --------------------------------------------------------------------
Common Stock
Preferred Paid In Retained
Stock Class A Class B Capital Earnings
BALANCE, January 1, 1992 $585,000 $234,000 $312,000 $819,000 $32,822
Change in par value - (231,660) (308,880) 540,540 -
Net earnings - - - - 716,530
------------ ------------ ------------ ----------- -----------
BALANCE, December 31, 1992 585,000 2,340 3,120 1,359,540 749,352
Net earnings - - - - 817,912
------------ ------------ ------------ ----------- -----------
BALANCE, December 31, 1993 $585,000 $2,340 $3,120 $1,359,540 $1,567,264
============ ============ ============ ============ ===========
<FN>
See notes to consolidated financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
- -------------------------------------------------------------------------------------
1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $817,912 $716,530
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation and amortization 189,469 184,274
Provision for loan losses 72,000 75,000
Amortization of premiums on investment securities
and securities available for sale 196,099 355,675
Gain on sale of investment securities (68,818) (66,529)
Provision for deferred taxes (12,000) 50,000
Loss (gain) on sale of repossessed assets 62,397 (15,369)
Change in accrued interest receivable 136,198 183,929
Change in accrued interest payable (18,457) (65,374)
Change in other liabilities (77,171) 89,697
Change in other assets (15,371) 85,190
------------ ------------
Total adjustments 464,346 876,493
------------ ------------
Net cash from operating activities 1,282,258 1,593,023
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities 6,040,154 22,905,952
Proceeds from maturities of investment securities 14,852,306 3,656,521
Purchases of investment securities (16,617,773) (25,997,557)
Loan originations, net of repayments (3,653,689) (6,589,643)
Capitalized cost of repossessed assets (3,997) (67,247)
Proceeds from sale of repossessed assets 750,567 520,435
Purchases of premises and equipment (47,747) (27,407)
------------ ------------
Net cash from investing activities 1,319,821 (5,598,946)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits (1,249,119) 3,889,004
Repayment of long-term debt (280,000) (253,000)
------------ ------------
Net cash from financing activities (1,529,119) 3,636,004
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,072,960 (369,919)
CASH AND CASH EQUIVALENTS, beginning of year 5,969,792 6,339,711
------------ ------------
CASH AND CASH EQUIVALENTS, end of year $7,042,752 $5,969,792
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $1,921,066 $2,387,047
============ ============
Income taxes paid $296,214 $274,069
============ ============
Noncash investing activities:
Transfers from loans to repossessed assets $612,645 $746,154
============ ============
Transfer of investment securities to securities available for sale $6,467,610 $ -
============ ============
<FN>
See notes to consolidated financial statements.
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated
financial statements include the accounts of the
Company and its wholly-owned subsidiary, Standard
Bank & Trust (the Bank). All material intercompany
balances and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents - For purposes of the
statements of cash flows, the Company considers
cash and short-term investments purchased with
original maturities of three months or less to be
cash and cash equivalents.
Investment Securities - Investment securities are
carried at cost, adjusted for amortization of
premium and accretion of discount. Premiums and
discounts are amortized and accreted over the life
of the related security using a method that
approximates the level yield method. These
securities are not carried at the lower of cost or
market because the Company has the ability and
intent to hold these securities to maturity. In
connection with the pending adoption of SFAS 115,
the Company has changed its investment strategy and
has transferred certain of its investment
securities to securities available for sale.
Securities Available for Sale - Securities held for
sale are stated at the lower of aggregate cost or
market. Gains or losses on securities held for
sale are recognized on the specific identification
method and are included in the statement of
earnings under noninterest income.
Loans and Allowance for Loan Losses - Loans are
stated at the principal amount outstanding, net of
the allowance for loan losses. Interest on loans
is calculated by the interest method on the daily
outstanding principal balance. Accrual of interest
is discontinued on a loan when management believes,
after considering economic and business conditions
and collection efforts, that the borrower's
financial condition is such that collection of
interest is doubtful.
The allowance for loan losses is established
through a provision for loan losses charged to
operations and is maintained at a level adequate to
absorb probable losses. Management determines the
adequacy of the allowance based upon reviews of
individual credits, recent loss experience, current
economic conditions, the risk characteristics of
the various categories of loans and other pertinent
factors. Loans deemed uncollectible are charged to
the allowance. Provisions for loan losses and
recoveries on loans previously charged off are
added to the allowance.
Premises and Equipment - Premises and equipment are
stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line
method over the estimated useful lives of the
various classes of assets. The estimated useful
lives for the principal classes of assets are 40
years on buildings and leasehold improvements, 5 to
25 years on furniture and equipment, and 5 years on
automobiles.
Repossessed Assets - Assets acquired through
foreclosure or repossession are recorded at the
lower of cost (principal balance of the former loan
plus costs of obtaining title and possession) at
the time of foreclosure or repossession or fair
value minus estimated costs to sell. Costs of
developing or improving assets acquired through
foreclosure or repossession are included in the
carrying value of the foreclosed or repossessed
asset to the extent it does not exceed fair value
minus estimated costs to sell. Subsequent to
foreclosure or repossession, any declines in the
fair value of the assets below the carrying value
are charged directly to income.
Other Assets - Included in other assets are
organization and acquisition costs, net of
accumulated amortization. The organization and
acquisition costs are being amortized on a
straight-line basis over 5 years.
Income Taxes - The Company uses the liability
method for financial accounting and reporting for
income taxes in accordance with Statement of
Financial Accounting Standards No. 109 Accounting
for Income Taxes. Deferred income taxes are
recognized for the tax consequences of all events
that have been recognized in the financial
statements or tax returns, measured by applying the
provisions of the then enacted tax laws. Temporary
differences between financial accounting and
reporting for tax purposes arise primarily from
depreciation and deduction for loan losses. The
Company and its subsidiary file consolidated income
tax returns.
Disclosures About Fair Values of Financial
Instruments - Statement of Financial Accounting
Standards No. 107 (SFAS 107), Disclosure about Fair
Value of Financial Instruments, requires certain
entities to disclose the estimated fair value of
its financial instruments. For the Bank, as with
most financial institutions, most of its assets and
its liabilities are considered financial
instruments as defined in SFAS 107. This statement
will be effective for the Company's financial
statements for the year ending December 31, 1995.
Preferred Stock - Preferred stock consists of 6,000
shares of nonvoting 9% cumulative preferred $100
par value stock. The preferred stock may be
redeemed at the option of the Company at par plus
cumulative but unpaid dividends to the date of
redemption. Cumulative but unpaid dividends at
December 31, 1993 totaled $108,900.
Net Earnings Per Common Share - Net earnings per
common share were computed by dividing net earnings
applicable to common shares by the average common
shares outstanding during the period. Cumulative
preferred dividends for the current period not paid
or declared are deducted from net earnings in
determining earnings applicable to common shares.
Reclassifications - Certain prior year's amounts
have been reclassed to conform to current year's
classifications.
B. 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 statement of financial
condition included restricted cash reserve
requirements of $120,000 and $100,000 at December
31, 1993 and 1992.
C. INVESTMENT SECURITIES AND SECURITIES AVAILABLE FOR
SALE
The amortized cost and estimated market value of
investment securities at December 31, 1993 and 1992
are as follows:
1993
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
Municipal securities $4,070,940 $160,003 $1,950 $4,228,993
U.S. Treasury securities
and obligations of U.S.
Government agencies 7,197,337 - 79,357 7,117,980
Mortgage-backed securities 6,246,830 82,442 48,647 6,280,625
------------ ------------ ------------ ------------
$17,515,107 $242,445 $129,954 $17,627,598
============ ============ ============ ============
1992
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
Municipal securities $3,008,281 $86,833 $522 $3,094,592
U.S. Treasury securities
and obligations of U.S
Government agencies 12,219,296 103,531 56,298 12,266,529
Mortgage-backed securities 13,157,109 54,539 131,124 13,080,524
------------ ------------ ------------ ------------
$28,384,686 $244,903 $187,944 $28,441,645
============ ============ ============ ============
The amortized cost and estimated market value of
investment securities at December 31, 1993 by
contractual maturity are shown below. 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.
Estimated
Amortized Market
Cost Value
Due in one year or less $4,494,995 $4,492,339
Due after one year through five years 4,546,522 4,533,216
Due after five years through ten years 2,226,760 2,321,418
------------ ------------
11,268,277 11,346,973
Mortgage-backed securities 6,246,830 6,280,625
------------ ------------
$17,515,107 $17,627,598
============ ============
The amortized cost and estimated market value of
securities available for sale at December 31, 1993
are as follows:
1993
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
U.S. Treasury securities and
obligations of U.S.
Government agencies $4,024,410 $15,102 $1,700 $4,037,812
Mortgage-backed securities 2,443,200 20,196 27,941 2,435,455
------------ ------------ ------------ ------------
$6,467,610 $35,298 $29,641 $6,473,267
============ ============ ============ ============
The amortized cost and estimated market value of
securities available for sale at December 31, 1993
by contractual maturity are shown below. 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.
Estimated
Amortized Market
Cost Value
Due in one year or less $2,524,053 $2,538,593
Due after one year through five years 1,500,357 1,499,219
------------ ------------
4,024,410 4,037,812
Mortgage-backed securities 2,443,200 2,435,455
------------ ------------
$6,467,610 $6,473,267
============ ============
Upon acquisition of the Bank, management
restructured the majority of the investment
portfolio purchased from the predecessor bank.
Certain investment securities were sold and the
proceeds were reinvested.
Proceeds from sales of investment securities were
$6,040,154 and $22,905,952 for the years ended
December 31, 1993 and 1992. Gross gains of $77,440
and $66,529 were realized on these sales during the
years ended December 31, 1993 and 1992 and gross
losses of $8,622 were realized during the year
ended December 31, 1993.
Securities with a carrying amount of $7,019,059 at
December 31, 1993, and $8,722,150 at December 31,
1992 were pledged for purposes evolving in the
normal course of business.
The Company adopted Statement of Financial
Accounting Standards No. 115 Accounting for Certain
Investments in Debt and Equity Securities (SFAS
115) on January 1, 1994. SFAS 115 required
securities to be classified into the categories of
held to maturity, available for sale or trading
securities based upon management's intended use of
such securities. The effect of adopting SFAS 115
was not material at date of adoption.
D. LOANS
Loans at December 31, are summarized as follows:
1993 1992
Commercial loans $7,474,366 $6,944,646
Loans to individuals for household,
family and other consumer expenditures 19,071,966 19,121,457
Real estate mortgage loans 19,571,358 16,942,811
Other 243,152 385,934
------------ ------------
$46,360,842 $43,394,848
============ ============
Included above are loans on non-accrual status of
approximately $62,000 and $103,000 at December 31,
1993 and 1992, respectively.
The Bank generally grants commercial loans,
residential and commercial real estate mortgage
loans, consumer loans, student loans and real
estate construction loans to customers throughout
the Independence, Missouri area. A substantial
proportion of the Bank's debtors' ability to honor
their contracts is dependent upon the general
economic health of the local and regional economy.
Activity in the allowance for loan losses for the
years ended December 31, 1993 and 1992 is
summarized as follows:
1993 1992
Balance, beginning of year $612,899 $745,589
Provision charged to operations 72,000 75,000
Net charge-offs (75,051) (207,690)
------------ ------------
Balance, end of year $609,848 $612,899
============ ============
E. PREMISES AND EQUIPMENT
Premises and equipment at December 31, consisted of
the following:
1993 1992
Land $474,916 $474,916
Buildings 1,658,609 1,651,216
Furniture, fixtures and equipment 831,042 820,818
Autos 35,336 6,474
------------ ------------
2,999,903 2,953,424
Less accumulated depreciation 317,407 160,127
------------ ------------
Premises and equipment, net $2,682,496 $2,793,297
============ ============
F. REPOSSESSED ASSETS
Repossessed assets at December 31, consisted of the
following:
1993 1992
Real estate $140,000 $145,000
Equipment 43,603 221,000
Autos 91,575 105,500
------------ ------------
$275,178 $471,500
============ ============
G. LONG-TERM DEBT
Long-term debt at December 31, 1993 consists of a
note payable to bank due in annual installments
through December, 1996. Interest is payable
quarterly at varying rates assigned to different
maturing amounts of the note ranging from 4.93% to
7.62%. At December 31, 1993 the weighted average
rate was 5.62%.
The note is secured by substantially all of the
common stock of Standard Bank and Trust, the
Company's only significant asset. Under the
covenants of the note, the Company may not issue
any additional capital stock, is restricted to the
payment of dividends on its preferred stock and is
limited to the levels of bonus and capital
expenditures which may be made and is required to
maintain certain financial statements and loan loss
ratios. The principal payment of $280,000
scheduled for payment in February of 1994 was
prepaid during 1993.
Principal maturities of long-term debt are as
follows:
Year Ending December 31,
1995 $ 309,000
1996 2,768,000
H. INCOME TAXES
The components of income tax expense for the years
ended December 31, 1993 and 1992 are as follows:
1993 1992
Current $316,000 $302,000
Deferred (12,000) 50,000
------------ ------------
$304,000 $352,000
============ ============
The effective income tax expense differs from the
statutory federal tax rate for the years ended
December 31, 1993 and 1992 as follows:
1993 1992
Tax at federal statutory rate $381,000 $363,000
Tax exempt interest (75,000) (65,000)
State income taxes, net of federal benefit 15,000 51,000
Other (17,000) 3,000
------------ ------------
$304,000 $352,000
============ ============
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used for income
tax purposes. Significant items comprising the
Company's net deferred tax liability as of December
31, 1993 and 1992 were as follows:
Deferred assets:
Allowance for loan losses $52,000 $29,000
Other 31,000 11,000
------------ ------------
83,000 40,000
Deferred liabilities:
Depreciation on premises and equipment 108,000 74,000
Other 13,000 16,000
------------ ------------
Net deferred liability $38,000 $50,000
============ ============
The deferred liability is included in other
liabilities in the statement of financial
condition.
I. EMPLOYEE BENEFITS
The Bank sponsors a contributory 401(k) plan
covering substantially all employees. Employees
may contribute to the plan through payroll
withholdings up to 15% of their salary and an
established overall limitation. The Bank does not
match the employee deferral but may make, at the
discretion of the Board of Directors, profit
sharing contributions which are allocated to the
various employee accounts on a pro rata basis.
Contributions by the Bank were approximately
$50,000 and $49,300 for the years ended December
31, 1993 and 1992.
J. COMMITMENTS AND CONTINGENCIES
The Bank is a party to financial instruments with
off-balance sheet risk in the normal course of
business to meet the financing needs of its
customers. These financial instruments include
commitments to extend credit, and standby letters
of credit and financial guarantees. These
instruments involve, to varying degrees, elements
of credit risk in excess of the amount recognized
in the accompanying statement of financial
condition.
Commitments to extend credit, standby letters of
credit and financial guarantees all include
exposure to some credit loss in the event of
nonperformance of the customer. The Bank's credit
policies and procedures for credit commitments and
financial guarantees are the same as those for
extensions of credit that are recorded on the
consolidated statements of financial condition.
Because these instruments have fixed maturity
dates, and because many of them expire without
being drawn upon, they do not generally present any
significant liquidity risk to the Bank. As of
December 31, 1993 and 1992, the Bank had
undisbursed lines of credit to existing borrowers
of approximately $4,931,000 and $4,316,000 and
outstanding standby letters of credit and
guarantees totaling approximately $110,750 and
$187,500. Such lines of credit predominately carry
variable rates of interest.
K. RELATED PARTY TRANSACTIONS
The Bank has entered into transactions with its
directors and their affiliates (related parties).
Such transactions were made in the ordinary course
of business on substantially the same terms and
conditions, including interest rates and
collateral, as those prevailing at the same time
for comparable transactions with other customers,
and did not, in the opinion of management, involve
more than normal credit risk or present other
unfavorable features.
An analysis of the activity with respect to these
related party loans for the years ended
December 31, 1993 and 1992 is as follows
1993 1992
Balance, beginning of year $677,021 $869,234
New loans 259,794 25,000
Repayments and reductions (237,906) (217,213)
------------ ------------
Balance, end of year $698,909 $677,021
============ ============
L. REGULATORY MATTERS
One of the principal sources of cash of the Company
is dividends from the Bank. The total dividends
that can be declared by the Bank without receiving
prior approval from regulatory authorities is
limited to an amount which, after payment, would
not cause the Bank's tangible shareholders' equity
to be less than 7% of total tangible assets. At
December 31, 1993 and 1992, approximately $229,000
and $291,000, respectively, of the Bank's retained
earnings were restricted as to the payment of
dividends by this provision.
The Company has agreed not to redeem its preferred
stock if, subsequent to redemption, its debt-to-
equity ratio exceeds 30%, or the Bank's tangible
equity capital ratio falls below 7%. In addition,
the Company has agreed not to pay dividends on its
preferred stock if (a) the Bank's tangible equity
capital ratio falls below 7%; (b) the Company's
level of debt exceeds that projected; or (c) the
payment of preferred dividends would reduce the
Company's ability to achieve a debt-to-equity ratio
of 30% or less within 12 years of formation. The
Company has also agreed not to incur additional
debt without the prior written approval of the
Federal Reserve Bank.
The Bank is required to maintain minimum capital in
accordance with federal guidelines. The guidelines
require a minimum ratio of defined capital to risk
adjusted assets of 8.00%. The Bank's total risk
based capital, risk based capital requirement and
excess risk based capital at December 31, 1993, is
as follows:
Amount Percent (1)
Core capital (Tier I) $6,527,685 12.08%
Supplementary capital (Tier II)
Allowable portion of reserve for
loan losses 609,848 1.13%
------------ ------------
Total risk based capital $7,137,533 13.21%
============ ============
Risk based capital requirement $4,322,080 8.00%
============ ============
Excess risk based capital $2,815,453 5.21%
============ ============
<FN>
(1) Percentage based on risk weighted assets of $54,026,000.
In addition, the Bank is required to maintain a
minimum leverage ratio (Tier 1 capital to quarterly
average assets) of 3% to 5%, depending on
classification by regulators. At December 31,
1993, the Bank's ratio was 8.16%.
Effective December 19, 1992, the Federal Deposit
Insurance Corporation Improvement Act of 1991
(FDICIA) established five regulatory capital
categories: well-capitalized, adequately-
capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized;
and authorized banking regulatory agencies to take
prompt corrective action with respect to
institutions in the three undercapitalized
categories. These corrective actions become
increasingly more stringent as the institution's
regulatory capital declines. At December 31, 1993,
the Bank exceeded the minimum requirements for the
well-capitalized category.
M. CONDENSED FINANCIAL INFORMATION - PARENT COMPANY
ONLY
STATEMENTS OF FINANCIAL CONDITION
December 31,
1993 1992
ASSETS
Cash on deposit with the Bank $17,685 $24,365
Investment in net assets of subsidiary 6,544,340 5,994,647
Other assets 47,860 62,726
------------ ------------
$6,609,885 $6,081,738
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt 3,077,000 $3,357,000
Accrued interest payable 13,578 25,386
Other liabilities 2,043 -
------------ ------------
Total liabilities 3,092,621 3,382,386
Shareholders' equity:
Cumulative 9% preferred stock, $100 par value; 6,000
shares authorized, 5,850 issued and outstanding 585,000 585,000
Common stock, Class A, $1 par value, 500,000
shares authorized, 2,340 issued and outstanding 2,340 2,340
Common stock, Class B, $1 par value, 500,000
shares authorized, 3,120 issued and outstanding 3,120 3,120
Paid in capital 1,359,540 1,359,540
Retained earnings 1,567,264 749,352
------------ ------------
Total shareholders' equity 3,517,264 2,699,352
------------ ------------
$6,609,885 $6,081,738
============ ============
STATEMENTS OF EARNINGS
For the Years Ended December 31, 1993 and 1992
1993 1992
Income:
Dividend income $442,000 $330,000
Expenses:
Interest expense 179,570 205,594
Other 81,211 32,980
------------ ------------
Total expenses 260,781 238,574
------------ ------------
Earnings before income tax benefit and equity
in undistributed earnings of subsidiary 181,219 91,426
Income tax benefit 87,000 86,000
------------ ------------
Earnings before equity in undistributed
earnings of subsidiary 268,219 177,426
Equity in net undistributed earnings of subsidiary 549,693 539,104
------------ ------------
Net earnings $817,912 $716,530
============ ============
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1993 and 1992
1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $817,912 $716,530
Adjustments to reconcile net earnings to net cash from
operating activities:
Amortization 15,866 15,864
Equity in undistributed earnings (549,693) (539,104)
Change in other assets (1,000) 107,500
Change in accrued interest payable (11,808) 11,648
Change in other liabilities 2,043 (1,831)
------------ ------------
Total adjustments (544,592) (405,923)
------------ ------------
Net cash from operating activities 273,320 310,607
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital contribution in subsidiary - (108,322)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (280,000) (253,000)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,680) (50,715)
CASH AND CASH EQUIVALENTS, beginning of year 24,365 75,080
------------ ------------
CASH AND CASH EQUIVALENTS, end of year $17,685 $24,365
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $191,378 $193,946
============ ============
Income taxes paid $296,214 $274,069
============ ============
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL CONDITION
- ---------------------------------------------------------------
(Unaudited)
September 30, December 31,
1994 1993
------------- -------------
(In Thousands)
Cash and due from banks $1,881 $2,943
Federal funds sold - 4,100
------------- -------------
Total cash and cash equivalents 1,881 7,043
Securities available for sale (1994 at fair
value, cost, $6,363,884; 1993 at cost,
fair value $6,473,267) 6,093 6,468
Held to maturity securities, at cost
(fair value of $15,052,632 and $17,627,598) 15,496 17,515
Loans 54,399 46,361
Less allowance for loan loss (599) (610)
------------- -------------
Net loans 53,800 45,751
Premises and equipment, net 2,585 2,682
Repossessed assets 90 275
Accrued interest receivable 444 396
Deferred income taxes 58 -
Other assets 239 236
------------- -------------
$80,686 $80,366
============= =============
Deposits
Noninterest bearing $14,334 $14,134
Interest bearing 58,629 58,903
------------- -------------
Total deposits 72,963 73,037
Long-term debt 3,077 3,077
Accrued interest payable 357 432
Other liabilities 375 303
------------- -------------
Total liabilities 76,772 76,849
Shareholders' Equity:
Cumulative 9% preferred stock, $100 par value; 6,000
shares authorized, 5,850 shares issued and outstanding 585 585
Common stock, Class A, $1 par value, 500,000
shares authorized, 2,340 issued and outstanding 2 2
Common stock, Class B, $1 par value, 500,000
shares authorized, 3,120 issued and outstanding 3 3
Paid in capital 1,360 1,360
Net unrealized loss on securities available
for sale - net of tax (165) -
Retained earnings 2,129 1,567
------------- -------------
Total shareholders' equity 3,914 3,517
------------- -------------
$80,686 $80,366
============= =============
<FN>
See notes to consolidated interim financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
- ------------------------------------------------------
(In Thousands Except Share and per Share Data)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
---------- ----------
Interest income:
Loans, including fees $3,281 $3,046
Held to maturity securities and securities
available for sale 857 1,050
Short-term investments 70 64
---------- ----------
Total interest income 4,208 4,160
Interest expense:
Deposits 1,350 1,309
Long-term debt 142 136
---------- ----------
Total interest expense 1,492 1,445
Net interest margin 2,716 2,715
Provision for loan losses 65 72
---------- ----------
Net interest margin after provision for loan loses 2,651 2,643
Noninterest income:
Service charges and fees to customers 356 361
Other 171 167
---------- ----------
Total noninterest income 527 528
Noninterest expense:
Salaries and employee benefits 1,216 1,224
Net occupancy expense 162 167
Furniture and equipment expense 66 65
FDIC insurance assessment 133 134
Data processing fees 101 100
Advertising 61 92
Legal and professional fees 61 82
Office supplies 36 37
Loss from operation and sale of repossessed assets 61 43
Other 468 483
---------- ----------
Total noninterest expense 2,365 2,427
---------- ----------
Earnings before income taxes 813 744
Provision for income taxes 251 202
---------- ----------
Net earnings $562 $542
========== ==========
Weighted average common shares outstanding 5,460 5,460
========== ==========
Net earnings per common share $95.73 $92.00
========== ==========
<FN>
See notes to consolidated interim financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
- ------------------------------------------------------
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
Balance, beginning of period $3,517 $2,699
Decrease in net unrealized gains on available
for sale securities (165) -
Net income 562 542
---------- ----------
Balance, end of period $3,914 $3,241
========== ==========
<FN>
See notes to consolidated interim financial statements.
STANDARD BANCORPORATION, INC AND SUBSIDIARY
CONSOLIDATED CONDENSED INTERIM STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
- ------------------------------------------------------
(Unaudited)
Nine Months Ended
September 30,
1994 1993
---------- ----------
(In Thousands)
NET CASH FROM OPERATING ACTIVITIES $853 $955
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities
available for sale 9,973 -
Proceeds from sales of held to maturity securities - 1,949
Purchases of securities available for sale (9,893) -
Proceeds from maturities of held to maturity securities 4,373 10,765
Purchases of held to maturity securities (2,395) (7,769)
Loan originations, net of repayments (8,385) (4,787)
Capitalized cost of repossessed assets - (3)
Proceeds from sale of repossessed assets 412 383
Purchases of premises and equipment (26) (40)
---------- ----------
Net cash from investing activities (5,941) 498
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits (74) (3,236)
Repayment of long-term debt - (280)
---------- ----------
Net cash from financing activities: (74) (3,516)
---------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (5,162) (2,063)
CASH AND CASH EQUIVALENTS, beginning of period 7,043 5,970
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $1,881 $3,907
========== ==========
Supplemental disclosure:
Interest Paid $1,567 $1,566
Income Taxes Paid $248 $266
Transfers from loans to repossessed assets $271 $476
<FN>
See notes to consolidated interim financial statements.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
A: GENERAL
The accompanying unaudited consolidated condensed financial
statements and notes thereto contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial
position of the Company and its subsidiary as of September 30, 1994 and the
results of their operations. The consolidated condensed financial
statements should be read in conjunction with the 1993 audited consolidated
financial statements and the notes thereto.
B: ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for loan losses are summarized as
follows:
1994 1993
---------- ----------
(In Thousands)
Balance, January 1 $610 $613
Provision for loan losses 65 72
Net charge-offs (76) (71)
---------- ----------
Balance, September 30 $599 $614
========== ==========
C: INVESTMENT SECURITIES
The Company adopted Statement of Financial Accounting Standards No.
115 (SFAS 115) as of January 1, 1994 without material impact to the financial
statements. As of September 30, 1994, gross unrealized losses on securities
available for sale were approximately $271,000.
D: MERGER AGREEMENT
The Company has entered into an Agreement and Plan of Reorganization
with Fourth Financial Corporation dated September 2, 1994 whereby Fourth
Financial will acquire all of the issued and outstanding shares of the
Company by exchanging up to 317,730 shares of Fourth Financial shares for
shares of the Company. Such exchange is contemplated to qualify as a tax-
free reorganization under the Internal Revenue Code. The Agreement, as
amended, will terminate if all conditions to the obligations of the parties
have not occurred on or before February 28, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following commentary is management's discussion
and analysis of Standard Bancorporation Inc. (SBI or the
Company) and subsidiary, Standard Bank and Trust
(Standard or the Bank) consolidated financial condition
and results of operations and is designed to highlight
the major factors impacting the financial position and
performance of the years ending December 31, 1993 and
1992. Comparative analysis of operations between 1992
and 1991 are not provided as the Company had banking
operations for only 15 days in 1991 and such comparisons
are not considered to be meaningful. Reference should be
made to the consolidated financial statements included
elsewhere to more fully comprehend this discussion.
PERFORMANCE SUMMARY
SBI's consolidated net earnings during 1993 were
$818,000 versus $717,000 during 1992. The increase in
1993 earnings over 1992 is primarily attributable to the
net effect of higher net interest margins, higher
noninterest expense and lower income tax expense. For
1993 return on average assets and return on average
common equity were 1.02% and 31.92%, respectively. For
the comparative period in 1992, return on average assets
and return on average common equity were .89% and 38.48%
respectively.
Year end assets at December 31, 1993 were $80.4
million or 1% lower than December 31, 1992 reflective of
a $4.4 million decline in investment securities offset by
higher loan levels of $2.9 million and $1.6 million
higher levels of short term investments.
The provision for loan losses totaled $72,000 and
$75,000 for 1993 and 1992, respectively. The reserve for
loans as a percentage of total loans was 1.32% at
December 31, 1993 versus 1.41% at December 31, 1992. Net
charge offs declined from $208,000 in 1992 to $75,000 in
1993. Nonperforming loans as a percentage of total loans
declined from .46% at December 31, 1992 to .23% at
December 31, 1993.
The following table presents average balances, income
and expense, and yields and rates for 1993 and 1992.
1993 1992
---------- -------- ----- ---------- -------- -----
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------- -------- ----- ---------- -------- -----
(in thousands)
Assets:
Interest-earning assets:
Loans and leases (1) (2) $45,367 $4,094 9.02 % $42,396 $4,018 9.48 %
Federal funds sold 2,849 83 2.91 1,601 59 3.69
Held to maturity securities and
securities available for sale
Taxable 22,317 1,179 5.28 26,643 1,574 5.91
Non-taxable (3) 3,643 196 5.38 2,953 156 5.28
---------- -------- ---------- --------
Total interest earning assets $74,176 $5,552 7.48 $73,593 $5,807 7.89
Cash and due from banks 2,736 3,242
Repossessed assets 423 230
Bank premises and equipment 2,737 2,860
Income receivable and other assets 911 989
Allowance for loan losses (641) (725)
---------- ----------
Total assets $80,342 $80,189
========== ==========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing demand $19,820 $371 1.87 % $18,810 $412 2.19 %
Savings 10,701 286 2.67 9,762 290 2.97
Time under $100,000 28,005 1,002 3.58 31,043 1,354 4.36
Time of $100,000 or more 1,444 64 4.43 1,453 60 4.13
---------- -------- ---------- --------
Total interest-bearing deposits $59,970 $1,723 $61,068 $2,116
Federal funds purchased 2 - - 8 - -
Long-term debt 3,167 180 5.68 3,431 206 6.00
---------- -------- ---------- --------
Total interest-bearing liabilities $63,139 $1,903 3.01 $64,507 $2,322 3.60
Non-interest bearing deposits 13,305 12,448
Accrued interest payable
and other liabilities 751 787
---------- ----------
Total liabilities $77,195 $77,742
Preferred stock 585 585
Common stock 5 5
Paid in capital 1,360 1,360
Retained earnings 1,197 497
---------- ----------
Total liabilities and
shareholders' equity $80,342 $80,189
========== -------- --------
Net interest income $3,649 $3,485
======== ========
Rate Analysis:
Interest income/interest earning assets 7.48 % 7.89 %
Interest expense/interest earning assets 2.57 3.16
----- -----
Net yield on average interest earning assets 4.91 4.73
===== =====
<FN>
(1) Nonaccrual loans are included in average total loans and leases.
(2) Loan fees on new loans have been included in interest income, but the amounts of such
fees are not material to total interest income.
(3) Tax-exempt interest is not on a tax-equivalent basis.
NET INTEREST INCOME
Net interest income totaled $3,649,000 for 1993, an
increase of $164,000 or 4.70% over the $3,485,000 earned
during 1992. The increase in net interest income and net
yield on average interest earning assets was primarily
attributable to higher average levels of loans
versus securities and lower average levels of time
deposits. Both interest income yields and interest
expense rates declined from 1992 to 1993 due to a falling
interest rate environment. Gross interest income
declined from 1993 to 1992 $255,000 or 4.4% even
though total average earning assets increased
approximately 1.0% for the same period.
The following table attributes changes in net
interest income either to changes in average balance or
to changes in average rates for earning assets and
interest bearing liabilities. The change in interest due
jointly to volume and rate has been allocated to volume
and rate in proportion to the relationship of the
absolute dollar amount of change in each.
|------- 1993 vs 1992 ------|
Change attributable to Total
Volume Yield/Rate Change
---------- ------------ ---------
(in thousands)
Increase (decrease) in:
Interest income:
Loans and leases (1) (2) $274 ($198) $76
Federal funds sold 38 (14) 24
Held to maturity securities and
securities available for sale
Taxable (239) (156) (395)
Non-taxable (3) 37 3 40
---------- ------------ ---------
Total interest income change $110 ($365) ($255)
Interest expense:
Interest-bearing demand 21 (62) (41)
Savings 27 (31) (4)
Time deposits (124) (224) (348)
Long-term debt (15) (11) (26)
---------- ------------ ---------
Total interest expense change ($91) ($328) ($419)
---------- ------------ ---------
Net interest income change $201 ($37) $164
========== ============ =========
<FN>
(1) Nonaccruing loans have been included in average total loans and leases.
(2) Loan fees on new loans have been included in interest income, but
the amounts of such fees are not material to total interest income.
(3) Tax-exempt interest is not on a tax-equivalent basis.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $72,000 and
$75,000 for the years ending December 31, 1993 and 1992,
respectively. Net charge offs for 1993 were $75,000 as
compared with net charge offs of $208,000 for 1992. The
allowance for loan losses was $610,000 and $613,000 as of
December 31, 1993 and 1992 respectively. The allowance
as a percentage of loans was 1.32% and 1.41% as of
December 31, 1993 and 1992, respectively.
NONINTEREST INCOME
Noninterest income was $754,000 for the year ending
December 31, 1993, nearly the same as the $753,000 of
noninterest income for 1992. Service charges and fees to
customers decreased $27,000 or 5.3% from 1992 to 1993
primarily from lower service charges on deposit accounts.
Other noninterest income increased $25,000 or 13.6%
between 1993 and 1992 as a result of pricing changes for
trust services. Security gains of $69,000 and $67,000
were realized for the years ending December 31, 1993 and
1992, respectively.
NONINTEREST EXPENSE
Noninterest expense was $3,209,000 for the year
ending December 31, 1993, a $115,000 or 3.7% increase
compared with the $3,094,000 of noninterest expense in
1992. This increase was caused by several factors. Net
losses associated with the sale and operation of
repossessed assets and increased legal and professional
fees associated with disposition of these repossessed
assets increased from 1992 to 1993. Net loss on the sale
and operation of repossessed assets increased from
$13,000 in 1992 to $123,000 in 1993. Legal and
professional fees increased from $58,000 in 1992 to
$132,000 in 1993. Offsetting these increased noninterest
expense categories was a $113,000 decrease in salaries
and employee benefits expense. This decrease in salary
and employee benefits expense resulted primarily from a
change in the Bank's policy relative to the amount of
sick leave an employee can accumulate and from a fewer
number of executive employees.
INCOME TAXES
SBI provides for income taxes using the liability
method for financial accounting and reporting for income
taxes in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income
Taxes". Income tax expense was $304,000 and $352,000 for
the years ending December 31, 1993 and 1992,
respectively. The effective tax rate for SBI's
consolidated financial statements was 27.1% in 1993 and
32.9% in 1992. This decrease in effective rate in 1993
is primarily a result of reversals of the overaccrual of
state income taxes in the prior year.
LOANS
Gross loans outstanding increased $2,966,000 or 6.8%
from December 31, 1992 to December 31, 1993 primarily
from growth realized in real estate mortgage loans,
particularly home equity lines of credit.
This increase in real estate loans reflects activity
stimulated by relatively lower interest rates.
Commercial loans at December 31, 1993 also increased
$529,000, a 7.6% increase over December 31, 1992 levels.
Installment loans showed little change between 1992 and
1993 as competitive forces impacted market share.
The following table shows the composition of loans
for the periods presented:
December 31
1993 1992
------------ ------------
(in thousands)
Commercial loans $7,474 $6,945
Real estate loans
Construction 1,077 1,143
Real estate mortgage 18,495 15,800
Installment loans to individuals 19,072 19,121
Other 243 386
------------ ------------
Total loans and lease financiing $46,361 $43,395
============ ============
The Bank makes substantially all of its loans to
customers within the Independence, Missouri area. The
Company had no industry concentrations greater than 10%
of total loans outstanding and no foreign loans at
December 31, 1993.
The following table presents the maturity
distribution and interest sensitivity of loans as of
December 31, 1993 to the extent such information is
available.
(in thousands)
---------
Loans with fixed interest rates:
Due within 1 Year $3,741
Due 1 through 5 Years 22,747
Due after 5 Years 3,635
---------
30,123
Loans with floating interest rates 16,238
---------
$46,361
=========
Historical maturity information for loans with floating
interest rates is not available at December 31, 1993. On
a current basis, the majority of loans with floating
interest rates reprice within one year.
Nonperforming assets consist of nonaccrual loans,
troubled debt restructurings, loans which are
contractually past due 90 days or more as to principal or
interest and repossessed assets. Accrual of interest is
discontinued on a loan when management believes, after
considering economic and business conditions and
collection efforts, that the borrower's financial
condition is such that collection of interest is
doubtful. Potential problem loans are those loans which
are currently performing but where known information
about possible credit problems of the borrowers causes
management to have serious doubts as to the ability of
such borrowers to comply with present repayment terms and
which may result in the transfer of such loans to
nonperforiming status. Nonperforming loans (nonaccrual
loans plus loans greater than 90 days past due) at
December 31, 1993 were $106,000 or 0.23% of total loans
compared with $200,000 and 0.46% of total loans at
December 31, 1992.
The following table presents the amount of loans and
other nonperforming assets for the periods indicated:
December 31
1993 1992
--------- ---------
(in thousands)
Nonaccrual loans $62 $103
Troubled debt restructurings - -
Other real estate and nonperforming assets 275 472
--------- ---------
Total nonperforming assets $337 $575
========= =========
Past due loans (90 days or more) $44 $97
Gross income that would have been
recorded in the period then ended if
nonaccrual loans and troubled debt
restructurings had been in accordance
with their original terms 6 11
Amount of interest income on nonaccrual
loans and troubled debt restructurings
that was included in the period. 4 1
Potential problem loans (1) 362 203
Foreign loans outstanding - -
Loan concentrations - -
<FN>
(1) Balances shown are loans which the primary souce of repayment may not be sufficient to meet the present
terms of the loan. SBI believes it has sufficient security to support the current loan balance.
The Company has no troubled debt restructurings as
of December 31, 1993 or 1992 respectively.
The decrease in nonperforming assets from 1992 to
1993 is primarily due to the sale of substantially all of
the assets of a previous foreclosed loan on construction
equipment. The level of repossessed autos remains fairly
consistent over time.
The allowance for loan losses is established through
a provision for loan losses charged to operations and is
maintained at a level which management believes is
adequate to absorb probable losses. Management
determines the adequacy of the allowance based upon
reviews of individual credits, recent loss experience,
current economic conditions, the risk characteristics of
the various categories of loans and other pertinent
factors.
The following table summarizes the changes in the
allowance for credit losses arising from loans charged
off and recoveries on loans previously charged off, by
loan category, and additions to the allowance which have
been charged to operating expense.
1993 1992
---------- ----------
(in thousands)
Balance at January 1, $613 $746
Charge-offs:
Commercial 4 74
Real Estate:
Construction - -
Mortgage 1 -
Installment 75 135
Other - 3
---------- ----------
Total charge-offs 80 212
---------- ----------
Recoveries:
Commercial - -
Real Estate:
Construction - -
Mortgage - -
Installment 5 4
Other - -
---------- ----------
Total recoveries 5 4
---------- ----------
Net loans charged off 75 208
Provision for credit losses 72 75
---------- ----------
Balance at December 31, $610 $613
========== ==========
Loans at period end $46,361 $43,395
Average loans $45,367 $42,396
Net charge-offs to average loans 0.17% 0.49%
Allowance for credit losses to period-end loans 1.32% 1.41%
Allowance for credit losses to period-end
nonperforming loans 575.47% 306.50%
The following table presents an allocation of the
allowance for loan losses by loan type for the periods
presented:
Percent of loans
Balance at December 31, 1993 Amount in each category
Applicable to: (in thousands) to total loans
- ------------------------------ -------------- -------------------
Commercial $155 16.12%
Real Estate:
Construction 11 2.32%
Mortgage 190 39.90%
Installments 254 41.14%
Other - 0.52%
-------------- -------------------
$610 100.00%
============== ===================
Percent of loans
Balance at December 31, 1992 in each category
Applicable to: Amount to total loans
- ------------------------------ -------------- -------------------
Commercial $163 16.00%
Real Estate:
Construction 15 2.63%
Mortgage 160 36.41%
Installments 275 44.06%
Other - 0.90%
-------------- -------------------
$613 100.00%
============== ===================
INVESTMENT PORTFOLIO
The following table presents the book value of the
securities portfolio by type of security as of December
31, for the years indicated:
Securities available for sale
- ----------------------------------------------------
December 31
1993
-----------
(in thousands)
U.S. Treasury Obligations $4,025
U.S. Agency Securities
Mortgage-backed 2,443
Other -
-----------
Total book value $6,468
===========
Market value $6,473
===========
The maturity and yield distribution of securities available for
sale (except for mortgage-backed securities) at December 31, 1993
is as follows:
After 1 After 5
Under through through
1 Year 5 Years 10 Years Total
----------- ----------- ----------- -----------
U.S. Treasury Obligations:
Amount $2,525 $1,500 $ - $4,025
Yield 4.58 % 3.93 % - % 4.33 %
Mortgage-backed securities
Amount 2,443
Yield 4.91 %
-----------
Total securities available for sale $6,468
===========
Held to maturity securities
- ----------------------------------------------------
December 31
1993 1992
----------- -----------
(in thousands)
U.S. Treasury Obligations $ - $6,660
U.S. Agency Securities
Mortgage-backed 6,247 13,157
Other 7,197 5,559
Obligations of states and political subdivisions 4,071 3,008
----------- -----------
Total book value $17,515 $28,384
=========== ===========
Market value $17,628 $28,442
=========== ===========
The maturity and yield distribution of held to maturity securities
(except for mortgage-backed securities) at December 31, 1993 is as
follows:
After 1 After 5
Under through through
1 Year 5 Years 10 Years Total
----------- ----------- ----------- -----------
U.S. Agency Securities
Amount $4,495 $2,702 $ - $7,197
Yield 3.32 % 3.58 % - % 3.42 %
Obligations of states and political subdivisions (1)
Amount - 1,844 2,227 4,071
Yield - % 4.97 % 5.36 % 5.19 %
----------- ----------- ----------- -----------
Total Amount $4,495 $4,546 $2,227 $11,268
Total Yield 3.32 % 4.15 % 5.36 %
Mortgage-backed securities
Amount 6,247
Yield 6.16 %
-----------
Total held to maturity securities $17,515
<FN> ===========
(1) Not based on taxable equivalents.
The Company adopted Statement of Financial
Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115) on
January 1, 1994. SFAS 115 requires securities to be
classified into the categories of held to maturity,
available for sale or trading based upon management's
intended use of such securities. Based upon the market
values of securities as of date of adoption, the effect
of adopting SFAS 115 was not material to the financial
statements. In connection with the pending adoption of
SFAS 115, the Company changed its investment strategy in
late 1993 and transferred certain of its investment
securities into securities available for sale at December
31, 1993.
Total securities declined $4,402,000 or 15.5% from
1992 due to mortgage-backed securities paydowns and
proceeds from sales of securities which were not
reinvested but were primarily used to fund loan growth
with the balance being maintained in federal funds sold
as of December 31, 1993.
Excluding U.S. Treasury securities and obligations
of U.S. Government agencies and corporations, there were
no security holdings of any one issuer at December 31,
1993 that exceeded 10% of consolidated stockholders'
equity.
DEPOSITS
Average total deposits were $73,275,000 during 1993
compared to $73,516,000 in 1992, a decrease of less than
1%. Average interest bearing deposits however decreased
from $61,068,000 in 1992 to $59,970,000 in 1993, a 1.8%
decrease. Average noninterest bearing demand deposits
increased $857,000 or 6.9% in 1993 from 1992. The
increase in noninterest bearing demand deposits can be
primarily attributed to growth in commercial demand
deposit accounts associated with the increased marketing
activities for commercial loan and deposit accounts.
Average time deposits decreased $3,047,000 or 9.4% during
1993 as compared to 1992, while average interest bearing
demand and savings deposits increased $1,949,000 or 6.8%
during 1993. This was primarily a result of customers
switching from longer-term to shorter-term deposit
products.
1993 1992
-------------------------- --------------------------
Average Average Average Average
Balance Rate Balance Rate
-------------- ---------- -------------- ----------
(in thousands) (in thousands)
Noninterest-bearing deposits $13,305 - $12,448 -
Interest-bearing deposits:
Demand deposits 19,820 1.87% 18,810 2.19%
Savings deposits 10,701 2.67% 9,762 2.97%
Time deposits under $100,000 28,005 3.58% 31,043 4.36%
Time deposits of $100,000 or more 1,444 4.43% 1,453 4.13%
-------------- --------------
Total interest-bearing deposits 59,970 2.87% 61,068 3.46%
-------------- --------------
Total deposits $73,275 $73,516
============== ==============
The following table presents time deposits of
$100,000 or more by time remaining until maturity.
December 31,
1993
--------------
(in thousands)
Under three months $430
Over three through six months 469
Over six through twelve months 435
Over twelve months -
--------------
$1,334
==============
The Company's average amounts of short-term borrowings
outstanding for the years ending December 31, 1993 and
1992 were not significant.
CAPITAL RESOURCES
As of December 31, 1993, total SBI consolidated
capital was $3,517,000 or 4.38% of total assets as
compared to $2,699,000 or 3.32% of total assets as of
December 31, 1992. For 1993, total stockholders' equity
averaged $3,147,000 or 3.92% of average assets. The 1992
average equity was $2,447,000 or 3.05% of average assets.
Standard is required to maintain minimum capital in
accordance with federal guidelines. Under the risk based
capital rules, both on- and off-balance sheet items are
categorized by degree of risk to arrive at a total risk
adjusted asset base. The Bank's regulatory capital is
then divided by risk adjusted assets to determine risk
adjusted capital adequacy. In addition, Standard is
required to maintain a minimum leverage ratio (Tier 1
capital to quarterly average assets) of 3% to 5%,
depending on classification by regulators. At December
31, 1993, Standard's ratio was 8.16%.
The Bank's total risk based capital, risk based
capital requirement and excess risk based capital at
December 31, 1993 are as follows:
AMOUNT
(in thousands) PERCENT (1)
-------------- -----------
Core capital (Tier I) $6,528 12.08%
Supplementary capital (Tier II)
Allowable portion of reserve for
loan losses 610 1.13%
-------------- -----------
Total risk based capital $7,138 13.21%
============== ===========
Risk based capital requirement $4,322 8.00%
============== ===========
Excess risk based capital $2,816 5.21%
============== ===========
<FN>
(1) Percentage based on risk weighted assets of $54,026,000.
Effective December 19, 1992, the Federal Deposit
Insurance Corporation Improvement Act of 1991 (FDICIA)
established five regulatory capital categories: well-
capitalized, adequately-capitalized, undercapitalized,
significantly undercapitalized and critically
undercapitalized; and authorized banking regulatory
agencies to take prompt corrective action with respect to
institutions in the three undercapitalized categories.
These corrective actions become increasingly more
stringent as the institution's regulatory capital
declines. At December 31, 1993, Standard exceeded the
minimum requirements for the well-capitalized category.
The asset and liability structure of a bank holding
company is substantially different from that of most
other companies and, therefore, the effects of inflation
are different. Most assets in a bank holding company are
monetary in nature. These principally include cash,
investment securities, loans and federal funds sold.
Likewise, virtually all liabilities are also monetary in
nature, Liabilities include all deposits and borrowed
funds. In general, periods of high inflation are
accompanied by high interest rates. The Company can
normally offset its higher cost of funds with higher
rates charged on loans and higher rates received on
investment securities and thereby attempt to minimize the
effects of inflation. Conversely, during periods of low
inflation, lower and more moderate interest rates are
normally present. In addition, as a result of policies
relative to the pricing of loans and deposits, increases
in interest rates would tend to have a more immediate
impact on the cost of funds than the yield on earning
assets. In general, management's response to rising
interest rates would include bidding more aggressively
for long-term liabilities and less aggressively for
short-term liabilities.
The parent company relies primarily on Standard for
its source of cash needs. The cash flow from the Bank to
the parent company comes in the form of dividends and tax
benefits. Total dividends that can be declared by the
Bank without receiving prior approval from regulatory
authorities is limited to an amount which, after payment,
would not cause the Bank's tangible shareholders' equity
to be less than 7% of total tangible assets. At December
31, 1993 and 1992, approximately $229,000 and $291,000,
respectively, of the Bank's retained earnings were
restricted as to the payment of dividends by this
provision.
The parent company has a term loan outstanding from
an unaffiliated bank in the amount of $3,077,000 at
December 31, 1993. This note is due in annual
installments through December 1996. Interest is payable
quarterly at varying rates assigned to different maturing
amounts of the note ranging from 4.93% to 7.62%. At
December 31, 1993 the weighted average rate was 5.62%
The note is secured by substantially all of the common
stock of Standard, SBI's only significant asset. Under
the covenants of the note, SBI may not issue any
additional capital stock, is restricted to the payment of
dividends on its preferred stock and is limited to the
levels of bonus and capital expenditures which may be
made and is required to maintain certain financial
statements and loan loss ratios.
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1994 AND 1993
The following commentary is management's discussion and analysis for the
nine months ended September 30, 1994.
Results of Operations
For the nine months ended September 30, 1994, net income increased
$20,000 or 3.7% over the same period of 1993. This increase was
attributable to the net effect of lower noninterest expenses and higher
income taxes. Net interest margins (interest income less interest expense)
and noninterest income were comparable in the first nine months of both
years. The lower noninterest expense in 1994 was the result of lower
advertising expenses and lower legal and professional fees associated with
the repossession of assets. The effective income tax rate in 1993 was 3.7%
lower than the 1994 rate due to the 1993 rate having been favorably
impacted by a reversal in 1993 of an over accrual of state income taxes in
1992.
Financial Condition at September 30, 1994
Total average earning assets were $75.9 million and $73.7 million at
September 30, 1994 and December 31, 1993, respectively; an increase of
3.0%. Actual loans outstanding increased by approximately $8 million from
December 31, 1993 due primarily to increases in the commercial and real
estate loan categories. The Bank has been able to increase loan volume
through increased marketing activity targeting commercial customers and
balancing their mix of loan volume to rely less on installment loans. The
allowance for loan losses at September 30, 1994 was $599,000 or 1.1% of
gross loans outstanding. Non performing loans (loans on nonaccrual plus
loans greater than 90 days past due) were approximately $310,000 at
September 30, 1994.
Total securities at September 30, 1994 have decreased from December
31, 1993 by approximately $2.4 million which, with a decline of $4.1
million in short term investments, has helped to fund the loan growth as
total deposits have remained substantially unchanged from December 31,
1993. Included in the decrease of investment securities for the nine
months ending September 30, 1994 are unrealized losses on securities
available for sale of $271,000 relating to the adoption of SFAS 115 on
January 1, 1994. The rise in interest rates since December 31, 1993 also
reduced the market value of the Company's held to maturity securities,
which declined to approximately $443,000 below their amortized cost during
the nine months ended September 30, 1994.
STANDARD BANCORPORATION, INC. AND SUBSIDIARY
QUARTERLY FINANCIAL DATA
(In thousands except per share data)
1994 1993
------------------------ --------------------------------
3rd 2nd 1st 4th 3rd 2nd 1st
----- ----- ----- ----- ----- ----- -----
Interest income $1,482 $1,370 $1,356 $1,392 $1,387 $1,365 $1,408
Interest expense 510 491 491 458 465 455 525
----- ----- ----- ----- ----- ----- -----
Net interest margin 972 879 865 934 922 910 883
Provision for loan losses 9 18 38 - 24 24 24
----- ----- ----- ----- ----- ----- -----
Net interest margin after provision for
loan losses 963 861 827 934 898 886 859
Investment securities gains - - - 69 - - -
Other noninterest income 168 190 169 157 179 175 174
Noninterest expense (751) (860) (754) (782) (799) (795) (833)
----- ----- ----- ----- ----- ----- -----
Earnings before income taxes 380 191 242 378 278 266 200
Provision for income taxes 117 59 75 102 75 72 55
----- ----- ----- ----- ----- ----- -----
Net Earnings $263 $132 $167 $276 $203 $194 $145
===== ===== ===== ===== ===== ===== =====
PER COMMON SHARE DATA:
Net Earnings $45.76 $21.78 $28.19 $48.16 $34.75 $33.11 $24.14
Cash dividends - - - - - - -
Book value (period-end) $609.76 $564.96 $560.73 $537.04 $486.51 $449.33 $413.80
1992
---------------------------------
4th 3rd 2nd 1st
----- ----- ----- - -----
Interest income $1,436 $1,468 $1,489 $1,414
Interest expense 548 575 599 600
----- ----- ----- - -----
Net interest margin 888 893 890 814
Provision for loan losses 37 38 - -
----- ----- ----- -----
Net interest margin after provision for
loan losses 851 855 890 814
Investment securities gains - 1 (1) 67
Other noninterest income 162 178 163 183
Noninterest expense (776) (779) (772) (767)
----- ----- ----- -----
Earnings before income taxes 237 255 280 297
Provision for income taxes 78 84 92 98
----- ----- ----- -----
Net Earnings $159 $171 $188 $199
===== ===== ===== =====
PER COMMON SHARE DATA:
Net Earnings $26.68 $28.89 $32.00 $34.02
Cash dividends - - - -
Book value (period-end) $387.24 $358.12 $326.80 $292.37
FOURTH FINANCIAL CORPORATION,
STANDARD BANCORPORATION, INC., OKLAHOMA SAVINGS, INC.,
AND BLACKWELL SECURITY BANCSHARES, INC. (Pending Acquisitions)
The following unaudited pro forma condensed consolidated statement
of condition as of September 30, 1994 combines the amounts shown in the
historical consolidated statements of condition of Fourth Financial and
SBI, as reflected in the unaudited pro forma condensed consolidated
statement of condition (see "Pro Forma Financial Statements") with the
historical consolidated statements of condition of the following
companies, all as of September 30, 1994:
Oklahoma Savings, Inc. ("OSI")* Purchase Transaction
Blackwell Security Bancshares, Inc. ("BSB")* Purchase Transaction
-----------------
* Financial statements are not presented separately herein.
The pro forma condensed consolidated statement of condition is not
necessarily indicative of the combined financial position as it may be
in the future or as it might have been had the acquisitions been
consummated on September 30, 1994. The following notes describe the
assumptions used in this pro forma condensed consolidated statement of
condition. The pro forma condensed consolidated statement of condition
should be read in conjunction with the other pro forma and historical
financial statements and notes thereto appearing elsewhere herein.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONDITION
September 30, 1994
(Unaudited)
(Dollars in thousands, except per share amounts)
Combined
Pro Forma Pro Forma
Fourth Financial ----------------------
and SBI OSI BSB Adj. Combined
-------------- --------- ---------- --------- -----------
ASSETS:
Cash and due from banks.............$ 341,476 $ 1,645 $ 1,475 $ (19)D $ 344,577
Interest-bearing deposits in other
financial institutions............ 1,591 990 - - 2,581
Investment securities............... 3,073,380 16,940 20,231 (275)B 3,110,259
(17)C
Trading account securities.......... 1,898 - - - 1,898
Federal funds sold and securities
purchased under agreements
to resell......................... 1,798 5,300 2,386 239 A 852
(8,871)C
Loans and leases.................... 3,874,294 70,137 23,161 - 3,967,592
Allowance for credit losses......... (73,414) (960) (493) - (74,867)
-------------- --------- ---------- --------- -----------
Net loans and leases............ 3,800,880 69,177 22,668 - 3,892,725
Bank premises and equipment......... 159,706 875 583 - 161,164
Income receivable and other assets.. 149,795 1,292 840 470 B 153,511
1,114 C
Intangible assets, net.............. 94,963 - - 3,484 B 100,266
1,819 C
------------- -------- ---------- --------- -----------
Total assets.................$ 7,625,487 $ 96,219 $ 48,183 $ (2,056) $7,767,833
============== ========= ========== ========= ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Deposits............................$ 5,731,071 $ 87,557 $ 41,262 $ (19)D $5,859,871
Other borrowings.................... 1,224,507 118 - - 1,224,625
Accrued interest, taxes, and
other liabilities................. 63,450 645 193 929 B 65,990
773 C
Long-term debt...................... 5,099 - - - 5,099
Total liabilities........... 7,024,127 88,320 41,455 1,683 7,155,585
-------------- --------- ---------- --------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock..................... 100,000 - - - 100,000
Common stock........................ 137,744 4 217 80 B 137,828
(217)C
Capital surplus..................... 107,311 3,720 1,428 239 A 108,376
(2,894)B
(1,428)C
Retained earnings................... 281,775 4,455 5,355 (4,455)B 281,775
(5,355)C
Less: Stock option loans and
ESOP loans......... (2,030) (280) - - (2,310)
Treasury stock............ (10,019) - - 10,019 B -
Unrealized gains (losses) on
available-for-sale securties.. (13,421) - (272) 272 C (13,421)
-------------- --------- ---------- --------- -----------
Total stockholders' equity... 601,360 7,899 6,728 (3,739) 612,248
-------------- --------- ---------- --------- -----------
Total liabilities and
stockholders' equity..$ 7,625,487 $ 96,219 $ 48,183 $ (2,056) $7,767,833
============== ========= ========== ========= ===========
Book value per share
of common stock.................. $18.44 $18.58
====== ======
Risk-based capital ratios:
Tier I (regulatory minimum 4%)... 11.25 % 11.20 %
Total (regulatory minimum 8%).... 12.50 12.45
Leverage capital ratio (regulatory
minimum 3%)..................... 7.00 6.95
Pro forma adjustments and notes to the condensed consolidated
statement of condition are as follows (dollars in thousands):
(A) To record the exercise of options for 23,149 of OSI shares
pursuant to OSI's 1993 Stock Option and Incentive Plan.
(B) To record the issuance of 372,262 shares of Fourth Stock,
valued for purposes of this pro forma financial statement at
$30 per share, in exchange for the 443,169 shares of OSI
Stock estimated to be outstanding at consummation and to
eliminate the equity accounts and reflect the purchase
method of accounting:
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . (275)
Income receivable and other assets . . . . . . . . . . . . . . . . . . . 470
Intangible assets (cost in excess of net assets acquired) . . . . . . . . 3,484
Accrued interest, taxes and other liabilities . . . . . . . . . . . . . . 929
The 355,466 shares of Fourth Stock held in treasury will be
reissued in this transaction.
(C) To record the purchase of BSB, eliminate equity accounts,
and reflect the purchase method of accounting:
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . (17)
Income receivable and other assets . . . . . . . . . . . . . . . . . . . 1,114
Accrued interest, taxes and other liabilities . . . . . . . . . . . . . . 773
Intangible assets (cost in excess of net
assets acquired) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,819
(D) To eliminate intercompany balances:
Cash and due from banks/deposits. . . . . . . . . . . . . . . . . . . . . 19
The purchase prices have been allocated to the identifiable
assets and liabilities acquired based upon the estimate of their
fair values with the excess allocated to cost in excess of net
assets acquired. As required by Statement of Financial
Accounting Standard No. 109 "Accounting for Income Taxes,"
deferred taxes have been recorded for the difference between the
tax basis and book basis of the net assets at an effective rate
of 39%.
Cost in excess of net assets acquired is being amortized on the
straight-line method over 20 years.
Pro forma book value per share of common stock is based on the
26,875,640 shares issued and outstanding of common stock of Fourth
Financial at September 30, 1994, the 317,730 shares anticipated to be
issued in the pending SBI acquisition, and the 372,262 shares
anticipated to be issued in the pending OSI acquisition.
FOURTH FINANCIAL CORPORATION,
EQUITY BANK FOR SAVINGS, F.A., AND
EMPRISE BANK, NATIONAL ASSOCIATION (Recent Acquisitions),
STANDARD BANCORPORATION, INC., OKLAHOMA SAVINGS, INC.,
AND BLACKWELL SECURITY BANCSHARES, INC., (Pending Acquisitions)
The following unaudited pro forma condensed consolidated
statements of income for the nine months ended September 30, 1994 and
1993 and for the year ended December 31, 1993 combine (1) the amounts
shown in the historical consolidated statements of income of Fourth
Financial which have been restated for pooling-of-interest transactions
prior to September 30, 1994, (2) the amounts shown in the historical
consolidated statements of income of Equity (acquired May 26, 1994 and
not presented separately herein), (3) the amounts shown in the
historical consolidated statements of income of Emprise (acquired May
31, 1994 and not presented separately herein), and (4) the amounts
shown in the historical consolidated statements of income of SBI as
reflected in the unaudited pro forma condensed consolidated statements
of income (see "Pro Forma Financial Statements") with (5) the amounts
shown in the historical consolidated statements of income of the
following companies:
Oklahoma Savings, Inc. ("OSI")* Purchase Transaction
Blackwell Security Bancshares, Inc. ("BSB")* Purchase Transaction
-----------------
* Financial statements are not presented separately herein.
The historical financial statements of OSI used in these pro forma
condensed consolidated statements of income reflect its September 30
year end. The historical financial statements of Fourth Financial,
Equity, Emprise, BSB, and SBI all reflect year ends of December 31.
The combinations of OSI and BSB are based on the purchase method of
accounting assuming, for pro forma purposes only, that the acquisitions
had been consummated at January 1, 1993. Historical financial
statements will not be restated to reflect the purchase acquisitions
since operations will only be included from the date of acquisition.
The pro forma results for the year ended December 31, 1993 and nine
months ended September 30, 1994 and 1993 are not necessarily indicative
of the results as they may be in the future. The pro forma condensed
consolidated statements of income should be read in conjunction with
the other pro forma and historical financial statements and notes
thereto appearing elsewhere herein.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Nine Months Ended Year Ended
September 30, December 31,
--------------------- ------------
1994 1993 1993
---------- ---------- ----------
Interest income:
Interest and fees on loans.......... $ 239,615 $ 226,555 $ 304,944
Interest on short-term investments.. 986 2,292 2,649
Interest and dividends on
investment securities............. 139,887 146,641 195,173
Interest and dividends on trading
account securities................ 72 95 135
---------- ---------- ----------
Total interest income.......... 380,560 375,583 502,901
---------- ---------- ----------
Interest expense:
Interest on deposits................ 125,742 138,808 182,852
Interest on other borrowings........ 32,954 16,403 24,103
Interest on long-term debt.......... 1,035 1,993 2,453
---------- ---------- ----------
Total interest expense......... 159,731 157,204 209,408
---------- ---------- ----------
Net interest income...................... 220,829 218,379 293,493
Provision for credit losses.............. 617 8,225 9,333
---------- ---------- ----------
Net interest income after provision
for credit losses...................... 220,212 210,154 284,160
Noninterest income....................... 84,371 80,755 110,044
Noninterest expense...................... 209,872 228,281 301,647
---------- ---------- ----------
Income before income taxes
and cumulative change in
accounting principle................... 94,711 62,628 92,557
Income taxes........................ 31,521 14,396 22,543
---------- ---------- ----------
Income before cumulative change
in accounting principle................ $ 63,190 $ 48,232 $ 70,014
========== ========== ==========
Income before cumulative change in
accounting principle applicable to
common and common-equivalent shares... $ 57,940 $ 42,982 $ 63,014
========== ========== ==========
Earnings before cumulative change
in accounting principle per
common share:
Primary.............................. $ 2.11 $ 1.62 $ 2.35
========= ========= =========
Fully diluted........................ $ 2.05 $ 1.58 $ 2.28
========= ========= =========
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1994
(Unaudited)
(In thousands, except per share amounts)
Combined
Pro Forma
Fourth Financial, Pro Forma
Equity, Emprise -------------------
and SBI OSI BSB Adj. Combined
------------- --------- --------- ------- ----------
Interest income:
Interest and fees on loans... $ 233,923 $ 4,039 $ 1,653 $ - $ 239,615
Interest on short-term
investments................ 1,099 163 102 (139)B 986
(239)D
Interest and dividends on
investment securities...... 138,189 715 851 31 A 139,887
101 C
Interest and dividends on
trading account securities. 72 - - - 72
------------- --------- --------- ------- ----------
Total interest income.... 373,283 4,917 2,606 (246) 380,560
------------- --------- --------- ------- ----------
Interest expense:
Interest on deposits......... 122,258 2,521 963 - 125,742
Interest on other borrowings. 32,940 14 0 - 32,954
Interest on long-term debt... 1,035 - - - 1,035
------------- --------- --------- ------- ----------
Total interest expense... 156,233 2,535 963 - 159,731
------------- --------- --------- ------- ----------
Net interest income............... 217,050 2,382 1,643 (246) 220,829
Provision for credit losses....... 880 (260) (3) - 617
------------- --------- --------- ------- ----------
Net interest income after
provision for credit losses..... 216,170 2,642 1,646 (246) 220,212
Noninterest income................ 83,603 459 309 - 84,371
Noninterest expense............... 206,741 1,753 1,074 131 A 209,872
173 C
------------- --------- --------- ------- ----------
Income before income taxes
and cumulative change in
accounting principle............ 93,032 1,348 881 (550) 94,711
Income taxes ................ 31,059 320 279 12 A 31,521
(54)B
(2)C
(93)D
------------- --------- --------- ------- ----------
Income before cumulative change
in accounting principle......... $ 61,973 $ 1,028 $ 602 $ (413) $ 63,190
============= ========= ========= ======= ==========
Income before cumulative
change in accounting principle
applicable to common and
common-equivalent shares........ $ 56,723 $ 57,940
============= ==========
Earnings before cumulative
change in accounting principle
per common share:
Primary....................... $2.08 $2.11
===== =====
Fully diluted................. $2.02 $2.05
===== =====
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1993
(Unaudited)
(In thousands, except per share amounts)
Combined
Pro Forma
Fourth Financial Pro Forma
Equity, Emprise -------------------
and SBI OSI BSB Adj. Combined
-------------- --------- --------- ------- ----------
Interest income:
Interest and fees on loans.... $ 220,142 $ 4,703 $ 1,710 $ - $ 226,555
Interest on short-term
investments................. 2,525 115 87 (238)B 2,292
(197)D
Interest and dividends
on investment securities.... 144,903 711 872 55 A 146,641
100 C
Interest and dividends on
trading account securities.. 95 - - - 95
------------ --------- --------- ------- ----------
Total interest income..... 367,665 5,529 2,669 (280) 375,583
------------ --------- --------- ------- ----------
Interest expense:
Interest on deposits.......... 134,839 2,945 1,024 - 138,808
Interest on other borrowings.. 16,403 - - - 16,403
Interest on long-term debt... 1,993 - - - 1,993
------------ --------- --------- ------- ----------
Total interest expense.... 153,235 2,945 1,024 - 157,204
------------ --------- --------- ------- ----------
Net interest income................ 214,430 2,584 1,645 (280) 218,379
Provision for credit losses........ 7,960 257 8 - 8,225
------------ --------- --------- ------- ----------
Net interest income after
provision for credit losses...... 206,470 2,327 1,637 (280) 210,154
Noninterest income................. 79,997 338 420 - 80,755
Noninterest expense................ 223,887 2,900 1,190 131 A 228,281
173 C
------------ --------- --------- ------- ----------
Income before income taxes
and cumulative change in
accounting principle............. 62,580 (235) 867 (584) 62,628
Income taxes ................. 14,134 128 284 22 A 14,396
(93)B
(2)C
(77)D
------------ --------- --------- ------- ----------
Income before cumulative change
in accounting principle.......... $ 48,446 $ (363) $ 583 $ (434) $ 48,232
Income before cumulative ============ ========= ========= ======= ==========
change in accounting principle
applicable to common and
common-equivalent shares......... $ 43,196 $ 42,982
============ ==========
Earnings before cumulative
change in accounting principle
per common share:
Primary........................ $1.62 $1.62
===== =====
Fully diluted.................. $1.58 $1.58
===== =====
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31,1993
(Unaudited)
(In thousands, except per share amounts)
Combined
Pro Forma
Fourth Financial, Pro Forma
Equity, Emprise -------------------
and SBI OSI BSB Adj. Combined
-------------- --------- --------- ------- ----------
Interest income:
Interest and fees on loans..... $ 296,565 $ 6,108 $ 2,271 $ - $ 304,944
Interest on short-term
investments.................. 2,946 192 115 (333)B 2,649
(271)D
Interest and dividends on
investment securities........ 192,833 931 1,169 107 A 195,173
133 C
Interest and dividends on
trading account securities... 135 - - - 135
------------ --------- --------- ------- ----------
Total interest income...... 492,479 7,231 3,555 (364) 502,901
------------ --------- --------- ------- ----------
Interest expense:
Interest on deposits........... 177,658 3,841 1,353 - 182,852
Interest on other borrowings... 24,098 5 - - 24,103
Interest on long-term debt... 2,453 - - 2,453
------------ --------- --------- ------- ----------
Total interest expense..... 204,209 3,846 1,353 - 209,408
------------ --------- --------- ------- ----------
Net interest income................. 288,270 3,385 2,202 (364) 293,493
Provision for credit losses......... 9,139 184 10 - 9,333
------------ --------- --------- ------- ----------
Net interest income after
provision for credit losses....... 279,131 3,201 2,192 (364) 284,160
Noninterest income.................. 109,074 447 523 - 110,044
Noninterest expense................. 295,992 3,593 1,656 175 A 301,647
231 C
------------ --------- --------- ------- ----------
Income before income taxes
and cumulative change in
accounting principle.............. 92,213 55 1,059 (770) 92,557
Income taxes .................. 22,312 88 340 42 A 22,543
(130)B
(3)C
(106)D
------------ --------- --------- ------- ----------
Income before cumulative change
in accounting principle........... $ 69,901 $ (33) $ 719 $ (573) $ 70,014
============ ========= ========= ======= ==========
Income before cumulative
change in accounting principle
applicable to common and
common-equivalent shares.......... $ 62,901 $ 63,014
============ ==========
Earnings before cumulative change
in accounting principle per
common share:
Primary......................... $2.35 $2.35
====== =====
Fully diluted................... $2.28 $2.28
====== =====
Pro forma adjustments and notes to the condensed consolidated
statements of income are as follows:
Nine Months Ended
September 30, Year Ended
------------- December 31,
1994 1993 1993
---- ---- ----
(In thousands)
(A) To reflect adjustments resulting from the purchase
method of accounting for OSI:
Interest and dividends on investment securities . . . . . (31) (55) (107)
Noninterest expense (amortization of
cost in excess of net assets acquired). . . . . . . . . 131 131 175
Income taxes. . . . . . . . . . . . . . . . . . . . . . . 12 22 42
(B) To reflect the foregone interest income on short-term
investments converted to cash and used to acquire treasury
stock for the purchase of OSI:
Interest on short-term investments. . . . . . . . . . . . 139 238 333
Income taxes . . . . . . . . . . . . . . . . . . . . . . (54) (93) (130)
(C) To reflect adjustments resulting from the purchase
method of accounting for BSB:
Interest and dividends on investment securities . . . . . (101) (100) (133)
Noninterest expense:
Cost in excess of net assets acquired amortization 68 68 91
Covenant not to compete amortization. . . . . . . . . . 105 105 140
Total effect on noninterest expense . . . . . . . . . . 173 173 231
Income taxes. . . . . . . . . . . . . . . . . . . . . . . (2) (2) (3)
(D) To reflect the foregone interest income on short-term
investments converted to cash and used for the
purchase of BSB and the related income tax effects:
Interest on short-term investments. . . . . . . . . . . . 239 197 271
Income taxes. . . . . . . . . . . . . . . . . . . . . . . (93) (77) (106)
Pro forma earnings per common share are based on the
following weighted average number of shares outstanding:
Nine Months Ended
September 30, Year Ended
------------- December 31,
1994 1993 1993
---- ---- ----
Primary . . . . . . . . . . . . . . . . . . . . . . . 27,458,228 26,574,734 26,659,075
Fully diluted . . . . . . . . . . . . . . . . . . . . 30,906,503 30,648,621 30,689,789
Primary earnings per common share were computed by dividing net
income applicable to common and common-equivalent shares by the
weighted average common and common-equivalent shares outstanding during
the period. Fully diluted earnings per common share were computed by
adjusting net income for interest expense (net of income taxes)
associated with convertible debt. The adjusted net income was then
divided by the weighted average of common and common-equivalent shares
outstanding plus the number of shares which would have been outstanding
during the year had convertible securities been converted in accordance
with their respective governing instruments. Note 17 to the Fourth
Financial 1993 Consolidated Financial Statements more fully describes
Fourth Financial's common stock equivalents and convertible securities.
The adjustment of net income for convertible debt interest expense (net
of income taxes) was as follows:
Nine Months Ended
September 30, Year Ended
------------- December 31,
1994 1993 1993
---- ---- ----
Interest expense adjustment. . . . . . . . . . . . . . . . . . -- 4 4
ANNEX I
AGREEMENT AND PLAN OF REORGANIZATION
among
FOURTH FINANCIAL CORPORATION,
STANDARD BANCORPORATION, INC.,
and
ALL OF THE STOCKHOLDERS OF
STANDARD BANCORPORATION, INC.
Dated as of September 2, 1994
as Amended December 7, 1994
TABLE OF CONTENTS
Page No.
--------
ARTICLE I. Definitions. . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . 8
Section 1.3 Use of Defined Terms . . . . . . . . . . . . . . . . . 8
ARTICLE II. Plan of Reorganization . . . . . . . . . . . . . . . . 8
Section 2.1 Tax-Free Reorganization. . . . . . . . . . . . . . . . 8
Section 2.2 Agreements of Fourth . . . . . . . . . . . . . . . . . 9
Section 2.3 Agreements of SBI and the Stockholders . . . . . . . .10
Section 2.4 The Merger . . . . . . . . . . . . . . . . . . . . . .15
Section 2.5 Conversion and Exchange of Shares. . . . . . . . . . .16
Section 2.6 Advance Preparations for Merger. . . . . . . . . . . .18
ARTICLE III. Representations and Warranties . . . . . . . . . . . .19
Section 3.1 Representations and Warranties of SBI, and
the
Stockholders . . . . . . . . . . . . . . . . . . . . .19
Section 3.2 Representations and Warranties of Fourth . . . . . . .30
ARTICLE IV. Securities Laws Matters. . . . . . . . . . . . . . . .33
Section 4.1 Registration Statement and Proxy Statement . . . . . .33
Section 4.2 State Securities Laws. . . . . . . . . . . . . . . . .33
Section 4.3 Affiliates . . . . . . . . . . . . . . . . . . . . . .33
Section 4.4 Affiliates' Agreements . . . . . . . . . . . . . . . .34
ARTICLE V. Closing Conditions . . . . . . . . . . . . . . . . . .35
Section 5.1 Conditions to Obligations of Fourth. . . . . . . . . .35
Section 5.2 Conditions to Obligations of SBI and
the Stockholders . . . . . . . . . . . . . . . . . . .37
ARTICLE VI. Effective Time . . . . . . . . . . . . . . . . . . . .38
ARTICLE VII. Termination of Agreement . . . . . . . . . . . . . . .39
Section 7.1 Mutual Consent; Absence of Stockholder
Approval; Termination Date . . . . . . . . . . . . . .39
Section 7.2 Election by Fourth . . . . . . . . . . . . . . . . . .39
Section 7.3 Election by SBI. . . . . . . . . . . . . . . . . . . .39
Section 7.4 Effect of Termination. . . . . . . . . . . . . . . . .40
ARTICLE VIII. Indemnification. . . . . . . . . . . . . . . . . . . .40
Section 8.1 Effect of Closing. . . . . . . . . . . . . . . . . . .40
Section 8.2 General Indemnification. . . . . . . . . . . . . . . .41
Section 8.3 Procedure. . . . . . . . . . . . . . . . . . . . . . .41
Section 8.4 Survival of Representations and Warranties . . . . . .42
Section 8.5 Several Liability of Stockholders. . . . . . . . . . .42
Section 8.6 Indemnification Payments . . . . . . . . . . . . . . .43
ARTICLE IX. Miscellaneous. . . . . . . . . . . . . . . . . . . . .43
Section 9.1 Expenses . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . .43
Section 9.3 Stockholders' Agreements . . . . . . . . . . . . . . .43
Section 9.4 Time . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 9.5 Law Governing. . . . . . . . . . . . . . . . . . . . .44
Section 9.6 Entire Agreement; Amendment. . . . . . . . . . . . . .44
Section 9.7 Successors and Assigns . . . . . . . . . . . . . . . .44
Section 9.8 Cover, Table of Contents, and Headings . . . . . . . .44
Section 9.9 Counterparts . . . . . . . . . . . . . . . . . . . . .44
EXHIBITS
Exhibit "A" Form of Merger Agreement
Exhibit "B" Form of Knudsen, Berkheimer,
Richardson & Endacott legal opinion
[Omitted]
Exhibit "C" Form of Foulston & Siefkin legal
opinion [Omitted]
Exhibit "D" Form of Affiliate's Agreement
AGREEMENT AND PLAN OF REORGANIZATION
(as amended)
AGREEMENT AND PLAN OF REORGANIZATION, dated as of
September 2, 1994, between FOURTH FINANCIAL CORPORATION,
a Kansas corporation ("Fourth"), STANDARD BANCORPORATION,
INC., a Nebraska corporation ("SBI"), and all of the
stockholders of SBI and CHRIS J. MURPHY, as amended
December 7, 1994.
W I T N E S S E T H: That,
--------------------
WHEREAS, the Boards of Directors of Fourth and SBI
have approved and deem it advisable and in the best
interests of their respective stockholders to consummate
the business combination transaction provided for herein;
and
WHEREAS, Fourth, SBI, the stockholders of SBI, and
Mr. Murphy, who is a party to an agreement with Mr.
Harper dated April 17, 1991 relating to Mr. Harper's
shares of SBI capital stock, desire to make certain
representations, warranties, and agreements in connection
with the transaction contemplated hereby and also to
prescribe various conditions to consummating such
transaction; and
WHEREAS, for Federal income tax purposes, it is
intended that the merger contemplated by this agreement
shall qualify as a reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as
amended;
NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties,
covenants, and agreements set forth herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms as used
in this Agreement shall have the following meanings
unless the context otherwise requires:
"Affiliate" has the same meaning as in Rules 145 and 405
adopted under the Securities Act by the SEC, as the same
may be amended from time to time.
"Agreement" refers to this Agreement and Plan of
Reorganization and all amendments hereto.
"Bank" means Standard Bank & Trust, a Missouri
state-chartered bank.
"Bank Stock" means the common stock of the Bank, par
value $100.00 per share.
"Bank Holding Company Act" means the federal Bank
Holding Company Act of 1956, as amended (12 U.S.C.
Section 1841 et seq.), or any successor federal statute,
and the rules and regulations of the Board promulgated
thereunder, all as the same may be in effect at the time.
"Best Efforts" does not include those actions which
are not commercially reasonable under the circumstances.
"Board" means the Board of Governors of the Federal
Reserve System or any successor governmental entity which
may be granted powers currently exercised by the Board of
Governors.
"Closing" means the consummation of the Merger as
provided in this Agreement.
"Closing Price" means the closing price of Fourth
Stock on the trading day two trading days prior to the
Effective Time as reported in the Southwest Edition of
The Wall Street Journal.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder, all as the same may be in effect at the time.
"Comptroller" means the United States Comptroller of
the Currency or any successor governmental agency which
may be granted powers currently exercised by the
Comptroller of the Currency.
"Corporations" refers to SBI and the Bank.
"Disclosure Statement" means the Disclosure
Statement prepared by SBI and the Stockholders, and
delivered by them to Fourth prior to the execution and
delivery of this Agreement by Fourth.
"Division Director" means the Director of the
Division of Finance of the State of Missouri or any
successor official or agency which may be granted powers
currently exercised by the Director of the Division of
Finance of the State of Missouri.
"Effective Time" means the date and time on which
the Merger is effective as more fully defined in this
Agreement.
"Environmental, Health, and Safety Liabilities"
means any loss, cost, expense, claim, demand, liability,
or obligation of whatever kind or otherwise, based upon
any Environmental, Health, and Safety Law relating to:
(i) any environmental, health, or safety
matter or conditions, including, but not limited to,
on-site or off-site contamination, occupational
safety and health, and regulation of chemical
substances or products;
(ii) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings,
damages, losses, claims, demands, and response,
remedial or inspection costs and expenses arising
under any Environmental, Health, and Safety Law;
(iii) financial responsibility under any
Environmental Law for cleanup costs or corrective
actions, including for any removal, remedial or
other response actions, and for any natural resource
damage; and
(iv) any other compliance, corrective, or
remedial action required under any Environmental,
Health, and Safety Law.
"Environmental, Health, and Safety Law" means any
provision of past or present Law relating to any
environmental, health, or safety matters or conditions,
Hazardous Materials, pollution, or protection of the
environment, including, but not limited to, on-site and
off-site contamination, occupational safety and health,
and regulation of chemical substances or products,
emissions, discharges, release, or threatened release of
contaminants, chemicals or industrial, toxic,
radioactive, or Hazardous Materials or wastes into the
environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials,
pollutants, contaminants, chemicals, or industrial,
toxic, radioactive, or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder, all as the same may
be in effect at the time.
"Exchange Act" means the federal Securities Exchange
Act of 1934, as amended, and the rules and regulations
promulgated thereunder, all as the same may be in effect
at the time.
"Exchange Ratio" means (a) if the Closing occurs on
or before February 15, 1995, in the case of SBI Class A
Common Stock, 53.9974; in the case of SBI Class B Common
Stock, 53.9971; and in the case of SBI Preferred Stock,
3.4487; and (b) if the Closing occurs after February 15,
1995, in the case of SBI Class A Common Stock, 54,4654;
in the case of SBI Class B Common Stock, 54.4654; and in
the case of SBI Preferred Stock 3.4786.
"Federal Deposit Insurance Act" means the Federal
Deposit Insurance Act, as amended, and the rules and
regulations promulgated thereunder, all as the same may
be in effect at the time.
"FDIC" means the Federal Deposit Insurance
Corporation or any successor agency.
"Financial Statements" refers to all of the
financial statements described in clause g of Section 3.1
of this Agreement.
"Fourth" means Fourth Financial Corporation, a
Kansas corporation and a party to this Agreement.
"Fourth Stock" means the common stock of Fourth, par
value $5 per share.
"GAAP" means generally accepted accounting
principles, applied on a consistent basis, set forth in
Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or
in statements of the Financial Accounting Standards Board
and/or their successors which are applicable in the
circumstances in question; and the requisite that such
principles be applied on a consistent basis means that
the accounting principles observed in a current period
are comparable in all material respects to those applied
in a preceding period.
"Hazardous Materials" means and includes: (i) any
hazardous substance or toxic material (excluding any
lawful product for use in the ordinary course of the
Bank's business which contains such substance or
material), pollutant, contaminant, toxic material, or
hazardous waste as defined in any federal, state, or
local environmental Law; (ii) waste oil and petroleum
products; and (iii) any asbestos, asbestos-containing
material, urea formaldehyde or material which contains
it.
"Law" or "Laws" means all applicable statutes, laws,
ordinances, regulations, orders, writs, injunctions, or
decrees of the United States of America, any state or
commonwealth, or any subdivision thereof, or of any court
or governmental department, agency, commission, board,
bureau, or other instrumentality.
"Litigation" means any proceeding, claim, lawsuit,
and/or investigation being conducted or, to the best of
the knowledge of the person or corporation making the
representation, threatened before any court or other
tribunal, including, but not limited to, proceedings,
claims, lawsuits, and/or investigations, under or
pursuant to any occupational safety and health, banking,
antitrust, securities, tax, or other Laws, or under or
pursuant to any contract, agreement, or other instrument.
"Merger" means the merger of SBI into Fourth
pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Articles
of Merger, substantially in the form of Exhibit "A"
hereto, pursuant to which the Merger will be effected.
"Occupied Properties" means the parcels of real
property owned or leased by the Corporations on which the
Corporations conduct or have conducted operations, all of
which are described in Exhibit "H" to the Disclosure
Statement under the caption "Occupied Properties".
"Permitted Contract" means a contract or agreement,
written or oral, between the Bank, on the one hand, and a
person other than a customer of the Bank or another
financial institution, on the other hand, which (i) was
entered into in the ordinary course of business, (ii) may
be terminated by Fourth after the Effective Time on no
more than 30 days' prior notice, (iii) provides for a
payment of no more than $10,000 in any calendar month by
the Bank, and (iv) provides for no payment upon
termination in excess of $10,000.
"Permitted Encumbrances" mean with respect to any
asset:
(a) liens for taxes not past due;
(b) mechanics' and materialmen's liens for
services or materials for which payment is not past
due; and
(c) minor defects, encumbrances, and
irregularities in title which do not, in the
aggregate, materially diminish the value of a
property or materially impair the use of a property
for the purposes for which it is or may reasonably
be expected to be held.
"Proxy Statement" means the proxy statement to be
used in connection with the special stockholders' meeting
of SBI to be called for the purpose of considering and
voting upon the Merger.
"Registration Statement" means the registration
statement on Form S-4 to be filed by Fourth with the SEC
pursuant to the Securities Act in connection with the
registration of the shares of Fourth Stock to be issued
in connection with the Merger.
"Required Approvals" means the approval, consent, or
non-objection, as the case may be, of the Board, the
Comptroller, the Division Director, and all other
governmental or self-governing agencies, boards,
departments, and bodies whose approval, consent, or non-
action is required in order to consummate the Merger, the
conversion of the Bank into a national banking
association or the merger of the Bank with another
Missouri financial institution as contemplated by Section
2.3.i below, the direct ownership by Fourth of the Bank
in substantially its present form, and all other
transactions expressly set forth in this Agreement, which
approvals, consents, and non-objections shall have become
final and nonappealable without any appeal or other form
of review having been initiated and as to which all
required waiting periods shall have expired.
"SBI" means Standard Bancorporation, Inc., a
Nebraska corporation and a party to this Agreement.
"SBI Class A Common Stock" means Class A common
stock of SBI, par value $1.00 per share.
"SBI Class B Common Stock" means Class B non-voting
common stock of SBI, par value $1.00 per share.
"SBI Common Stock" refers collectively to both SBI
Class A Common Stock and SBI Class B Common Stock.
"SBI Preferred Stock" means 9% cumulative, non-
participating, non-voting preferred stock of SBI, par
value $100 per share.
"SBI Stock" refers collectively to both classes of
SBI Common Stock and SBI Preferred Stock.
"SEC" means the United States Securities and
Exchange Commission or any other governmental entity
which may be granted powers currently being exercised by
the Securities and Exchange Commission.
"Securities Act" means the federal Securities Act of
1933, as amended, or any successor federal statute, and
the rules and regulations promulgated thereunder, all as
the same shall be in effect at the time.
"Stockholders" refers collectively to the persons
executing this Agreement as "Stockholders," including
Chris J. Murphy, and "Stockholder" refers to any one of
them.
"Subsidiary" means any corporation fifty percent or
more of the common stock or other form of equity of which
shall be owned, directly or indirectly, by another
corporation.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in
accordance with GAAP consistent with that applied in the
preparation of the financial statements submitted
pursuant to this Agreement, and all financial statements
submitted pursuant to this Agreement shall be prepared in
all material respects in accordance with such principles.
1.3 Use of Defined Terms. All terms defined in
this Agreement shall have the defined meanings when used
in the Merger Agreement, or any other agreement,
document, or certificate made or delivered pursuant to
this Agreement, unless otherwise there defined or unless
the context otherwise requires.
ARTICLE II
PLAN OF REORGANIZATION
2.1 Tax-Free Reorganization. It is the intention
of the parties that the Merger contemplated by this
Agreement and the Merger Agreement shall qualify as tax-
free reorganization under Section 368(a)(1)(A) of the
Code.
2.2 Agreements of Fourth.
a. Fourth has approved and adopted this
Agreement and the Merger Agreement in accordance
with the applicable Laws of the United States of
America and the State of Kansas.
b. Fourth shall cause all necessary action to
be taken to authorize the issuance of the number of
shares of Fourth Stock to be issued in the Merger.
c. Prior to the Effective Time, Fourth,
separately and with the other parties hereto, shall
use its Best Efforts in good faith to take or cause
to be taken as promptly as practicable all such
steps as shall be necessary to obtain all of the
Required Approvals, and shall do any and all acts
and things reasonably deemed by Fourth or the
Corporations to be necessary or appropriate in order
to cause the Merger to be consummated on the terms
provided herein and in the Merger Agreement as
promptly as practicable.
d. On or prior to the Effective Time, as
appropriate for the transactions contemplated
hereby, Fourth shall execute and deliver the Merger
Agreement and the other closing documents provided
for in this Agreement, shall take all such other
actions as are required or desirable to effect the
Merger, and shall utilize its Best Efforts to cause
all of the conditions described in Section 5.2 of
this Agreement to occur and be continuing, and to
consummate all of the other transactions
contemplated hereby.
e. Prior to the Effective Time, Fourth shall,
to the extent permitted by Law and outstanding
confidentiality agreements, give SBI and its counsel
and accountants full access, during normal business
hours and upon reasonable notice, to its respective
properties, books, and records, and shall furnish
SBI during such period with all such information
concerning its affairs as SBI may reasonably
request. The availability or actual delivery of
information about Fourth to SBI shall not affect the
covenants, representations, and warranties of Fourth
contained in this Agreement; provided, that SBI
shall promptly disclose to Fourth any apparent
breaches of such covenants, representations, or
warranties discovered by it prior to the Effective
Time. Except for information disclosed in the
Registration Statement or as otherwise required to
be disclosed in the course of obtaining governmental
approvals, SBI shall treat as confidential all such
information in the same manner as SBI treats similar
confidential information of its own and, if this
Agreement is terminated, SBI shall continue to treat
all such information obtained in such investigation
and not otherwise known to SBI from a source not
known to SBI to be under a confidential relationship
with Fourth, or already in the public domain, as
confidential and shall return such documents
theretofore delivered by Fourth to SBI as Fourth
shall request.
f. At the Effective Time, Fourth shall
replace or repay SBI's existing credit facility with
First Bank, N.A., pursuant to a Credit Agreement
dated December 12, 1991 or any replacement
financing.
g. Fourth shall provide directors' and
officers' liability insurance coverage for the
directors and officers of the Corporations
substantially similar to that currently in effect,
or continue such insurance, for a period from the
Effective Time through the termination of the
applicable indemnification period described in
Section 8.4 of this Agreement, which insurance shall
provide coverage for acts and omissions occurring on
or prior to the Effective Time.
2.3 Agreements of SBI and the Stockholders.
a. Prior to the consummation of the Merger,
SBI shall not, and shall not permit the Bank to,
except with the prior written consent of Fourth or
as otherwise provided in this Agreement or the
Merger Agreement:
(1) Amend its articles of association,
articles of incorporation, bylaws, or other
charter documents, or make any change in its
authorized, issued, or outstanding capital
stock, grant any stock options or right to
acquire shares of any class of its capital
stock or any security convertible into any
class of capital stock, purchase, redeem,
retire, or otherwise acquire any shares of any
class of its capital stock or any security
convertible into any class of its capital
stock, or agree to do any of the foregoing;
(2) Declare, set aside, or pay any
dividend or other distribution in respect of
any class of its capital stock, except that the
Bank shall be permitted to pay dividends
sufficient to permit SBI to make required
payment on its Bank Stock debt to First Bank,
N.A. and to pay its normal operating expenses
including expenses associated with the proposed
merger transaction;
(3) Adopt, enter into, or amend
materially any employment contract or any
bonus, stock option, profit sharing, pension,
retirement, incentive, or similar employee
benefit program or arrangement or grant any
salary or wage increase except (a) normal
individual increases in compensation to
employees in accordance with established
employee procedures of the Corporations, (b)
payments in accordance with the Fourth
Financial Corporation Acquisition Severance
Schedule previously furnished to SBI, and (c)
accrued but unvested bonuses for three senior
executives identified in the Disclosure
Statement in the approximate aggregate amount
of $100,000, and in the individual amounts set
forth in the Disclosure Statement, may be paid
at Closing;
(4) Incur any indebtedness for borrowed
money (except for borrowings under SBI's
current credit facility with First Bank, N.A.,
to pay SBI's expenses incurred in the ordinary
course of business and federal funds,
repurchase agreements entered into in the
ordinary and usual course of business, deposits
received by the Bank, endorsement, for
collection or deposit, of negotiable
instruments received in the ordinary and usual
course of business, and issuance of letters of
credit by the Bank in the ordinary and usual
course of business), assume, guarantee,
endorse, or otherwise as an accommodation
become liable or responsible for obligations of
any other individual, firm, or corporation;
(5) Pay or incur any obligation or
liability, absolute or contingent, other than
liabilities incurred in the ordinary and usual
course of business of the Corporations;
(6) Except for transactions in the
ordinary and usual course of business of the
Bank or for Permitted Encumbrances, mortgage,
pledge, or subject to lien or other encumbrance
any of its properties or assets;
(7) Except for transactions in the
ordinary and usual course of business of the
Bank (including, without limitation, sales of
assets acquired by the Bank in the course of
collecting loans) sell or transfer any of its
properties or assets or cancel, release, or
assign any indebtedness owed to it or any
claims held by it;
(8) Without Fourth's consent, which
consent will not be unreasonably withheld, make
any investment of a capital nature in excess of
$25,000 for any one item or group of similar
items either by the purchase of stock or
securities (not including bonds purchased in
the ordinary and usual course of business by
the Bank), contributions to capital, property
transfers, or otherwise, or by the purchase of
any property or assets of any other individual,
firm, or corporation;
(9) Without Fourth's consent, which
consent will not be unreasonably withheld,
enter into any other agreement not in the
ordinary and usual course of business;
(10) Merge or consolidate with any other
corporation, acquire any stock (except in a
fiduciary capacity), solicit any offers for any
class of its capital stock or a substantial
portion of the assets of any of the
Corporations or, except in the ordinary course
of business, acquire any assets of any other
person, corporation, or other business
organization, or enter into any discussions
with any person concerning, or agree to do, any
of the foregoing; or
(11) Enter into any transaction or take
any action which would, if effected prior to
the Effective Time, constitute a breach of any
of the representations, warranties, or
covenants contained in this Agreement.
b. Prior to the Effective Time, SBI shall,
and shall cause the Bank to, conduct its respective
business in the ordinary and usual course as
heretofore conducted, including maintaining its
current policies and procedures regarding the
review, approval, and collection of loans; furnish
Fourth with monthly financial statements and
management reports; and use its Best Efforts (1) to
preserve its business and business organization
intact, (2) to keep available to Fourth the services
of its present officers and employees, (3) to
preserve the good will of customers and others
having business relations with it, (4) to maintain
its properties in customary repair, working order,
and condition (reasonable wear and tear excepted),
(5) to comply with all Laws applicable to it and the
conduct of its business, (6) to keep in force at not
less than their present limits all existing policies
of insurance, (7) to make no material changes in the
customary terms and conditions upon which it does
business, (8) to duly and timely file all reports,
tax returns, and other documents required to be
filed with federal, state, local, and other
authorities, and (9) unless it is contesting the
same in good faith and has established reasonable
reserves therefor, to pay when required to be paid
all taxes indicated by tax returns so filed or
otherwise lawfully levied or assessed upon it or any
of its properties and to withhold or collect and pay
to the proper governmental authorities or hold in
separate bank accounts for such payment all taxes
and other assessments which it believes in good
faith to be required by law to be so withheld or
collected.
c. Prior to the Effective Time, to the extent
permitted by Law, SBI shall, and shall cause the
Bank to, give Fourth and its counsel and accountants
full access, during normal business hours and upon
reasonable notice, to their respective properties,
books, and records, and furnish Fourth during such
period with all such information concerning their
affairs as Fourth may reasonably request. The
availability or actual delivery of information about
the Corporations to Fourth shall not affect the
covenants, representations, and warranties of the
SBI and the Stockholders contained in this Agreement
or the Merger Agreement except as provided in
Section 8.1 hereof; provided, that Fourth shall
promptly disclose to SBI and the Stockholders any
apparent breaches of such covenants,
representations, or warranties discovered by it
prior to the Effective Time. Except for
confidential information disclosed in the
Registration Statement or as otherwise required to
be disclosed in the course of obtaining governmental
approvals, Fourth shall treat as confidential all
confidential information in the same manner as
Fourth treats similar confidential information of
its own and, if this Agreement is terminated, Fourth
shall continue to treat all such information
obtained in such investigation and not otherwise
known to Fourth from a source not known to Fourth to
be under a confidential relationship with the
Corporations, or already in the public domain, as
confidential and shall return such documents
theretofore delivered by the Corporations to Fourth
as the Corporations shall request.
d. SBI shall cause this Agreement and the
Merger Agreement to be submitted promptly to its
stockholders for approval, adoption, ratification,
and confirmation at a meeting to be called and held
in accordance with the applicable Law and its
articles of incorporation and bylaws. The board of
directors of SBI hereby recommends to its
stockholders the approval, adoption, ratification,
and confirmation of the Agreement and the Merger
Agreement.
e. SBI shall, and shall cause the Bank, to
use its Best Efforts with Fourth in good faith to
take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain all
of the Required Approvals, and do any and all acts
and things reasonably deemed by Fourth or the
Corporations to be necessary or appropriate in order
to cause the Merger to be consummated on the terms
provided herein and in the Merger Agreement as
promptly as practicable.
f. On or prior to the Effective Time, as
appropriate for the transactions contemplated
hereby, SBI shall execute and deliver the Merger
Agreement and the other closing documents provided
for in this Agreement, shall take all such other
actions required or desirable in order to effect the
Merger, and shall utilize its Best Efforts to cause
all of the conditions described in Section 5.1 of
this Agreement to occur and be continuing, and to
consummate all of the other transactions
contemplated hereby.
g. SBI shall obtain current title evidence or
insurance, environmental assessment reports, and
surveys on such of the Corporations' real estate as
Fourth may reasonably request.
h. From the date hereof through the Effective
Time, SBI shall cause the Bank to give Robert W.
Peterson, Vice President, BANK IV Kansas, National
Association (or such other person as may be
designated by Fourth in writing) at least one
business day advance oral notice of all proposed
securities purchases or sales involving an aggregate
price of $50,000 or more.
i. SBI and Stockholders acknowledge that
Fourth may acquire one or more financial
institutions located in Missouri in addition to the
Bank and that Fourth intends to merge all of its
Missouri financial institutions together into a
national banking association called "BANK IV
Missouri, National Association." Accordingly,
Stockholders and SBI agree to take, and to cause the
Bank to take, all such action as Fourth may
reasonably request in order for (1) such a merger to
occur contemporaneous with or immediately following
the Closing and/or (2) the Bank to be converted into
a national banking association named "BANK IV
Missouri, National Association" contemporaneously or
immediately following the Closing.
j. Prior to the Effective Time, SBI shall
acquire all of the shares of Bank Stock held as
directors' qualifying shares pursuant to the
existing repurchase agreements between the Bank and
the Bank directors.
k. Chris J. Murphy and Charles M. Harper
agree that Mr. Murphy will not acquire any shares of
SBI Stock from Mr. Harper pursuant to their existing
agreement prior to the Effective Time. Mr. Murphy
agrees that if he acquires any of the Fourth Stock
issued to Mr. Harper in the Merger, he will be bound
by the terms and conditions of this Agreement at
such time as though he had been an SBI stockholder
on the date hereof. Fourth shall not be required to
register the transfer of any shares of Fourth Stock
from Mr. Harper to Mr. Murphy until Mr. Murphy has
executed and delivered to Fourth an Affiliate's
Agreement.
2.4 The Merger.
a. At the Effective Time, the Merger shall
occur pursuant to the Merger Agreement. The Merger
Agreement shall be substantially in the form of
Exhibit "A" to this Agreement, with such immaterial
changes thereto as may be required or desirable in
order to obtain the required governmental approvals
and with all blanks properly completed.
b. As the result of the Merger, the separate
existence of SBI shall cease, and Fourth, as the
surviving corporation, shall continue its corporate
existence under the laws of the State of Kansas; the
articles of incorporation and the bylaws of Fourth
in effect at the Effective Time shall be the
articles of incorporation and bylaws of the
surviving corporation until further amended as
provided by Law; the directors and officers of
Fourth immediately preceding the Merger shall be the
directors and officers of the surviving corporation;
Fourth shall possess all the rights, privileges,
powers, and franchises of a public as well as of a
private nature of SBI; all property, real, personal,
and mixed, belonging to SBI shall be vested in and
belong to Fourth; and all rights of creditors of SBI
shall continue unimpaired against Fourth.
c. From time to time as and when requested by
Fourth, its respective successors or assigns, the
officers and directors of SBI last in office shall
execute and deliver such deeds and other instruments
and shall take or cause to be taken such other
actions as shall be necessary or desirable to vest
or perfect in or to confirm of record or otherwise
Fourth's title to, and possession of, all the
property, interests, assets, rights, privileges,
immunities, powers, franchises, and authority of SBI
and otherwise to carry out the purposes of this
Agreement; provided, that no such officer or
director shall thereby incur any expense or
liability.
2.5 Conversion and Exchange of Shares.
a. Merger. The manner of converting or
exchanging the shares of capital stock of SBI
outstanding at the Effective Time shall be as
follows:
(1) The Merger shall effect no change in
any of the then issued and outstanding shares
of Fourth Stock and none of Fourth's then
issued and outstanding shares of Fourth Stock
shall be converted or exchanged as the result
of the Merger.
(2) At the Effective Time, upon
consummation of the Merger, each issued and
outstanding share of SBI Class A Common Stock,
SBI Class B Common Stock, and SBI Preferred
Stock shall cease to be an issued and existing
share, and each share (and all rights to
receive accrued preferred stock dividends)
shall automatically be converted into and
exchanged solely for that number of shares of
Fourth Stock equal to the appropriate Exchange
Ratio for such class of stock. If the Closing
occurs on or before February 15, 1995, a
maximum of 315,000 shares of Fourth Stock will
be issued in connection with the Merger, with
126,354 shares of Fourth Stock being allocated
for the conversion and exchange of SBI Class A
Common Stock, 168,471 shares of Fourth Stock
being allocated for the conversion and exchange
of SBI Class B Common Stock, and 20,175 shares
of Fourth Stock being allocated for conversion
and exchange of SBI Preferred Stock. If the
Closing occurs after February 15, 1995, a
maximum of 317,730 shares of Fourth Stock will
be issued in connection with the Merger, with
127,449 shares of Fourth Stock being allocated
for the conversion and exchange of SBI Class A
Common Stock, 169,932 shares of Fourth Stock
being allocated for the conversion and exchange
of SBI Class B Common Stock, and 20,349 shares
of Fourth Stock being allocated for the
conversion and exchange of SBI Preferred Stock.
No holder of SBI Preferred Stock shall have any
right to receive any dividend on any of the SBI
Preferred Stock.
b. Adjustment for Changes in Fourth's
Capitalization. If, between the date of this
Agreement and the Effective Time, Fourth shall take
any action to subdivide its outstanding shares of
common stock into a greater number of shares, or to
combine its outstanding shares of common stock into
a smaller number of shares, or to declare a stock
dividend on its outstanding common stock, or to
effect a reclassification of its common stock, then
the number and kind of shares of Fourth Stock which
the stockholders of SBI shall be entitled to receive
in the Merger shall be adjusted equitably to prevent
dilution or enlargement of the proportionate common
stock interests in Fourth to be received by them.
c. Stock Certificates. After the Effective
Time and until surrendered for exchange, each
outstanding stock certificate which prior to the
Effective Time represented SBI Stock shall be deemed
for all corporate purposes to represent the right to
receive the number of shares of Fourth Stock into
which the shares of stock have been so converted;
provided, that in any matters relating to the shares
represented by such stock certificates, Fourth may
rely exclusively upon the record of stockholders
maintained by SBI containing the names and addresses
of all stockholders of record at the Effective Time.
Unless and until such outstanding stock certificates
formerly representing such shares are so
surrendered, no dividend payable to holders of
Fourth Stock, as of any date on or subsequent to the
Effective Time, shall be paid to the holder of such
outstanding certificates in respect thereof. Upon
surrender of such outstanding certificates (or, in
case of lost certificates, upon receipt of a surety
bond or other form of indemnification which is
satisfactory to Fourth), however, the former SBI
stockholder shall receive a certificate evidencing
the shares of Fourth Stock to which such stockholder
is entitled plus the accrued dividends on such stock
from the Effective Time, without interest.
d. Fractional Shares. No fractional shares
of Fourth Stock will be issued. Instead, upon
surrender of SBI stock certificates (or in the case
of lost certificates, a surety bond or other form of
indemnification which is satisfactory to Fourth),
Fourth will pay, or cause to be paid, to the holder
thereof the cash value of the fractional interest to
which the holder thereof would otherwise be
entitled, based upon the Closing Price.
e. Exchange Procedure. Promptly after the
Effective Time, Fourth will send a notice and
transmittal form to each record holder of
outstanding certificates that immediately prior to
the Effective Time evidenced shares of SBI Stock,
advising such stockholder of the effectiveness of
the Merger and the procedures for surrendering to
Fourth such certificates in exchange for
certificates representing the number of shares of
Fourth Stock into which the shares of such capital
stock represented by such certificates shall have
been converted.
2.6 Advance Preparations for Merger. The parties
acknowledge that Fourth anticipates it will be desirable
to take various actions immediately following the
Effective Time to maximize the future profitability of
the Bank, and that, as future stockholders of Fourth, the
stockholders of SBI will all benefit from such action to
the extent they are successful. Accordingly, SBI will,
and will cause the Bank to, cooperate with Fourth in
making advance plans and preparations for post-closing
operations, including, without limitation, cooperation
with employees of Fourth in planning for post-closing
operations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of SBI and the
Stockholders. Except as expressly disclosed in the
Disclosure Statement, SBI and the Stockholders jointly
and severally represent and warrant to Fourth as follows:
a. Organization, Good Standing, and
Authority. SBI is a bank holding company duly
registered pursuant to the Bank Holding Company Act.
Each of the Corporations is a corporation or bank
duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation and with all appropriate governmental
agencies, and each has all requisite corporate power
and authority to conduct its business as it is now
conducted, to own its properties and assets, and to
lease properties used in its business. The only
subsidiary of SBI is the Bank. The Bank has no
Subsidiaries. None of the Corporations is in
violation of its charter documents or bylaws, or of
any applicable Law in any material respect. The
deposits of the Bank are insured by the FDIC to the
maximum extent for each depositor provided by the
Federal Deposit Insurance Act and the Bank has paid
all assessments and filed all reports required to be
filed under the Federal Deposit Insurance Act.
b. Binding Obligations; Due Authorization.
This Agreement constitutes, and the Merger Agreement
will upon execution and delivery constitute, subject
only to the approval and adoption thereof by the
stockholders of SBI, valid and binding obligations
of SBI and each Stockholder, enforceable against
each of such parties in accordance with the
respective terms of such documents, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
or other similar Laws relating to or affecting the
enforcement of creditors' rights generally, and
subject as to the enforcement of remedies to general
principles of equity. The execution, delivery, and
performance of this Agreement, the Merger Agreement,
and the transactions contemplated by all such
agreements have been duly authorized by the board of
directors of SBI.
c. Absence of Default. None of the execution
or the delivery of this Agreement and the Merger
Agreement, the consummation of the transactions
contemplated hereby or thereby, or the fulfillment
of the terms hereof or thereof, will (1) conflict
with, or result in a breach of the terms,
conditions, or provisions of, or constitute a
default under the charter documents or bylaws of any
of the Corporations or under any material agreement
or instrument under which any of the Corporations is
obligated, other than the Credit Agreement dated
December 12, 1991, between SBI and First Bank, N.A.,
or (2) violate any Law to which any of the
Corporations is subject.
d. Capitalization. SBI is authorized to
issue (i) 6,000 shares of SBI Preferred Stock, par
value $100 per share, of which 5,850 shares are
validly issued and outstanding; (ii) 500,000 shares
of SBI Class A Common Stock, par value $1.00 per
share, of which 2,340 shares are validly issued and
outstanding; and (iii) 500,000 shares of SBI Class B
Common Stock, par value $1.00 per share, of which
3,120 shares are validly issued and outstanding.
The Bank is authorized to issue 26,000 shares of
Bank Stock, par value $100 per share, of which
26,000 shares are validly issued and outstanding,
all of which are owned by SBI, except for: (i) ten
shares held as directors' qualifying shares, all of
which are subject to valid repurchase agreements,
true and correct copies of which are included in the
Disclosure Statement as Exhibits "D-1" to "D-10";
and (ii) the pledge of such shares to secure the
loan from First Bank, N.A. referred to above, are
free and clear of all encumbrances, liens, security
interests, and claims whatsoever.
e. Charter Documents. True and correct
copies of the charter documents and bylaws of each
of the Corporations, with all amendments thereto,
are included in the Disclosure Statement as Exhibits
"E-1" to "E-4."
f. Options, Warrants, and Other Rights.
Neither of the Corporations has outstanding any
options, warrants, or rights of any kind requiring
it to sell or issue to anyone any capital stock of
any class and neither of the Corporations has agreed
to issue, sell, or purchase any additional shares of
any class of its capital stock.
g. Financial Statements. Included in the
Disclosure Statement as Exhibits "G-1" through "G-6"
are true and complete copies of the following
financial statements, all of which have been
prepared in accordance with GAAP and all applicable
regulatory accounting principles consistently
followed throughout the periods indicated and fairly
present in all material respects the financial
condition of the Corporations as of the dates and
for the periods indicated, subject in the case of
interim financial statements, to normal recurring
year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially
adverse) and the absence of notes (which if
presented would not differ materially from those
included in the most recent year-end financial
statements):
(1) Audited Consolidated Financial
Statements of SBI as of December 31, 1993, and
1992 and for the fiscal years then ended, with
auditors' report thereon and notes thereto,
which have been examined by Deloitte & Touche,
LLP, independent certified public accountants;
(2) Audited Financial Statements of the
Bank as of December 31, 1993, and 1992 and for
the fiscal years then ended, with auditors'
report thereon and notes thereto, which have
been examined by Deloitte & Touche LLP,
independent certified public accountants; and
(3) Consolidated Reports of Condition and
Income as of September 30, 1993, December 31,
1993, March 31, 1994, and June 30, 1994.
As soon as practicable between the date hereof
and the Effective Time, the Corporations will
deliver to Fourth copies of monthly operating
statements and monthly securities inventory reports
of the Bank and SBI and of all reports filed by
either of them with any regulatory agencies. The
books of account of each of the Corporations and
each of the Financial Statements fairly and
correctly reflect and, when delivered, will reflect
in all material respects in accordance with GAAP or
otherwise applicable rules and regulations of
regulatory agencies applied on a consistent basis,
the respective incomes, expenses, assets, and
liabilities, absolute or contingent, of each of the
Corporations (except for the absence in the monthly
operating statements of the Bank and in the
quarterly regulatory reports of certain information,
adjustments, and footnotes normally included in
financial statements prepared in accordance with
GAAP which in the aggregate would not be materially
adverse). There have been no material adverse
changes in the financial condition of any of the
Corporations from December 31, 1993, other than
changes made in the usual and ordinary conduct of
the businesses of the Corporations, none of which
has been or will be materially adverse and all of
which have been or will be recorded in the books of
account of the Corporations; and except as
specifically permitted by this Agreement, there have
been no material adverse changes in the respective
businesses, assets, properties, or liabilities,
absolute or contingent, of any of the Corporations,
or in their respective condition, financial or
otherwise, from the date of the most recent of the
Financial Statements that has been delivered to
Fourth on the date hereof other than (i) changes
occurring in the usual and ordinary conduct of the
business of the Corporations, none of which has been
or will be materially adverse and all of which have
been or will be recorded in the respective books of
account of the Corporations, and (ii) resulting from
action required or permitted by this Agreement to be
taken by any of the Corporations. Neither of the
Corporations has any contingent liabilities, other
than letters of credit and similar obligations of
the Bank incurred in the ordinary course of
business, that are not described in or reserved
against in the Financial Statements listed above.
No claims based on "undisclosed liabilities and
obligations" as defined in the Purchase and
Assumption Agreement, dated December 1, 1990 among
W. Grant Gregory, Standard State Bank and Trust, and
Independence Financial Corporation have been
asserted against either of the Corporations pursuant
to such Purchase and Assumption Agreement.
h. Properties. SBI does not own or lease any
real property. Exhibit "H" to the Disclosure
Statement is a complete list of all real estate
owned or leased by the Bank. The Bank has good and
marketable title in fee simple to all of the real
property shown on its books as being owned by it,
free and clear of all liens, encumbrances, and
charges, except for those exceptions described on
Exhibit "H" to the Disclosure Statement and
Permitted Encumbrances. All leases of real property
to which the Bank is a party as lessee, a true and
complete copy of each of which with all amendments
thereto is included in Exhibit "H" to the Disclosure
Statement, are valid and enforceable in accordance
with their respective terms except as enforcement
may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar Laws and
equitable principles affecting creditors' rights
generally, and there has been no material default by
any party thereto. No zoning ordinance prohibits,
interferes with, or materially impairs the
usefulness of the Occupied Properties; and all the
premises on the Occupied Properties or leased by the
Bank are in good operating condition and repair,
normal wear and tear excepted.
i. Personal Property. SBI does not own or
lease any material tangible personal property. The
Bank has good and merchantable title to all of the
machinery, equipment, materials, supplies, and other
property of every kind, tangible or intangible,
contained in its offices and other facilities or
shown as assets in its records and books of account,
free and clear of all liens, encumbrances, and
charges except for leasehold improvements to leased
premises and for personal property held under the
leases described on Exhibit "I" to the Disclosure
Statement. All leases of personal property to which
the Bank is a party as lessee, true and complete
copies of each which with all amendments thereto are
included in Exhibit "I" to the Disclosure Statement,
are valid and enforceable in accordance with their
terms, and there has been no material default by any
party thereto. All of such personal property owned
or leased by the Bank is in good operating
condition, normal wear and tear excepted.
j. Taxes. Except for an amended 1993 federal
tax return providing for the payment of additional
income tax in the amount of approximately $30,000 to
be filed by the Corporations prior to the Effective
Time, the Corporations have all filed all tax
returns and reports required to be filed with the
United States Government and with all states and
political subdivisions thereof where any such
returns or reports are required to be filed and
where the failure to file such return or report
would subject any of the Corporations to any
material liability or penalty. All taxes imposed by
the United States, or by any foreign country, or by
any state, municipality, subdivision, or
instrumentality of the United States or of any
foreign country, or by any other taxing authority,
which are due and payable by any of the Corporations
have been paid in full or adequately provided for by
reserves shown in the records and books of account
of the Corporations and in the Financial Statements.
No extension of time for the assessment of
deficiencies for any years is in effect. None of
the Corporations has any knowledge of any unassessed
tax deficiency proposed or threatened against any of
them.
k. Contracts. Other than Permitted Contracts
and agreements with customers of the Bank and with
financial institutions entered into by the Bank in
the ordinary course of banking business, attached to
the Disclosure Statement as Exhibit "K" is a list of
all material contracts and other agreements and
arrangements, both written and oral, to which either
of the Corporations is a party, which affect or
pertain to the operation of their respective
businesses, and which involve future payments by any
of the Corporations of $10,000 or more (the
"Scheduled Agreements"). All parties to the
Scheduled Agreements have in all material respects
performed, and are in good standing with respect to,
all the material obligations required to be
performed under all such contracts and other
agreements and arrangements, and no obligation with
respect thereto is overdue. All of the agreements
of the Corporations, including without limitation
the agreements disclosed in writing pursuant to this
clause k, are valid, binding, and enforceable in
accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws and equitable principles
affecting creditors' rights generally. Except as
otherwise noted in Exhibit "K" to the Disclosure
Statement, no contract, lease, or other agreement or
arrangement to which any of the Corporations is a
party or as to which any of any of their assets is
subject requires the consent of any third party in
connection with this Agreement or the Merger. The
Corporations are not in default under any of the
Scheduled Agreements; the Corporations are not aware
of any default by any other party to any of the
Scheduled Agreements or any claim by any other party
that the Corporations are in default under any of
the Scheduled Agreements. Except for Permitted
Contracts and except as set forth in Exhibit "K" to
the Disclosure Statement, neither of the
Corporations is a party to:
(1) Any contract for the purchase or sale
of any materials, services, or supplies which
contains any escalator, renegotiation, or
redetermination clause or which commits it for
a fixed term;
(2) Any contract of employment with any
officer or employee not terminable at will
without liability on account of such
termination;
(3) Any management or consultation
agreement not terminable at will without
liability on account of such termination;
(4) Any license, royalty, or union
agreement, or loan agreement in which a
Corporation is the borrower;
(5) Any contract, accepted order, or
commitment for the purchase or sale of
materials, services, or supplies having a total
remaining contract price in excess of $10,000;
(6) Any contract containing any
restrictions on any party thereto competing
with either Corporation or any other person;
(7) Any other agreement which materially
affects the business, properties, or assets of
either of the Corporations, or which was
entered into other than in the ordinary and
usual course of business; or
(8) Any letter of credit or commitment to
make any loan or group of loans to related
parties in an amount in excess of $100,000.
None of the Corporations' agreements described
in this clause k other than loans made in the
ordinary course is reasonably anticipated by either
of the Corporations or any Stockholder to result in
a material loss to either of the Corporations.
1. Labor Relations; Employees; ERISA.
Neither of the Corporations is a party to or
affected by any collective bargaining agreement or
employment agreement, nor is any Corporation a party
to any pending or, to the knowledge of either of the
Corporations, any threatened labor dispute,
organizational efforts, or labor negotiations. Each
of the Corporations has complied with all applicable
Laws relating to the employment of labor, including,
but not limited to, the provisions thereof relating
to wages, hours, collective bargaining, payment of
social security taxes, and equal employment
opportunity, the violation of which would have a
materially adverse impact on their respective
businesses. Neither of the Corporations is liable
for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
True and complete copies of the Bank's 401(K) Plan,
the Bank's Annual Officer Bonus Plan, and the Bank's
long-term incentive plan, together with all
amendments thereto, are attached as Exhibits L-1
through L-3, respectively, to the Disclosure
Statement. Except for the three plans described in
the preceding sentence, neither of the Corporations
has any written or oral retirement, pension, profit
sharing, stock option, bonus, or other employee
benefit plan or practice other than group health,
life, and accident insurance. Each such plan is in
material compliance with ERISA and the Code and the
401(K) Plan is a "qualified plan" within the meaning
of Section 401(a) of the Code and is the subject of
a currently effective written determination of the
Internal Revenue Service to such effect and to the
further effect that the trust thereunder is a trust
exempt from tax under Section 501 of the Code. The
Corporations and Stockholders know of no facts or
circumstances that could adversely affect the status
of such plan as such a plan or such trust as such a
trust. All accrued contributions and other payments
to be made by the Bank under the three plans have
been made or reserves adequate for such purposes
have been set aside therefor. Neither of the
Corporations has violated any of the provisions of
ERISA, and neither of them has engaged in any
"prohibited transactions" as such term is defined in
Section 406 of ERISA. Each of the Corporations has
complied with all applicable notice requirements and
has provided group health care continuation coverage
under Section 4980B of the Code and/or any other
applicable Laws. There is no employee of either of
the Corporations whose employment is not terminable
at will without severance pay or other penalty or
compensation.
m. Government Authorizations. Each of the
Corporations has all permits, charters, licenses,
orders, and approvals of every federal, state,
local, or foreign governmental or regulatory body
required in order to permit it to carry on its
business substantially as presently conducted except
where the failure to do so would not have a material
adverse effect on the businesses, results of
operations or general business affairs of SBI and
the Bank taken as a whole. All such licenses,
permits, charters, orders, and approvals are in full
force and effect, and neither of the Corporations
knows of any threatened suspension or cancellation
of any of them or of any fact or circumstance that
will interfere with or adversely affect the renewal
of any of such licenses, permits, charters, orders,
or approvals; and none of such permits, charters,
licenses, orders, and approvals will be affected by
the consummation of the transactions contemplated by
this Agreement.
n. Insurance. Exhibit "N" to the Disclosure
Statement is a complete list of all insurance
policies presently in effect and in effect during
the past three years. All the insurance policies
and bonds currently maintained by either of the
Corporations are in full force and effect.
o. Litigation. Exhibit "O" to the Disclosure
Statement contains a true and complete list and
brief description of all pending or, to the
knowledge of either of the Corporations or any of
the Stockholders, threatened Litigation to which
either of the Corporations is or would be a party or
to which any of their assets is or would be subject.
Except as described on Exhibit "O" to the Disclosure
Statement, neither of the Corporations is a party to
any Litigation other than routine litigation
commenced by the Bank to enforce obligations of
borrowers in which no counterclaims for any material
amounts of money have been asserted or, to the
knowledge of either of the Corporations or any of
the Stockholders, threatened. To the knowledge of
the Corporations or any of the Stockholders, there
are no threatened proceedings against or
investigations of any of the Corporations by either
regulatory agency.
p. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than
legal, accounting, and financial advisors) has been
retained by either of the Corporations or any
Stockholder or is entitled to be paid based upon any
agreements, arrangements, or understandings made by
either of the Corporations or any Stockholder in
connection with any of the transactions contemplated
by this Agreement or the Merger Agreement.
q. SEC Filings To Be Accurate. The
information pertaining to the Corporations which has
been or will be furnished to Fourth by or on behalf
of any of the Corporations or Stockholders for
inclusion in the Registration Statement or the Proxy
Statement, and the information pertaining to either
of the Corporations which will appear in the
Registration Statement or the Proxy Statement, in
the form filed with the SEC, will not contain any
untrue statement of any material fact or omit to
state any material fact required to be stated
therein or necessary to make the statements therein,
in the light of the circumstances under which they
are made, not misleading. The Corporations and
Stockholders shall promptly advise Fourth in writing
if prior to the Effective Time any of them shall
obtain knowledge of any fact that would make it
necessary to amend the Registration Statement or the
Proxy Statement, or to supplement the prospectus
contained in the Registration Statement, in order to
make the statements therein not misleading or to
comply with applicable Law.
r. Stockholder Matters. Exhibit "R-1" to the
Disclosure Statement accurately sets forth after the
name of each Stockholder, the number of shares of
each class of SBI Stock beneficially owned by such
Stockholder, in each case free and clear of all
liens, encumbrances, claims, and equities which
would impair the right of the record owner to vote
such shares in favor of the Merger, and the number
of shares of Fourth Stock to be received in the
Merger; provided, however, that no Stockholder makes
any warranty as to the shares owned by any other
Stockholder. Neither of the Corporations is a party
and none of the Stockholders is a party to any
agreement (except for an agreement dated April 17,
1991, by and between Charles M. Harper and Chris J.
Murphy) which in any way restricts the right of any
Stockholder to vote on this Agreement or the Merger
Agreement or consummate the transactions
contemplated therein. There is no plan or intention
by any of the Stockholders to sell, exchange, or
otherwise dispose of a number of shares of Fourth
Stock received in the Merger that would reduce the
SBI stockholders' ownership of Fourth Stock to a
number of shares having a value, as of the Effective
Time, of less than 50 percent of the value of all of
the SBI Stock outstanding immediately prior to the
Effective Time. Solely for purposes of the
preceding sentence, an amount of Fourth Stock equal
to (i) the value of SBI Stock surrendered for cash
in lieu of fractional shares of Fourth Stock, and
(ii) the value of shares of Fourth Stock held by SBI
stockholders prior to the Merger and otherwise sold,
exchanged, or disposed of prior or subsequent to the
Effective Time, shall be deemed received by SBI
stockholders in the Merger and sold, exchanged, or
disposed of immediately thereafter.
s. Environmental Compliance. The
Corporations are in material compliance with all
relevant Environmental, Health, and Safety Laws and
neither of the Corporations has any material
Environmental, Health, and Safety Liabilities.
Except as described in Exhibit "S" to the Disclosure
Statement, none of the Occupied Properties and, to
the knowledge of SBI and any of the Stockholders, no
real or personal property owned or leased by the
Bank at any time is now being used or has at any
time in the past ever been used for the storage
(whether permanent or temporary), disposal, or
handling of any Hazardous Materials, nor are any
Hazardous Materials located in, on, under, or at any
real or personal property owned, leased, or used by
the Bank. Neither of the Corporations has received
any notice of a material violation of any
Environmental, Health, and Safety Law, or any notice
of any material potential Environmental, Health, and
Safety Liabilities with respect to any properties or
assets in which either of the Corporations has or
has had any interest.
t. Employment of Aliens. The Bank is in
material compliance with the Immigration and Control
Act of 1986.
u. Notes and Leases. All promissory notes
and leases owned by the Bank at the Effective Time
will represent bona fide indebtedness or obligations
to the Bank and are and will be fully enforceable in
accordance with their terms without valid set-offs
or counterclaims, except as shown on the books and
records of the Bank and except as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws and equitable principles
affecting creditors' rights generally; provided,
however, no representation or warranty is made in
this Agreement as to the collectibility of any such
note or lease.
v. No Misrepresentations. Neither this
Agreement, the Financial Statements, nor any other
letter, certificate, statement, or document
furnished or to be furnished to Fourth by or on
behalf of SBI, the Stockholders, or any of them,
pursuant to or in connection with this Agreement and
the transactions contemplated hereby, when
considered in conjunction with all other information
and documents furnished to Fourth hereunder,
contains or will contain any misstatement of a
material fact or omits or will omit to state a
material fact necessary to make the statements
contained herein or therein not misleading.
w. Updating of Representations and
Warranties. Between the date hereof and the
Effective Time, SBI and the Stockholders will
promptly disclose to Fourth in writing any
information of which any of them has actual
knowledge (1) concerning any event that would render
any of their representations or warranties contained
in this Agreement untrue if made as of the date of
such event, (2) which renders any information set
forth in this Agreement or the Disclosure Statement
no longer correct in all material respects, or (3)
which arises after the date hereof and which would
have been required to be included in this Agreement
or the Disclosure Statement if such information had
existed on the date hereof.
3.2 Representations and Warranties of Fourth.
Fourth represents and warrants to SBI and the
Stockholders, and each of them, as follows:
a. Organization, Good Standing, and
Authority. Fourth is a bank holding company duly
registered pursuant to the Bank Holding Company Act.
Fourth and each of its banking Subsidiaries is a
corporation or bank duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation and with all
appropriate governmental agencies, and each has all
requisite corporate power and authority to conduct
its business as it is now conducted, to own its
properties and assets, and to lease properties used
in its business. None of Fourth or any of its
banking Subsidiaries is in violation of its charter
documents or bylaws, or of any applicable Law in any
material respect, or in default in any material
respect under any material agreement, indenture,
lease, or other document to which it is a party or
by which it is bound. All of Fourth's issued and
outstanding equity securities are duly registered
under the Federal Securities Exchange Act of 1934,
as amended. Shares of Fourth Stock are listed on
the National Market System of NASDAQ.
b. Binding Obligations: Due Authorization.
This Agreement constitutes, and the Merger Agreement
will upon execution and delivery constitute, valid
and binding obligations of Fourth, enforceable
against it in accordance with the terms of such
documents, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
or other similar laws and equitable principles
affecting creditors' rights generally. The
execution, delivery, and performance of this
Agreement and the Merger Agreement, and the
transactions contemplated by all such agreements
have been duly authorized by the board of directors
of Fourth. No approval of the holders of
outstanding Fourth Stock or other voting securities
of Fourth is necessary to consummate the Merger.
c. Absence of Default. None of the execution
or the delivery of this Agreement and the Merger
Agreement, the consummation of the transactions
contemplated hereby or thereby, or the fulfillment
of the terms hereof or thereof, will (1) conflict
with, or result in a breach of the terms,
conditions, or provisions of, or constitute a
default under the charter documents or bylaws of
Fourth or any of its banking Subsidiaries or under
any agreement or instrument under which Fourth or
any of its banking Subsidiaries is obligated, or (2)
violate any Law to which any of them is subject.
d. SEC Documents. Fourth has previously
delivered to SBI its Annual Report on Form 10-K for
the year ended December 31, 1993, and its Quarterly
Reports on Form 10-Q for the quarters ended March 31
and June 30, 1994, in each case with exhibits
thereto, as filed with the SEC, and a copy of the
definitive proxy statement used by Fourth in
connection with its 1994 annual stockholders'
meeting. All of the financial statements contained
in such documents have been prepared in accordance
with GAAP applied on a consistent basis. The books
of account of Fourth and each of its banking
Subsidiaries fairly and correctly reflect, in
accordance with GAAP applied on a consistent basis,
the respective incomes, expenses, assets, and
liabilities, absolute and contingent, of Fourth and
each of its banking Subsidiaries. There have been
no material adverse changes in the consolidated
financial condition of Fourth from December 31,
1993.
e. Brokers or Finders. No broker, agent,
finder, consultant, or other party (other than legal
and accounting advisors) has been retained by Fourth
or is entitled to be paid based upon any agreements,
arrangements, or understandings made by Fourth in
connection with any of the transactions contemplated
by this Agreement or the Merger Agreement.
f. SEC Filings to be Accurate. The
information pertaining to Fourth which has been or
will be furnished by or on behalf of Fourth and its
banking Subsidiaries or its management for inclusion
in the Registration Statement or the Proxy
Statement, and the information pertaining to Fourth
which will appear in the Registration Statement or
the Proxy Statement, in the form filed with the SEC,
will contain no untrue statement of any material
fact and will not omit to state any material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they are made, not
misleading. Fourth shall promptly advise SBI in
writing if prior to the Effective Time it shall
obtain knowledge of any fact that would make it
necessary to amend the Registration Statement or the
Proxy Statement, or to supplement the prospectus
contained in the Registration Statement, in order to
make the statements therein not misleading or to
comply with applicable Law.
g. No Misrepresentations. Neither this
Agreement, the disclosure documents described in
clause "d" of this Section 3.2, nor any other
letter, certificate, statement, or document
furnished or to be furnished to SBI or the
Stockholders, by or on behalf of Fourth pursuant to
or in connection with this Agreement and the
transactions contemplated hereby contains or will
contain any misstatement of a material fact or omits
or will omit to state a material fact necessary to
make the statements contained herein or therein not
misleading.
h. Capitalization. Fourth is authorized to
issue (i) 50,000,000 shares of common stock, par
value $5 per share, of which 27,201,925 shares were
issued and 26,845,241 shares were outstanding on
June 30, 1994, (ii) 250,000 shares of Class A 7%
Cumulative Convertible Preferred Stock, par value
$100 per share, all of which are issued and
outstanding, and (iii) 5,000,000 shares of Class B
Preferred Stock, without par value, none of which
have been issued. The shares of Fourth Stock to be
issued in the Merger will be duly and validly
issued, fully paid, and nonassessable, and not
issued in violation of any preemptive rights or any
Laws applicable thereto.
i. Updating of Representations and
Warranties. Between the date hereof and the
Effective Time, Fourth will promptly disclose to SBI
and the Stockholders in writing any information of
which it has actual knowledge (1) concerning any
event that would render any representation or
warranty of Fourth untrue if made as of the date of
such event, (2) which renders any information set
forth in this Agreement no longer correct in all
material respects, or (3) which arises after the
date hereof and which would have been required to be
included in the Agreement if such information had
existed on the date hereof.
ARTICLE IV
SECURITIES LAWS MATTERS
4.1 Registration Statement and Proxy Statement.
Fourth shall as soon as practicable prepare and file the
Registration Statement under and pursuant to the
Securities Act for the purpose of registering the shares
of Fourth Stock to be issued in the Merger. SBI shall,
and shall cause the Bank to provide promptly to Fourth
such information concerning their respective businesses,
financial condition, and affairs as may be required or
appropriate for inclusion in the Registration Statement
or the Proxy Statement and each shall cause its counsel
and independent public accountants to cooperate with the
other's counsel and independent public accountants in the
preparation and filing of the Registration Statement and
the Proxy Statement. Fourth and SBI shall use their Best
Efforts to have the Registration Statement declared
effective under the Securities Act as soon as may be
practicable and thereafter SBI shall distribute the Proxy
Statement to its stockholders in accordance with
applicable Laws not fewer than 20 business days prior to
the date on which the Merger Agreement is to be submitted
to the stockholders for voting thereon. If necessary, in
light of developments occurring subsequent to the
distribution of the Proxy Statement to stockholders, SBI
shall mail or otherwise furnish to its stockholders such
amendments to the Proxy Statement or supplements to the
Proxy Statement as may, in the opinion of Fourth or SBI,
be necessary so that the Proxy Statement, as so amended
or supplemented, will contain no untrue statement of any
material fact and will not omit to state any material
fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances
under which they were made, not misleading, or as may be
necessary to comply with applicable Law. Fourth shall
not be required to maintain the effectiveness of the
Registration Statement for the purpose of resale of
Fourth Stock by any person.
4.2 State Securities Laws. Fourth shall prepare
and file and the parties hereto shall cooperate in making
any filings required under the securities laws of any
State in order either to qualify or register the Fourth
Stock so it may be offered and sold lawfully in such
State in connection with the Merger or to obtain an
exemption from such qualification or registration.
4.3 Affiliates. Certificates representing shares
of Fourth Stock issued to Affiliates of SBI pursuant to
the Fourth Merger Agreement may be subjected to stop
transfer orders and may bear a restrictive legend in
substantially the following form:
The shares of common stock represented by this
certificate have been issued or transferred to
the registered holder as the result of a
transaction to which Rule 145 under the
Securities Act of 1933, as amended (the "Act"),
applies. Such shares may not be sold, pledged,
transferred, or assigned, and the issuer shall
not be required to give effect to any attempted
sale, pledge, transfer, or assignment, except
(i) pursuant to a then current effective
registration under the Act, (ii) in a
transaction permitted by Rule 145 as to which
the issuer has, in the reasonable opinion of
its counsel, received reasonably satisfactory
evidence of compliance with Rule 145, or (iii)
in a transaction which, in the opinion of
counsel satisfactory to the issuer or as
described in a "no-action" or interpretive
letter from the staff of the Securities and
Exchange Commission, is not required to be
registered under the Act. Transfer of the
shares represented by this certificate is
further restricted by an Affiliate's Agreement
dated as of ____________, 1994, between the
issuer and the registered holder to which
reference is hereby made.
4.4 Affiliates' Agreements. Each Stockholder
shall, and SBI shall use its Best Efforts to cause each
director, executive officer, and other person who is an
Affiliate of SBI to, deliver to Fourth, at the Effective
Time, a written agreement, in substantially the form of
Exhibit "D" hereto, providing that such person will not
sell, pledge, transfer, or otherwise dispose of any
shares of Fourth Stock received by such Affiliate in the
Merger, except in compliance with the applicable
provisions of the Securities Act and the rules and
regulations thereunder, or sell or otherwise dispose of
any shares of Fourth Stock received by such Affiliate in
the Merger or in any other way reduce his risk relative
to such shares (within the meaning of Accounting Series
Release No. 130) until such time as financial results
covering at least 30 days following the Merger have been
published.
ARTICLE V
CLOSING CONDITIONS
5.1 Conditions to Obligations of Fourth. The
obligations of Fourth to effect the Merger and to issue
any Fourth Stock shall be subject to the following
conditions which may, to the extent permitted by Law, be
waived by Fourth at its option:
a. Stockholder Approvals. The approval,
ratification, and confirmation of this Agreement and
the Merger Agreement by the stockholders of SBI
shall have been duly obtained as required by Law.
b. Absence of Litigation. No order,
judgment, or decree shall be outstanding restraining
or enjoining consummation of the Merger; and no
Litigation shall be pending or threatened in which
it is sought to restrain or prohibit the Merger or
obtain other substantial monetary or other relief
against one or more of the parties hereto in
connection with this Agreement.
c. Securities Laws. The Registration
Statement shall have become effective under the
Securities Act and Fourth shall have received all
state securities laws permits or other
authorizations or confirmation of the availability
of exemption from registration requirements
necessary to issue the Fourth Stock in the Merger.
Neither the Registration Statement nor any such
permit, authorization, or confirmation shall be
subject to a stop-order or threatened stop-order or
similar proceeding or order by the SEC or any state
securities authority.
d. Regulatory Approvals. All appropriate
regulatory agencies concerned with the transaction
shall have approved the transaction, and no such
approval shall have involved the imposition of any
conditions which are materially burdensome to Fourth
or otherwise materially inconsistent with any
application as filed.
e. Minimum Net Worth of the Bank. Fourth
shall have been reasonably satisfied that the
aggregate net worth of the Bank calculated as of the
end of the month immediately preceding the Effective
Time, determined in accordance with GAAP was at
least $6,500,000, excluding any adjustments required
by F.A.S. No. 115 to reflect changes in the Bank's
securities portfolio to adjust to market value.
f. Opinion of Counsel. Fourth shall have
received the opinion of Knudsen, Berkheimer,
Richardson & Endacott, counsel to the Corporation,
substantially in the form of Exhibit "B" hereto.
g. Representations and Warranties; Covenants.
The representations and warranties of SBI and the
Stockholders contained in Section 3.1 of this
Agreement shall have been true and correct in all
material respects on the date made and shall be true
and correct in all material respects at the
Effective Time as though made at such time,
excepting: (i) any changes occurring in the ordinary
course of business, none of which shall have been
materially adverse, and (ii) any changes
contemplated or permitted by this Agreement. SBI
and the Stockholders shall each have performed in
all material respects all of their obligations under
this Agreement.
h. Certificates. SBI and the Stockholders
shall have delivered to Fourth a certificate, in
form and substance satisfactory to Fourth, dated the
Effective Time and signed by each of the
Corporations' chief executive officer and chief
financial officer certifying in such detail as
Fourth may reasonably request the fulfillment of
conditions a, b, e, and g above and j and n below.
i. Affiliates' Agreements. Prior to the
Effective Time, Fourth shall have received from SBI
a list, reviewed by SBI's counsel, identifying all
of its stockholders who are, in its opinion,
Affiliates of SBI. Fourth shall not be obligated to
deliver any shares of Fourth Stock to any person who
is named as an Affiliate on such list prior to
receipt from such person of an agreement
substantially in the form of Exhibit "D" hereto.
j. Material Adverse Changes. Since the date
of this Agreement there shall not have occurred any
material adverse change in the condition (financial
or otherwise) business, liabilities (contingent or
otherwise), properties, or assets of any of the
Corporations.
k. Satisfactory Environmental Reports.
