1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the fiscal year ended December 31, 1996 or ----------------- [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996) For the transition period from to ---------- ----------- Commission file number 0-10826 BancorpSouth, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Mississippi 64-0659571 - -------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Mississippi Plaza Tupelo, Mississippi 38801 - --------------------------------------- ----------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (601) 680-2000 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Title of Each Class Which Registered -------------------------- -------------------------- NONE NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $2.50 PAR VALUE - ------------------------------------------------------------------------------- (Title of Class) (Cover Page Continues on Next Page) 2 (Continued from Cover Page) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of January 31, 1997, was approximately $532,909,000 based on the closing sale price as reported on the Nasdaq Stock Market. On March 14, 1997, the registrant had outstanding 22,227,705 shares of Common Stock, par value $2.50 per share. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 1996, are incorporated by reference into Part II of this Report. Portions of the definitive Proxy Statement used in connection with Registrant's Annual Meeting of Shareholders to be held April 22, 1997, are incorporated by reference into Part III of this Report. 2 3 BANCORPSOUTH, INC. FORM 10-K For the Fiscal Year Ended December 31, 1996 CONTENTS PART I Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . 4 Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . 19 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 20 Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . 20 PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. . . . . . . . . . . . .21 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . 21 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation. . . . . . 22 Item 8. Financial Statements and Supplementary Data . . . . . . . 22 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . 22 PART III Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . .23 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . .25 Item 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . .26 Item 13. Certain Relationships and Related Transactions . . . . . .26 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . . . . . . . . . . . . . . . . . .27 3 4 PART I Item 1. - Business General The Company is a bank holding company with commercial banking in Mississippi and Tennessee. Its principal subsidiaries are Bank of Mississippi ("BOM") and Volunteer Bank ("VOL"). The Company's principal office is located at One Mississippi Plaza, Tupelo, Mississippi 38801 and its telephone number is (601) 680-2000. Description of Business BOM has its principal office in Tupelo, Lee County, Mississippi, and conducts a general commercial banking and trust business through 101 offices in 50 municipalities or communities in 32 counties throughout Mississippi. BOM has grown through the acquisition of other banks, the purchase of assets from federal regulators and through the opening of new branches and offices. In addition, BOM operates consumer finance and credit life insurance subsidiaries. At December 31, 1996, BOM had total deposits of approximately $2.45 billion and total assets of approximately $2.80 billion. VOL has its principal office in Jackson, Madison County, Tennessee, and conducts a general commercial banking and trust business through 30 offices in 16 municipalities or communities in 12 counties in west Tennessee. VOL has grown through the acquisition of other banks and through the opening of new branches and offices. In addition, VOL operates consumer finance and credit life insurance subsidiaries. At December 31, 1996, VOL had total deposits of approximately $720 million and total assets of approximately $828 million. The Company, through its subsidiaries, provides a range of financial services to individuals and small-to-medium size businesses. Various types of checking accounts, both interest bearing and non-interest bearing, are available. Savings accounts and certificates of deposit with a range of maturities and interest rates are available to meet the needs of customers. Other services include safe deposit and night depository facilities. Limited 24-hour banking with automated teller machines is provided in most of its principal markets. BOM is an issuing bank for MasterCard and overdraft protection is available to approved MasterCard holders maintaining checking accounts with the Company's subsidiary banks. The Company offers a variety of services through the trust departments of its subsidiary banks, including personal trust and estate services, certain employee benefit accounts and plans, including individual retirement accounts, and limited corporate trust functions. At December 31, 1996, the Company and its subsidiaries employed 1,932 persons. The Company and its subsidiaries are not a party to any collective bargaining agreements, and employee relations are deemed to be good. Competition 4 5 Vigorous competition exists in all major areas where the Company is engaged in business. The Company's subsidiary banks compete for available loans and depository accounts not only with state and national commercial banks in their respective areas but also with savings and loan associations, insurance companies, credit unions, money market mutual funds, automobile finance companies and financial services companies. None of these competitors is dominant in the whole area served by the Company's subsidiary banks. The principal areas of competition in the banking industry center on a financial institution's ability and willingness to provide credit on a timely and competitively priced basis, to offer a sufficient range of deposit and investment opportunities at a competitive price and maturity, and to offer personal and other services of sufficient quality and at competitive prices. The Company and its subsidiaries believe they can compete effectively in all these areas. Regulation and Supervision The following is a brief summary of the regulatory environment in which the Registrant and its subsidiaries operate and is not designed to be a complete discussion of all statutes and regulations affecting such operations, including those statutes and regulation specifically mentioned herein. The Company is a bank holding company and is registered as such with the Board of Governors of the Federal Reserve System (the "FRB") and is subject to regulation and supervision by