-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GIrOIB1evADzpaGcxrugtHWYEQn5QGghkrHvnphZz0o/pNUqT+NU9YnZho3mFr6r FJxWr+R0l2Ij0fL4QvggwA== 0000906280-95-000051.txt : 19950612 0000906280-95-000051.hdr.sgml : 19950612 ACCESSION NUMBER: 0000906280-95-000051 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19950609 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDSOUTH BANCORP INC CENTRAL INDEX KEY: 0000745981 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 721020809 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-58499 FILM NUMBER: 95546333 BUSINESS ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 BUSINESS PHONE: 3182378343 MAIL ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 S-4/A 1 As filed with the Securities and Exchange Commission on June 9, 1995 Registration No. 33-58499 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MidSouth Bancorp, Inc. (Exact name of registrant as specified in its charter)
Louisiana 6711 72-1020809 (State or other (Primary Standard Industrial (I.R.S. Employer jurisdiction of incorporation Classification Code Number) Identification Number) or organization) 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 (318) 237-8343 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Copy to: C. R. CLOUTIER Copy to: ANTHONY J. CORRERO, III P. O. Box 3745 ALAN JACOBS Correro, Fishman & Casteix, L.L.P. Lafayette, Louisiana 70502 McGlinchey Stafford Lang 47th Floor (318) 237-8343 A Professional Limited Liability Company 201 St. Charles Avenue (Name, address, including zip 2777 Stemmons Freeway New Orleans, Louisiana 70170-4700 code, and telephone number Suite 925 including area code, of agent Dallas, Texas 75207 for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the date of the shareholders' meeting of Sugarland Bancshares, Inc. described in this registration statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. MIDSOUTH BANCORP, INC. CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus A. Information About the Transaction 1. Forepart of Registration Statement Cover Page and Outside Front Cover Page of Prospectus 2. Inside Front and Outside Back Cover Inside Cover; Table of Contents Pages of Prospectus 3. Risk Factors, Ratio of Earnings to * Fixed Charges and Other Information 4. Terms of Transaction Summary; The Plan 5. Pro Forma Financial Information MidSouth Bancorp, Inc. Pro Forma Condensed Combined Financial Statements (Unaudited) 6. Material Contacts with the Company * Being Acquired 7. Additional Information Required for * Reoffering by Persons and Parties Deemed to be Underwriters 8. Interests of Named Experts and * Counsel 9. Disclosure of Commission Position * on Indemnification for Securities Act Liability B. Information About the Registrant 10. Information with Respect to S-3 * Registrants 11. Incorporation of Certain Information * by Reference 12. Information with Respect to S-2 or Information About MidSouth S-3 Registrants 13. Incorporation of Certain Information Information About MidSouth by Reference 14. Information with Respect to Registrants * other than S-2 or S-3 Registrants C. Information About the Company Being Acquired 15. Information with Respect to S-3 * Companies 16. Information with Respect to S-2 or * S-3 Companies 17. Information with Respect to Information about Sugarland Companies other than S-2 or S-3 Companies D. Voting and Management Information 18. Information if Proxies, Consents or Authorizations are to be Solicited (1) Date, Time and Place Introductory Statement-General Information (2) Revocability of Proxy Introductory Statement-Solicitation, Voting and Revocation of Proxies (3) Dissenters' Rights of Dissenters' Rights Appraisal (4) Persons Making Solicitation Introductory Statement-General (5) Interests of Certain Persons Summary - Interests of Certain Persons in the in Matters to be Acted Upon; Mergers; The Plan - Interests of Certain Voting Securities and Persons in the Mergers; The Plan - Employee Principal Holders Thereof Benefits; Information About Sugarland - Security Ownership of Principal Shareholders and Management; Security Ownership of Management and Certain Beneficial Owners of MidSouth (6) Vote Required for Approval Introductory Statement-Shares Entitled to Vote; Quorum; Vote Required (7) Directors and Executive Information About Sugarland; Officers; Executive Information About MidSouth; Compensation; Certain Election of Directors of MidSouth; Relationships and Related Security Ownership of Management Transactions and Certain Beneficial Owners of MidSouth; Executive Compensation and Certain Transactions 19. Information if Proxies, Consents or * Authorizations are not to be Solicited or in an Exchange Offer ____________________ * Not applicable or answer is in the negative. SUGARLAND BANCSHARES, INC. 1527 W. Main Street Jeanerette, Louisiana 70544 June 20, 1995 Dear Shareholder: You are cordially invited to attend a Special Meeting of Shareholders of Sugarland Bancshares, Inc. ("Sugarland") to be held on July 19, 1995 at 2:00 p.m., local time at Sugarland's main office, 1527 W. Main Street, Jeanerette, Louisiana. At the meeting, you will be asked