Fourth shall have received environmental assessment
reports covering all of the Corporations' real
estate, in form and substance reasonably
satisfactory to Fourth, which do not cause Fourth
reasonably to conclude that there are any material
Environmental, Health, and Safety Liabilities
associated with any of such real estate.
l. Pooling of interests. Fourth shall have
received a letter from its independent public
accountants, dated the Effective Time, to the effect
that the Merger can properly be treated for
accounting purposes as a "pooling of interests"
under GAAP. Fourth's accountants have reviewed the
agreement, dated April 17, 1991, between Charles M.
Harper and Chris J. Murphy and have advised Fourth
that the provisions of such agreement will not
prevent the transaction from qualifying for
treatment as a "pooling of interests."
m. Resignations. SBI shall have delivered to
Fourth the written resignations, effective at the
Effective Time, of those officers and directors of
the Bank as Fourth shall have requested at least two
business days prior to the Effective Time.
n. Directors' Qualifying Shares. SBI shall
have acquired all of the ten shares of Bank Stock
held as directors' qualifying shares in accordance
with currently existing agreements.
5.2 Conditions to Obligations of SBI and the
Stockholders. The obligations of SBI and the
Stockholders to effect the Merger and to consummate the
transactions contemplated hereby shall be subject to the
following conditions which may, to the extent permitted
by Law, be waived by them at their option:
a. General. Each of the conditions specified
in clauses a, b, c, and d of Section 5.1 of this
Agreement shall have occurred and be continuing.
b. Representations and Warranties; Covenants.
The representations and warranties of Fourth
contained in Section 3.2 of this Agreement shall
have been true and correct in all material respects
on the date made and shall be true and correct in
all material respects at the Effective Time as
though made at such time, excepting any changes
occurring in the ordinary course of business, none
of which shall have been materially adverse, and
excepting any changes contemplated or permitted by
this Agreement. Fourth shall have duly performed in
all material respects all of its obligations under
this Agreement.
c. Certificate. Fourth shall have delivered
to SBI a certificate, in form and substance
satisfactory to SBI, dated the Effective Time and
signed by its chief executive officer and chief
financial officer on behalf of Fourth, certifying in
such detail as SBI may reasonably request as to the
fulfillment of the foregoing conditions except for
the conditions set forth in clauses a and e of
Section 5.1 of this Agreement.
d. Opinion of Counsel. SBI and the
Stockholders shall have received the opinion of
Foulston & Siefkin, counsel to Fourth, addressed to
SBI and the Stockholders, satisfactory in form and
substance to SBI, substantially in the form of
Exhibit "C" hereto.
e. Material Adverse Change. Since the date
of this Agreement there shall not have occurred any
material adverse change in the condition (financial
or otherwise), business, properties, liabilities
(contingent or otherwise), or assets of Fourth.
ARTICLE VI
EFFECTIVE TIME
The consummation of the Merger and the delivery of
the certificates and other documents called for by this
Agreement, and the consummation of all other transactions
contemplated by this Agreement shall take place at such
time and place in Wichita, Kansas, as the parties may
mutually agree which, unless otherwise agreed, shall be
not later than the last day of the month in which the
final regulatory approval required to effect the Merger
is received and the latest required waiting period
expires. The parties agree that they shall exert their
reasonable Best Efforts to cause the Effective Time to be
on or before December 31, 1994.
ARTICLE VII
TERMINATION OF AGREEMENT
7.1 Mutual Consent; Absence of Stockholder
Approval; Termination Date. This Agreement and the
Merger Agreement shall terminate at any time when the
parties hereto mutually agree in writing. This Agreement
and the Merger Agreement may also be terminated at the
election of either SBI or Fourth, as the case may be,
upon written notice from the party electing to terminate
this Agreement and the Merger Agreement to the other
party if, without fault on the part of the party electing
to terminate this Agreement and the Merger Agreement, the
Merger Agreement is not ratified and approved by the
stockholders of SBI by the requisite vote or if there has
been a denial of a Required Approval or the granting of a
Required Approval only upon compliance with terms
reasonably deemed onerous by Fourth. Unless extended by
written agreement of the parties, this Agreement and the
Merger Agreement shall terminate if all conditions to the
obligations of the parties hereto and the Closing have
not occurred on or before February 28, 1995.
7.2 Election by Fourth. This Agreement shall
terminate at Fourth's election, upon written notice from
Fourth to SBI, if any one or more of the following events
shall occur and shall not have been remedied to the
satisfaction of Fourth within 30 days after written
notice is delivered to SBI: (a) there shall have been
any material breach of any of the material obligations,
covenants, or warranties of SBI or the Stockholders; or
(b) there shall have been any written representation or
statement furnished by SBI which at the time furnished is
false or misleading in any material respect in relation
to the size and scope of the transactions contemplated by
this Agreement.
7.3 Election by SBI. Notwithstanding the approval
of the Merger Agreement by the Stockholders of SBI, this
Agreement and the Merger Agreement shall terminate at the
election of SBI, upon written notice from SBI to Fourth,
if any one or more of the following events shall occur
and shall not have been remedied to SBI's satisfaction
within 30 days after written notice is delivered to
Fourth: (a) there shall have been any material breach of
any of the material obligations, covenants, or warranties
of Fourth hereunder; or (b) there shall have been any
written representation or statement furnished by Fourth
hereunder which at the time furnished is false or
misleading in any material respect in relation to the
size and scope of the transactions contemplated by this
Agreement.
7.4 Effect of Termination. In the event of
termination of this Agreement by either SBI or Fourth as
provided in this Article VII, this Agreement and the
Merger Agreement shall forthwith become void and there
shall be no liability or obligation on the part of the
Stockholders, SBI, Fourth, or their respective officers,
directors, or employees except (i) with respect to the
parties' obligations under Section 9.1, (ii) all
obligations relating to the confidential information
contained in this Agreement and in existing
confidentiality agreements, and (iii) with respect to any
liabilities or damages incurred or suffered by a party as
a result of the willful breach by the other party of any
of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 Effect of Closing. Except as provided in this
Section, closing of the transactions contemplated by this
Agreement shall not prejudice any claim for damages which
any of the parties hereto may have hereunder in law or in
equity, due to a material default in observance or the
due and timely performance of any of the covenants and
agreements herein contained or for the material breach of
any warranty or representation hereunder, unless such
observance, performance, warranty, or representation is
specifically waived in writing by the party making such
claim. In the event any warranty or representation
contained herein is or becomes untrue or breached (other
than by reason of any fraudulent misrepresentation or
fraudulent breach of warranty or any willful breach of a
covenant) and such breach or misrepresentation is
promptly communicated by SBI to Fourth in writing prior
to the Effective Time, Fourth shall have the right, at
its sole option, either to waive such misrepresentation
or breach in writing or to terminate this Agreement, but
in either such event, neither SBI nor any of the
Stockholders shall be liable to Fourth for any such
damages, costs, expenses, or otherwise by reason of such
breach or misrepresentation. In the event Fourth elects
to close the transactions contemplated by this Agreement
notwithstanding the written communication of such breach
or misrepresentation to Fourth by SBI, Fourth shall be
deemed to have waived such breach or misrepresentation in
writing.
8.2 General Indemnification. Subject to the
limitations on the liability of Stockholders contained in
this Article VIII, Stockholders shall be liable for, and
shall defend, save, indemnify, and hold harmless Fourth,
and its respective officers, directors, employees, and
agents, and each of them (hereinafter individually
referred to as an "Indemnitee" and collectively as
"Indemnitees") against and with respect to any losses,
liabilities, claims, diminution in value, litigation,
demands, damages, costs, charges, legal fees, suits,
actions, proceedings, judgements, expenses, or any other
losses (including without limitation any income tax
consequences of the receipt of any indemnification
payment) (herein collectively referred to as
"Indemnifying Losses") that may be sustained, suffered or
incurred by, or obtained against, any Indemnitee arising
from or by reason of the breach or nonfulfillment of any
of the warranties, agreements, or representations made by
the Stockholders, or any of them, in this Agreement;
provided, however that the liability of Stockholders to
defend, save, indemnify, and hold harmless any of the
Indemnitees for any liabilities, claims, or demands
indemnified under this Agreement, shall be limited to the
amount by which all such Indemnifying Losses exceed
$100,000 in the aggregate, net of income tax effect and
after taking into account all available insurance
proceeds, net recoveries on other real estate owned and
other non-ledger assets, in each case to the extent such
amounts exceed the amounts such assets were carried on
the books of the Bank at July 31, 1994. It is agreed
that the indemnification obligations of the Stockholders
shall be solely for the benefit of the Indemnitees and
may not be enforced by any insurer under any subrogation
or similar agreement or arrangement or by any
governmental agency except as a receiver for any
Indemnitee.
8.3 Procedure. If any claim or demand shall be
made or liability asserted against any Indemnitee, or if
any litigation, suit, action, or administrative or legal
proceedings shall be instituted or commenced in which any
Indemnitee is involved or shall be named as a defendant
either individually or with others, and if such
Litigation, claim, demand, liability, suit, action, or
proceeding, if successfully maintained, will result in
any Indemnifying Losses as defined in Section 8.2, Fourth
shall give Stockholders written notice thereof within 20
days after it acquires knowledge thereof. If, within 20
days after the giving of such notice, Fourth receives
written notice from Stockholders (acting jointly) stating
that Stockholders dispute or intend to defend against
such claim, demand, liability, suit, action, or
proceeding, then Stockholders shall have the right to
select counsel of their choice and to dispute or defend
against or settle such claim at their expense, and the
Indemnitees shall fully cooperate with Stockholders in
such dispute or defense or settlement so long as
Stockholders are conducting such dispute or defense
diligently and in good faith. If no such notice of
intent to dispute or defend is received by Fourth within
aforesaid 20-day period, or if such diligent and good
faith defense is not being, or ceases to be, conducted,
Fourth shall have the right, directly or through one or
more of the Indemnitees, to dispute and defend against
the claim, demand, or other liability at the cost and
expense of Stockholders, to settle such claim, demand, or
other liability, together with interest or late charges
thereon, and in either event to be indemnified as
provided in this Agreement so long as Fourth conducts
such defense diligently and in good faith; provided,
notice of any proposed settlement shall be given to
Stockholders as far in advance as practicable under the
circumstances and, if Stockholders shall timely object to
the terms of such proposed settlement, they may assume
the defense in accordance with the terms of this Section
8.3. If any event shall occur that would entitle
Indemnitees to a right of indemnification hereunder, any
loss, damage, or expense subject to indemnification shall
be subject to the limitations otherwise set forth in this
Article VIII.
8.4 Survival of Representations and Warranties.
Notwithstanding any rule of law or provision of this
Agreement to the contrary, the representations and
warranties of Stockholders contained in this Agreement
shall survive the Merger and the closing of the
transactions described in this Agreement; provided,
however, that no claim by an Indemnitee for
indemnification or breach of warranty under this
Agreement shall be valid unless an Indemnitee shall have
given written notice of its assertion or claim to
Stockholders on or prior to the earlier date on which
Fourth files or is required to file with the SEC its:
(a) Annual Report on Form 10-K for the year ended
December 31, 1994 if the Effective Time is in 1994, or
(b) Quarterly Report on Form 10-Q for the quarter ending
March 31, 1995 if the Effective Time is after December
31, 1994.
8.5 Several Liability of Stockholders. The
liability of the Stockholders under this Agreement shall
not be joint, but rather shall be several in proportion
to the aggregate amount of Fourth Stock each such
Stockholder receives for the stock being exchanged
pursuant to this Agreement and the Merger Agreement as
compared to the total amount of Fourth Stock being
received by all SBI stockholders. The liability of each
Stockholder under this Agreement shall be limited to the
sum of the value of Fourth Stock and cash for fractional
shares, if any, received by such Stockholder under this
Agreement and the Merger Agreement. For the purposes of
this Section 8.5, the Fourth Stock received by
Stockholders shall be deemed to have the same value as
the reported closing price thereof in the NASDAQ
quotation system on the date in which the Effective Time
occurs.
8.6 Indemnification Payments. All indemnification
obligations of the Stockholders under this Article VIII
shall be satisfied by payment in Fourth Stock which will
be deemed to have the same value as the reported closing
price thereof in the NASDAQ quotation system on the date
in which the Effective Time occurs.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses. Whether or not the Merger is
effected, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expense.
9.2 Notices. All notices or other communications
required or permitted hereunder shall be sufficiently
given if personally delivered or if sent by certified or
registered mail, postage prepaid, return receipt
requested, addressed as follows: (a) if to Fourth,
addressed to Darrell G. Knudson, Chairman of the Board,
Post Office Box 4, Wichita, Kansas 67201; and (b) if to
SBI and the Stockholders, addressed to W. Grant Gregory,
375 Park Avenue, Suite 307, New York, N.Y. 10152, or to
such other address as shall have been furnished in
writing in the manner provided herein for giving notice.
9.3 Stockholders' Agreements. Each Stockholder
agrees not to sell, pledge, encumber, or otherwise
hypothecate or transfer any shares of capital stock of
any class of either of the Corporations prior to the
Effective Time. Each Stockholder also agrees to vote all
shares of SBI Stock owned by him or it in favor of
approval of this Agreement and the Merger Agreement.
9.4 Time. Time is of the essence of this
Agreement.
9.5 Law Governing. This Agreement shall, except to
the extent federal law is applicable, be construed in
accordance with and governed by the laws of the State of
Kansas, without regard to the principles of conflicts of
laws thereof.
9.6 Entire Agreement; Amendment. This Agreement
contains and incorporates the entire agreement and
understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior
negotiations, agreements, letters of intent, and
understandings. This Agreement may only be amended by an
instrument in writing duly executed by all corporate
parties hereto and the Stockholders (by the Agents acting
for all Stockholders jointly), and all attempted oral
waivers, modifications, and amendments shall be
ineffective.
9.7 Successors and Assigns. The rights and
obligations of the parties hereto shall inure to the
benefit of and shall be binding upon the successors and
permitted assigns of each of them; provided, however,
that this Agreement, the Merger Agreement, or any of the
rights, interests, or obligations hereunder or thereunder
may not be assigned by any of the parties hereto without
the prior written consent of the other parties hereto.
9.8 Cover, Table of Contents, and Headings. The
cover, table of contents, and the headings of the
sections and subsections of this Agreement and the Merger
Agreement are for convenience of reference only and shall
not be deemed to be a part hereof or thereof or taken
into account in construing this Agreement or the Merger
Agreement.
9.9 Counterparts. This Agreement and the Merger
Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but which
together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this
Agreement to be executed.
FOURTH FINANCIAL CORPORATION STANDARD
BANCORPORATION, INC.
By/s/ Darrell G. Knudson By/s/ W. Grant Gregory
- ------------------------ ----------------------
Darrell G. Knudson W. Grant Gregory
Chairman of the Board Chairman of the
Board
"Fourth" "SBI"
STOCKHOLDERS
I. Class A Common Stock No.of Shares
- ------------------------ ------------
Date: ___________, 1994 /s/W. Grant Gregory 780 shares
-------------------
W. Grant Gregory
Date: ___________, 1994 /s/Charles M. Harper 780 shares
--------------------
Charles M. Harper
Date: ___________, 1994 /s/Chris J. Murphy - shares
------------------
Chris J. Murphy
THE STUART KANSAS CITY
LIMITED PARTNERSHIP
Date: ___________, 1994 By/s/James Stuart, III 780 shares
----------------------
James Stuart, III
General Partner
[continued]
II. Class B Non-Voting Common Stock
- ------------------------------------
Date: ___________, 1994 /s/Charles M. Harper 1,040 shares
--------------------
Charles M. Harper
Date: ___________, 1994 /s/Chris J.Murphy - shares
-----------------
Chris J. Murphy
THE STUART KANSAS CITY
LIMITED PARTNERSHIP
Date: ___________, 1994 By/s/James Stuart, III 1,040 shares
----------------------
James Stuart, III
General Partner
SOUTHWEST COMPANY
Date: ___________, 1994 By/s/James Gregory 1,040 shares
------------------
James Gregory
President
III. 9% Cumulative, Non-Participating, Non-Voting Preferred Stock
- ------------------------------------------------------------------
Date: ___________, 1994 /s/Charles M. Harper 1,950 shares
--------------------
Charles M. Harper
Date: ___________, 1994 /s/James Stuart 1,950 shares
---------------
James Stuart
Date: ___________, 1994 /s/Chris J.Murphy - shares
-----------------
Chris J. Murphy
SOUTHWEST COMPANY
Date: ___________, 1994 By/s/James Gregory 1,950 shares
------------------
James Gregory
President
Exhibit "A"
AGREEMENT AND ARTICLES OF MERGER
THIS AGREEMENT AND ARTICLES OF MERGER is
made as of the_____ day of______________1994, between
FOURTH FINANCIAL CORPORATION, a Kansas corporation
("Fourth") and STANDARD BANCORPORATION, INC., a Nebraska
corporation ("SBI"). Fourth and SBI are hereinafter
sometimes referred to as the "Constituent Corporations;"
SBI is hereinafter sometimes referred to as the "Merging
Corporation"; and Fourth is hereinafter sometimes called
the "Surviving Corporation."
Recitals
A. The respective Boards of Directors of
each of the two Constituent Corporations have duly
adopted resolutions approving an Agreement and Plan of
Reorganization, dated as of September 2, 1994, between
Fourth and SBI (the "Agreement and Plan of
Reorganization") and this Agreement and Articles of
Merger, subject, among other things, to the approval and
adoption of the Agreement and Plan of Reorganization and
this Agreement and Articles of Merger by the holders of
at least two-thirds of the issued and outstanding capital
stock of each class of SBI, authorizing the proposed
merger of the SBI into Fourth upon the terms and
conditions herein set forth.
B. No approval of the stockholders of
Fourth of this Agreement is required by reason of K.S.A.
17-6702(e) and
17-6701(f).
NOW, THEREFORE, Fourth and SBI hereby
agree that Fourth and SBI shall merge on the terms and
conditions hereinafter provided and in accordance with
the following articles and plan:
Articles and Plan of Merger
1. SBI shall merge with and into Fourth
which shall continue as the Surviving Corporation and
shall be governed by the laws of the State of Kansas (the
"Merger"). At the Effective Time (as defined in Paragraph
6), the separate existence of SBI shall cease. The
corporate identity, existence, purposes, franchises,
powers, rights, and immunities of Fourth shall continue
unaffected and unimpaired by the Merger, and the
corporate identity, existence, purposes, franchises,
powers, rights, and immunities of SBI shall be merged
into Fourth which shall be fully vested therewith. It is
the intention of the parties that the transaction
contemplated by this Agreement of Merger shall qualify as
a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended.
2. The Restated Articles of
Incorporation and Bylaws of Fourth, as in effect on the
Effective Time, shall be and remain the articles of
incorporation and bylaws of the Surviving Corporation
until thereafter amended as provided by law.
3. At the Effective Time:
(a) Fourth shall, without other
transfer, succeed to and possess all the
rights, privileges, powers, and franchises
both of a public and private nature and
shall be subject to all the restrictions,
disabilities, debts, liabilities, and
duties of each of the Constituent
Corporations.
(b) The rights, privileges,
powers, and franchises of each of the
Constituent Corporations and all property,
real, personal and mixed, of and all debts
due or belonging to any of the Constituent
Corporations shall be vested in Fourth;
and all property, rights, privileges,
powers, and franchises, and all and every
other interest shall be thereafter as
effectually the property of Fourth as they
were of any of the Constituent
Corporations.
(c) Title to any real estate and
to any other property vested by deed or
otherwise in any of the Constituent
Corporations shall not revert or be in any
way impaired by reason of the Merger or
the statutes providing therefor; provided,
however, that all rights of creditors and
all liens upon the property of any of the
Constituent Corporations shall be
preserved unimpaired, and all debts,
liabilities, and duties of all of the
Constituent Corporations shall thenceforth
attach to Fourth and may be enforced
against it to the same extent as if they
had been incurred or contracted by Fourth.
After the Effective Time, the Constituent
Corporations shall each execute or cause
to be executed such further assignments,
assurances, or other documents as may be
necessary or desirable to confirm title to
their respective properties, assets, and
rights in Fourth or to otherwise carry out
the purposes of this Agreement of Merger,
and their respective officers and
directors shall do all such acts and
things to accomplish those purposes which
Fourth may reasonably request.
4. At the Effective Time:
(a) Each issued and outstanding
share of each class of capital stock of
SBI shall cease to be an issued and
existing share.
(b) Each share of capital stock of
SBI (together with all rights to receive
unpaid preferred stock dividends), shall
automatically be converted into and
exchanged for shares of common stock of
Fourth, par value $5.00 per share ("Fourth
Stock"), as follows:
No. of Shares
of Fourth
Stock to Be
Class of SBI Capital Stock Received
- -------------------------- -------------
Class A Common Stock, par value $1 p/share 53.9974
Class B Common Stock, par value $1 p/share 53.9971
9% Cumulative Non-Voting Preferred
Stock, $100 p/share 3.4487
[If the Closing occurs after February 15,
1995, these exchange ratios will be
changed to conform to the applicable
exchange ratios set forth in the
Agreement and Plan of Reorganization.]
(c) Until surrendered for
exchange, each outstanding stock
certificate which prior to the Effective
Time represented capital stock of SBI
shall be deemed for all corporate purposes
to represent the right to receive the
number of shares of Fourth Stock into
which the shares have been so converted;
provided, that in any matters relating to
the shares represented by such
certificates, Fourth may rely conclusively
upon the record of stockholders maintained
by SBI containing the names and addresses
of the holders of record of such stock at
the Effective Time. Unless and until such
outstanding stock certificates formerly
representing shares of capital stock of
SBI are so surrendered, no dividend
payable to the holders of record of Fourth
Stock, as of any date subsequent to the
Effective Time, shall be paid to the
holder of such outstanding certificates in
respect thereof. Upon surrender of such
outstanding certificates (or, in the case
of lost certificates, upon receipt of a
surety bond or other form of
indemnification satisfactory to Fourth),
however, the former SBI stockholders shall
receive certificates evidencing the shares
of Fourth Stock to which they are entitled
plus the accrued dividends on such stock,
without interest.
(d) No fractional shares of Fourth
Stock will be issued. Instead, upon
surrender of SBI common or preferred stock
certificates (or, in the case of lost
certificates, upon receipt of a surety
bond or other form of indemnification
which is satisfactory to Fourth) Fourth
will pay, or cause to be paid, to the
holder thereof the cash value of the
fractional interest to which the holder
thereof would otherwise be entitled, based
upon the closing price of Fourth Stock on
the last trading day two trading days
prior to the Effective Time as reported in
the Southwest Edition of The Wall Street
Journal.
(e) The Merger shall effect no
change in the rights of the holders of
Fourth Stock that is outstanding
immediately before the Effective Time.
(f) No holder or former holder of
SBI preferred stock shall have any right
to receive any additional payment or other
consideration with respect to unpaid
dividends on such preferred stock, the
rights to the receipt of which dividends
shall be extinguished at the Effective
Time.
5. The officers and directors of Fourth
at the Effective Time shall continue to be the officers
and directors of the Surviving Corporation until their
successors are duly elected and qualified or their
earlier death, resignation, or removal.
6. The Merger shall be effected by and
be given effect upon the filing of this Agreement of
Merger in the offices of the Secretary of State of Kansas
and the Secretary of State of Nebraska. Such date and
time of filing is referred to in this Agreement of Merger
as the "Effective Time." This Agreement of Merger shall
also be recorded in accordance with the provisions of the
Kansas General Corporation Code and the Nebraska Business
Corporation Act, but such recording shall not be a
condition precedent to its becoming effective.
7. This Agreement and Articles of Merger
may be terminated and abandoned by mutual consent of the
Boards of Directors of Fourth and SBI at any time prior
to the Effective Time, or by the Board of Directors of
either Fourth Financial or SBI (acting jointly) if the
Agreement and Plan of Reorganization shall have been
terminated as therein provided.
8. This Agreement and Articles of Merger
may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original
instrument, but all of such counterparts together shall
constitute but one agreement.
IN WITNESS WHEREOF, pursuant to authority
duly given by its Board of Directors, each of the
Constituent Corporations has caused this Agreement and
Articles of Merger to be executed by its Chairman of the
Board, President, or Vice President and attested by
its Secretary or an Assistant Secretary as of the date
and year first above written.
FOURTH FINANCIAL CORPORATION
By______________________
Darrell G. Knudson
Chairman of the Board
ATTEST:
By ____________________________
William J. Rainey, Secretary
STANDARD BANCORPORATION, INC.
By______________________
Chris J. Murphy
President
ATTEST:
By_____________________________
E. Dean Gall, Secretary
[ACKNOWLEDGEMENTS, CERTIFICATES,
AND CONSENT OMITTED]
EXHIBIT "D"
AFFILIATE'S AGREEMENT
THIS AGREEMENT, made and entered into as of the
__day of____________1994, by and between
____________________________, (hereinafter referred to as
"Affiliate") and FOURTH FINANCIAL CORPORATION, a Kansas
corporation (hereinafter referred to as "Fourth").
W I T N E S S E T H: That;
WHEREAS, Fourth, Affiliate and Standard
Bancorporation, Inc. ("SBI") are parties to an Agreement
and Plan of Reorganization, dated as of September 2, 1994
(the "Agreement"), which provides for, subject to various
terms and conditions, the merger of SBI into Fourth (the
"Merger"); and
WHEREAS, Section 5.1.i of the Agreement
provides that a condition to Fourth's obligation to
effect the Merger is the execution and delivery by each
"affiliate" of SBI, as such term is defined in the
Agreement (an "Affiliate"), of an agreement concerning
the shares of common stock, par value $5 per share, of
Fourth ("Fourth Stock") to be received by such Affiliate
in the Merger; and
WHEREAS, the parties desire to effect the
Merger and it is in the best interests of the undersigned
that the Merger be effected;
NOW, THEREFORE, in consideration of the
premises and the issuance of Fourth Stock to the
undersigned in the Merger, and in order to induce SBI and
Fourth to effect the Merger, the undersigned hereby agree
as follows:
1. Securities Act Restriction on Transfer and
Sale. Affiliate hereby agrees not to sell, pledge, offer
to sell, transfer, assign, or otherwise dispose of any of
the shares of Fourth Stock issued to Affiliate in the
Merger in violation of the Securities Act of 1933, as
amended.
2. Pooling of Interests Restriction on
Transfer and Sale. Affiliate hereby agrees not to sell,
pledge, offer to sell, transfer, assign, or otherwise
dispose of any shares of Fourth Stock to be received by
Affiliate in the Merger or in any other way reduce
Affiliate's risk relative to such shares (within the
meaning of Accounting Series Release No. 130) until
financial results covering at least 30 days following the
Merger have been published.
3. Restrictive Legend. Affiliate hereby
acknowledges and agrees that all certificates evidencing
Fourth Stock to be issued to Affiliate pursuant to the
Merger shall be subject to stop transfer orders and shall
bear a restrictive legend substantially in the following
form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ISSUED OR TRANSFERRED TO
THE REGISTERED HOLDER AS THE RESULT OF A
TRANSACTION TO WHICH RULE 145 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
APPLIES. SUCH SHARES MAY NOT BE SOLD, PLEDGED,
TRANSFERRED, OR ASSIGNED, AND THE ISSUER SHALL
NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED
SALE, PLEDGE, TRANSFER, OR ASSIGNMENT, EXCEPT
(i) PURSUANT TO A THEN CURRENT EFFECTIVE
REGISTRATION UNDER THE ACT, (ii) IN A
TRANSACTION PERMITTED BY RULE 145 AS TO WHICH
THE ISSUER HAS, IN THE REASONABLE OPINION OF
ITS COUNSEL, RECEIVED REASONABLY SATISFACTORY
EVIDENCE OF COMPLIANCE UNDER RULE 145, OR (iii)
IN A TRANSACTION WHICH, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER OR AS
DESCRIBED IN A "NO-ACTION" OR INTERPRETIVE
LETTER FROM THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION, IS NOT REQUIRED TO BE
REGISTERED UNDER THE ACT.
TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS FURTHER RESTRICTED BY AN
AFFILIATE'S AGREEMENT DATED AS OF
______________, 1994, BETWEEN THE ISSUER AND
THE REGISTERED HOLDERS TO WHICH REFERENCE IS
HEREBY MADE.
4. Miscellaneous. This Affiliate's Agreement
constitutes the entire agreement and understanding of the
parties relating to the subject matter hereof and may not
be amended or modified except by written instrument duly
executed by the parties hereto. This Affiliate's
Agreement shall be governed by the laws of the State of
Kansas and shall be construed in accordance therewith.
This Affiliate's Agreement shall inure to the benefit of,
and shall be binding upon, the heirs, legatees, devisees,
successors, trustees, and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have
executed this Affiliate's Agreement as of the date first
above written.
FOURTH FINANCIAL CORPORATION
By ______________________________
Darrell G. Knudson
Chairman of the Board
"Fourth"
"Affiliate"
ANNEX II
Form 10-K of Fourth Financial Corporation for the year ended
December 31, 1993, which was previously filed with the Securities
and Exchange Commission, is omitted.
ANNEX III
Form 10-Q of Fourth Financial Corporation for the quarter ended
September 30, 1994, which was previously filed with the Securities
and Exchange Commission, is omitted.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------------------------
Page
- --------------------------------------------------------------------------------------------------
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
The Agreement and Proposed Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Pro Forma Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Information Concerning Fourth Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Information Concerning SBI and the Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Price Range of and Dividends on Fourth Stock and SBI Stock . . . . . . . . . . . . . . . . . . .34
Equity Securities and Principal Holders Thereof. . . . . . . . . . . . . . . . . . . . . . . . .35
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Information Incorporated by Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Deadline for Submission of Fourth Financial Stockholders'
Proposals for the 1995 Annual Meetings of Stockholders . . . . . . . . . . . . . . . . . . . .38
Index to Financial Statements and Related Information. . . . . . . . . . . . . . . . . . . . . F-1
<FN>
Annex I - Agreement and Plan of Reorganization, dated as of September 2, 1994, as amended as of December 7, 1994, with
Exhibits "A" and "D" only
Annex II - Form 10-K of Fourth Financial Corporation for the year ended December 31, 1993
Annex III - Form 10-Q of Fourth Financial Corporation for the quarter ended September 30, 1994
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
-----------------------------------------
Section 8.01 of Registrant's Bylaws provides as
follows:
The Corporation shall (a) 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, or employee of
the Corporation or of a subsidiary of the Corporation,
or is or was serving at the request of the Corporation
as a director, officer, or employee 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, and (b) 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, or
employee of the Corporation or of a subsidiary of the
Corporation or is or was serving at the request of the
Corporation as a director, officer, or employee 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 any such action,
suit or proceeding. Indemnification shall be afforded
to the fullest extent permissible under the Kansas
General Corporation Code or the indemnification
provisions of any successor statute, and not further,
and shall be subject to any applicable procedural
requirements and standards of conduct on the part of
the persons to be indemnified prescribed by that
statute. The foregoing right of indemnification shall
in no way be exclusive of any other rights of
indemnification to which any such person may be
entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise,
and shall inure to the benefit of the heirs,
executors, and administrators of such a person. The
Corporation may, but shall not be required to,
purchase liability insurance indemnifying the
directors, officers, and employees of the Corporation
and its subsidiaries.
Kansas Statutes Annotated Section 17-6305 provides as
follows:
(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 such person 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,
judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in
connection with such action, suit or proceeding,
including attorney fees, if such person acted in good
faith and in a manner such person 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 such
person's 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 such person
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 such person's 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 such person 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
actually and reasonably incurred by such person in
connection with the defense or settlement of such
action or suit, including attorney fees, if such
person acted in good faith and in a manner such person
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 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 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), or in defense of any claim, issue or matter
therein, such director, officer, employee or agent
shall be indemnified against expenses actually and
reasonably incurred by such person in connection
therewith, including attorney fees.
(d) Any indemnification under subsections (a)
and (b), 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 such director, officer, employee
or agent has met the applicable standard of conduct
set forth in subsections (a) and (b). Such
determination shall be made (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 a director or officer
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 the director or officer to repay such amount
if it is ultimately determined that the director or
officer 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 a person's 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 such person and incurred by
such person in any such capacity, or arising out of
such person's status as such, whether or not the
corporation would have the power to indemnify such
person 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 this section
with respect to the resulting or surviving corporation
as such person 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 benefits
plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any
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 such person 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 a person.
Pursuant to a policy of directors' and officers'
liability insurance having limits of $15,000,000, the
directors and officers of the Registrant are insured,
subject to the limits, retention, exceptions, and other
terms and conditions of the policy, against liability for
any actual or alleged error or misstatement or misleading
statement or act or omission or neglect or breach of duty
while acting in their capacities as directors or officers
of the Registrant.
Item 21. Exhibits and Financial Statement Schedules.
------------------------------------------
(a) Exhibits:
2.1 Agreement and Plan of Reorganization, dated
as of September 2, 1994, between Fourth
Financial Corporation and Standard
Bancorporation, Inc. (Exhibit 10.2 to Form
S-4 Registration Statement, Reg. No. 33-
55797).*
2.2 Letter agreement, dated as of December 7,
1994, amending Agreement and Plan of
Reorganization.
4.1 Restated Articles of Incorporation of Fourth
Financial Corporation, dated August 10, 1992
(Exhibit 3.01 to Form 10-Q for quarter ended
June 30, 1992).*
4.2 Bylaws (Exhibit 3.05 to Form 10-K for the
year ended December 31, 1993).*
5.1 Opinion of Foulston & Siefkin (to be filed by
amendment to the Registration Statement).
8.1 Tax opinion of Knudsen, Berkheimer,
Richardson & Endacott.
10.1 Stock Purchase and Merger Agreement, dated
as of June 23, 1994 among Fourth Financial
Corporation and BANK IV Oklahoma, National
Association as Purchasers, Security Bank and
Trust Company and the Stockholders of
Blackwell Security Bancshares, Inc., as
Sellers (Exhibit 2.01 to Form 10-Q for the
quarter ended June 30, 1994).*
10.2 Agreement and Plan of Reorganization, dated
as of July 21, 1994, between Fourth
Financial Corporation and Oklahoma Savings,
Inc. (Exhibit 2.02 to Form 10-Q for the
quarter ended June 30, 1994).*
10.3 Letter amendment dated November 8, 1994, to
Agreement and Plan of Reorganization
(Exhibit 2.2 to Amendment No. 1 to Form S-4
Registration Statement, Reg. No. 33-55797).*
13.1 Annual Report of Fourth Financial
Corporation on Form 10-K for fiscal year
ended December 31, 1993.*
13.2 Quarterly Report of Fourth Financial
Corporation on Form 10-Q for the quarter
ended March 31, 1994.*
13.3 Quarterly Report of Fourth Financial
Corporation on Form 10-Q for the quarter
ended June 30, 1994.*
13.4 Quarterly Report of Fourth Financial
Corporation on Form 10-Q for the quarter
ended September 30, 1994.*
23.1 See page II-9 of the Registration Statement
for the consent of Ernst & Young LLP.
23.2 See page II-10 of the Registration Statement
for the consent of Arthur Andersen LLP.
23.3. See page II-11 of the Registration
Statement for the consent of Sartain
Fischbein & Co.
23.4 See page II-12 of the Registration Statement
for the consent of GRA, Thompson, White &
Co., P.A.
23.5 See page II-13 of the Registration Statement
for the consent of Grant Thornton.
23.6 See page II-14 of the Registration Statement
for the consent of Deloitte & Touche LLP
regarding KNB Bancshares, Inc.
23.7 See page II-15 of the Registration Statement
for the consent of Deloitte & Touche LLP
regarding Standard Bancorporation, Inc. and
Subsidiary.
23.8 The consent of Foulston & Siefkin will be
included in their opinion filed as Exhibit
5.1 in an amendment to the Registration
Statement.
23.9 The consent of Knudsen, Berkheimer,
Richardson & Endacott is included in their
opinion filed as Exhibit 8.1 to the
Registration Statement.
24.1 Power of Attorney (included on signature
page of the Registration Statement).
99.1 Form of Proxy to be used at the Special
Meeting.
99.2 Form of Affiliate's Agreement (Exhibit "D"
to Agreement and Plan of Reorganization,
dated as of September 2, 1994 between Fourth
Financial Corporation and Standard
Bancorporation, Inc. (Exhibit "D" to Exhibit
10.2 to Form S-4 Registration Statement,
Reg. No. 33-55797).*
__________________________
* Previously filed with Securities and Exchange
Commission and incorporated herein by reference.
(b) Financial Statement Schedules:
NONE
Item 22. Undertakings.
------------
1. The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to
each person to whom the prospectus is sent or given, the
latest annual report to security holders that is
incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and,
where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth
in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim
financial information.
2. The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. 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.
4. The undersigned registrant hereby 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.
5. 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.
6. 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.
7. The registrant undertakes that every prospectus:
(i) that is filed pursuant to paragraph 6 immediately
preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
8. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
(b) That for the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment to this registration statement shall be deemed
to be a new registration statement relating to the
securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from this registration by means of a
post-effective amendment any of the securities being
registered that remain unsold at the termination of the
offering.
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wichita, State of Kansas, on
December 9, 1994.
Fourth Financial Corporation
By /s/ Darrell G. Knudson
---------------------
Darrell G. Knudson
Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby
constitutes and appoints Darrell G. Knudson, William J.
Rainey, and Michael J. Shonka, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name,
place, and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to
this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and
hereby grants to 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 said 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.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates
indicated.
- --------------------------------------------------------------------------------------------------------------------------
Signature Title Date
- --------------------------------------------------------------------------------------------------------------------------
/s/ Darrell G. Knudson Chairman of the Board
- ---------------------------------- (Principal Executive Officer
Darrell G. Knudson of the Issuer) December 9, 1994
/s/ Michael J. Shonka Senior Vice President
- ---------------------------------- (Principal Financial Officer) December 9, 1994
Michael J. Shonka
/s/ Barbara M. Noyes Vice President and Controller
- ---------------------------------- (Principal Accounting Officer) December 9, 1994
Barbara M. Noyes
/s/ Lionel D. Alford Director December 9, 1994
- ----------------------------------
Lionel D. Alford
/s/ Thomas R. Clevenger Director December 9, 1994
- ----------------------------------
Thomas R. Clevenger
/s/ Jordan L. Haines Director December 9, 1994
- ----------------------------------
Jordan L. Haines
Director December 9, 1994
- ----------------------------------
Lawrence M. Jones
Director December 9, 1994
- ----------------------------------
Joseph M. Klein
/s/ Darrell G. Knudson Director December 9, 1994
- ----------------------------------
Darrell G. Knudson
Director December 9, 1994
- ----------------------------------
Fred L. Merrill, Sr.
/s/ Russell W. Meyer, Jr. Director December 9, 1994
- ----------------------------------
Russell W. Meyer, Jr.
Director December 9, 1994
- ----------------------------------
Laird G. Noller
/s/ Patrick E. O'Shaughnessy Director December 9, 1994
- ----------------------------------
Patrick E. O'Shaughnessy
/s/ Robert F. Vickers Director December 9, 1994
- ----------------------------------
Robert F. Vickers
/s/ Ken Wagnon Director December 9, 1994
- ----------------------------------
Ken Wagnon
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the
caption "Experts" in the Registration Statement (Form S-4)
and related Prospectus of Fourth Financial Corporation for
the registration of 317,730 shares of its common stock and
to the incorporation by reference therein of our report
dated January 20, 1994, with respect to the consolidated
financial statements of Fourth Financial Corporation
included in its Annual Report (Form 10-K) for the year
ended December 31, 1993, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Wichita, Kansas
December 7, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our reports (and to all references to our Firm), included in or made a part
of the Registration Statement (Form S-4) and related Prospectus of
Fourth Financial Corporation for the registration of 317,730 shares
of its common stock.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
December 7, 1994
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of Fourth
Financial Corporation for the registration of 317,730 shares of its common
stock and to the incorporation by reference therein of our report dated
February 19, 1993, with respect to the consolidated financial statements
of Fourth Financial Corporation included in its Annual Report (Form 10-K)
for the year ended December 31, 1993, filed with the Securities and
Exchange Commission.
/s/ Sartain Fischbein & Co.
SARTAIN FISCHBEIN & CO.
Tulsa, Oklahoma
December 9, 1994
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the heading "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Fourth
Financial Corporation for the registration of up to 317,730 shares of its
common stock. We also consent to the incorporation by reference of our
report dated September 16, 1993, with respect to the consolidated
financial statements of Ponca Bancshares, Inc. and Subsidiary included in
Fourth Financial Corporation's Annual Report on Form 10-K for the year
ended December 31, 1993.
/s/ GRA, Thompson, White & Co., P.A.
GRA, THOMPSON, WHITE & CO., P.A.
Merriam, Kansas
December 9, 1994
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated January 23, 1992, with respect to the
consolidated financial statements, not appearing therein, of United Bank
of Kansas, Inc. and Subsidiary included in Fourth Financial Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993 which is
incorporated by reference in this Registration Statement (Form S-4) and
related Prospectus. We consent to the incorporation by reference in the
Registration Statement and related Prospectus of the aforementioned report
and to the use of our name as it appears under the caption "Experts".
/s/ Grant Thornton
GRANT THORNTON
Wichita, Kansas
December 9, 1994
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Fourth Financial Corporation on Form S-4 (relating to the
registration of 317,730 shares of common stock) of the report of Deloitte
& Touche on the financial statements of KNB Bancshares, Inc. and
Subsidiaries for the year ended December 31, 1991, dated February 7, 1992,
appearing in the Annual Report on Form 10-K of Fourth Financial Corporation
for the year ended December 31, 1993 and to the reference to Deloitte &
Touche LLP under the heading "Experts" in the Proxy Statement-Prospectus,
which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Kansas City, Missouri
December 9, 1994
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement
(relating to the registration of 317,730 shares of common
stock of Fourth Financial Corporation) of Fourth Financial
Corporation on Form S-4 of our report dated March 16, 1994
on the consolidated financial statements of Standard
Bancorporation, Inc. and subsidiary for the years ended
December 31, 1993 and 1992 appearing in the Proxy
Statement-Prospectus which is a part of such Registration
Statement.
We also consent to the reference to us under the heading
"Experts".
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Lincoln, Nebraska
December 9, 1994
Exhibit Page
No. Description No.
- ------- ----------- ----
2.1 Agreement and Plan of Reorganization, dated as of
September 2, 1994, between Fourth Financial Corporation
and Standard Bancorporation, Inc. (Exhibit 10.2 to Form
S-4 Registration Statement, Reg. No. 33-55797).*
2.2 Letter agreement, dated as of December 7, 1994,
amending Agreement and Plan of Reorganization.
4.1 Restated Articles of Incorporation of Fourth Financial
Corporation, dated August 10, 1992 (Exhibit 3.01 to
Form 10-Q for quarter ended June 30, 1992).*
4.2 Bylaws (Exhibit 3.05 to Form 10-K for the year ended
December 31, 1993).*
5.1 Opinion of Foulston & Siefkin (to be filed by amendment
to the Registration Statement) .
8.1 Tax opinion of Knudsen, Berkheimer, Richardson &
Endacott.
10.1 Stock Purchase and Merger Agreement, dated as of June
23, 1994 among Fourth Financial Corporation and BANK IV
Oklahoma, National Association as Purchasers, Security
Bank and Trust Company and the Stockholders of
Blackwell Security Bancshares, Inc., as Sellers
(Exhibit 2.01 to Form 10-Q for the quarter ended June
30, 1994).*
10.2 Agreement and Plan of Reorganization, dated as of July
21, 1994, between Fourth Financial Corporation and
Oklahoma Savings, Inc. (Exhibit 2.02 to Form 10-Q for
the quarter ended June 30, 1994).*
10.3 Letter amendment dated November 8, 1994, to Agreement
and Plan of Reorganization (Exhibit 2.2 to Amendment
No. 1 to Form S-4 Registration Statement, Reg. No. 33-
55797).*
13.1 Annual Report of Fourth Financial Corporation on Form
10-K for fiscal year ended December 31, 1993.*
13.2 Quarterly Report of Fourth Financial Corporation on
Form 10-Q for the quarter ended March 31, 1994.*
13.3 Quarterly Report of Fourth Financial Corporation on
Form 10-Q for the quarter ended June 30, 1994.*
13.4 Quarterly Report of Fourth Financial Corporation on
Form 10-Q for the quarter ended September 30, 1994.*
23.1 See page II-9 of the Registration Statement for the
consent of Ernst & Young LLP.
23.2 See page II-10 of the Registration Statement for the
consent of Arthur Andersen LLP.
23.3 See page II-11 of the Registration Statement for the
consent of Sartain Fischbein & Co.
23.4 See page II-12 of the Registration Statement for the
consent of GRA, Thompson, White & Co., P.A.
23.5 See page II-13 of the Registration Statement for the
consent of Grant Thornton.
23.6 See page II-14 of the Registration Statement for the
consent of Deloitte & Touche LLP regarding KNB
Bancshares, Inc.
23.7 See page II-15 of the Registration Statement for the
consent of Deloitte & Touche LLP regarding Standard
Bancorporation, Inc. and Subsidiary.
23.8 The consent of Foulston & Siefkin will be included
in their opinion filed as Exhibit 5.1 in an amendment
to the Registration Statement.
23.9 The consent of Knudsen, Berkheimer, Richardson &
Endacott is included in their opinion filed as Exhibit
8.1 to the Registration Statement.
24.1 Power of Attorney (included on signature page of the
Registration Statement).
99.1 Form of Proxy to be used at the Special Meeting.
99.2 Form of Affiliate's Agreement (Exhibit "D" to Agreement
and Plan of Reorganization, dated as of September 2,
1994 between Fourth Financial Corporation and Standard
Bancorporation, Inc.) (Exhibit "D" to Exhibit 10.2 to
Form S-4 Registration Statement, Reg. No. 33-55797).*
__________________________
* Previously filed with Securities and Exchange
Commission and incorporated herein by reference.