the FRB. The Company is required to file with the FRB annual reports and such other information as they may require. The FRB may also conduct examinations of the Company. The Company is a legal entity which is separate and distinct from its subsidiaries. There are various legal limitations on the extent to which the subsidiary banks may extend credit, pay dividends or otherwise supply funds to the Company or its affiliates. In particular, the subsidiary banks are subject to certain restrictions imposed by federal law on any extensions of credit to the Company or, with certain exceptions, other affiliates. Dividends to shareholders are paid from dividends paid to the Company by its subsidiaries which are subject to approval by the applicable regulatory authorities. BOM and VOL are incorporated under the banking laws of the States of Mississippi and Tennessee, respectively, and accordingly are subject to the applicable provisions of state banking laws rather than the National Bank Act. BOM is subject to the supervision of the Mississippi Department of Banking and Consumer Finance and to regular examinations by that department. VOL is subject to the supervision of the Tennessee Department of Financial Institutions and to regular examinations by that department. The deposits in BOM and VOL are insured by the Federal Deposit Insurance Corporation (the "FDIC") and, therefore, each bank is subject to the provisions of the Federal Deposit Insurance Act and to examination by the FDIC. Neither bank is a member of the Federal Reserve System. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") permits among other things the acquisition by bank holding companies of savings associations, irrespective of their financial condition, and increased the deposit insurance premiums for banks 5 6 and savings associations. FIRREA also provides that commonly controlled federally insured financial institutions must reimburse the FDIC for losses incurred by the FDIC in connection with the default of another commonly controlled financial institution or in connection with the provision of FDIC assistance to such a commonly controlled financial institution in danger of default. Reimbursement liability under FIRREA is superior to any obligations to shareholders of such federally insured institutions (including a bank holding company such as the Company if it were to acquire another federally insured financial institution), arising as a result of their status as a shareholder of a reimbursing financial institution. The Company and its subsidiary banks are subject to the provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). This statute provides for increased funding for the FDIC's deposit insurance fund and expanded the regulatory powers of federal banking agencies to permit prompt corrective actions to resolve problems of insured depository institutions through the regulation of banks and their affiliates, including bank holding companies. The provisions are designed to minimize the potential loss to depositors and to FDIC insurance funds if financial institutions default on their obligations to depositors or become in danger of default. Among other things, FDICIA provides a framework for a system of supervisory actions based primarily on the capital levels of financial institutions. FDICIA also provides for a risk-based deposit insurance premium structure. The FDIC charges an annual assessment for the insurance of deposits based on the risk a particular institutions poses to its deposit insurance fund. While most of the Company's deposits are in the Bank Insurance Fund (BIF), certain other of the Company's deposits which were acquired from thrifts over the years remain in the Savings Association Insurance Fund (SAIF). Deposit insurance rates for 1997 for the Company's deposits in BIF have been assessed at zero while deposits insurance rates for 1997 for the Company's deposits in SAIF will continue at the rate of 23 cents per $100 of insured deposits. The Company is required to comply with the risk-based capital guidelines which the FRB adopted in January 1989, and to other tests relating to capital adequacy which the FRB adopts from time to time. See Note 17 of Notes to Consolidated Financial Statements on page 37 of the Company's 1996 Annual Report to Shareholders incorporated herein by reference. In September 1994, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("IBBEA") was signed into law. Beginning September 29, 1995, IBBEA permits adequately capitalized and managed bank holding companies to acquire control of banks in states other than their home states, subject to federal regulatory approval, without regard to whether such a transaction is prohibited by the laws of any state. IBBEA permits states to continue to require that an acquired bank have been in existence for a certain minimum time period which may not exceed five years. A bank holding company may not, following an interstate acquisition , control more than 10% of the nation's total amount of bank deposits or 30% of bank deposits in the relevant state (unless the state enacts legislation to raise the 30% limit). States retain the ability to adopt legislation to effectively lower the 30% limit. Beginning June 1, 1997, federal banking regulators may approve merger transactions involving banks located in different states, without regard to laws of any state prohibiting such transactions; except that, mergers may not be approved with respect to banks located in states that, prior to June 1, 1997, enacted legislation 6 7 prohibiting mergers by banks located in such state with out-of-state institutions. Federal banking regulators may permit an out-of-state bank to open new branches in another state if such state has enacted legislation permitting interstate branching. Affiliated institutions are authorized to accept deposits for existing accounts, renew time deposits and close and service loans for affiliated institutions without being deemed an impermissible branch of the affiliate. The Company has applied for permission from the various regulators to merge BOM and VOL into one bank as soon as practicable after the June 1, 1997 effective date of the law which allows such transactions. 7 8 Selected Statistical Information Set forth below is certain selected statistical information relating to the Company's business. Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest Differentials Net Interest Revenue, the difference between Interest Revenue and Interest Expense, is the most significant component of the Company's earnings. For internal analytical purposes, management adjusts Net Interest Revenue to a "taxable equivalent" basis using an effective tax rate of 35% on tax exempt items (primarily interest on municipal securities). Another significant statistic in the analysis of Net Interest Revenue is the effective interest differential, also called the net yield on earning assets. The net yield on earning assets is net interest divided by total interest-earning assets. Recognizing the importance of interest differential to total earnings, management places great emphasis on managing interest rate spreads. Although interest differential is affected by national, regional and local economic conditions, including the level of credit demand and interest rates, there are significant opportunities to influence interest differential through appropriate loan and investment policies which are designed to maximize interest differential while maintaining sufficient liquidity and availability of "incremental funds" for purposes of meeting existing commitments and for investment in lending and other investment opportunities that may arise. The following table sets forth the average balances of assets and liabilities and the average rates earned and paid for the three years ended December 31, 1996. The table shows the various components of earning assets and the sources used to fund these assets which are included in the effective interest differential. 8 9 Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest Differential 1996 1995 --------------------------- -------------------------- (Taxable equivalent basis) Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ---------- -------- ------ ------- -------- ------- ASSETS (Dollars in thousands) Interest bearing deposits in other banks $ 12,313 $ 646 5.25% $ 15,974 $ 857 5.36% Held-to-maturity securities: U.S. treasury and agencies 361,649 23,823 6.59% 398,194 28,152 7.07% State and political subdivisions (1) 118,458 9,709 8.20% 118,493 10,517 8.88% Other securities 84 2 2.38% 4,228 168 3.97% Available-for-sale securities (2) 231,040 14,400 6.23% 183,396 8,902 4.85% Federal funds sold 60,868 3,289 5.40% 39,451 2,205 5.59% Loans (net of unearned discount) (3) (4) (6) 2,410,746 227,920 9.45% 2,146,967 204,397 9.52% Mortgages held for sale 27,729 1,917 6.91% 20,805 1,433 6.89% ---------- --------- ---------- -------- Total interest earning assets and revenue 3,222,887 281,706 8.74% 2,927,508 256,631 8.77% Other assets 266,537 256,363 Less: alowance for credit losses (36,503) (32,574) ---------- ---------- Total $3,452,921 $3,151,297 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 700,863 $ 20,426 2.91% $654,151 $ 17,733 2.71% Savings 371,514 14,930 4.02% 300,278 11,916 3.97% Time 1,526,564 83,390 5.46% 1,416,901 77,516 5.47% Federal funds purchased and securities under repurchase agreements 40,880 1,954 4.78% 40,845 2,084 5.10% Other short-term borrowings (5) 3,359 158 4.70% 4,706 299 6.35% Long term debt 80,619 5,647 7.00% 68,452 4,909 7.17% ---------- --------- ---------- -------- Total interest bearing liabilities and expense 2,723,799 126,505 4.64% 2,485,333 114,457 4.61% Demand deposits - non-interest bearing 383,897 361,120 Other liabilities 45,476 36,449 ---------- ---------- Total liabilities 3,153,172 2,882,902 Shareholders' equity 299,749 268,395 ---------- ---------- Total $3,452,921 $3,151,297 ========== ========== Net interest revenue $ 155,201 $142,174 ========= ======== Net yield on interest earning assets 4.81% 4.86% ===== ===== 1994 ------------------------- (Taxable equivalent basis) Average Yield/ Balance Interest Rate ------- -------- ------ ASSETS (Dollars in thousands) Interest bearing deposits in other banks $ 11,112 $ 660 5.94% Held-to-maturity securities: U.S. treasury and agencies 315,429 18,642 5.91% State and political subdivisions (1) 107,774 10,325 9.58% Other securities 4,556 270 5.93% Available-for-sale securities (2) 266,370 13,974 5.25% Federal funds sold 43,437 1,756 4.04% Loans (net of unearned discount) (3) (4) (6) 1,881,922 163,902 8.71% Mortgages held for sale 33,620 2,400 7.14% ---------- -------- Total interest earning assets and revenue 2,664,220 211,929 7.95% Other assets 249,064 Less: alowance for credit losses (28,745) ---------- Total $2,884,539 ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 618,929 $ 16,320 2.64% Savings 292,908 9,515 3.25% Time 1,237,205 53,435 4.32% Federal funds purchased and securities under repurchase agreements 36,686 1,338 3.65% Other short-term borrowings (5) 15,145 968 6.39% Long term debt 46,673 3,453 7.40% ---------- -------- Total interest bearing liabilities and expense 2,247,546 85,029 3.78% Demand deposits - non-interest bearing 364,451 Other liabilities 31,613 ---------- Total liabilities 2,643,610 Shareholders' equity 240,929 ---------- Total $2,884,539 ========== Net interest revenue $126,900 ======== Net yield on interest earning assets 4.76% ===== 1. Includes taxable equivalent adjustments of $2,755,000, $3,026,000 and $3,112,000 in 1996, 1995 and 1994, respectively, using an effective tax rate of 35%. 2. Includes taxable equivalent adjustment of $281,000, $581,000 and $747,000 in 1996, 1995 and 1994 using an effective ax rate of 35%. 3. Includes fees on loans of $4,249,000 in 1994. 4. Includes taxable equivalent adjustment of $751,000, $597,000 and $175,000 in 1996, 1995 and 1994, respectively, using an effective tax rate of 35%. 5. Interest expense includes interest paid on liabilities not included in averages. 6. Non-accrual loans are immaterial for each of the years presented. 9 10 Analysis of Changes in Effective Interest Differential Net interest revenue may also be analyzed by segregating the rate and volume components of interest revenue and interest expense. The table which follows presents an analysis of rate and volume change in net interest from 1995 to 1996 and 1994 to 1995. Changes which are not solely due to volume or rate are allocated to volume. 1996 OVER 1995 - INCREASE (DECREASE) 1995 OVER 1994 - INCREASE (DECREASE) ------------------------------------ ------------------------------------ (Taxable equivalent basis) Volume Rate Total Volume Rate Total ----------- ---------- ---------- ----------- ----------- ---------- (In thousands) INTEREST REVENUE Due from banks - interest bearing ($ 192) ($ 19) ($ 211) $ 261 ($ 64) $ 197 Held-to-maturity securities: U.S. Government agencies (2,407) (1,922) (4,329) 5,851 3,659 9,510 State and political subdivisions (3) (805) (808) 951 (759) 192 Other securities (99) (67) (166) (13) (89) (102) Available-for-sale securities 2,970 2,528 5,498 (4,028) (1,044) (5,072) Federal funds sold 1,157 (73) 1,084 (223) 672 449 Loans (net of unearned discount) 24,939 (1,4160 23,523 25,233 15,262 40,495 Mortgages held for sale 479 5 484 (883) (840 (967) ------- ------- ------- ------- ------- ------- Total 26,844 (1,769) 25,075 27,149 17,553 44,702 ------- ------- ------- ------- ------- ------- INTEREST EXPENSE Demand deposits - interest bearing 1,361 1,331 2,693 955 458 1,413 Savings deposits 2,883 151 3,014 292 2,109 2,401 Time deposits 5,900 (116) 5,874 9,831 14,250 24,081 Federal funds purchased and securities under repurchase agreements 2 (132) (130) 212 534 746 Other short-term borrowings 963) (79) (141) (663) (6) (669) Long-term debt 852 (114) 738 1,562 (106) 1,456 ------- ------- ------- ------- ------- ------- Total 11,005 1,043 12,048 12,169 17,239 29,428 ------- ------- ------- ------- ------- ------- Increase (Decrease) in Effective Interest Differential $ 15,839 ($ 2,812) $ 13,027 $ 14,960 $ 314 $ 15,274 ======= ======= ======= ======= ======= ======= 10 11 Investment Portfolio Held-to-Maturity Securities The following table shows the amortized cost of held-to-maturity securities at December 31, 1996, 1995 and 1994: December 31 ------------------------------------- 1996 1995 1994 -------- -------- -------- (In thousands) U. S. Treasury securities $ 91,340 $ 33,355 $ 59,793 U. S. Government agency securities 292,930 293,831 376,708 Taxable obligations of states and political subdivisions 1,375 500 - Tax exempt obligations of states and political subdivisions 144,406 110,830 112,915 Other securities 15 787 3,416 -------- -------- -------- TOTAL $530,066 $439,303 $552,832 ======== ======== ======== The following table shows the maturities and weighted average yields as of the end of the latest period for each investment category presented above: December 31, 1996 U.S. U.S. GOVERMENT STATES & WEIGHTED TREASURY AGENCY POLITICAL OTHER AVERAGE SECURITIES SECURITIES SUBDIVISIONS SECURITIES YIELD ---------- ---------- ------------ ---------- ------- (In thousands) PERIOD TO MATURITY: Maturing within one year $ 1,437 $130,803 $ 21,406 $ - 7.00% Maturing after one year but within five years 87,919 146,847 66,749 15 6.89% Maturing after five years but within ten years 1,984 12,208 47,797 - 7.22% Maturing after ten years - 3,072 9,829 - 8.36% ------- -------- -------- ------- TOTAL $91,340 $292,930 $145,781 $ 15 ======= ======== ======== ======= The yield on tax-exempt obligations of states and political subdivisions has been adjusted to a taxable equivalent basis using a 35% tax rate. 11 12 Available-for-Sale Securities The following table shows the book value of available-for-sale securities at December 31, 1996, 1995 and 1994: December 31 ------------------------------------- 1996 1995 1994 -------- --------- -------- (In thousands) U. S. Treasury securities $ 43,864 $ 51,241 $ 30,429 U. S. Government agency securities 129,515 127,488 67,607 Taxable obligations of states and political subdivisions 503 3,337 - Tax exempt obligations of states and political subdivisions 12,567 20,000 30,234 Other securities 44,290 37,689 65,759 -------- -------- -------- TOTAL $230,739 $239,755 $194,029 ======== ======== ======== The following table shows the maturities and weighted average yields as of the end of the latest period for each investment category presented above: December 31, 1996 ----------------------------------------------------------------- U.S. U.S. GOVERMENT STATES & WEIGHTED TREASURY AGENCY POLITICAL OTHER AVERAGE SECURITIES SECURITIES SUBDIVISIONS SECURITIES YIELD ---------- ---------- ------------ ---------- -------- (In thousands) PERIOD TO MATURITY: Maturing within one year $11,427 $65,789 $4,518 $22,000 5.93% Maturing after one year but within five years 32,437 52,627 6,613 7,748 6.39% Maturing after five years but within ten years - 1,672 503 14,542 6.54% Maturing after ten years - 9,427 1,436 - 7.57% ------- -------- ------- ------- TOTAL $43,864 $129,515 $13,070 $44,290 ======= ======== ======= ======= The yield on tax-exempt obligations of states and political subdivisions has been adjusted to a taxable equivalent basis using a 35% tax rate. 12 13 Loan Portfolio The Company's loans are widely diversified by borrower and industry. The following table shows the composition of loans by collateral type of the Company at December 31 for the years indicated. DECEMBER 31 ----------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ----------- ---------- ---------- (In thousands) Commercial & agricultural (1)(2) $238,246 $223,225 $211,988 $203,798 $382,233 Consumer & installment 744,456 695,127 633,692 510,538 501,627 Real estate mortgage 1,407,841 1,314,935 1,151,666 1,013,446 692,467 Lease financing 149,104 121,617 81,816 60,781 51,325 Other 14,471 16,780 11,913 52,692 22,594 ---------- ---------- ---------- ---------- ---------- Total gross loans $2,554,118 $2,371,684 $2,091,075 $1,841,255 $1,650,246 ========== ========== ========== ========== ========== (1) Including $14,580,000, $17,388,000, $15,247,000, $15,588,000 and $18,197,000 in 1996, 1995, 1994, 1993 and 1992, respectively, of loans classified as agricultural. (2) Including $38,406,000, $36,054,000, $29,838,000, $27,048,000 and $20,364,000 in 1996, 1995, 1994, 1993 and 1992, respectively, of loans secured by or relating to agricultural land. Maturity Distribution of Loans The maturity distribution of the Company's loan portfolio is one factor in management's evaluation of the risk characteristics of the loan portfolio. The following table shows the maturity distribution of gross loans of the Company as of December 31, 1996. ONE YEAR ONE TO AFTER OR LESS FIVE YEARS FIVE YEARS ----------- ------------- ---------- (In thousands) Commercial & agricultural $135,694 $ 83,425 $ 19,127 Consumer & installment 188,123 549,052 7,281 Real estate mortgages 526,681 656,907 224,253 Lease financing 48,385 100,716 3 Other 10,049 4,422 0.00 -------- ---------- -------- Total gross loans $908,932 $1,394,522 $250,664 ======== ========== ======== 13 14 Sensitivity of Loans to Changes in Interest Rates The interest sensitivity of the Company's loans is important in the management of effective interest differential. The Company attempts to manage the relationship between the rate sensitivity of its assets and liabilities to produce an effective interest differential that is not significantly impacted by the level of interest rates. The following table shows the interest sensitivity of the Company's gross loans as of December 31, 1996. December 31, 1996 FIXED VARIABLE RATE RATE ----- -------- (In thousands) Loan Portfolio Due after one year $1,281,961 $363,225 ========== ======== Nonaccrual, Past Due and Restructured Loans See Note 5 of Notes to Consolidated Financial Statements on page 28 of the Company's 1996 Annual Report to Shareholders incorporated herein by reference. The aggregate principal balance of non-accrual loans was $3,940,000, $1,592,000, $3,029,000, $4,072,000 and $10,742,000 at December 31, 1996, 1995, 1994, 1993 and 1992, respectively. The aggregate principal balance of restructured loans was $77,000, $7,000, $1,448,000, $4,018,000 and $2,045,000 at December 31, 1996, 1995, 1994, 1993 and 1992, respectively. Accruing loans which were contractually past due 90 days or more for years ended December 31, 1996, 1995, 1994, 1993 and 1992, amounted to $4,811,000, $5,148,000, $3,614,000, $4,277,000 and $8,523,000, respectively. The Company's policy provides that loans are placed in non-accrual status if any of the following criteria are met: (1) a loan is determined to be a loss of any amount as to principal or interest; (2) a loan has a deficiency balance; (3) receipt of notice of bankruptcy with regards to a borrower; or (4) a loan involves repossession of property and it is reasonably assumed that there will be a loss. In the normal course of business, management becomes aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which do not currently meet the criteria for disclosure as problem loans. Historically, some of these loans are ultimately restructured or placed in non-accrual status. At December 31, 1996, no loans were known to be potential problem loans. At December 31, 1996, the Company did not have any concentration of loans in excess of 10% of total loans outstanding. Loan concentrations are considered to exist when there are amounts loaned to a multiple number of borrowers engaged in similar activities which would cause them to be similarly impacted by economic or other conditions. However, the Company does conduct business in a geographically concentrated area. The ability of the Company's borrowers to repay loans is to some extent dependent upon the economic conditions prevailing in the market area. 14 15 Summary of Loan Loss Experience In the normal course of business, the Company assumes risks in extending credit. The Company manages these risks through its lending policies, loan review procedures and the diversification of its loan portfolio. Although it is not possible to predict loan losses with any certainty, management constantly reviews the characteristics of the loan portfolio to determine its overall risk profile and quality. Constant attention to the quality of the loan portfolio is achieved by a formal loan review process. Throughout this on-going process, management is advised of the condition of individual loans and of the quality profile of the entire loan portfolio. Any loan or portion thereof which is classified as "loss" by regulatory examiners or which is determined by management to be uncollectible because of such factors as the borrower's failure to pay interest or principal, the borrower's financial condition, economic conditions in the borrower's industry, or the inadequacy of underlying collateral, is charged off. The provision for credit losses charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses at a level that is adequate to meet the present and potential risks of losses on the Company's current portfolio of loans. Management's judgment is based on a variety of factors which include the Company's experience related to loan balances, charge-offs and recoveries, scrutiny of individual loans and risk factors, results of regulatory agency reviews of loans, and present and future economic conditions of the Company's market area. Material estimates that are particularly susceptible to significant change in the near term are a necessary part of this process. Future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Management does not believe the allowance for credit losses can be fragmented by category of loans with any precision that would be useful to investors but is doing so in this report only in an attempt to comply with disclosure requirements of regulatory agencies. The breakdown of the allowance by loan category is based in part on evaluations of specific loans' past history and on economic conditions within specific industries or geographical areas. Accordingly, since all of these conditions are subject to change, the allocation is not necessarily indicative of the breakdown of any future losses. 15 16 The following table presents (a) the breakdown of the allowance for credit losses by loan category and (b) the percentage of each category in the loan portfolio to total loans at December 31 for the years presented: 1996 1995 1994 ALLOWANCE % OF ALLOWANCE % OF ALLOWANCE % OF FOR LOANS TO FOR LOANS TO FOR LOANS TO CREDIT LOSS TOTAL LOANS CREDIT LOSS TOTAL LOANS CREDIT LOSS TOTAL LOANS =========== =========== =========== =========== =========== =========== (In thousands) Commercial & agricultural $3,570 9.33% $3,290 9.41% $3,100 10.14% Consumer & installment 11,100 29.15% 10,413 29.31% 9,350 30.30% Real estate mortgage 20,532 55.12% 19,500 55.44% 17,090 55.08% Lease financing 2,070 5.84% 1,433 5.13% 1,290 3.91% Other - 0.56% - 0.71% - 0.57% ------ ------ ------ ------ ------ ------ TOTAL $37,272 100.00% $34,636 100.00% $30,830 100.00% ====== ====== ====== ====== ====== ====== 1993 1992 ALLOWANCE % OF ALLOWANCE % OF FOR LOANS TO FOR LOANS TO CREDIT LOSS TOTAL LOANS CREDIT LOSS TOTAL LOANS =========== ----------- ----------- ----------- Commercial & agricultural $3,020 11.07% $5,550 23.16% Consumer & installment 7,620 27.73% 7,355 30.40% Real estate mortgage 16,123 55.04% 10,426 41.96% Lease financing 705 3.30% 785 3.11% Other - 2.86% - 1.37% ------ ------ ------ ------ TOTAL $27,468 100.00% $24,116 100.00% ====== ====== ====== ====== 16 17 The following table sets forth certain information with respect to the Company's loans (net of unearned discount) and the allowance for credit losses for the five years ended December 31, 1996. 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- (In thousands) LOANS Average loans for the period $ 2,410,746 $ 2,146,967 $ 1,881,922 $ 1,675,048 $ 1,550,745 =========== =========== =========== =========== =========== ALLOWANCE FOR CREDIT LOSSES Balance, beginning of period 34,636 30,830 27,468 24,116 21,106 Loans charged off: Commercial & agricultural (1,197) (448) (1,479) (374) (1,662) Consumer & installment (5,969) (3,550) (3,146) (5,030) (5,214) Real estate mortgage (808) (715) (1,217) (2,128) (4,810) Lease financing (30) (1) (19) (144) (169) ----------- ----------- ----------- ----------- ----------- Total loans charged off (8,004) (4,714) (5,861) (7,676) (11,855) ----------- ----------- ----------- ----------- ----------- Recoveries: Commercial & agricultural 427 99 1,539 169 348 Consumer & installment 1,163 1,084 1,271 1,326 1,409 Real estate mortgage 241 366 412 325 169 Lease financing 5 18 55 176 96 ----------- ----------- ----------- ----------- ----------- Total recoveries 1,836 1,567 3,277 1,996 2,022 ----------- ----------- ----------- ----------- ----------- Net charge-offs (6,168) (3,147) (2,584) (5,680) (9,833) Provision charged to operating expense 8,804 6,206 5,946 9,032 12,843 Acquisitions -- 747 -- -- -- ----------- ----------- ----------- ----------- ----------- Balance, end of period $ 37,272 $ 34,636 $ 30,830 $ 27,468 $ 24,116 =========== =========== =========== =========== =========== RATIOS Net charge-offs to average loans 0.26% 0.15% 0.14% 0.34% 0.63% =========== =========== =========== =========== =========== 17 18 Deposits Deposits represent the principal source of funds for the Company. The distribution and market share of deposits by type of deposit and by type of depositor are important considerations in the Company's assessment of the stability of its funds sources and its access to additional funds. Furthermore, management shifts the mix and maturity of the deposits depending on economic conditions and loan and investment policies in an attempt, within set policies, to minimize cost and maximize effective interest differential. The following table shows the classification of deposits on an average basis for the three years ended December 31, 1996. YEARS ENDED DECEMBER 31 -------------------------------------------------------------------------------- 1996 1995 1994 -------------------------------------------------------------------------------- Average Average Average Average Average Average Amount Rate Amount Rate Amount Rate ------ ---- ------ ---- ------ ---- (Dollars in thousands) Non-interest bearing demand deposits $ 383,897 -- $ 361,120 -- $ 364,451 -- Interest bearing demand deposits 700,863 2.91% 654,151 2.71% 618,929 2.64% Savings 371,514 4.02% 300,278 3.97% 292,908 3.25% Time 1,526,564 5.46% 1,416,901 5.47% 1,237,205 4.32% ---------- ---------- ---------- TOTAL DEPOSITS $2,982,838 $2,732,450 $2,513,493 ========== ========== ========== Time deposits of $100,000 and over including certificates of deposits of $100,000 and over at December 31, 1996, had maturities as follows: DECEMBER 31, 1996 ----------------- (In thousands) Three months or less $111,204 Over three months through six months 96,670 Over six months through twelve months 54,377 Over twelve months 136,872 -------- TOTAL $399,123 ======== 18 19 Return on Equity and Assets Return on average common equity, average assets, and the dividend payout ratio are based on net income for the three years ended December 31, 1996, as presented below: YEARS ENDED DECEMBER 31, ------------------------ 1996 1995 1994 ---- ---- ---- Return on average common equity 14.31% 13.23% 12.75% Return on average assets 1.24 1.13 1.07 Dividend payout ratio 34.65 34.37 32.69 The Company's average common equity as a percent of average assets was 8.68%, 8.52% and 8.35% for 1996, 1995 and 1994, respectively. Short-Term Borrowings See Note 8 of Notes to Consolidated Financial Statements on pages 29 and 30 of the Company's 1996 Annual Report to Shareholders incorporated herein by reference. Item 2. - Properties The physical properties of the Registrant are held in its subsidiaries as follows: a. Bank of Mississippi - The main office of the BOM is located at One Mississippi Plaza in the central business district of Tupelo in a seven-floor modern glass, concrete, and steel office building owned by BOM. BOM occupies approximately 75% of the rentable space in the building with the remainder leased to various unaffiliated tenants. BOM owns 78 of its 101 branch banking facilities. The remaining 23 branch banking facilities are occupied under leases varying in length from one to 12 years. BOM also owns several buildings in the Hattiesburg, Mississippi, area (which provide space for certain of BOM's Southern Region activities including warehouse requirements, mortgage lending, trust services, lease servicing and central operations), an operations center near the Tupelo Municipal Airport (which provides operational support for VOL as well), an office building in downtown Jackson, Mississippi (which has approximately 86,000 square feet of space, of which BOM uses approximately two-thirds for banking activities while leasing or holding for lease the remaining 28,000 square feet) and an office building in downtown Gulfport, Mississippi (which has approximately 85,000 square feet of space, of which BOM uses approximately 7,500 square feet for banking activities while leasing or holding for lease the remaining portion of the building). 19 20 BOM considers all its buildings and leased premises to be in good condition. BOM also owns several parcels of property acquired under foreclosure. Ownership of and rentals on other real property by BOM are not material. b. Volunteer Bank - The main office of VOL is located at One Jackson Place in the central business district of Jackson, Tennessee in a building owned by VOL. VOL owns 22 of its 30 branch banking facilities. The remaining 8 branch banking facilities are occupied under leases varying in length from one to 30 years. VOL considers all its building and leased premises to be in good condition. VOL also owns several parcels of property acquired under foreclosure. Ownership of and rentals on other real property by VOL are not material. c. Personal Finance Company - This wholly-owned subsidiary of BOM occupies 36 leased offices, with the unexpired terms varying in length from one to five years. The average size of these leased offices is approximately 1,000 square feet with average annual rent of approximately $8,000. All these premises are considered to be in good condition. d. TC Finance, Inc.- This wholly-owned subsidiary of VOL occupies 9 leases offices with the unexpired terms varying in length from one to five years. Item 3. - Legal Proceedings The Company and its subsidiaries are defendants in various lawsuits arising in the ordinary course of business. In the opinion of management, after consultation with outside legal counsel, the outcome of these actions should not have a material adverse effect on the financial condition of the Company and its subsidiaries, taken as a whole. Item 4. - Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the fourth quarter of 1996. 20 21 PART II Item 5. - Market for the Registrant's Common Stock and Related Stockholder Matters Market for Common Stock The common stock of the Company trades on The Nasdaq Stock Market under the symbol BOMS. The following table sets forth the range of closing sale prices of the Company's common stock as reported on The Nasdaq Stock Market. The prices have been restated to reflect the effect of the two-for-one stock split effected in the form of a 100% stock dividend paid November 20, 1995. 