to consider and vote upon a proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things, Sugarland State Bank (the "Bank"), the banking subsidiary of Sugarland, will be merged into MidSouth National Bank ("MidSouth Bank"), the wholly-owned subsidiary of MidSouth Bancorp, Inc. ("MidSouth"), and Sugarland will merge into MidSouth (the "Holding Company Merger"). The terms of the Plan provide that, on the effective date of the Holding Company Merger, each outstanding share of common stock of Sugarland will be converted into one share of MidSouth preferred stock as more fully described in the attached Joint Proxy Statement and Prospectus. You are urged carefully to read the Joint Proxy Statement and Prospectus in its entirety for a more complete description of the terms of the Plan and the proposed Mergers. The Plan has been approved by your Board of Directors. The Board believes, based on its own analysis and the opinion of Sugarland's financial advisor (all of which are described in the accompanying Joint Proxy Statement and Prospectus), that the proposed mergers are in the best interest of Sugarland's shareholders. After consummation of the proposed mergers, you, as a new shareholder of MidSouth, will own convertible preferred stock in MidSouth, which is intended to be publicly traded on the American Stock Exchange Emerging Company Marketplace. As a result of the mergers, the combined entities, through MidSouth, will be better able to offer a broad range of banking services to its customers and to compete more effectively with holding companies and other financial institutions in the changing economic and legal environment facing all financial institutions. The Board of Directors recommends that you vote FOR the Plan and urges you to execute the enclosed proxy and return it promptly in the accompanying envelope. Very truly yours, D. J. Tranchina President SUGARLAND BANCSHARES, INC. 1527 W. Main Street Jeanerette, Louisiana 70544 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 19, 1995 Jeanerette, Louisiana June 20, 1995 A Special Meeting of Shareholders of Sugarland Bancshares, Inc. ("Sugarland") will be held on July 19, 1995 at 2:00 p.m. local time at Sugarland's main office, 1527 W. Main Street, Jeanerette, Louisiana, to vote upon the following matters: 1.A proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things: (a) Sugarland State Bank, the subsidiary of Sugarland, will be merged into MidSouth National Bank, the wholly-owned subsidiary of MidSouth Bancorp, Inc. ("MidSouth"), (b) Sugarland will be merged into MidSouth and (c) on the effective date of the merger of MidSouth and Sugarland, each outstanding share of common stock of Sugarland will be converted into one share of MidSouth Series A Cumulative Convertible Preferred Stock as determined in accordance with the terms of the Plan. 2.Such other matters as may properly come before the Special Meeting and any adjournment thereof. Only shareholders of record at the close of business on June 7, 1995 are entitled to notice of and to vote at the Special Meeting. Dissenting shareholders who comply with the procedural requirements of the Business Corporation Law of Louisiana will be entitled to receive payment of the fair cash value of their shares if the merger of MidSouth and Sugarland is effected upon approval by less than eighty percent (80%) of the total voting power of Sugarland. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please mark, date and sign the enclosed proxy and return it promptly in the enclosed stamped envelope. Your proxy may be revoked by appropriate notice to Sugarland's Secretary, or by execution and delivery of a later-dated proxy, at any time prior to the voting thereof. If you attend the Special Meeting, you may withdraw your proxy and vote in person. BY ORDER OF THE BOARD OF DIRECTORS __________________________________ Ronald R. Hebert, Sr., Secretary MIDSOUTH BANCORP, INC. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 June 20, 1995 Dear Shareholder: You are invited to attend the annual meeting of shareholders of MidSouth Bancorp, Inc. ("MidSouth") to be held on July 19, 1995 at 2:00 p.m., local time at MidSouth's main office, 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana. At the meeting, you will be asked (i) to elect directors of MidSouth and (ii) to approve the issuance of up to 187,286 shares of MidSouth Series A Cumulative, Convertible Preferred Stock (the "Preferred Stock") in connection with an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things, Sugarland State Bank, the subsidiary of Sugarland Bancshares, Inc. ("Sugarland"), will merge into MidSouth National Bank ("MidSouth Bank"), the wholly-owned subsidiary of MidSouth, and Sugarland will merge into MidSouth the ("Holding Company Merger"). The terms of the Plan provide that, on the effective date of the Holding Company Merger, each outstanding share of common stock of Sugarland will be converted into one share of Preferred Stock as more fully described in the attached Joint Proxy Statement and Prospectus. You are urged carefully to read the Joint Proxy Statement and Prospectus in its entirety for a more complete description of the terms of the Plan and the proposed mergers. The Plan has been approved unanimously by your Board of Directors. The Board believes that the proposed mergers are in the best interest of MidSouth's shareholders. As a result of the proposed mergers, through MidSouth Bank, MidSouth will be able to compete more effectively with holding companies and other financial institutions in the changing economic and legal environment facing all financial institutions. The Board of Directors recommends that you vote FOR the issuance of the Preferred Stock and urges you to execute the enclosed proxy and return it promptly in the accompanying envelope. Very truly yours, C.R. Cloutier President MIDSOUTH BANCORP, INC. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 19, 1995 Lafayette, Louisiana June 20, 1995 The annual meeting of shareholders of MidSouth Bancorp, Inc. ("MidSouth") will be held on July 19, 1995 at 2:00 p.m. local time at MidSouth's main office, 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana, to vote upon the following matters: 1.The election of directors of MidSouth. 2.The issuance of up to 187,286 shares of MidSouth Series A Cumulative, Convertible Preferred Stock (the "Preferred Stock") in connection with an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things: (a) Sugarland State Bank, the subsidiary of Sugarland Bancshares, Inc. ("Sugarland"), will merge into MidSouth National Bank, the wholly-owned subsidiary of MidSouth, (b) Sugarland will merge into MidSouth and (c) on the effective date of the merger of MidSouth and Sugarland, each outstanding share of common stock of Sugarland will be converted into one share of Preferred Stock as determined in accordance with the terms of the Plan. 3.Such other matters as may properly come before the meeting or any adjournments thereof. Only shareholders of record at the close of business on June 7, 1995 are entitled to notice of and to vote at the annual meeting. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the annual meeting, please mark, date and sign the enclosed proxy and return it promptly in the enclosed stamped envelope. Your proxy may be revoked by appropriate notice to MidSouth's Secretary at any time prior to the voting thereof. BY ORDER OF THE BOARD OF DIRECTORS Karen L. Hail, Secretary PROSPECTUS MIDSOUTH BANCORP, INC. Series A Cumulative Convertible Preferred Stock JOINT PROXY STATEMENT MidSouth Bancorp, Inc. and Sugarland Bancshare, Inc. Meetings of Shareholders to be held July 19, 1995 MidSouth Bancorp, Inc. ("MidSouth") has filed a Registration Statement pursuant to the Securities Act of 1933 (the "Securities Act") covering up to 187,286 shares of Cumulative, Convertible Preferred Stock, Series A, of MidSouth (the "Preferred Stock") which may be issued in connection with a proposed merger of Sugarland Bancshares, Inc. ("Sugarland") into MidSouth, pursuant to which shareholders of Sugarland will be entitled to receive one share of Preferred Stock for each share of common stock held prior to the Merger. This document constitutes the Joint Proxy Statement of MidSouth and Sugarland in connection with the transactions described herein and a Prospectus of MidSouth with respect to the shares of MidSouth Preferred Stock to be issued if the merger is consummated. MidSouth has agreed to use its best efforts to list the Preferred Stock on the American Stock Exchange Emergining Companies Market. The American Stock Exchange recently announced that it was discontinuing its Emergining Companies Market but would continue quotations thereon for MidSouth common stock. MidSouth intends to apply for listing of the Perferred Stock on the regular American Stock Exchange and believes that such listing application will be approved. There can be no assurance that such listing will be accomplished or that an active trading market in the Perferred Stock will occur. The listing of the Perferred Stock is not a condition to consummation of the merger, and in the absence of listing, the ability of holders of perferred Stock to dispose of their shares will be significately curtailed. See "Summary - Market Prices and Dividends." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE MIDSOUTH PREFERRED STOCK DESCRIBED IN THIS JOINT PROXY STATEMENT AND PROSPECTUS IS NOT A SAVINGS ACCOUNT OR DEPOSIT ACCOUNT AND IS NOT THE OBLIGATION OF ANY BANK OR SAVINGS ASSOCIATION. AN INVESTMENT IN THE PREFERRED STOCK IS NOT FEDERALLY INSURED. No person has been authorized to give any information or to make any representations other than those contained in this Joint Proxy Statement and Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by MidSouth or Sugarland. This Joint Proxy Statement and Prospectus shall not constitute an offer by MidSouth to sell or the solicitation of an offer by MidSouth to buy, nor shall there be any sale of the securities offered by this Joint Proxy Statement and Prospectus in any state in which, or to any person to whom, it would be unlawful prior to registration or qualification under the laws of such state for MidSouth to make such an offer or solicitation. