1
As filed with the Securities and Exchange Commission on October 4, 2001.
Registration No.
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
417 North 20th Street
Birmingham, AL 35203
(205) 944-1300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
CHARLES C. PINCKNEY FRANK M. CONNER III WILLIAM T. LUEDKE IV
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD LLP BRACEWELL & PATTERSON LLP
SOMERVILLE LLP 601 PENNSYLVANIA AVENUE, N.W. 711 LOUISIANA STREET, SUITE 2900
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, TENTH FLOOR HOUSTON, TEXAS 77002
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 (713) 221-2900
(205) 250-5000 (202) 756-3300
--------------------
Approximate date of commencement of proposed sale of 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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
--------------------
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
-----------------------------------------------------------------------------------------------------------------------
Common Stock 1,108,758 $11.81772758 $ 13,103,000 $ 3,275.75
=======================================================================================================================
*Calculated in accordance with Rule 457(f), based on the total stockholders'
equity of the company being acquired as of June 30, 2001.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), shall
determine.
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PROXY STATEMENT PROSPECTUS
FIRST BANCSHARES OF TEXAS, INC. REGIONS FINANCIAL CORPORATION
______ SHARES OF COMMON STOCK
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of First Bancshares of Texas, Inc., a bank
holding company headquartered in Houston, Texas, and Regions Financial
Corporation, a bank holding company and financial holding company headquartered
in Birmingham, Alabama, have agreed on a merger of First Bancshares and Regions.
Regions will be the surviving corporation in the merger.
If the merger is completed, you will receive .589 of a share of Regions
common stock for each share of First Bancshares common stock you own, subject to
possible adjustment. The .589 of a share multiple, as it may be adjusted, is
referred to as the "exchange ratio." Regions stockholders will continue to own
their existing shares of Regions common stock after the merger.
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." Based on the closing price of Regions common stock on _______ of
$_______ and the .589 exchange ratio, you will receive approximately $_______
worth of Regions common stock for each share of First Bancshares common stock
you own. The .589 exchange ratio is subject to possible adjustment in limited
circumstances as described in this proxy statement-prospectus. The actual value
of the Regions common stock received by First Bancshares stockholders in the
merger will depend on the market value of Regions common stock at the time we
complete the merger.
First Bancshares has scheduled a special meeting for its stockholders
to vote on the merger, to be held at _______, local time, on _______, at 2001
Kirby Drive, Suite 808, Houston, Texas, 77019. We cannot complete the merger
unless the stockholders of First Bancshares approve it.
This proxy statement-prospectus provides you with detailed information
about the proposed merger. You can also get information about Regions from
documents filed with the Securities and Exchange Commission. We encourage you to
read this entire document carefully.
ALSO, YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE
13 OF THIS PROXY STATEMENT-PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE REGIONS COMMON STOCK TO BE ISSUED UPON COMPLETION
OF THE MERGER OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this proxy statement-prospectus is _______. It is first being mailed
on or about _______.
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HOW TO OBTAIN ADDITIONAL INFORMATION
This proxy statement-prospectus incorporates important business and
financial information about Regions Financial Corporation that is not included
in or delivered with this document. This information is described on page 60
under the caption "Where You Can Find More Information." You can obtain free
copies of this information from Regions by writing or calling:
Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35203
Attention: Shareholder Relations
Telephone: (205) 326-7090
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST THE
INFORMATION BY _______, 2001.
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FIRST BANCSHARES OF TEXAS, INC.
2001 KIRBY DRIVE, SUITE 808, HOUSTON, TEXAS, 77019
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD _______, 2001
First Bancshares of Texas, Inc. will hold a Special Meeting of
Stockholders at First Bancshares' main office, located at 2001 Kirby Drive,
Suite 808, Houston, Texas, 77019 on _______, 2001, at _______:00 p.m., local
time. At the special meeting the following matters will be presented for
stockholder vote:
1. Merger. The Agreement and Plan of Merger, dated as of August 3,
2001, by and between First Bancshares and Regions Financial Corporation. If the
agreement is approved and the merger is completed, (1) First Bancshares will
merge with and into Regions with Regions as the surviving corporation and (2)
each share of First Bancshares common stock (excluding certain shares held by
First Bancshares, Regions, or their respective subsidiaries and excluding all
shares held by stockholders who perfect their dissenters' rights) will be
converted into .589 of a share of Regions common stock, subject to possible
adjustment, with cash to be paid instead of any remaining fractional share
interest, all as described more fully in the accompanying proxy
statement-prospectus; and
2. Other Business. Such other business as may properly come before the
special meeting, including adjourning the special meeting to permit, if
necessary, further solicitation of proxies.
Stockholders of record at the close of business on _______, 2001, will
receive notice of and may vote at the special meeting or any adjournment or
postponement thereof.
You have a right to dissent from the merger and obtain payment of the
fair value of your First Bancshares shares in cash by complying with the
applicable provisions of Texas law, which are attached to the accompanying proxy
statement-prospectus as Appendix C.
Your board of directors unanimously recommends that you vote FOR the
proposals listed above.
We urge you to sign and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the special meeting in person. The
proxy may be revoked by the person executing the proxy by filing with the
Secretary of First Bancshares an instrument of revocation or a duly executed
proxy bearing a later date or by electing to vote in person at the special
meeting.
By Order of the Board of Directors
Mary Melville
Corporate Secretary
, 2001
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TABLE OF CONTENTS
SUMMARY.......................................................................................................1
The Companies.............................................................................................1
The Merger................................................................................................1
Comparative Per Share Market Price Information............................................................2
Reasons for the Merger....................................................................................2
Fairness Opinion of First Bancshares' Financial Advisor...................................................2
The Special Meeting.......................................................................................3
Recommendations to Stockholders...........................................................................3
Voting Rights at the Special Meeting......................................................................3
Stockholder Vote Required.................................................................................3
Share Ownership of Management and Certain Stockholders....................................................3
Effective Time............................................................................................3
Exchange of Stock Certificates............................................................................4
Regulatory Approvals and Other Conditions to Completion of the Merger.....................................4
Termination and Amendment of the Merger Agreement.........................................................4
Federal Income Tax Consequences...........................................................................5
Accounting Treatment......................................................................................5
Interests of Certain Persons in the Merger That May Be Different from Yours...............................5
Dissenters' Appraisal Rights..............................................................................5
Certain Differences in Stockholders' Rights...............................................................6
Comparative Per Share Data................................................................................6
Selected Financial Data...................................................................................8
RISK FACTORS.................................................................................................13
General..................................................................................................13
Risks Relating to the Merger.............................................................................13
THE SPECIAL MEETING..........................................................................................14
General..................................................................................................14
Record Date; Vote Required...............................................................................15
THE MERGER...................................................................................................16
General..................................................................................................16
Possible Adjustment of Exchange Ratio....................................................................16
Background of the Merger.................................................................................17
First Bancshares' Reasons for the Merger.................................................................19
Regions' Reasons for the Merger..........................................................................20
Opinion of First Bancshares' Financial Advisor...........................................................21
Effective Time of the Merger.............................................................................26
Distribution of Regions Stock Certificates and Payment For Fractional Shares.............................26
Conditions to Completion of the Merger...................................................................27
Regulatory Approvals.....................................................................................28
Waiver, Amendment, and Termination of the Merger Agreement...............................................28
Conduct of Business Pending the Merger...................................................................29
Management Following the Merger..........................................................................30
Interests of Certain Persons in the Merger...............................................................30
Dissenting Stockholders..................................................................................31
Federal Income Tax Consequences of the Merger............................................................34
Accounting Treatment.....................................................................................35
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Expenses and Fees........................................................................................35
Resales of Regions Common Stock..........................................................................35
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS...............................................................36
Antitakeover Provisions Generally........................................................................36
Authorized Capital Stock.................................................................................37
Amendment of Certificate or Articles of Incorporation and Bylaws.........................................38
Classified Board of Directors and Absence of Cumulative Voting...........................................38
Removal of Directors.....................................................................................39
Limitations on Director Liability........................................................................39
Indemnification..........................................................................................40
Special Meetings of Stockholders.........................................................................40
Actions by Stockholders Without a Meeting................................................................41
Stockholder Nominations..................................................................................41
Mergers, Consolidations, and Sales of Assets Generally...................................................41
Business Combinations with Certain Persons...............................................................42
Dissenters' Rights.......................................................................................42
Stockholders' Rights to Examine Books and Records........................................................43
Dividends................................................................................................43
COMPARATIVE MARKET PRICES AND DIVIDENDS......................................................................45
INFORMATION ABOUT FIRST BANCSHARES...........................................................................47
Business and Properties..................................................................................47
Competition..............................................................................................48
Legal Proceedings........................................................................................48
Management...............................................................................................48
Transactions with Management.............................................................................49
Voting Securities and Principal Stockholders.............................................................49
INFORMATION ABOUT REGIONS....................................................................................51
General..................................................................................................51
Recent Developments......................................................................................51
SUPERVISION AND REGULATION...................................................................................53
General..................................................................................................53
Payment of Dividends.....................................................................................54
Capital Adequacy.........................................................................................55
Prompt Corrective Action.................................................................................56
FDIC Insurance Assessments...............................................................................57
DESCRIPTION OF REGIONS COMMON STOCK..........................................................................58
STOCKHOLDER PROPOSALS........................................................................................58
FORWARD LOOKING STATEMENTS...................................................................................58
EXPERTS......................................................................................................59
OPINIONS.....................................................................................................60
WHERE YOU CAN FIND MORE INFORMATION..........................................................................60
APPENDIX A-Agreement and Plan of Merger.....................................................................A-1
APPENDIX B-Opinion of Hoefer & Arnett, Incorporated ........................................................B-1
APPENDIX C-Copy of Articles 5.11, 5.12, and 5.13, Texas Business Corporation Act,
pertaining to dissenters' rights..........................................................................C-1
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SUMMARY
This summary highlights selected information from this proxy
statement-prospectus. It does not contain all of the information that is
important to you. You should carefully read this entire document and all other
documents to which we refer in this document in order to understand fully the
merger and to obtain a more complete description of the legal terms of the
merger. See "Where You Can Find More Information" (page 60). Each item in this
summary includes a page reference that directs you to a more complete
description in this document of the topic discussed.
THE COMPANIES (PAGES 47 AND 51)
FIRST BANCSHARES OF TEXAS, INC.
2001 Kirby Drive, Suite 808
Houston, Texas, 77019
(713) 522-5970
First Bancshares is incorporated in Texas and is a bank holding
company. First Bancshares owns First Bank of Texas, a commercial bank which
serves customers in Harris, Hamilton, and Montgomery Counties. As of June 30,
2001, First Bancshares' total assets were about $169.2 million, deposits were
about $151.8 million, and stockholders' equity was about $13.1 million.
REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
(205) 944-1300
Regions is incorporated in Delaware and is a regional bank holding
company and financial holding company. Through its subsidiaries, Regions
provides banking and other financial services. Regions has banking operations in
Alabama, Arkansas, Florida, Georgia, Louisiana, South Carolina, Tennessee, and
Texas. As of June 30, 2001, Regions' total assets were about $45.1 billion,
deposits were about $31.2 billion, and stockholders' equity was about $3.8
billion.
THE MERGER (PAGE 16)
If we complete the merger, Regions will be the surviving corporation.
When the merger is completed, you will receive .589 of a share of Regions stock
for each share of First Bancshares stock that you own, subject to possible
adjustment. You will not receive any fraction of a share of Regions common
stock. Instead, you will receive a cash payment for any fraction of a share of
Regions common stock to which you may become entitled.
If you elect to dissent from the merger under Texas law and follow the
required procedures, you will receive a cash payment for your shares of First
Bancshares common stock instead of receiving Regions common stock in the merger.
More information about your rights to dissent from the merger, and the
procedures you must follow should you choose to do so, is included under the
heading "The Merger -- Dissenting Stockholders" on page 31.
The exchange ratio of .589 of a share of Regions common stock for each
share of First Bancshares common stock could be adjusted under limited
circumstances. If the average of the daily last sales prices
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of Regions common stock over a five trading day period following the mailing of
this proxy statement-prospectus is less than $26.00 or greater than $36.00, then
the exchange ratio will be adjusted under a formula included in the merger
agreement. The intent of the formula is that you will not bear the risk of a
sharp decline, and likewise will not realize the benefit of a sharp increase, in
the price of Regions common stock between the date of the merger agreement and
_______, 2001. The adjustment mechanism is explained in detail under the heading
"The Merger--Possible Adjustment of Exchange Ratio" on page 16.
We have attached the merger agreement to this proxy
statement-prospectus as Appendix A. We encourage you to read the merger
agreement. It is the legal document that establishes the terms and conditions of
the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 45)
Shares of Regions are quoted on the Nasdaq National Market under the
symbol "RGBK." Shares of First Bancshares are not quoted on any established
market. On August 10, 2001, the last full trading day prior to the public
announcement of the merger, Regions stock closed at $32.00 per share. As of that
date the last known price of First Bancshares stock was $_______ per share on
_______, 2001. On _______, 2001, Regions stock closed at $_______ per share and
the last known price of First Bancshares stock was $_______ per share on
_______, 2001.
Based on the exchange ratio of .589 of a share, the market value of the
consideration that First Bancshares stockholders will receive in the merger for
each share of First Bancshares common stock would be $18.85 based on Regions'
August 10, 2001 closing price and $_______ based on Regions' _______, 2001
closing price. Of course, the market price of Regions common stock will
fluctuate prior to and after completion of the merger, while the exchange ratio
will be fixed on or about _______, 2001. Therefore, you should obtain current
stock price quotations for Regions common stock.
REASONS FOR THE MERGER (PAGE 19)
First Bancshares and Regions believe that the merger will result in a
company with expanded opportunities for profitable growth. In addition, we
anticipate that the combined resources of First Bancshares and Regions will
improve our ability to compete in First Bancshares' market area.
To review the background of and reasons for the merger in greater
detail, please see the discussion under the headings "The Merger--Background of
the Merger" and "The Merger--First Bancshares' Reasons for the Merger" on pages
17 and 19.
FAIRNESS OPINION OF FIRST BANCSHARES' FINANCIAL ADVISOR (PAGE 21)
In deciding to approve the merger, the First Bancshares board of
directors considered the opinion of its financial advisor Hoefer & Arnett,
Incorporated that as of the date of the opinion the exchange ratio was fair to
the First Bancshares stockholders from a financial point of view. We have
attached this opinion as Appendix B to this proxy statement-prospectus. You
should read it carefully.
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THE SPECIAL MEETING (PAGE 13)
The First Bancshares special meeting will be held at First Bancshares'
main office, 2001 Kirby Drive, Suite 808, Houston, Texas, 77019, at _______ p.m.
on _______, 2001. At the special meeting, First Bancshares stockholders will be
asked to approve the merger agreement.
RECOMMENDATIONS TO STOCKHOLDERS (PAGE 19)
The First Bancshares board of directors has approved the merger
agreement and the merger and believes that the merger is fair to you and in your
best interests. The board of directors unanimously recommends that you vote
"FOR" the proposal to approve the merger agreement and the merger.
VOTING RIGHTS AT THE SPECIAL MEETING (PAGE 15)
You can vote at the First Bancshares special meeting if you owned First
Bancshares common stock as of the close of business on _______, 2001, the record
date. On that date, 1,737,864 shares of First Bancshares common stock were
outstanding and therefore are allowed to vote at the special meeting. You will
be able to cast one vote for each share of First Bancshares common stock you
owned on _______, 2001. Participants in the First Bancshares employee stock
ownership plan are entitled to direct the trustees of the plan how to vote the
shares of First Bancshares' common stock held by the plan. A separate request
for voting instructions directing the trustees how to vote the shares held by
the First Bancshares employee stock ownership plan will be sent to the
participants in the plan.
Regions stockholders will not vote on the merger.
STOCKHOLDER VOTE REQUIRED (PAGE 15)
To approve the merger, First Bancshares stockholders who hold on the
record date a majority of the outstanding shares of common stock entitled to
vote on the merger agreement must vote for the merger. If you do not vote, this
will have the same effect as a vote against the merger.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS (PAGE 47)
All together, the directors and officers of First Bancshares, their
immediate family members and entities they control can cast about 38.04% of the
votes entitled to be cast at the First Bancshares special meeting. The members
of the First Bancshares board of directors have agreed to vote all of shares
over which they have voting authority (other than as a fiduciary) in favor of
the merger.
EFFECTIVE TIME (PAGE 26)
The merger will become final at the time specified in the Certificate
of Merger reflecting the merger to be filed with the Secretary of State of the
state of Delaware and the Articles of Merger reflecting the merger to be filed
with the Secretary of State of the state of Texas. If First Bancshares
stockholders approve the merger at the special meeting, and Regions obtains all
required regulatory approvals, we currently anticipate that the merger will be
completed during the fourth quarter of 2001. First Bancshares and
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Regions cannot assure you that we can obtain the necessary stockholder and
regulatory approvals or that the other conditions to completion of the merger
can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (PAGE 26)
Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your First Bancshares stock certificates in
exchange for Regions stock certificates. You will need to carefully review and
complete these materials and return them as instructed along with your stock
certificates for First Bancshares common stock. You should not send First
Bancshares, Regions, or Regions' transfer agent any stock certificates until you
receive these instructions.
REGULATORY APPROVALS AND OTHER CONDITIONS TO COMPLETION OF THE MERGER (PAGE 27)
Regions is required to notify and obtain approvals from certain
government regulatory agencies before the merger may be completed, including the
Federal Reserve and other federal and state banking regulators. We expect that
Regions will obtain all required regulatory approvals, but we cannot assure you
that these regulatory approvals will be obtained.
In addition to the required regulatory approvals, the merger will be
completed only if certain conditions, including, but not limited to the
following, are met or, if waivable, waived:
- First Bancshares stockholders approve the merger agreement and the
merger at the special meeting;
- First Bancshares and Regions each receive an opinion of counsel that
the merger will qualify as a tax-free reorganization; and
- neither Regions nor First Bancshares has breached in any material
respect any of its representations or obligations under the merger
agreement.
In addition to these conditions, the merger agreement, attached to this
proxy statement-prospectus as Appendix A, describes other conditions that must
be met before the merger may be completed.
In cases where the law permits, either Regions or First Bancshares
could elect to waive a condition that has not been satisfied and complete the
merger although it is entitled not to. We cannot be certain whether or when any
of the conditions we have listed will be satisfied (or waived, where
permissible), or that the merger will be completed.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (PAGE 28)
Regions and First Bancshares may agree to terminate the merger
agreement and elect not to complete the merger at any time before the merger is
completed.
Each of the parties also can terminate the merger agreement in certain
other circumstances, including if the merger is not completed by March 31, 2002.
However, a party may not terminate the merger agreement for this reason if the
merger has not been completed because of a breach of the merger agreement by the
party seeking termination.
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In addition, the parties may also terminate the merger agreement if
other circumstances occur which are described in the agreement, attached to this
proxy statement-prospectus as Appendix A.
The merger agreement may be amended by the written agreement of First
Bancshares and Regions. The parties may amend the merger agreement without
stockholder approval, even if First Bancshares stockholders have already
approved the merger. However, First Bancshares stockholders must approve any
amendments that would modify, in a material respect, the type or amount of
consideration that they will receive in the merger.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 34)
We expect that you will not recognize any gain or loss for U.S. federal
income tax purposes when you exchange all of your shares of First Bancshares
common stock for shares of Regions common stock in the merger, except in
connection with cash received instead of fractional shares. We have conditioned
the merger on our receipt of a legal opinion that this will be the case, but
this opinion will not bind the Internal Revenue Service, which could take a
different view.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN FIRST BANCSHARES
STOCKHOLDERS, INCLUDING THE TYPES OF FIRST BANCSHARES STOCKHOLDERS DISCUSSED ON
PAGE 34, AND WILL NOT APPLY TO ANY FIRST BANCSHARES STOCKHOLDER WHO DISSENTS
FROM THE MERGER UNDER TEXAS LAW. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE
MERGER TO YOU CAN BE COMPLICATED. THEY WILL DEPEND ON YOUR SPECIFIC SITUATION
AND MANY VARIABLES NOT WITHIN OUR CONTROL. YOU SHOULD CONSULT YOUR OWN TAX
ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
ACCOUNTING TREATMENT (PAGE 35)
Regions expects to account for the merger as a purchase transaction for
accounting and financial reporting purposes, meaning that the assets and
liabilities of First Bancshares will be recorded at their estimated fair values
and added to those of Regions. Therefore, the financial statements of Regions
issued after the merger will reflect these values from First Bancshares and will
not be restated retroactively to reflect the historical financial position or
results of operations of First Bancshares.
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS
(PAGE 30)
Some of the officers of First Bancshares have benefit and compensation
plans and employment contracts that provide them with interests in the merger
that are different from, or in addition to, their interests as stockholders of
First Bancshares. In particular, members of First Bancshares' board of directors
and its officers are entitled to indemnification under the merger agreement. The
First Bancshares board of directors was aware of these interests and considered
them in approving and recommending the merger.
For more information about these matters, please refer to the
discussion under the heading "The Merger-Interests of Certain Persons in the
Merger" on page 30.
DISSENTERS' APPRAISAL RIGHTS (PAGE 42)
Texas law permits you to dissent from the merger and to have the fair
value of your stock appraised by a court and paid to you in cash. To do this,
you must follow certain procedures, including the filing of certain notices and
refraining from voting your shares in favor of the merger. If you dissent from
the
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merger, your shares of First Bancshares common stock will not be exchanged for
shares of Regions common stock in the merger, and your only right will be to
receive the appraised value of your shares in cash.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS (PAGE 36)
When the merger is completed you will automatically become a Regions
stockholder, unless you receive cash in the merger as a result of exercising
your dissenters' rights. The rights of Regions stockholders differ from the
rights of First Bancshares stockholders in certain significant ways. Many of
these differences have to do with provisions in Regions' certificate of
incorporation, bylaws, and Delaware law. Certain of these provisions are
intended to make a takeover of Regions more difficult if the Regions board of
directors does not approve it.
COMPARATIVE PER SHARE DATA
The following table shows information about Regions' and First
Bancshares' income per share, dividends per share and book value per share, and
similar information reflecting the merger of Regions and First Bancshares (which
is referred to as "pro forma" information). In presenting the comparative pro
forma information for certain time periods, we assumed that Regions and First
Bancshares had been merged throughout those periods.
In presenting the comparative pro forma information, we also assumed
that Regions will record First Bancshares assets and liabilities at their
estimated fair values and add them to the assets and liabilities of Regions for
accounting and financial reporting purposes (a method which is referred to as
the "purchase" method of accounting).
The information listed as "equivalent pro forma" was computed by
multiplying the pro forma amounts by the exchange ratio of .589 of a share. It
is intended to reflect the fact that First Bancshares stockholders will be
receiving .589 of a share of Regions common stock for each share of First
Bancshares common stock exchanged in the merger. This may not be the actual
exchange ratio, since the exact ratio will not be determined until on or about
_______.
The pro forma information, while helpful in illustrating the financial
attributes of the combined company under one set of assumptions, does not
attempt to predict or suggest future results. Also, the information we have set
forth for the six-month period ended June 30, 2001 does not indicate what the
results will be for the full 2001 fiscal year.
The information in the following table is based on the historical
financial information of Regions and First Bancshares. See "Where You Can Find
More Information" on page 60.
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SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------------- ------------
2001 2000 2000
-------- -------- --------
(Unaudited) (Unaudited except Regions
and FBOT historical)
NET INCOME PER COMMON SHARE
Regions historical ........................................... $ 1.06 $ 1.23 $ 2.39
Regions historical - diluted ................................. 1.05 1.22 2.38
FBOT historical .............................................. .29 .62 1.08
FBOT historical - diluted .................................... .27 .52 .90
Regions and FBOT pro forma combined(1) ....................... 1.06 2.39
Regions and FBOT pro forma combined
- diluted(1) ............................................ 1.05 2.38
FBOT pro forma equivalent(2) ................................. .62 1.41
FBOT pro forma equivalent
- diluted(2) ............................................ .62 1.40
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical ........................................... .56 .54 1.08
FBOT historical .............................................. .20 .20 .40
FBOT pro forma equivalent(3) ................................. .33 .64
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical ........................................... 16.81 14.55 15.73
FBOT historical .............................................. 7.86 6.67 7.47
Regions and FBOT pro forma combined(1) ....................... 16.81
FBOT pro forma equivalent(2) ................................. 9.90
(1) Represents the combined results of Regions and First Bancshares as if
the merger were completed on January 1, 2000 (or June 30, 2001, in the
case of Book Value Per Share Data), and were accounted for as a
purchase.
(2) Represents pro forma combined information multiplied by the exchange
ratio of .589 of a share of Regions common stock for each share of
First Bancshares common stock. The exchange ratio is subject to
adjustment under certain conditions if the average of the closing sales
prices of Regions common stock over a specified period is less than
$26.00 or greater than $36.00. See "The Merger--Possible Adjustment of
Exchange Ratio." The presentation of pro forma equivalent information
would be affected by any increase in the exchange ratio.
(3) Represents historical dividends declared per share by Regions
multiplied by the exchange ratio of .589 of a share of Regions common
stock for each share of First Bancshares common stock.
7
14
(4) The exchange ratio is subject to adjustment if the average closing
price of Regions common stock over a specified period is less than
$26.00 per share or greater than $36.00 per share. The combined and
equivalent pro forma per share data assuming illustrative exchange
ratios of .558 (corresponding to an assumed average closing price of
$38.00) and .638 (corresponding to an assumed average closing price of
$24.00) are as follows:
Exchange Ratio
----------------------------------------------------------------------------
.558 .638
---------------------------------- ------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, 2001 December 31, 2000 June 30, 2001 December 31, 2000
------------- ----------------- ------------- ------------------
(Unaudited)
NET INCOME PER COMMON SHARE
Regions and FBOT pro forma combined ........... $ 1.06 $ 2.39 $ 1.06 $ 2.39
Regions and FBOT pro forma combined -
diluted .................................. 1.05 2.38 1.05 2.38
FBOT pro forma equivalent ..................... .59 1.33 .68 1.52
FBOT pro forma equivalent - diluted ........... .59 1.33 .67 1.52
DIVIDENDS DECLARED PER COMMON
SHARE
FBOT pro forma equivalent ..................... .31 .60 .36 .69
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions and FBOT pro forma combined ........... 16.81 16.81
FBOT pro forma equivalent ..................... 9.38 10.72
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each
of Regions and First Bancshares.
The information in the following tables is based on the historical
financial information of Regions and First Bancshares. All of the summary
financial information provided in the following tables should be read in
connection with this historical financial information and with the more detailed
financial information we have incorporated by reference in this proxy
statement-prospectus, which you can find in the documents of Regions
incorporated by reference. See "Where You Can Find More Information" on page 60.
The financial information as of or for the interim periods ended June 30, 2001
and 2000 has not been audited and in the respective opinions of management
reflects all adjustments (consisting only of normal recurring adjustments)
necessary to a fair presentation of such data.
8
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Selected Historical Financial Data of Regions
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------------------- ------------------------------
2001 2000 2000 1999
------------ ------------ ------------ ------------
(Unaudited)
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .......................... $ 1,601,688 $ 1,572,816 $ 3,234,243 $ 2,854,686
Total interest expense ......................... 903,402 870,009 1,845,446 1,428,831
Net interest income ............................ 698,286 702,807 1,388,797 1,425,855
Provision for loan losses ...................... 57,490 56,981 127,099 113,658
Net interest income after
loan loss provision ....................... 640,796 645,826 1,261,698 1,312,197
Total noninterest income before
security gains (losses) ................... 417,329 344,393 641,138 536,981
Security gains (losses) ........................ 467 (39,951) (39,928) 160
Total noninterest expense ...................... 724,087 543,922 1,121,182 1,064,312
Income tax expense ............................. 98,954 135,048 214,203 259,640
Net income ..................................... 235,551 271,298 527,523 525,386
PER SHARE DATA:
Net income ..................................... $ 1.06 $ 1.23 $ 2.39 $ 2.37
Net income -diluted ............................ 1.05 1.22 2.38 2.35
Cash dividends ................................. .56 .54 1.08 1.00
Book value ..................................... 16.81 14.55 15.73 13.89
OTHER INFORMATION:
Average number of shares outstanding ........... 221,273 220,782 220,762 221,617
Average number of shares outstanding
- diluted .................................. 223,573 221,987 221,989 223,967
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ................................... $ 45,139,089 $ 42,901,514 $ 43,688,293 $ 42,714,395
Securities ..................................... 7,713,087 9,245,683 8,994,171 10,913,044
Loans, net of unearned income .................. 30,962,953 30,390,990 31,376,463 28,144,675
Total deposits ................................. 31,159,282 32,508,901 32,022,491 29,989,094
Long-term debt ................................. 4,936,855 2,370,148 4,478,027 1,750,861
Stockholders' equity ........................... 3,826,360 3,187,435 3,457,944 3,065,112
PERFORMANCE RATIOS:
Return on average assets(1) .................... 1.07%(a) 1.29%(b) 1.23%(c) 1.33%
Return on average stockholders'
equity(1) ................................. 13.29(a) 17.45(b) 16.31(c) 17.13
Net interest margin(1) ......................... 3.63 3.63 3.55 3.94
Efficiency (2) ................................. 62.49(a) 51.37(b) 54.35(c) 53.60
Dividend payout ................................ 52.83 43.90 45.19 42.19
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ................. .32% .23% .31% .37%
Problem assets to net loans and
other real estate (3) ..................... .98 .71 .76 .68
Nonperforming assets to net loans
and other real estate (4) ................. 1.11 .93 .87 .93
Allowance for loan losses to loans,
net of unearned income .................... 1.24 1.20 1.20 1.20
Allowance for loan losses to
nonperforming assets (4) .................. 111.56 128.99 137.07 128.70
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996
------------ ------------ ------------
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .......................... $ 2,597,786 $ 2,276,584 $ 1,954,283
Total interest expense ......................... 1,272,968 1,097,376 942,459
Net interest income ............................ 1,324,818 1,179,208 1,011,824
Provision for loan losses ...................... 60,505 89,663 46,026
Net interest income after
loan loss provision ....................... 1,264,313 1,089,545 965,798
Total noninterest income before
security gains (losses) ................... 467,695 406,484 341,792
Security gains (losses) ........................ 7,002 498 3,311
Total noninterest expense ...................... 1,103,708 901,776 837,034
Income tax expense ............................. 213,590 197,222 156,008
Net income ..................................... 421,712 397,529 317,859
PER SHARE DATA:
Net income ..................................... $ 1.92 $ 1.89 $ 1.64
Net income -diluted ............................ 1.88 1.86 1.61
Cash dividends ................................. .92 .80 .70
Book value ..................................... 13.61 12.75 11.82
OTHER INFORMATION:
Average number of shares outstanding ........... 220,114 209,781 194,241
Average number of shares outstanding
- diluted .................................. 223,781 213,750 197,751
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ................................... $ 36,831,940 $ 31,414,058 $ 26,993,344
Securities ..................................... 7,969,137 6,315,923 5,742,375
Loans, net of unearned income .................. 24,365,587 21,881,123 18,395,552
Total deposits ................................. 28,350,066 25,011,021 22,019,412
Long-term debt ................................. 571,040 445,529 570,545
Stockholders' equity ........................... 3,000,401 2,679,821 2,274,563
PERFORMANCE RATIOS:
Return on average assets(1) .................... 1.24%(d) 1.35% 1.25%(e)
Return on average stockholders'
equity(1) ................................. 14.62(d) 15.38 14.71(e)
Net interest margin(1) ......................... 4.25 4.41 4.36
Efficiency (2) ................................. 60.82(d) 57.78 61.84(e)
Dividend payout ................................ 47.92 42.33 42.68
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ................. .28% .27% .18%
Problem assets to net loans and
other real estate (3) ..................... .60 .78 .63
Nonperforming assets to net loans
and other real estate (4) ................. 1.15 .91 .83
Allowance for loan losses to loans,
net of unearned income .................... 1.29 1.39 1.38
Allowance for loan losses to
nonperforming assets (4) .................. 112.27 151.89 166.41
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Selected Historical Financial Data of Regions - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
(In thousands, except per share data and ratios)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ..................... 8.06% 7.37% 7.54% 7.74% 8.47% 8.75% 8.50%
Average loans to average deposits .... 99.98 90.96 94.63 91.35 86.93 84.94 82.42
Tier 1 risk-based capital (5) ........ 8.78 9.23 9.14 9.51 10.26 10.48 10.81
Total risk-based capital (5) ......... 12.18 11.10 11.44 11.42 12.17 12.93 13.59
Tier 1 leverage (5) .................. 6.69 6.83 6.90 6.95 7.40 7.52 7.44
-------------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total assets
is 3% to 5%. The ratios for prior periods have not been restated to
reflect the combinations with First National Bancorp and First Commercial
Corporation, accounted for as poolings of interests, or any other
pooling-of-interests transactions.
(a) Ratios for June 30, 2001 excluding $17.8 million (after tax) for merger
and other nonrecurring charges are as follows: Return on average assets -
1.15%; Return on average stockholders' equity - 14.30%, and Efficiency -
60.48%.
(b) Ratios for June 30, 2000 excluding $44.0 million (after tax) for gain on
sale of credit card portfolio and $26.2 million (after tax) for loss on
sale of securities are as follows: Return on average assets - 1.20%;
Return on average stockholders' equity - 16.30%, and Efficiency - 54.85%.
(c) Ratios for 2000 excluding $44.0 million (after tax) for gain on sale of
credit card portfolio and $26.2 million (after tax) for loss on sale of
securities are as follows: Return on average assets - 1.19%, Return on
average stockholders' equity - 15.76%, and Efficiency - 56.19%.
(d) Ratios for 1998 excluding $80.7 million (after tax) for nonrecurring
merger and consolidation charges are as follows: Return on average assets
- 1.48%, Return on average stockholders' equity - 17.42%, and Efficiency -
54.13%.
(e) Ratios for 1996 excluding $20.2 million (after-tax) charge for SAIF
assessment and merger expenses are as follows: Return on average assets -
1.33%, Return on average stockholders' equity - 15.64%, and Efficiency -
60.93%.
10
17
Selected Historical Financial Data of First Bancshares
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- --------- --------- --------- --------- --------- ---------
(Unaudited)
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .................. $ 5,591 $ 5,236 $ 10,825 $ 9,533 $ 8,686 $ 9,801 $ 13,627
Total interest expense ................. 2,132 1,899 4,064 3,374 3,202 4,071 6,483
Net interest income .................... 3,459 3,337 6,761 6,159 5,484 5,730 7,144
Provision (benefit) for loan losses .... 61 -- -- 94 (300) 40 175
Net interest income after loan
loss provision (benefit) .......... 3,398 3,337 6,761 6,065 5,784 5,690 6,969
Total noninterest income excluding
security gains (losses) ........... 1,303 1,270 2,523 2,396 1,979 5,673 3,554
Security gains (losses) ................ -- -- 17 (46) 140 236 (44)
Total noninterest expense .............. 4,090(a) 3,209 7,036 6,486 6,061 6,929 7,828
Income tax expense ..................... 149 453 630 358 723 1,790 873
Net income ............................. 462(a) 945 1,635 1,571 1,119 2,880 1,778
PER SHARE DATA:
Net income ............................. $ .29 $ .62 $ 1.08 $ .98 $ .63 $ 1.51 $ .81
Net income - diluted ................... .27 .52 .90 .83 .54 1.31 .72
Cash dividends ......................... .20 .20 .40 .40 .40 .20 .20
Book value ............................. 7.86 6.67 7.47 6.35 6.61 7.24 6.60
OTHER INFORMATION:
Average number of shares outstanding ... 1,591 1,524 1,520 1,596 1,769 1,901 2,182
Average number of shares outstanding,
- diluted .......................... 1,741 1,824 1,820 1,896 2,069 2,201 2,482
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ........................... $169,150 $147,322 $ 150,116 $ 140,440 $ 131,642 $ 115,600 $ 180,104
Securities ............................. 58,091 50,026 49,303 52,076 51,629 54,006 109,482
Loans, net of unearned income .......... 85,892 76,612 79,559 74,400 64,413 49,161 49,693
Allowance for loan losses .............. 857 815 825 802 800 892 813
Total deposits ......................... 151,828 133,625 135,655 119,347 118,144 97,301 164,261
Long-term debt ......................... 1,900 1,000 2,005 1,200 -- 975 925
Stockholders' equity ................... 13,103 10,152 11,321 9,687 11,030 13,538 12,758
PERFORMANCE RATIOS:
Return on average assets(1) ............ .58% 1.27% 1.13% 1.15% .91% 1.95% .88%
Return on average stockholders'
equity(1) ......................... 7.95 19.23 15.17 15.17 9.11 21.90 12.92
Net interest margin(1) ................. 4.99 5.45 5.45 4.74 4.77 5.36 4.64
Efficiency (2) ......................... 87.00 69.65 75.79 76.66 78.08 60.98 74.39
Dividend payout ........................ 70.56 32.28 37.25 38.57 60.05 13.09 21.73
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ......... .03% (.02)% (.03)% .13% (.37)% (.08)% (1.77)%
Problem assets to net loans and
other real estate (3) ............. .02 .03 .19 .09 .62 1.30 .95
Nonperforming assets to net loans
and other real estate (4) ......... .02 .03 .19 .09 .62 1.30 .95
Allowance for loan losses to loans,
net of unearned income ............ 1.00 1.06 1.04 1.08 1.24 1.81 1.64
Allowance for loan losses to
nonperforming assets (4) .......... 579.05 550.68 557.43 1,215.15 201.51 142.04 174.46
11
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Selected Historical Financial Data of First Bancshares - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
(In thousands, except per share data and ratios)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets........................... 7.35% 6.61% 7.23% 7.61% 9.94% 8.89% 6.81%
Average loans to average deposits.......... 56.93 54.18 60.38 58.45 52.72 37.79 23.77
Tier 1 risk-based capital (5).............. 11.05 12.96 10.79 11.96 15.23 24.32 17.86
Total risk-based capital (5)............... 11.81 12.97 11.63 12.92 16.41 26.05 19.10
Tier 1 leverage (5)........................ 6.60 8.02 6.89 7.13 7.90 10.95 6.53
-------------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total assets
is 3% to 5%.
(a) In connection with the exercise of outstanding stock options and stock
appreciation rights in May 2001, First Bancshares recognized compensation
expense of $600,000.
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RISK FACTORS
GENERAL
If the merger is completed, you will receive shares of Regions common
stock in exchange for your shares of First Bancshares common stock unless you
dissent from the merger. You should be aware of particular risks and
uncertainties that are applicable to an investment in Regions common stock.
Specifically, there are risks and uncertainties that bear on Regions' future
financial results and that may cause Regions' future earnings and financial
condition to be less than Regions' expectations.
Some of the risks and uncertainties involved in an investment in
Regions common stock relate to economic conditions generally and would affect
other financial institutions in similar ways. These aspects are discussed in
this proxy statement-prospectus under the heading "Forward-Looking Statements"
on page 58. This section addresses particular risks and uncertainties that are
specific to Regions.
RISKS RELATING TO THE MERGER
FIRST BANCSHARES STOCKHOLDERS MAY RECEIVE SHARES OF REGIONS COMMON STOCK
VALUED AT LESS THAN $26.00 PER SHARE AT THE TIME WE COMPLETE THE MERGER. The
exchange ratio of .589 of a share may be increased based on the average of the
daily last sales prices of Regions common stock over the five full trading days
following the mailing of this proxy statement-prospectus. If such average is
less than $26.00, then the exchange ratio will be increased based on a formula
in the merger agreement. See "The Merger-Possible Adjustment of Exchange Ratio."
However, the exact value of Regions common stock on the date we complete the
merger will not be known until that date. If the market price of Regions common
stock on the date we complete the merger is lower than the average of the daily
last sales prices of Regions common stock used to determine the exchange ratio,
the value of each share of Regions common stock you receive in exchange for your
shares of First Bancshares common stock may be less than $26.00 on the date we
complete the merger or the date you receive your Regions stock certificate. The
trading price of Regions common stock could fluctuate depending upon any number
of reasons, including those specific to Regions and those that influence the
trading prices of equity securities generally. You should be aware that the
value of the Regions common stock you receive in the merger may be less at the
time we complete the merger than at the time the exchange ratio becomes fixed,
whether or not the exchange ratio is adjusted.
REGIONS MAY NOT BE ABLE TO SUCCESSFULLY ASSIMILATE THE OPERATIONS OF
FIRST BANCSHARES' OR OTHER CONTEMPORANEOUS OR FUTURE ACQUIRED ENTITIES INTO
REGIONS' OPERATIONS. Based on its past history, it is likely that Regions will
make acquisitions of other financial institutions both contemporaneously with
the merger and after the merger is completed. These acquisitions involve the
assimilation of companies that have previously operated independently of each
other. Successful assimilation of the operations of First Bancshares' and other
acquired entities will depend primarily on Regions' ability to consolidate
operations, systems and procedures and to reduce costs. Regions may not be able
to assimilate such operations without encountering difficulties, including the
loss of key employees and customers and unexpected problems with operations,
personnel, or technology.
REGIONS' ACQUISITION STRATEGY COULD POSE RISKS OF FUTURE STOCKHOLDER
DILUTION OR REDUCTION OF CAPITAL, WHICH IN TURN COULD REDUCE THE VALUE OF AN
INVESTMENT IN REGIONS COMMON STOCK. Regions has grown
13
20
through acquisitions in recent years, and Regions from time to time evaluates
strategic opportunities in the banking industry and in the related financial
services industries. If Regions makes acquisitions in the future, one or more of
those possible future acquisitions could be material to Regions. Regions may
issue common stock to pay for those future acquisitions, which could dilute the
ownership interest of all Regions stockholders at the time of any such
acquisition. Regions may also use cash or other liquid assets or incur debt to
complete future acquisitions. In those events, Regions could become more
susceptible to economic downturns and competitive pressures.
THE SPECIAL MEETING
GENERAL
This proxy statement-prospectus is being furnished to the stockholders
of First Bancshares of Texas, Inc. in connection with the solicitation by the
First Bancshares board of directors of proxies for use at a special meeting of
stockholders, at which First Bancshares stockholders will be asked to vote upon
a proposal to approve the agreement and plan of merger dated as of August 3,
2001, by and between First Bancshares and Regions Financial Corporation.
Participants in the First Bancshares employee stock ownership plan are entitled
to direct the trustees of the Plan how to vote the shares of First Bancshares'
common stock held by the plan. A separate request for voting instructions
directing the trustees how to vote the shares held by the First Bancshares
employee stock ownership plan will be sent to the participants in the plan.
The special meeting will be held at _______:00 p.m., local time, on
_______, 2001, at the main offices of First Bancshares, located at 2001 Kirby
Drive, Suite 808, Houston, Texas, 77019.
First Bancshares stockholders are requested promptly to sign, date, and
return the accompanying proxy card to First Bancshares in the enclosed
postage-paid, addressed envelope. A stockholder's failure to return a properly
executed proxy card or to vote at the special meeting will have the same effect
as a vote against the merger agreement.
Any First Bancshares stockholder who has delivered a proxy may revoke
it at any time before it is voted by giving notice of revocation in writing or
submitting to First Bancshares a signed proxy card bearing a later date,
provided that such notice or proxy card is actually received by First Bancshares
before the special meeting or in open meeting prior to the taking of the
stockholder vote at the special meeting. Any notice of revocation should be sent
to First Bancshares of Texas, Inc., 2001 Kirby Drive, Suite 808, Houston, Texas,
77019, Attention: Mary Melville, Corporate Secretary. A proxy will not be
revoked by death of the stockholder executing the proxy, or if the stockholder
becomes incompetent after submitting a signed proxy, unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
First Bancshares common stock represented by properly executed proxies received
at or prior to the special meeting and not subsequently revoked will be voted as
directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY
PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME
BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE
GIVEN OR YOU HAVE VOTED AGAINST THE MERGER, THE PROXY HOLDER ALSO MAY VOTE IN
FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING TO PERMIT FURTHER
SOLICITATION OF PROXIES IN ORDER TO OBTAIN SUFFICIENT VOTES TO APPROVE THE
14
21
MERGER AGREEMENT. As of the date of this proxy statement-prospectus, First
Bancshares is unaware of any other matter to be presented at the special
meeting.
First Bancshares will solicit proxies by mail, and possibly by
telephone or telegram or in person by the directors, officers, and employees of
First Bancshares, who will receive no additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and will be reimbursed for their
reasonable out-of-pocket expenses.
First Bancshares stockholders should not forward any stock certificates
with their proxy cards.
RECORD DATE; VOTE REQUIRED
First Bancshares' board of directors has established the close of
business on _______, 2001, as the record date for determining the First
Bancshares stockholders entitled to notice of and to vote at the special
meeting. Only First Bancshares stockholders of record as of the record date will
be entitled to vote at the special meeting. As of the record date, there were
approximately _______ holders of _______ shares of the $1.00 par value common
stock of First Bancshares outstanding and entitled to vote at the special
meeting. Each share is entitled to one vote. For information as to persons known
by First Bancshares to beneficially own more than 5.0% of the outstanding shares
of First Bancshares common stock as of the record date, see "Information About
First Bancshares- Voting Securities and Principal Stockholders."
The presence, in person or by proxy, of a majority of the outstanding
shares of First Bancshares common stock entitled to vote at the special meeting
is necessary to constitute a quorum of the stockholders. A quorum must be
present before a vote on the merger agreement can be taken at the special
meeting. For these purposes, shares of First Bancshares common stock that are
present, or represented by proxy, at the special meeting will be counted for
quorum purposes regardless of whether the holder of the shares or proxy fails to
vote on the merger agreement for any reason, including broker nonvotes.
Generally, a broker who holds shares of First Bancshares common stock in
"street" name on behalf of a beneficial owner lacks authority to vote such
shares in the absence of specific voting instructions from the beneficial owner.
Once a quorum is established, approval of the merger agreement requires
the affirmative vote of the holders of a majority of the outstanding shares of
First Bancshares common stock entitled to vote at the special meeting. A failure
to vote, in person or by proxy, for any reason, including failure to return a
properly executed proxy, an abstention, or a broker nonvote, has the same effect
as a vote against the merger agreement.
The directors and executive officers of First Bancshares and their
affiliates possessed or shared the power to vote, as of the record date, 661,129
shares (or approximately 38.04% of the outstanding shares) of First Bancshares
common stock. The directors of First Bancshares have agreed to vote those shares
of First Bancshares common stock over which they have voting control (other than
as a fiduciary) in favor of the merger. The directors and executive officers of
Regions and their affiliates beneficially owned, as of the record date, no
shares of First Bancshares common stock. As of that date, no subsidiary of
either First Bancshares or Regions held any shares of First Bancshares common
stock as a fiduciary for others.
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THE MERGER
The following material describes certain aspects of the merger of First
Bancshares with and into Regions. This description does not purport to be
complete and is qualified in its entirety by reference to the Appendices hereto,
including the merger agreement, which is attached as Appendix A to this proxy
statement-prospectus and incorporated herein by reference. All stockholders are
urged to read the Appendices in their entirety.
GENERAL
The merger agreement provides generally for the acquisition of First
Bancshares by Regions pursuant to the merger of First Bancshares with and into
Regions, with Regions as the surviving corporation resulting from the merger.
On the date and at the time that the merger becomes effective, each
share of First Bancshares common stock (excluding shares held by First
Bancshares, Regions, or their respective subsidiaries, in each case other than
shares held as a fiduciary or as a result of debts previously contracted, and
excluding all shares held by stockholders who perfect their dissenters' rights)
issued and outstanding at the effective time of the merger will be converted
into .589 of a share of the $.625 par value common stock of Regions, subject to
possible adjustment as described below under the caption "--Possible Adjustment
of Exchange Ratio." Each share of Regions common stock outstanding immediately
prior to the effective time of the merger will remain outstanding and unchanged
as a result of the merger.
No fractional shares of Regions common stock will be issued in
connection with the merger. Instead of Regions issuing fractional shares, each
First Bancshares stockholder will receive a cash payment equal to the fractional
part of a share which the stockholder would otherwise receive multiplied by the
most recent last sale price of Regions common stock on the Nasdaq National
Market (as reported by The Wall Street Journal, or, if not reported thereby, by
another authoritative source selected by Regions), as of the time we complete
the merger.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
If we complete the merger, you will receive .589 of a share of Regions
common stock in exchange for each of your shares of First Bancshares common
stock unless this exchange ratio is adjusted as described below.
If the average of the daily last sales prices of Regions common stock
for the five consecutive full trading days following the mailing of this proxy
statement-prospectus (the "average closing price") is less than $26.00 or
greater than $36.00, then the exchange ratio will be adjusted as follows:
If the average closing price is less than $26.00, then the exchange
ratio shall be increased to the quotient (rounded to the nearest one-thousandth)
obtained by dividing:
the product of $26.00 and the exchange ratio (as then in effect)
by
the "average closing price."
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If the average closing price is greater than $36.00, then the exchange
ratio shall be decreased to the quotient (rounded to the nearest one-thousandth)
obtained by dividing:
the product of $36.00 and the exchange ratio (as then in effect)
by
the "average closing price."
This adjustment formula reflects the parties' intention that, for the
period of time between the date of the merger agreement and the approximate date
of the mailing of this proxy statement-prospectus, First Bancshares'
stockholders will not bear the risk of a decline in the market value of Regions
common stock below $26.00 per share, and will not realize the benefit of an
increase in the market value of Regions common stock above $36.00 per share,
both as measured by the "average closing price" over such five-trading-day
period. This formula is intended to result in you receiving, in exchange for
each share of First Bancshares common stock you own, Regions common stock having
a minimum value that approximates $15.31 and a maximum value that approximates
$21.20 as of the time of the mailing of this proxy statement-prospectus. You
should understand that these amounts are only approximations, because of the
likely difference between the "average closing price" and the trading price of
Regions common stock on any given date.
The operation of the formula can be illustrated by the following three
scenarios.
- If the "average closing price" over such five-trading-day
period were $24.00, then the "average closing price" would be
less than $26.00 so the exchange ratio would be adjusted, and
the new exchange ratio computed pursuant to the formula would
be .638.
- If the "average closing price" over such five-trading-day
period were equal to or greater than $26.00 and equal to or
less than $36.00, then there would be no adjustment and the
exchange ratio would remain at .589.
- If the "average closing price" over such five-trading-day
period were $38.00, then the "average closing price" would be
greater than $36.00 so the exchange ratio would be adjusted,
and the new exchange ratio computed pursuant to the formula
would be .558.
The actual market value of a share of Regions common stock at the time
we complete the merger and at the time certificates for those shares are
delivered following surrender and exchange of certificates for shares of First
Bancshares common stock may be more or less than the "average closing price"
computed prior to the special meeting as described above. Therefore, you bear
the risk of any decline in the market value of Regions common stock after the
exchange ratio becomes fixed, which will occur on or about _______, 2001. We
urge you to obtain current market quotations for Regions common stock. See
"Comparative Market Prices and Dividends."
BACKGROUND OF THE MERGER
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For the last several years and in the normal course of business, First
Bancshares has received inquiries regarding its level of interest in either
acquisition or affiliation with other financial institutions. During these
years, the banking and financial services industry has witnessed significant
developments including increasing use of technology, escalating costs of
providing products and services, and expanding competition from other financial
service institutions.
As the board of directors analyzed the developing market and the
dynamics of First Bancshares, several factors came to light. Based on historical
data and pro forma financials, the continuing asset growth of First Bank of
Texas had created a need for additional capital. Between year-end 1997 and
year-end 2000, First Bank of Texas experienced a 29.86% increase in assets.
During the first six months of 2001, the asset growth was approximately 12.7%.
Since asset size is the basis for capital requirements, it was clear that
capital would have to be increased.
Another factor considered by the directors was the growth of the
northwest Harris County market. There was significant increase not only in
individual customers but also in the number and size of small businesses. As
these small businesses grew, their borrowing needs also increased. Due to the
$2.0 million limitation on the indebtedness to any one borrower caused by its
capital structure, First Bank of Texas was increasingly forced to offer a
limited response to its larger customers. As a result, many customers chose to
go to a financial institution with a larger lending limit.
Changes in the banking laws in recent years have resulted in
competition not only from traditional commercial banks but also from savings
banks and credit unions as well as brokerage companies. All of these types of
institutions are now directly competing with commercial banks for customers of
all sizes. Increasingly, the customer base of First Bank of Texas is becoming
more sophisticated in financial matters and requires an even larger array of
services and products.
As First Bank of Texas has attempted to keep pace with the
technological requirements of the financial world, this has required significant
expense and the development of additional products and services. Increasingly,
the average customer of First Bank of Texas is expecting services with a higher
degree of technology.
The need for additional capital, upgraded technology, and enhanced
products and services caused the directors basically to choose between diluting
the current stockholders by selling more stock to raise additional capital or
finding a partner for First Bancshares. While the fiduciary responsibility of
the board dictated that it pay particular attention to the financial strength of
any other party, it was also extremely important to the directors that any
partner have a culture that would blend with both the customers and employees of
the bank.
The board of directors of First Bancshares sought professional advice
in June 2000 when it retained SAMCO Capital Markets, a division of Service Asset
Management Company ("SAMCO"), as an advisor. The board of directors authorized
SAMCO to contact several financial institutions that management, in
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conjunction with SAMCO, had identified as possible merger partners, to solicit
indications of possible interest in affiliating with First Bancshares. One of
the institutions initially solicited was Regions, which expressed an interest in
pursuing further discussions. After further discussions with Regions'
representatives, the board of directors concluded that the transaction with
Regions was in the best interests of both First Bancshares and its stockholders,
and First Bancshares and Regions proceeded to negotiate a definitive merger
agreement. The board of directors approved the merger agreement, and it was
executed as of August 3, 2001.
FIRST BANCSHARES' REASONS FOR THE MERGER.
In approving the merger, the directors of First Bancshares considered a
number of factors. Without assigning any relative or specific weights to the
factors, the First Bancshares board of directors considered the following
material factors:
- the information presented to the directors by the management of First
Bancshares concerning the business, operations, management earnings,
asset quality, financial condition and future prospects of First
Bancshares and Regions;
- the financial terms of the merger, including the relationship of the
merger price to the prices received by other comparable banking
organizations in other financial institution mergers;
- the nonfinancial terms of the merger, including the treatment of the
merger as a tax-free exchange of First Bancshares common stock for
Regions common stock for federal and state income tax purposes;
- the opinion rendered by First Bancshares' financial advisor to the
effect that, from a financial point of view, the exchange of First
Bancshares common stock for Regions common stock on the terms and
conditions set forth in the merger agreement is fair to the holders of
First Bancshares common stock;
- the increased liquidity that stockholders of First Bancshares will
receive with respect to Regions common stock, which is publicly traded
on the Nasdaq National Market; as there is no current public market for
First Bancshares common stock;
- the prospects for First Bancshares continuing to operate as an
independent community-based banking organization, including increasing
capital requirements, competitive and regulatory burdens, and
technological challenges facing community banks;
- the potential for increased dividends;
- the partial protection afforded to stockholders of First Bancshares in
the event of a decline in the market value of the Regions common stock;
and
- the non-economic terms of the transaction, such as the impact on
existing customers and employees.
The foregoing discussion of the information and factors considered by
the First Bancshares board of directors is not intended to be exhaustive but
includes all material factors considered by the board of directors. In reaching
its determination to approve the merger and the merger agreement, the First
Bancshares board of directors did not assign any relative or specific weights to
the foregoing factors, and individual directors may have given differing weights
to different factors. After deliberating with respect to the merger, and
considering, among other things, the matters discussed above, the First
Bancshares board of directors determined that the merger is in the best
interests of First Bancshares and its
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stockholders and unanimously approved the merger agreement. Each member of the
board of directors of First Bancshares has agreed to vote those shares of First
Bancshares common stock over which such member has voting authority (other than
as a fiduciary) in favor of the merger and the merger agreement.
The terms of the merger were the result of arms-length negotiations
between representatives of First Bancshares and representatives of Regions.
Based upon the consideration of the foregoing factors, the board of directors of
First Bancshares unanimously approved the merger as being in the best interests
of First Bancshares and its stockholders.
First Bancshares' board of directors unanimously recommends that First
Bancshares stockholders vote "FOR" approval of the merger agreement.
REGIONS' REASONS FOR THE MERGER.
In approving the merger agreement and the merger, the Regions board of
directors considered a number of factors concerning the benefits of the merger,
including the following:
- Information Concerning First Bancshares: The Regions board of directors
considered information concerning the business, operations, earnings,
asset quality, and financial condition of First Bancshares, and aspects
of the First Bancshares franchise, including the market position of
First Bancshares in each of the markets in which it operates and the
compatibility of the community bank orientation of the operations of
First Bancshares to that of Regions. The Regions board of directors
concluded that First Bancshares is a sound, well managed financial
institution which is well positioned in its market areas and which
presents an attractive opportunity for Regions to add to its franchise
in the Texas market.
- Financial Terms of the Merger: The Regions board of directors
considered various financial aspects of the merger as reported by
Regions' management including (1) the anticipated effect of the merger
on Regions' per share earnings (with the merger anticipated to have no
significant effect on Regions' earnings per share), (2) the anticipated
effect of the merger on Regions' book value per share (with the merger
anticipated not to dilute significantly Regions' book value per share),
(3) a comparison of First Bancshares to selected peer banks and a
comparison of pricing aspects of the merger to pricing characteristics
of other merger transactions involving financial institutions, and (4)
the accounting treatment of the merger as a purchase.
- Nonfinancial Terms of the Merger: The Regions board of directors
considered various nonfinancial aspects of the merger, including the
treatment of the merger as a tax-free exchange of First Bancshares
common stock for Regions common stock for federal income tax purposes
and the likelihood of the merger being approved by applicable
regulatory authorities without undue conditions or delay.
The foregoing discussion of the information and factors considered by
the Regions board of directors is not intended to be exhaustive but includes all
material factors considered by the Regions board of directors. In reaching its
determination to approve the merger and the merger agreement, the Regions board
of directors did not assign any relative or specific weights to the foregoing
factors, and individual directors may have given differing weights to different
factors. After deliberating with respect to the merger, and considering, among
other things, the matters discussed above, the Regions board of directors
determined that the merger is in the best interests of Regions and its
stockholders and unanimously approved the merger and the merger agreement.
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OPINION OF FIRST BANCSHARES' FINANCIAL ADVISOR
First Bancshares has retained Hoefer & Arnett, Incorporated to act as
financial advisor in connection with the merger. As part of this engagement,
Hoefer & Arnett agreed to render to First Bancshares' board of directors an
opinion with respect to the fairness to the stockholders of the consideration to
be received in the merger from a financial point of view.
First Bancshares' board of directors retained Hoefer & Arnett to render
a fairness opinion because Hoefer & Arnett is a nationally recognized investment
banking firm with substantial expertise in transactions similar to the proposed
transaction and is familiar with First Bancshares and its business. The firm is
a member of the National Association of Securities Dealers (NASD) with direct
access to inter-dealer markets in NASD automated quotation (NASDAQ) and
over-the-counter (OTC) securities, and makes markets in securities under its
symbol "HOFR." As part of its investment banking activities, Hoefer & Arnett is
regularly engaged in the independent valuation of financial institutions and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Hoefer & Arnett has not
previously provided investment banking and financial advisory services to First
Bancshares.
At a meeting of First Bancshares' board of directors on August 3, 2001,
Hoefer & Arnett rendered to First Bancshares' board of directors a verbal
opinion that, as of such date, and subject to various assumptions and matters
considered, the terms of the proposed merger of First Bancshares with and into
Regions were fair to the holders of shares of the common stock of First
Bancshares from a financial point of view. Hoefer & Arnett has confirmed its
August 3, 2001 oral opinion by delivery of its written opinion to First
Bancshares' board of directors, dated the date of this proxy statement, that
based upon and subject to various assumptions, matters considered and
limitations described therein, the terms of the proposed merger of First
Bancshares with and into Regions are fair to the holders of shares of the common
stock of First Bancshares from a financial point of view.
The full text of the Hoefer & Arnett opinion as of the date hereof,
which sets forth certain assumptions made, matters considered, and limits on the
review undertaken, is attached hereto as Appendix B. You are urged to read the
Hoefer & Arnett opinion in its entirety.
No limitations were imposed by First Bancshares' board of directors
upon Hoefer & Arnett with respect to the investigations made or procedures
followed in rendering its opinion. Hoefer & Arnett's opinion is based on the
financial analysis described below. Hoefer & Arnett' s opinion is for the use
and benefit of First Bancshares' board of directors in connection with its
consideration of the proposed transaction. Hoefer & Arnett' s opinion is not
intended to be and does not constitute a recommendation to any First Bancshares
stockholder as to how such stockholder should vote with respect to the proposed
transaction. Hoefer & Arnett' s opinion does not address First Bancshares'
underlying business decision to proceed with the proposed transaction.
In arriving at its opinion, Hoefer & Arnett reviewed and analyzed,
among other things, the following:
- the merger agreement;
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- annual reports to stockholders of First Bancshares for the years ended
December 31, 1999 and December 31, 2000, quarterly reports of condition
and income for the quarters ended June 30, 2000, September 30, 2000,
December 31, 2000, March 31, 2001 and June 30, 2001;
- financial statements for Regions included in its annual reports on Form
10-K for the years ended December 31, 1999 and December 31, 2000,
quarterly reports on Form 10-Q for quarters ended June 30, 2000,
September 30, 2000, December 31, 2000, March 31, 2001 and June 30,
2001;
- financial analyses and forecasts for First Bancshares prepared by
management;
- Hoefer & Arnett held discussions with senior management of First
Bancshares concerning its past and current operations, financial
condition and prospects, as well as the results of regulatory
examinations;
- selected investment research reports on and earnings estimates for
Regions;
- certain other publicly available financial and other information
concerning First Bancshares and Regions;
- the nature and financial terms of certain other merger and acquisition
transactions involving banks and bank holding companies; and
- such other financial studies, analyses and investigations as it deemed
appropriate for purposes of its opinion.
In conducting its review and in arriving at its opinion, Hoefer &
Arnett relied upon and assumed the accuracy and completeness of the financial
and other information provided to it or publicly available, and did not attempt
to independently verify the same. Hoefer & Arnett relied upon the management of
First Bancshares as to the reasonableness of the financial and operating
forecasts, and projections (and the assumptions and bases therefor) provided to
it, and Hoefer & Arnett assumed that such forecasts and projections reflect the
best currently available estimates and judgments of First Bancshares management.
Hoefer & Arnett also assumed, without independent verification, that the
aggregate allowance for loan losses set forth in the financial statements of
First Bancshares and Regions is adequate to cover such losses. Hoefer & Arnett
did not make or obtain any evaluations or appraisals of the properties of First
Bancshares or Regions, nor did it examine any individual loan credit files. For
purposes of its opinion, Hoefer & Arnett assumed that the reorganization will
have the tax, accounting and legal effects described in the Agreement and
relied, as to legal matters, exclusively on counsel to First Bancshares and
Regions, as to the accuracy of the disclosures set forth in the agreement.
Hoefer & Arnett's opinion as expressed herein is limited to the fairness, from a
financial point of view, to the holders of shares of common stock of First
Bancshares with respect to the terms of the proposed merger of First Bancshares
with and into Regions.
As a matter of policy, First Bancshares does not publicly disclose
internal management forecasts, projections or estimates of the type furnished to
Hoefer & Arnett in connection with its analysis of the financial terms of the
proposed transaction, and such forecasts and estimates were not prepared with a
view towards public disclosure. These forecasts and estimates were based on
numerous variables and assumptions which are inherently uncertain and which may
not be within the control of the management of First Bancshares, including
without limitation to, the general economic, regulatory and competitive
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conditions. Accordingly, actual results could vary materially from those set
forth in such forecasts and estimates.
As more fully discussed below, Hoefer & Arnett considered such
financial and other factors as Hoefer & Arnett deemed appropriate under the
circumstances, including among others the following:
- the historical and current financial position and results of operations
of First Bancshares and Regions, including interest income, interest
expense, net interest income, net interest margin, provision for loan
losses, noninterest income, noninterest expense, earnings, dividends,
internal capital generation, book value, intangible assets, return on
assets, return on stockholders' equity, capitalization, the amount and
type of nonperforming assets, loan losses and the reserve for loan
losses, all as set forth in the financial statements for First
Bancshares and Regions;
- the assets and liabilities of First Bancshares and Regions, including
the loan, investment and mortgage portfolios, deposits, other
liabilities, historical and current liability sources and costs and
liquidity; and
- Hoefer & Arnett's assessment of general economic, market and financial
conditions and its experience in other transactions, as well as its
experience in securities valuation and its knowledge of the banking
industry generally.
Hoefer & Arnett's opinion is necessarily based upon conditions as they
existed and can be evaluated on the date of its opinion and the information made
available to it through that date.
In connection with rendering its opinion to First Bancshares' board of
directors, Hoefer & Arnett performed a variety of financial analyses that are
summarized below. Hoefer & Arnett believes that its analyses must be considered
as a whole and that selecting portions of such analyses and the factors
considered therein, without considering all factors and analyses, could create
an incomplete view of the analyses and the processes underlying its opinion. The
preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analysis or summary
description. In its analyses, Hoefer & Arnett made numerous assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which are beyond the control of First Bancshares and Regions.
Any estimates contained in Hoefer & Arnett's analyses are not necessarily
indicative of future results or values, which may be significantly more or less
favorable than such estimates. Estimates of values of companies do not purport
to be appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Except as described below, none of the
financial analyses performed by Hoefer & Arnett was assigned a greater
significance by Hoefer & Arnett than any other.
The following is a summary of the financial analyses performed by
Hoefer & Arnett in connection with providing its opinion.
Summary of Proposal. Hoefer & Arnett reviewed the terms of the proposed
merger as described in the agreement. Pursuant to the agreement, each share of
First Bancshares common stock, excluding shares held by any First Bancshares
company or any Regions company, in each case other than in a fiduciary capacity
or as a result of debts previously contracted, issued and outstanding at the
effective time of the merger shall be converted into .589 of a share of Regions
common stock (subject to adjustment as set forth in the following proviso, the
"exchange ratio"); provided that (1) in the event the average closing
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price is greater than $36.00, the exchange ratio shall be equal to the quotient
(rounded to the nearest thousandth) obtained by dividing (a) the product of
$36.00 and the exchange ratio (as then in effect) by (b) the average closing
price and (2) in the event the average closing price is less than $26.00, the
exchange ratio shall be equal to the quotient (rounded to the nearest
thousandth) obtained by dividing (a) the product of $26.00 and the exchange
ratio (as then in effect) by (b) the average closing price.
Based on 1,737,864 common shares outstanding at First Bancshares, an
exchange ratio of .589 and a market price of $32.00 for Regions, Regions will
issue 1,023,602 shares to stockholders of First Bancshares for a total
transaction value of $32,755,264 or $18.85 per share. A per share price of
$18.85 represents a price to stated book value at June 30, 2001 of 2.50x, a
price to 2000 earnings of 17.51 and a price to total assets of 19.37%.
Analysis of Selected Bank Transactions. Hoefer & Arnett reviewed
certain information relating to selected bank mergers and acquisitions announced
between January 1, 2001 and July 31, 2001 in which the acquired banking
organization was located in Texas (the "selected transactions"). It compared
financial performance ratios at First Bancshares with financial performance
ratios of the banking organizations making up the selected transactions and it
compared the pricing multiples to be paid for First Bancshares with those paid
in the selected transactions. This data was obtained from SNL Securities.
At June 30, 2001, total assets at First Bancshares equaled $169.1
million, which was larger than the median asset size of $89.4 million for the
selected transactions. For the last twelve months ended December 31, 2000, First
Bancshares reported a return on average assets (ROAA) of 0.99% and a return on
average equity (ROAE) of 11.24%. These figures were below the median ratios of
1.22% and 12.68% for ROAA and ROAE, respectively, for the selected transactions.
At June 30, 2001, First Bancshares' equity to assets ratio equaled 7.75%, which
was below the median of 8.96% for the selected transactions.
On the basis of the pricing multiples for the selected transactions,
Hoefer & Arnett calculated a range of purchase prices as a multiple of tangible
book value and earnings, and as a percentage of assets. The chart below shows
the low, high and median for the selected transactions and the resulting price
range for First Bancshares.
Pricing Multiples for Per Share Value
Selected Transactions for First Bancshares
-------------------------------- ----------------------------------
Low High Median Low High Median
----- ----- ------ ------ ------ ------
Price/Book Value 1.31x 3.51x l.66x $ 9.88 $26.47 $12.52
Price/Earnings 9.05 49.53 12.81 9.77 53.49 13.83
Price/Assets 13.55% 23.54% 18.41% $13.19 $22.91 $17.92
Based on the median multiples, this analysis resulted in a range of
imputed values for First Bancshares' common stock of between $12.52 and $17.92,
which is below the transaction value of $18.85 per share.
Present Value Analysis. Hoefer & Arnett calculated the present value of
theoretical future earnings of First Bancshares and compared the transaction
value to the calculated present value of one share of First Bancshares' common
stock on a stand-alone basis. Based on projected earnings for First Bancshares
for 2001 through 2005, a discount rate of 12%, and including a residual value,
the stand-alone present value of First Bancshares' common stock equaled $13.59,
which is below the transaction value of $18.85 per share.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis,
Hoefer & Arnett estimated the net present value of the future streams of
after-tax cash flow that First Bancshares could produce to
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benefit a potential acquiror, referred to below as dividendable net income.
Based on projected earnings for First Bancshares for 2001 through 2005, Hoefer &
Arnett calculated assumed after-tax distributions to a potential acquiror such
that its tier 1 leverage ratio would be maintained at 7.00%. Hoefer & Arnett
calculated the sum of (1) the estimated terminal values per share of First
Bancshares' common stock based on assumed multiples to First Bancshares'
projected 2005 tangible equity and earnings using the multiples to be paid in
the proposed transaction for First Bancshares, plus (2) the assumed 2001 to 2005
dividendable net income streams per share, discounted to present values at an
assumed discount rate of 12%. This discounted cash flow analysis indicated
implied values of $12.03 per share and $15.97 per share.
Pro Forma Analysis. Hoefer & Arnett compared the changes in the amount
of earnings, book value and dividends attributable to one share of First
Bancshares common stock before the merger with the amounts attributable to the
shares of Regions common stock for which such shares of First Bancshares would
be exchanged under the Agreement.
Hoefer & Arnett's analysis analyzed a purchase price of $32.8 million
or $18.85 per share, an exchange ratio of 0.589 to 1 (based upon the closing
share price of Regions common stock on July 31, 2001 of $32.00) and included
pre-tax merger savings of $680,000. On an equity per share basis, First
Bancshares common stockholders are projected to experience appreciation ranging
from 27.12% to 28.88% in the years 2002 through 2005. First Bancshares common
stockholders are projected to experience earnings per share appreciation ranging
from 8.88% to 13.77% in the years 2002 through 2005. On a dividend per share
basis, First Bancshares common stockholders are projected to experience
appreciation of 3.44% in 2002 and slight dilution in subsequent years.
Stock Trading History. Hoefer & Arnett reviewed and analyzed the
historical trading prices and volumes for Regions common stock. In the previous
twelve months, the price for Regions common stock has ranged from a low of
$19.875 to a high of $32.99. A current market price of $32.00 results in a price
to book value of 1.90x and a price to trailing 12 months earnings multiple of
14.41x. The average volume of shares traded on a daily basis is 611,000.
Other Analysis. Hoefer & Arnett reviewed selected investment research
reports on and earnings estimates for Regions. Hoefer & Arnett prepared an
overview of the historical financial performance of First Bancshares and
Regions.
The opinion expressed by Hoefer & Arnett was based upon market,
economic and other relevant considerations as they existed and have been
evaluated as of the date of the opinion. Events occurring after the date of
issuance of the opinion, including but not limited to, changes affecting the
securities markets, the results of operations or material changes in the assets
or liabilities of First Bancshares could materially affect the assumptions used
in preparing the opinion.
In its engagement letter with Hoefer & Arnett, First Bancshares agreed
to pay Hoefer & Arnett $25,000 to review the terms of the transaction and to
render a fairness opinion in connection with the merger.
The foregoing description of the opinion of Hoefer & Arnett is
qualified in its entirety by reference to the full text of such opinion, which
is attached hereto as Appendix B.
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EFFECTIVE TIME OF THE MERGER
After all conditions to the merger are satisfied or waived, Regions
will file a certificate of merger with the Secretary of State of Delaware, and
Regions and First Bancshares will file articles of merger with the Secretary of
State of Texas. The merger will become effective on the date and at the time
specified in such filings, or, if later, the date and time when both the
Delaware certificate of merger has been filed by the Delaware Secretary of State
and a certificate of merger has been issued by the Texas Secretary of State.
Unless otherwise agreed upon by Regions and First Bancshares, and subject to the
satisfaction or waiver of the conditions to the obligations of the parties to
complete the merger, the parties will use their reasonable efforts to complete
the merger not later than the last business day of the month during which the
last of the following events occur: (1) the effective date (including the
expiration of any applicable waiting period) of the last federal or state
regulatory approval required for the merger and (2) the date on which the merger
agreement is approved by the requisite vote of First Bancshares stockholders.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
merger can or will be satisfied. Regions and First Bancshares anticipate that
all conditions to completion of the merger will be satisfied so that the merger
can be completed during the fourth quarter of 2001. However, delays in the
completion of the merger could occur.
The board of directors of either Regions or First Bancshares generally
may terminate the merger agreement if the merger is not completed by March 31,
2002, unless the failure to complete by that date is the result of a breach of
the merger agreement by the party seeking termination. See "-Conditions to
Completion of the Merger" and "-Waiver, Amendment, and Termination of the
Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the effective time of the merger, Regions will cause an
exchange agent selected by Regions to mail to the former stockholders of First
Bancshares a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of First
Bancshares common stock for certificates representing shares of Regions common
stock.
FIRST BANCSHARES STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon
surrender to the exchange agent of certificates for First Bancshares common
stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of First Bancshares common stock surrendering
such items a certificate or certificates representing the number of shares of
Regions common stock to which such holder is entitled, if any, and a check for
the amount to be paid instead of any fractional share interest, without
interest. After the effective time of the merger, to the extent permitted by
law, First Bancshares stockholders of record as of the effective time will be
entitled to vote at any meeting of holders of Regions common stock the number of
whole shares of Regions common stock into which their First Bancshares common
stock has been converted, regardless of whether such stockholders have
surrendered their First Bancshares common stock certificates. No dividend or
other distribution payable after the effective time of the merger with respect
to Regions common stock, however, will be paid to the holder of any
unsurrendered First Bancshares certificate until the holder duly surrenders such
certificate. Upon such surrender, all undelivered dividends and other
distributions and, if applicable, a check for the amount to be paid instead of
any fractional share interest will be delivered to such stockholder, in each
case without interest.
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After the effective time of the merger, a First Bancshares stockholder
will be unable to transfer shares of First Bancshares common stock. If a
certificate representing shares of First Bancshares common stock is presented
for transfer after the completion of the merger, it will be canceled and
exchanged for shares of Regions common stock and a check for the amount due, if
any, instead of a fractional share.
CONDITIONS TO COMPLETION OF THE MERGER
Completion of the merger is subject to a number of conditions,
including, but not limited to:
- the approval of the merger from the Board of Governors of the Federal
Reserve System and the expiration of all applicable waiting periods
associated with such approval, without any conditions or restrictions
(excluding requirements relating to the raising of additional capital
or the disposition of assets or deposits) that would, in the reasonable
good faith judgment of Regions' board of directors, so materially
adversely impact the economic or business benefits of the transactions
contemplated by the merger agreement as to render inadvisable the
completion of the merger;
- the approval of the merger agreement by the holders of the requisite
number of shares of First Bancshares common stock;
- the absence of any action by any court, or governmental authority, or
regulatory authority with appropriate jurisdiction prohibiting,
restraining, or making illegal the completion of the merger and the
other transactions contemplated by the merger agreement; and
- the receipt of a satisfactory opinion of counsel that the merger
qualifies for federal income tax treatment as a reorganization under
Section 368(a) of the Code, with the effects described under "--
Federal Income Tax Consequences of the Merger," including, among
others, that the exchange of First Bancshares common stock for Regions
common stock will not give rise to recognition of gain or loss to First
Bancshares stockholders, except to the extent of any cash received.
Completion of the merger also is subject to the satisfaction or waiver
of various other conditions specified in the merger agreement which are
customary in transactions of this nature, including, among others: (1) the
delivery by Regions and First Bancshares of certificates executed by their
respective duly authorized officers as to the satisfaction of certain conditions
and obligations set forth in the merger agreement and (2) as of the effective
time of the merger, the accuracy under the standard set forth in the merger
agreement of certain representations and warranties and the compliance in all
material respects with the agreements and covenants of each party.
REGULATORY APPROVALS
The merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. It is also possible that
any such approval may be accompanied by a conditional requirement which causes
such approvals to fail to satisfy the conditions set forth in the merger
agreement. Applications for the approvals described below have been submitted to
the appropriate regulatory agencies.
Regions and First Bancshares are not aware of any material governmental
approvals or actions that are required for completion of the merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
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The merger requires the prior approval of the Federal Reserve Board,
pursuant to Section 3 of the Bank Holding Company Act of 1956. In granting its
approval under Section 3 of the Bank Holding Company Act, the Federal Reserve
Board must take into consideration, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. The relevant statutes
prohibit the Federal Reserve Board from approving the merger (1) if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (2) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it would
be a restraint of trade in any other manner, unless the Federal Reserve Board
finds that any anticompetitive effects are outweighed clearly by the public
interest and the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. Under the Bank Holding Company Act,
the merger may not be completed until the 30th day following the date of Federal
Reserve Board approval, which may be shortened by the Federal Reserve Board to
the 15th day, during which time the United States Department of Justice may
challenge the transaction on antitrust grounds. The commencement of any
antitrust action would stay the effectiveness of the Federal Reserve Board's
approval, unless a court specifically orders otherwise.
The merger also is subject to the review of the Texas Department of
Banking.
WAIVER, AMENDMENT, AND TERMINATION OF THE MERGER AGREEMENT
Prior to the effective time of the merger, and to the extent permitted
by law, any provision of the merger agreement generally may be (1) waived by the
party benefitted by the provision or (2) amended by a written agreement between
Regions and First Bancshares approved by their respective boards of directors;
provided, however, that after approval by the First Bancshares stockholders, no
amendment that pursuant to the Texas Business Corporation Act requires further
approval of the First Bancshares stockholders, including decreasing the
consideration to be received by First Bancshares stockholders, may be made
without the further approval of such stockholders.
The merger agreement may be terminated, and the merger abandoned, at
any time prior to the effective time of the merger, either before or after
approval by First Bancshares stockholders, under certain circumstances,
including:
- by mutual consent of the boards of directors of Regions and First
Bancshares;
- by the board of directors of either party upon final denial of any
required consent of any regulatory authority, if such denial is
nonappealable or was not appealed within the time limit for appeal;
- by the board of directors of either party, if the holders of the
requisite number of shares of First Bancshares common stock shall not
have approved the merger agreement;
- by the board of directors of either party (provided the terminating
party is not in material breach of any representation, warranty,
covenant, or agreement included in the merger agreement), in the event
of any inaccuracy in any representation or warranty by the other party
which meets certain standards specified in the merger agreement and
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party;
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- by the board of directors of either party (provided the terminating
party is not in material breach of any representation, or warranty
included in the merger agreement), in the event of a breach by the
other party of any covenant or agreement included in the merger
agreement that cannot be cured within 30 days after giving notice to
the breaching party; and
- by the board of directors of either party if the merger shall not have
been completed by March 31, 2002, but only if the failure to complete
the merger by such date has not been caused by the terminating party's
breach of the merger agreement.
If the merger agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination generally will not relieve the parties from
the consequences of any uncured willful breach of the merger agreement giving
rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of First Bancshares and Regions generally has agreed to operate
its business only in the usual, regular, and ordinary course, and to use its
reasonable best efforts to preserve intact its business organizations and assets
and maintain its rights and franchises. Each has also agreed to take no action
which would materially adversely affect the ability of either party to obtain
any consents required for the merger or to perform its covenants and agreements
under the merger agreement and to complete the merger. However, Regions and its
subsidiaries are not prevented from discontinuing or disposing of any of its
assets or business. Nor is Regions prevented from acquiring or agreeing to
acquire any other entity or any assets thereof, if such action is, in the
judgment of Regions, desirable in the conduct of the business of Regions and its
subsidiaries. In addition, the merger agreement includes certain other
restrictions applicable to the conduct of the business of First Bancshares prior
to completion of the merger, as described below.
First Bancshares. First Bancshares has agreed not to take certain
actions relating to the operation of its business pending completion of the
merger without the prior written consent of Regions, which Regions has agreed it
will not unreasonably withhold. The actions First Bancshares has agreed not to
take are subject in some cases to exceptions for actions in the ordinary course
of business consistent with First Bancshares 's past practice or subject to
exceptions expressly recognized in the merger agreement. The specific agreements
not to take certain actions, including the exceptions and contractually
permitted actions, are set forth in the merger agreement, which is attached as
Appendix A. See Article 7 of the merger agreement. The actions First Bancshares
has agreed not to take are in the general categories of:
- amending its articles of incorporation, bylaws, or other governing
instruments;
- incurring indebtedness in excess of $500,000 or incurring material
liens;
- acquiring any of its outstanding shares of stock or the shares of stock
of its subsidiaries or making distributions in respect to its
outstanding shares, except of the payment of regular dividends
consistent with past practice;
- issuing additional securities;
- reclassifying capital stock or selling or encumbering assets;
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- increasing employees' salaries and benefits or accelerating the vesting
of any stock-based compensation or employee benefits;
- entering into or amending employment contracts;
- adopting employee benefit plans or amending existing plans;
- changing accounting methods or practices;
- commencing or settling litigation; or
- entering into or terminating material contracts.
In addition, First Bancshares has agreed not to solicit, directly or
indirectly, encourage, or facilitate any acquisition proposal from any other
person or entity. First Bancshares also has agreed not to negotiate with respect
to any such proposal, provide nonpublic information to any party making such a
proposal, or enter into any agreement with respect to any such proposal, except
in compliance with the fiduciary obligations of its board of directors. In
addition, First Bancshares has agreed to use reasonable efforts to cause its
officers, directors, affiliates, advisors, and other representatives not to
engage in any of the foregoing activities.
MANAGEMENT FOLLOWING THE MERGER
Upon completion of the merger, the present officers and directors of
Regions will retain their respective positions with Regions. Information
pertaining to the directors and executive officers of Regions, executive
compensation, certain relationships and related transactions, and other related
matters is included in Regions' Annual Report on Form 10-K for the year ended
December 31, 2000, incorporated herein by reference. See "Where You Can Find
More Information."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
W. Allen Gage, the chairman of the board and president of First
Bancshares, has entered into a three year consulting agreement with First Bank
of Texas and Regions. The consulting agreement provides that Mr. Gage will serve
as vice chairman of the board and vice president of First Bank of Texas from the
effective date of the merger through August 31, 2002. On August 31, 2002, Mr.
Gage shall cease serving as vice president but will continue to serve as vice
chairman of First Bank of Texas. During this three year period, Mr. Gage will be
paid based on an annual salary of $250,000, and he will be subject to covenants
not to compete with First Bank of Texas. Pursuant to the consulting agreement,
Mr. Gage will terminate his previous employment agreement with First Bancshares
upon the effectiveness of the merger.
Jim McCutchen, the president of First Bank of Texas, has entered into
an employment agreement with First Bank of Texas and Regions. Pursuant to the
employment agreement, Mr. McCutchen will serve as President of First Bank of
Texas for a period of one year after the effectiveness of the merger. During
this one year period, Mr. McCutchen will be paid based on an annual salary of
$96,000, and he will be subject to covenants not to compete with First Bank of
Texas.
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The merger agreement generally provides that Regions will indemnify and
hold harmless each person entitled to indemnification from First Bancshares or
any of its subsidiaries to the full extent permitted by law, and that such
rights will continue in full force and effect for six years from the effective
time of the merger with respect to matters occurring at or prior to the
effective time.
The merger agreement also requires Regions to use commercially
reasonable efforts to maintain in effect for a period of three years after the
effective time of the merger First Bancshares existing directors' and officers'
liability insurance policy with respect to claims arising from acts or events
which occurred prior to the effective time of the merger. Regions may substitute
policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous.
The merger agreement also provides that, after the effective time of
the merger, Regions will provide generally to officers and employees of First
Bancshares and its subsidiaries who, at or after the effective time, become
officers or employees of Regions or its subsidiaries, employee benefits under
employee benefit plans (other than stock option or other plans involving the
potential issuance of Regions common stock) on terms and conditions that, taken
as a whole, are substantially similar to those currently provided by Regions and
its subsidiaries to their similarly situated officers and employees. For
purposes of participation and vesting (but not benefit accrual) under such
employee benefit plans, service with First Bancshares or its subsidiaries prior
to the effective time of the merger will be treated as service with Regions or
its subsidiaries. The merger agreement further provides that Regions will cause
First Bancshares to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between First Bancshares
or its subsidiaries and any current or former director, officer, or employee,
and all provisions for vested amounts earned or accrued through the effective
time of the merger under First Bancshares' benefit plans.
As of the record date, directors and executive officers of First
Bancshares owned no shares of Regions common stock.
DISSENTING STOCKHOLDERS
Pursuant to the provisions of the Texas Business Corporation Act, if
the merger is consummated, any holder of First Bancshares common stock who (1)
gives to First Bancshares, prior to the special meeting, written objection to
the merger, and (2) does not vote in favor of the merger, shall be entitled to
receive, upon compliance with the statutory requirements summarized below, the
fair value of such holder's shares as of the day immediately preceding the
special meeting, excluding any appreciation or depreciation in anticipation of
the merger.
The written objection requirement referred to above will not be
satisfied under the Texas statutory provisions by merely voting against approval
of the merger agreement by proxy or in person at the special meeting. In
addition to not voting in favor of the merger, a stockholder wishing to preserve
the right to dissent and seek appraisal must give a separate written objection
to the merger, setting out that the stockholder intends to exercise the right of
dissent if the merger is effected. The written objection must also include the
stockholder's address to which notice of the effectiveness of the merger is to
be sent by the surviving corporation. Any written objection with notice of
intent to exercise the right of dissent should be addressed as follows: First
Bancshares of Texas, Inc., 2001 Kirby Drive, Suite 808, Houston, Texas, 77019,
Attention: Corporate Secretary.
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If the merger is effected, within ten days thereafter, Regions, as the
surviving corporation, must deliver or mail to all holders of First Bancshares
common stock who satisfied the foregoing requirements a written notice that the
merger has been effected.
A stockholder of record who receives such notice must make written
demand for payment of the fair value of such holder's shares within ten days
after the delivery or mailing of the notice. Such written demand must state the
number and class of the shares owned by the stockholder and the fair value of
the shares as estimated by the stockholder. Pursuant to the Texas Business
Corporation Act, any stockholder failing to make the written demand within the
ten day period shall be bound by the terms of the merger.
Upon receiving a demand for payment from any dissenting stockholder,
Regions as the surviving corporation shall make an appropriate notation in its
stockholder records. Within 20 days after demanding payment for shares, the
holder of any certificate representing such shares must submit the certificate
to Regions for notation thereon that such demand has been made. Failure to do
so, at the option of Regions, will terminate such stockholder's rights for
valuation and payment of his shares, unless a court of competent jurisdiction
for good and sufficient cause otherwise directs.
Within 20 days after receipt by Regions of a stockholder's written
demand for payment, Regions must mail or deliver to such stockholder a written
notice that either:
- accepts the amount declared in the demand and agrees to pay that amount
within 90 days after the effective date of the merger and upon
surrender of the stockholder's certificate representing the shares; or
- states Regions' estimate of the fair value of the shares and offers to
pay the amount of that estimate within 90 days after the effective date
of the merger and upon surrender of the stockholder's certificate
representing the shares.
If within 60 days after the effective date of the merger the value of
the shares is agreed upon between Regions and a dissenting stockholder, Regions
is to make payment for the shares within 90 days after the effective date of the
merger and upon surrender of the stockholder's certificate representing the
shares. Upon payment of the agreed value, the stockholder shall cease to have
any interest in the shares.
If a dissenting stockholder and Regions have not agreed upon the fair
value of the shares within 60 days after the effective date of the merger, then
either the stockholder or Regions may file a petition in any court of competent
jurisdiction in Harris County, Texas, asking for a finding and determination of
the fair value of the shares. If filed by a stockholder, service of the petition
shall be had upon Regions as the surviving corporation and Regions must within
10 days after service file with the clerk of court a list with the names and
addresses of all stockholders who have demanded payment and not reached
agreement as to the fair value. If filed by Regions, the petition must be
accompanied by such a list. The clerk of court shall give notice to Regions and
all stockholders named on the list of the time and place fixed for the hearing
of the petition.
After the hearing of the petition, the court shall determine the
stockholders who have complied with the statutory requirements and have become
entitled to the valuation of and payment for their shares, and the court shall
appoint one or more qualified appraisers to determine the value. The appraisers
may examine the books and records of First Bancshares, and shall afford the
interested parties a reasonable
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opportunity to submit pertinent evidence. The appraisers are to make a
determination of the value upon such examination as they deem proper.
The appraisers shall file a report of the value in the office of the
clerk of court, notice of which shall be given to the parties in interest. The
parties in interest may submit exceptions to the report, which will be heard
before the court upon the law and the facts. The court shall adjudge the fair
value of the shares of the stockholders entitled to payment for their shares and
shall direct the payment thereof by Regions as the surviving corporation,
together with interest beginning 91 days after the effective date of the merger.
However, the judgment shall be payable only upon and simultaneously with
surrender of the certificates representing the shares, duly endorsed. Upon
Regions' payment of the judgment, the dissenting stockholders shall cease to
have any interest in the shares.
The court shall allow the appraisers a reasonable fee as court costs,
and all court costs shall be allotted among the parties in the manner that the
court determines to be fair and equitable, with the respective parties to bear
their own attorneys fees.
Any stockholder who has demanded payment for such holder's shares may
withdraw such demand at any time before payment or before any petition has been
filed for valuation by the court. A demand may not be withdrawn after payment
or, unless Regions consents, after such a petition has been filed in court.
After a demand has been withdrawn, the stockholder and all claiming under the
stockholder shall be conclusively presumed to have approved the merger and shall
be bound thereby.
The foregoing is a summary of the material rights of a dissenting
stockholder of First Bancshares, but is qualified in its entirety by reference
to Articles 5.11, 5.12, and 5.13 of the Texas Business Corporation Act, included
in Appendix C to this proxy statement-prospectus. It is not intended to expand
or alter any right of dissent or payment to any stockholder and should not be so
read. Stockholders' rights of dissent and payment are limited to those provided
by law. Any First Bancshares stockholder who intends to exercise the right to
dissent from the merger should carefully review the text of such provisions and
should also consult with such holder's attorney. No further notice of the events
giving rise to dissenters' rights or any steps associated therewith will be
furnished to First Bancshares stockholders, except as indicated above or
otherwise required by law.
Any dissenting First Bancshares stockholder who perfects such holder's
right to be paid the value of such holder's shares will recognize taxable gain
or loss upon receipt of cash for such shares for federal income tax purposes.
See "-Federal Income Tax Consequences of the Merger."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO HOLDERS OF FIRST BANCSHARES COMMON STOCK. THIS
DISCUSSION MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS FIRST BANCSHARES
STOCKHOLDERS, IF ANY, WHO HOLD FIRST BANCSHARES COMMON STOCK OTHER THAN AS A
CAPITAL ASSET, WHO RECEIVED FIRST BANCSHARES COMMON STOCK UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, WHO HOLD FIRST BANCSHARES
COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION TRANSACTION," OR WHO ARE
INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR FOREIGN
PERSONS, AND DOES NOT DISCUSS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN TAXATION.
THIS DISCUSSION IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN
EFFECT AND ON PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY
WITH RETROACTIVE EFFECT) BY
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LEGISLATION, ADMINISTRATIVE ACTION, OR JUDICIAL DECISION. NO RULING HAS BEEN OR
WILL BE REQUESTED FROM THE INTERNAL REVENUE SERVICE ON ANY MATTER RELATING TO
THE TAX CONSEQUENCES OF THE MERGER.
Completion of the merger is conditioned upon receipt by Regions and
First Bancshares of an opinion from Alston & Bird LLP, special counsel to
Regions, concerning the material federal income tax consequences of the merger.
Based upon the assumption that the merger is completed in accordance with the
merger agreement and upon factual statements and factual representations made by
Regions and First Bancshares, it is such firm's opinion that:
1. The merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 (the "Code").
2. No gain or loss will be recognized by holders of First Bancshares
common stock who exchange in the merger of all of their First Bancshares common
stock solely for Regions common stock pursuant to the merger (except with
respect to any cash received in lieu of fractional share interests in Regions
common stock).
3. The tax basis of the Regions common stock received (including
fractional shares deemed received and redeemed) by holders of First Bancshares
common stock who exchange all of their First Bancshares common stock solely for
Regions common stock in the merger will be the same as the tax basis of the
First Bancshares common stock surrendered in exchange for the Regions common
stock (reduced by an amount allocable to a fractional share interest in Regions
common stock deemed received and redeemed).
4. The holding period of the Regions common stock received (including
fractional shares deemed received and redeemed) by holders of First Bancshares
common stock who exchange all of their First Bancshares common stock solely for
Regions common stock in the merger will be the same as the holding period of the
First Bancshares common stock surrendered in exchange therefor, provided that
such First Bancshares common stock is held as a capital asset at the effective
time of the merger.
5. The payment of cash to holders of First Bancshares common stock in
lieu of fractional share interests of Regions common stock will be treated for
federal income tax purposes as if the fractional shares were distributed as part
of the exchange and then were redeemed by Regions. These cash payments will be
treated as having been received as distributions in full payment in exchange for
the Regions common stock redeemed, as provided in Section 302(a) of the Code.
6. Where solely cash is received by a holder of First Bancshares common
stock in exchange for First Bancshares common stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of such holder's First Bancshares common stock, subject to the
provisions and limitations of Section 302 of the Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER
TAX CONSEQUENCES OF THE MERGER. FIRST BANCSHARES STOCKHOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX REPORTING REQUIREMENTS AND TAX
CONSEQUENCES UNDER STATE, LOCAL, AND FOREIGN LAW.
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ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
"purchase," as that term is used pursuant to accounting principles generally
accepted in the United States, for accounting and financial reporting purposes.
Under the purchase method of accounting, the assets and liabilities of First
Bancshares as of the effective time of the merger will be recorded at their
estimated respective fair values and added to those of Regions. Financial
statements of Regions issued after the effective time will reflect such values
and will not be restated retroactively to reflect the historical financial
position or results of operations of First Bancshares.
EXPENSES AND FEES
The merger agreement provides, in general, that each of the parties
will bear and pay its own expenses in connection with the transactions
contemplated by the merger agreement, including fees and expenses of its own
financial or other consultants, investment bankers, accountants, and counsel,
except that Regions will bear and pay all of the filing fees and one-half of the
printing costs in connection with this proxy statement-prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions common stock to be issued to First Bancshares stockholders
in the merger has been registered under the Securities Act of 1933, but that
registration does not cover resales of those shares by persons who control, are
controlled by, or are under common control with, First Bancshares (such persons
are referred to hereinafter as "affiliates" and generally include executive
officers, directors, and 10% stockholders) at the time of the special meeting.
Affiliates may not sell shares of Regions common stock acquired in connection
with the merger, except pursuant to an effective registration statement under
the Securities Act or in compliance with Rule 145 promulgated under the
Securities Act or in accordance with a legal opinion satisfactory to Regions
that such sale or transfer is otherwise exempt from the Securities Act
registration requirements.
Rule 145 promulgated under the Securities Act restricts the sale of
Regions common stock received in the merger by affiliates and certain of their
family members and related interests. Under the rule, during the one-year period
following the effective time of the merger, affiliates of First Bancshares may
resell publicly the Regions common stock received by them in the merger subject
to certain limitations as to the amount of Regions common stock sold in any
three-month period and as to the manner of sale, and subject to the timeliness
of Regions' periodic reporting obligations with the Securities and Exchange
Commission. After the one-year period and within two years following the
effective time of the merger, affiliates of First Bancshares who are not
affiliates of Regions may effect such resales subject only to the timeliness of
Regions' periodic reporting requirements. After two years, such affiliates of
First Bancshares who are not affiliates of Regions may resell their shares
without restriction. Persons who are affiliates of Regions after the effective
time of the merger may publicly resell the Regions common stock received by them
in the merger subject to similar limitations and subject to certain filing
requirements specified in SEC Rule 144. Affiliates will receive additional
information regarding the effect of Rule 145 on their ability to resell Regions
common stock received in the merger. Affiliates also would be permitted to
resell Regions common stock received in the merger pursuant to an effective
registration statement under the Securities Act or an available exemption from
the Securities Act registration requirements. This proxy statement-prospectus
does not cover any resales of Regions common stock received by persons who may
be deemed to be affiliates of First Bancshares or Regions.
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Each person who First Bancshares reasonably believes is an affiliate of
First Bancshares has delivered to Regions a written agreement providing that
such person generally will not sell, pledge, transfer, or otherwise dispose of
any Regions common stock to be received by such person upon completion of the
merger, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the merger, holders of First Bancshares common stock
will be exchanging their shares of a Texas corporation governed by the Texas
Business Corporation Act and First Bancshares' articles of incorporation, as
amended, and bylaws, for shares of Regions, a Delaware corporation governed by
the Delaware General Corporation Law and Regions' certificate of incorporation
and bylaws. Certain significant differences exist between the rights of First
Bancshares stockholders and those of Regions stockholders. The material
differences are summarized below. In particular, Regions' certificate of
incorporation and bylaws contain several provisions that under certain
circumstances may have an antitakeover effect in that they could impede or
prevent an acquisition of Regions unless the potential acquirer has obtained the
approval of Regions' board of directors. The following discussion is necessarily
general; it is not intended to be a complete statement of all differences
affecting the rights of stockholders and their respective entities, and it is
qualified in its entirety by reference to the Texas Business Corporation Act and
the Delaware General Corporation Law as well as to Regions' certificate of
incorporation and bylaws and First Bancshares' articles of incorporation and
bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Regions' certificate of incorporation and bylaws
described below under the headings, "-Authorized Capital Stock," "-Amendment of
Certificate or Articles of Incorporation and Bylaws," "-Classified Board of
Directors and Absence of Cumulative Voting," "-Removal of Directors,"
"-Limitations on Director Liability," "-Special Meetings of Stockholders,"
"-Actions by Stockholders Without a Meeting," "-Stockholder Nominations," and
"-Mergers, Consolidations, and Sales of Assets Generally," and the provisions of
the Delaware General Corporation Law described under the heading "-Business
Combinations With Certain Persons," are referred to herein as the "protective
provisions." In general, one purpose of the protective provisions is to assist
Regions' board of directors in playing a role in connection with attempts to
acquire control of Regions, so that the board of directors can further and
protect the interests of Regions and its stockholders as appropriate under the
circumstances, including, if the board of directors determines that a sale of
control is in their best interests, by enhancing the board of directors' ability
to maximize the value to be received by the stockholders upon such a sale.
Although Regions' management believes the protective provisions are,
therefore, beneficial to Regions' stockholders, the protective provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the protective provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
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The protective provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Regions
common stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the protective
provisions may decrease the market price of Regions common stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The protective provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the board of directors and
management. Furthermore, the protective provisions may make it more difficult
for Regions' stockholders to replace the board of directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the protective provisions may tend to
perpetuate the incumbent board of directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The certificate of incorporation authorizes the issuance of up
to 500,000,000 shares of Regions common stock and 5,000,000 shares of preferred
stock. At June 30, 2001, 229,133,874 shares of Regions common stock were issued,
including 1,500,000 treasury shares, and 227,633,874 shares were issued and
outstanding. No shares of preferred stock have been issued. Regions' board of
directors may authorize the issuance of additional shares of Regions common
stock or preferred stock without further action by Regions' stockholders, unless
such action is required in a particular case by applicable laws or regulations
or by any stock exchange upon which Regions' capital stock may be listed. The
certificate of incorporation does not provide preemptive rights to Regions
stockholders.
The authority to issue additional shares of Regions capital stock
provides Regions with the flexibility necessary to meet its future needs without
the delay resulting from seeking stockholder approval. The authorized but
unissued shares of Regions common stock will be issuable from time to time for
any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Regions.
In addition, the sale of a substantial number of shares of Regions common stock
to persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
common stock (or the right to receive Regions common stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions. Regions has committed not to
issue shares of preferred stock for any anti-takeover purpose, including any
purpose to make a change in control of Regions more costly or difficult.
First Bancshares. First Bancshares' authorized capital stock consists
of 100,000,000 shares of First Bancshares common stock, and 10,000,000 shares of
preferred stock issuable in series as determined by the board of directors of
First Bancshares. As of the record date, there were 1,737,864 shares of First
Bancshares common stock issued and outstanding, and no shares of First
Bancshares preferred stock were issued and outstanding.
Pursuant to the Texas Business Corporation Act, First Bancshares' board
of directors may authorize the issuance of additional shares of First Bancshares
common stock or preferred stock without further action by First Bancshares'
stockholders. First Bancshares' articles of incorporation, as amended, do not
provide the stockholders of First Bancshares with preemptive rights to purchase
or subscribe to any unissued authorized shares of First Bancshares common stock
or preferred stock or any option or warrant for the purchase thereof.
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AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware General Corporation Law generally provides that
the approval of a corporation's board of directors and the affirmative vote of a
majority of (1) all shares entitled to vote thereon and (2) the shares of each
class of stock entitled to vote thereon as a class is required to amend a
corporation's certificate of incorporation, unless the certificate specifies a
greater voting requirement. The certificate of incorporation states that its
provisions regarding authorized capital stock, election, classification, and
removal of directors, the approval required for certain business combinations,
meetings of stockholders, and amendment of the certificate of incorporation and
bylaws may be amended or repealed only by the affirmative vote of the holders of
at least 75% of the outstanding shares of Regions common stock.
The certificate of incorporation also provides that the board of
directors has the power to adopt, amend, or repeal the bylaws. Any action taken
by the stockholders with respect to adopting, amending, or repealing any bylaws
may be taken only upon the affirmative vote of the holders of at least 75% of
the outstanding shares of Regions common stock.
First Bancshares. The Texas Business Corporation Act generally provides
that a Texas corporation's articles of incorporation may be amended by the
affirmative vote of at least two-thirds of the shares entitled to vote thereon,
unless the articles of incorporation provide for a higher or lower voting
requirement. First Bancshares' articles of incorporation include special
provisions relating to amendment of the articles of incorporation which allow
the affirmative vote of a majority of the shares entitled to vote to amend the
articles of incorporation.
The board of directors has the power to adopt, amend, or repeal the
bylaws by a majority vote, subject to the right of the stockholders by majority
vote to adopt, amend, or repeal the bylaws by majority vote.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. The certificate of incorporation provides that Regions' board
of directors is divided into three classes, with each class to be as nearly
equal in number as possible. The directors in each class serve three-year terms
of office.
The effect of Regions' having a classified board of directors is that only
approximately one-third of the members of the board of directors are elected
each year; consequently, two annual meetings are effectively required for
Regions' stockholders to change a majority of the members of the board of
directors.
Pursuant to the certificate of incorporation, each stockholder
generally is entitled to one vote for each share of Regions stock held and is
not entitled to cumulative voting rights in the election of directors. With
cumulative voting, a stockholder has the right to cast a number of votes equal
to the total number of such holder's shares multiplied by the number of
directors to be elected. The stockholder has the right to cast all of such
holder's votes in favor of one candidate or to distribute such holder's votes in
any manner among any number of candidates. Directors are elected by a plurality
of the total votes cast by all stockholders. With cumulative voting, it may be
possible for minority stockholders to obtain representation on the board of
directors. Without cumulative voting, the holders of more than 50% of the shares
of Regions common stock generally have the ability to elect 100% of the
directors. As a result, the holders of the remaining Regions common stock
effectively may not be able to elect any person to the
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board of directors. The absence of cumulative voting, therefore, could make it
more difficult for a stockholder who acquires less than a majority of the shares
of Regions common stock to obtain representation on Regions' board of directors.
First Bancshares. First Bancshares' articles of incorporation do not
provide for a classified board of directors. Holders of First Bancshares common
stock are not afforded cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under the certificate of incorporation, any director or the
entire board of directors may be removed only for cause and only by the
affirmative vote of the holders of at least 75% of Regions' voting stock.
First Bancshares. Pursuant to First Bancshares' bylaws, any director or
the entire board of directors may be removed, with or without cause, by a vote
of the holders of a majority of the shares entitled to vote on the election of
directors.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The certificate of incorporation provides that a director of
Regions will have no personal liability to Regions or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability for (1) any breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (3) the payment of
certain unlawful dividends and the making of certain unlawful stock purchases or
redemptions, or (4) any transaction from which the director derived an improper
personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the likelihood
of stockholder derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duties, even though such action, if successful, might have
benefitted Regions and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
First Bancshares. The Texas Miscellaneous Corporation Laws Act provides
for, and First Bancshares' articles of incorporation include, a similar
provision, although somewhat more limited, limiting a director's personal
liability for money damages arising out of a breach of duty.
INDEMNIFICATION
Regions. The certificate of incorporation provides that Regions will
indemnify its officers, directors, employees, and agents to the full extent
permitted by the Delaware General Corporation Law. Under Section 145 of the
Delaware General Corporation Law as currently in effect, other than in actions
brought by or in the right of Regions, such indemnification would apply if it
were determined in the specific case that the proposed indemnitee acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of Regions and, with respect to any criminal proceeding, if
such person
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had no reasonable cause to believe that the conduct was unlawful. In actions
brought by or in the right of Regions, such indemnification probably would be
limited to reasonable expenses (including attorneys' fees) and would apply if it
were determined in the specific case that the proposed indemnitee acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of Regions, except that no indemnification may be made with
respect to any matter as to which such person is adjudged liable to Regions,
unless, and only to the extent that, the court determines upon application that,
in view of all the circumstances of the case, the proposed indemnitee is fairly
and reasonably entitled to indemnification for such expenses as the court deems
proper. To the extent that any director, officer, employee, or agent of Regions
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
First Bancshares. The Texas Business Corporation Act and First Bancshares'
articles of incorporation provide for indemnification of its directors,
officers, employees, and agents in substantially the same manner and with
substantially the same effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' certificate of incorporation and bylaws provide that
special meetings of stockholders may be called at any time, but only by the
chief executive officer, the secretary, or the board of directors of Regions.
Regions stockholders do not have the right to call a special meeting or to
require that Regions' board of directors call such a meeting. This provision,
combined with other provisions of the certificate of incorporation and the
restriction on the removal of directors, would prevent a substantial stockholder
from compelling stockholder consideration of any proposal (such as a proposal
for a business combination) over the opposition of Regions' board of directors
by calling a special meeting of stockholders at which such stockholder could
replace the entire board of directors with nominees who were in favor of such
proposal.
First Bancshares. Under First Bancshares' bylaws, a special meeting of
First Bancshares stockholders may be called by the president, board of
directors, or the holders of not less than 10.0% of the shares entitled to vote
at the meeting.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The certificate of incorporation provides that any action
required or permitted to be taken by Regions stockholders must be effected at a
duly called meeting of stockholders and may not be effected by any written
consent by the stockholders. These provisions would prevent stockholders from
taking action, including action on a business combination, except at an annual
meeting or special meeting called by the board of directors, chief executive
officer, or secretary, even if a majority of the stockholders were in favor of
such action.
First Bancshares. Under the Texas Business Corporation Act and First
Bancshares' bylaws, any action requiring or permitting stockholder approval may
be approved by written consent of stockholders holding all of the shares of
First Bancshares common stock outstanding.
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STOCKHOLDER NOMINATIONS
Regions. Regions' certificate of incorporation and bylaws provide that
any nomination by stockholders of individuals for election to the board of
directors must be made by delivering written notice of such nomination (the
"Nomination Notice") to the Secretary of Regions not less than 14 days nor more
than 50 days before any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days notice of the meeting is
given to stockholders, the Nomination Notice must be delivered to the Secretary
of Regions not later than the seventh day following the day on which notice of
the meeting was mailed to stockholders. The Nomination Notice must set forth
certain background information about the persons to be nominated, including
information concerning (1) the name, age, business, and, if known, residential
address of each nominee, (2) the principal occupation or employment of each such
nominee, and (3) the number of shares of Regions capital stock beneficially
owned by each such nominee. The board of directors is not required to nominate
in the annual proxy statement any person so proposed; however, compliance with
this procedure would permit a stockholder to nominate the individual at the
stockholders' meeting, and any stockholder may vote such holder's shares in
person or by proxy for any individual such holder desires.
First Bancshares. First Bancshares' articles of incorporation and
bylaws do not provide for special nominating procedures for election of
directors.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The certificate of incorporation generally requires the
affirmative vote of the holders of at least 75% of the outstanding voting stock
of Regions to effect (1) any merger or consolidation with or into any other
corporation, or (2) any sale or lease of any substantial part of the assets of
Regions to any party that beneficially owns 5.0% or more of the outstanding
shares of Regions voting stock, unless the transaction was approved by Regions'
board of directors before the other party became a 5.0% beneficial owner or is
approved by 75% or more of the board of directors after the party becomes such a
5.0% beneficial owner. In addition, the Delaware General Corporation Law
generally requires the approval of a majority of the outstanding voting stock of
Regions to effect (1) any merger or consolidation with or into any other
corporation, (2) any sale, lease, or exchange of all or substantially all of
Regions property and assets, or (3) the dissolution of Regions. However,
pursuant to the Delaware General Corporation Law, Regions may enter into a
merger transaction without stockholder approval if (1) Regions is the surviving
corporation, (2) the agreement of merger does not amend in any respect Regions'
certificate of incorporation, (3) each share of Regions stock outstanding
immediately prior to the effective date of the merger is to be an identical
outstanding or treasury share of Regions after the effective date of the merger,
and (4) either no shares of Regions common stock and no shares, securities, or
obligations convertible into such stock are to be issued or delivered under the
plan of merger, or the authorized unissued shares or the treasury shares of
Regions common stock to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other shares, securities, or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of Regions common stock outstanding immediately prior to the effective
date of the merger.
First Bancshares. The Texas Business Corporation Act generally requires
approval of at least two-thirds of the outstanding shares of a corporation's
voting stock to approve a merger, consolidation, share exchange, sale of all or
substantially all of the corporation's assets, or similar corporate transaction.
The corporation's board of directors by resolution may require a different
percentage of votes necessary for
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approval. First Bancshares articles of incorporation provide that a majority of
the outstanding shares of voting stock may approve such a transaction.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware General Corporation Law ("Section
203") places certain restrictions on "business combinations" (as defined in
Section 203 to include, generally, mergers, sales and leases of assets,
issuances of securities, and similar transactions) by Delaware corporations with
an "interested stockholder" (as defined in Section 203 to include, generally,
the beneficial owner of 15% or more of the corporation's outstanding voting
stock). Section 203 generally applies to Delaware corporations, such as Regions,
that have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotation system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
Regions has not specifically elected to avoid the application of
Section 203. As a result, Section 203 generally would prohibit a business
combination by Regions or a subsidiary with an interested stockholder within
three years after the person or entity becomes an interested stockholder, unless
(1) prior to the time when the person or entity becomes an interested
stockholder, Regions' board of directors approved either the business
combination or the transaction pursuant to which such person or entity became an
interested stockholder, (2) upon completion of the transaction in which the
person or entity became an interested stockholder, the interested stockholder
held at least 85% of the outstanding Regions voting stock (excluding shares held
by persons who are both officers and directors and shares held by certain
employee benefit plans), or (3) once the person or entity becomes an interested
stockholder, the business combination is approved by Regions' board of directors
and by the holders of at least two-thirds of the outstanding Regions voting
stock, excluding shares owned by the interested stockholder.
First Bancshares. Certain corporations in Texas are subject to the
Texas Business Combination Law, which imposes similar restrictions on certain
business combinations between the corporation and an interested stockholder.
First Bancshares is subject to the Texas Business Combination Law.
DISSENTERS' RIGHTS
Regions. The rights of dissenting stockholders of Regions are governed
by the Delaware General Corporation Law. Pursuant thereto, except as described
below, any stockholder has the right to dissent from any merger of which Regions
could be a constituent corporation. No appraisal rights are available, however,
for (1) the shares of any class or series of stock that is either listed on a
national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders or (2) any shares of stock of the
constituent corporation surviving a merger if the merger did not require the
approval of the surviving corporation's stockholders, unless, in either case,
the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (a) shares of stock
of the corporation surviving or resulting from the merger or consolidation; (b)
shares of stock of any other corporation that will be listed at the effective
date of the merger on a national securities exchange, quoted on the Nasdaq
National Market, or held of record by more than 2,000 stockholders; (c) cash
instead of fractional shares of stock described in clause (a) or (b) immediately
above; or (d) any combination of the shares of stock and cash instead of
fractional shares described in clauses (a) through (c) immediately above.
Because Regions common stock is quoted on the Nasdaq National Market and is held
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of record by more than 2,000 stockholders, unless the exception described
immediately above applies, holders of Regions common stock do not have
dissenters' rights.
First Bancshares. A summary of the pertinent provisions of the Texas
Business Corporation Act pertaining to dissenters' rights is set forth under the
caption "The Merger--Dissenting Stockholders," and such provisions are included
as Appendix C.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware General Corporation Law provides that a
stockholder may inspect books and records upon written demand under oath stating
the purpose of the inspection, if such purpose is reasonably related to such
person's interest as a stockholder.
First Bancshares. Pursuant to the Texas Business Corporation Act, upon
written notice of a demand to inspect corporate records and demonstration of a
proper purpose, a stockholder who has held shares of First Bancshares common
stock for at least six months or holds 5% or more of the outstanding shares of
First Bancshares common stock is entitled to inspect specified corporate
records, including accounting records, minutes of stockholder meetings and
certain resolutions adopted at director meetings, and stockholder records.
DIVIDENDS
Regions. The Delaware General Corporation Law provides that, subject to
any restrictions in the corporation's certificate of incorporation, dividends
may be declared from the corporation's surplus, or, if there is no surplus, from
its net profits for the fiscal year in which the dividend is declared and the
preceding fiscal year. Dividends may not be declared, however, if the
corporation's capital has been diminished to an amount less than the aggregate
amount of all capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets. Substantially all
of the funds available for the payment of dividends by Regions are derived from
its subsidiary depository institutions. There are various statutory limitations
on the ability of Regions' subsidiary depository institutions to pay dividends
to Regions. See "Supervision and Regulation-Payment of Dividends."
First Bancshares. Pursuant to the Texas Business Corporation Act, a
board of directors may from time to time make distributions to its stockholders,
subject to restrictions in its articles of incorporation, provided that no
distribution may be made if, after giving it effect, (1) the corporation would
be insolvent, or (2) the distribution exceeds the corporation's surplus. There
are no specific restrictions regarding payment of dividends contained in First
Bancshares' articles of incorporation. Substantially all of the funds available
for the payment of dividends by First Bancshares are derived from its banking
subsidiary, First Bank of Texas. There are various statutory limitations on the
ability of First Bank of Texas to pay dividends to First Bancshares.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." First Bancshares common stock is not traded in any established
market. The following table sets forth, for the indicated periods, the high and
low closing sale prices for Regions common stock as reported on the Nasdaq
National Market, the high and low prices of First Bancshares common stock based
on the transactions known to First Bancshares management, and the cash dividends
declared per share of Regions and First Bancshares common stock. For the
indicated period there has been only a very limited number of transactions in
First Bancshares common stock and all such transactions have involved limited
numbers of shares.
REGIONS FIRST BANCSHARES
PRICE RANGE CASH DIVIDENDS CASH DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- ---------
1999
First Quarter................. $ 41.44 $ 34.63 $ .25 15.75 14.00 $.10
Second Quarter................ 39.13 34.72 .25 14.62 12.50 .10
Third Quarter................. 38.94 29.81 .25 13.25 12.87 .10
Fourth Quarter................ 31.25 23.38 .25 13.37 12.87 .10
2000
First Quarter ................ 24.31 18.44 .27 13.62 13.00 .10
Second Quarter................ 24.50 19.19 .27 13.37 12.00 .10