1996: High Low ---- --- 4th quarter $ 28.25 $ 23.75 3rd quarter 24.00 21.50 2nd quarter 25.00 21.50 1st quarter 25.50 21.125 1995: 4th quarter $23.875 $ 20.25 3rd quarter 20.875 19.375 2nd quarter 20.00 18.00 1st quarter 18.00 16.25 Holders of Record As of February 28, 1997, there were 7,655 shareholders of record of the Company's common stock. Dividends The Company declared cash dividends totaling $0.70 per share during 1996, $0.62 during 1995 and $0.555 during 1994. Future dividends, if any, will vary depending on the Company's profitability and anticipated capital requirements. Item 6. - Selected Financial Data The information under the caption "Selected Financial Information" on page 11 of the Company's 1996 Annual Report to Shareholders is incorporated herein by reference. The Company's long-term debt at December 31, 1996, totaled $55,778,000, at December 31, 1995, totaled $73,624,000, at December 31, 1994, totaled $67,416,000, at December 31, 1993, totaled $24,508,000 and totaled $32,541,000 at December 31, 1992. 21 22 Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 13 through 20 of the Company's 1996 Annual Report to Shareholders is incorporated herein by reference. Item 8. - Financial Statements and Supplementary Data The following consolidated financial statements of the Company and its subsidiaries, the report of independent auditors thereon, and the quarterly data (unaudited), appearing in the Company's 1996 Annual Report to Shareholders, are incorporated herein by reference. Consolidated Balance Sheets on page 21. Consolidated Statements of Income on page 22. Consolidated Statements of Shareholders' Equity on page 23. Consolidated Statements of Cash Flows on page 24. Notes to Consolidated Financial Statements on pages 25 through 39. Report of Independent Auditors on page 40. Summary of Quarterly Results (Unaudited) on page 12. Item 9. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no disagreements with the Company's independent accountants and auditors on any matter of accounting principles or practices or financial statement disclosure. 22 23 PART III Item 10. - Directors and Executive Officers of the Registrant Information concerning the directors and nominees of the Company appears under the caption "Election of Directors" on pages 1 through 4 of the Company's definitive Proxy Statement for its 1997 annual meeting, and is incorporated herein by reference. Executive Officers of Registrant Information follows concerning the executive officers of the Company who are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934. Name Offices Held Age - ---- ------------ --- Aubrey B. Patterson Chairman of the Board of 54 Directors and Chief Executive Officer of the Company and Bank of Mississippi; Director of the Company; Director of Volunteer Bank Charles J. McKee Executive Vice President 65 of the Company; Vice Chairman, Bank of Mississippi; Director of Bank of Mississippi and Volunteer Bank L. Nash Allen, Jr. Treasurer, and Chief 52 Financial Officer of the Company; Executive Vice President, Bank of Mississippi Kenneth R. Wilburn Executive Vice President, 50 Loan Administration of the Company and Bank of Mississippi 23 24 Harry R. Baxter Vice Chariman and 52 Director of Marketing of the Company and Bank of Mississippi Gary R. Harder Senior Vice President, Audit 52 and Loan Review of the Company and Bank of Mississippi Michael W. Weeks Chairman of the Board of 48 Directors and Chief Executive Officer of Volunteer Bank; Executive Vice President of the Company Michael L. Sappington Vice Chairman 47 Bank of Mississippi Gregg Cowsert Vice Chairman and Chief 49 Lending Officer Bank of Mississippi James Threadgill Executive Vice President 42 Bank of Mississippi None of the executive officers of the Company are related by blood, marriage, or adoption. There are no arrangements or understandings between any of the executive officers and any other person pursuant to which the individual named above was or is to be selected as an officer. The executive officers of the Company are elected by the Board of Directors at its first meeting following the annual meeting of shareholders, and they hold office until the next annual meeting or until their successors are duly elected and qualified. Mr. Patterson served as President of the Bank of Mississippi from 1983 until April 1990 when he was named Chief Executive Officer of the Bank of Mississippi and the Company. He has served as Chairman of the Board and Chief Executive Officer of the Bank of Mississippi and the Company since April 1993. Following the merger with VBS on August 31, 1993, he served as a director of VBS and he has served as a director of Volunteer Bank since its formation on December 31, 1993. Mr. McKee has served as Vice Chairman and as Executive Vice President of the Bank of Mississippi during the last five years and as Executive Vice President of the Company since April, 1986. He has served as a director of Bank of Mississippi since 1993, as a director of VBS from 24 25 August 31 to December 31, 1992, and as a director of Volunteer Bank since its formation on December 31, 1992. Mr. Allen has served as Senior Vice President and Executive Vice President of the Bank of Mississippi during the past five years. He has served as Treasurer of the Company during this same period. Mr. Wilburn served as Senior Vice President-Loan Administration, Bank of Mississippi, until January 1988, when his designation was changed to Executive Vice President-Loan Administration. Since October 1992, he has also served as Executive Vice President of the Company. Mr. Baxter joined the Bank of Mississippi in July 1986, as Senior Vice President and Director of Marketing. He was named Executive Vice President and Director of Marketing in August 1989 and named Vice Chariman in August 1996. Mr. Harder served as First Vice President and Senior Vice President-Loan Review, Bank of Mississippi during the last five years. Since October, 1992 he has also served as First Vice President and then Senior Vice President of the Company. Mr. Weeks served as Vice-Chairman of the Board and Chief Executive Officer of Volunteer Bank from January 24, 1995 to March 16, 1995 when he was named Chairman of the Board and Chief Executive Officer of Volunteer Bank. He has served as Executive Vice President of the Company since January 17, 1995. Prior to his employment by the Company, Mr. Weeks served as a partner in the accounting firm of KPMG Peat Marwick LLP. Mr. Sappington joined First Mississippi National Bank in 1977 which was later merged with Bank of Mississippi in 1987. He has served as Senior Vice President and Executive Vice President. He was named Vice Chairman in August, 1996. Mr. Cowsert joined the Bank of Mississippi in 1990 as Senior Vice President. He has since served as Executive Vice President and was named Vice Chairman in August, 1996. Mr. Threadgill joined Bank of Mississippi in 1987 as Assistant Vice President. He has since served as Vice President, Community Bank President and was named Executive Vice President in August, 1996. Item 11. - Executive Compensation Information concerning the remuneration of executive officers of the Company appears under the caption "Executive Compensation" on pages 7 through 13 of the Company's definitive Proxy Statement for its 1997 annual meeting , and is incorporated herein by reference. Information concerning the remuneration of directors of the Company appears under the caption 25 26 "Compensation of Directors" on page 3 of the Company's definitive Proxy Statement for its 1997 annual meeting, and is incorporated herein by reference. Item 12. - Security Ownership of Certain Beneficial Owners and Management Information concerning the security ownership of certain beneficial owners and directors and executive officers of the Company appears under the caption "Security Ownership of Certain Beneficial Owners and Management" on pages 5 and 6 of the Company's definitive Proxy Statement for its 1997 annual meeting, and is incorporated herein by reference. Item 13. - Certain Relationships and Related Transactions Information concerning certain relationships and related transactions with management and others appears under the caption "Certain Relationships and Related Transactions" on page 15 of the Company's definitive Proxy Statement for its 1997 annual meeting, and is incorporated herein by reference. 26 27 PART IV Item 14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Consolidated Financial Statements: The following have been incorporated herein from the Company's 1996 Annual Report to Shareholders: -Report of Independent Auditors -Consolidated balance sheets as of December 31, 1996, and 1995. -Consolidated statements of income for the three years ended December 31, 1996. -Consolidated statements of shareholders' equity for the three years ended December 31, 1996. -Consolidated statements of cash flows for the three years ended December 31, 1996. -Notes to consolidated financial statements for the three years ended December 31, 1996. (a) 2. Consolidated Financial Statement Schedules: All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. (a) 3. Exhibits: (3)(a) Articles of incorporation, as amended. (1) (b) Bylaws. (2) (4) Specimen Common Stock Certificate. (3) (10)(a) Stock Bonus Agreement between Bancorp of Mississippi, Inc., and Aubrey B. Patterson, Jr., dated November 6, 1987, and Escrow Agreement between Bank of Mississippi and Aubrey B. Patterson, Jr., dated November 6, 1987. (4)(9) (b) Form of deferred compensation agreement between Bancorp of Mississippi, Inc. and certain key executives. (5)(9) (c) 1995 Stock Incentive Plan. (3)(9) (d) 1995 Non-Qualified Stock Option Plan for Non-Employee Directors. (3)(9) (e) Stock Bonus Agreement between BancorpSouth, Inc. and Michael W. Weeks, dated January 17, 1995 and Escrow Agreement between Bank of Mississippi and Michael W. Weeks dated January 17, 1995 (8)(9) (11) Statement re computation of per share earnings. (13)(a) Managements' Discussion and Analysis of Financial Condition and Results of Operations on pages 13 through 20 of the 1996 Annual Report to Shareholders. (6) (b) Consolidated Financial Statements and Notes thereto and Independent Auditors Report on pages 21 through 40 of the 1996 Annual Report to Shareholders. (6) 27 28 (c) Summary of Quarterly Results on page 12 of the 1996 Annual Report to Shareholders. (6) (d) Selected Financial Information on page 11 of the 1996 Annual Report to Shareholders. (6) (22) Subsidiaries of the Registrant. (23) Consent of Independent Accountants. (27) Financial Data Schedule (for SEC use only). (28) Information regarding Bancorp of Mississippi, Inc., amended and restated Salary Deferral-Profit Sharing Employee Stock Ownership Plan. (7)(9) (1) Filed as exhibits 3.1 and 3.2 to the Company's registration statement on Form S-4 filed on January 6, 1995 (Registration No. 33-88274) and incorporated by reference thereto. (2) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1985 (file number 0-10826), and incorporated by reference thereto. (3) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1994 (file number 0-10826), and incorporated by reference thereto. (4) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1987 (file number 0-10826), and incorporated by reference thereto. (5) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1988 (file number 0-10826), and incorporated by reference thereto. (6) Furnished for the information of the Commission only and not deemed "filed" as part of this Report on Form 10-K except for those portions which are specifically incorporated herein by reference. (7) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1990 (file number 0-10826), and incorporated by reference thereto. (8) Filed as an exhibit to the Company's Form 10-K for the year ended December 31, 1995 (file number 0-1-826), and incorporated by reference thereto. (9) Compensatory plans or arrangements. (b) Reports on Form 8-K: A current report on Form 8-K dated October 8, 1996 was filed with the Securities and Exchange Commission during the fourth quarter of 1996 reporting an event under Item 5-Other Events. 28 29 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BancorpSouth, Inc. DATE: March 26, 1997 /s/ Aubrey B. Patterson ----------------------------------- Aubrey B. Patterson Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Chairman of the Board, Chief Executive Officer (Principal Executive Officer) /s/ Aubrey B. Patterson and Director March 26, 1997 - ------------------------------ Aubrey B. Patterson Treasurer (Principal Financial and /s/ Nash Allen, Jr. Accounting Officer) March 26, 1997 - ------------------------------ L. Nash Allen, Jr. Director March 26, 1997 - ------------------------------ S. H. Davis Director March 26, 1997 - ------------------------------ Hassell Franklin Director March 26, 1997 - ------------------------------ Fletcher H. Goode, M.D. Director March 26, 1997 - ------------------------------ J. Louis Griffin, Jr. Director March 26, 1997 - ------------------------------ W. G. Holliman, Jr. Director March 26, 1997 - ------------------------------ Douglas Jumper 29 30 /s/ Turner O. Lashlee Director March 26, 1997 - ------------------------------ Turner O. Lashlee /s/ Alan W. Perry Director March 26, 1997 - ------------------------------ Alan W. Perry Director March 26, 1997 - ------------------------------ Frank A. Riley Director March 26, 1997 - ------------------------------ Travis E. Staub Director March 26, 1997 - ------------------------------ Andrew R. Townes, DDS Director March 26, 1997 - ------------------------------ Lowery A. Woodall 30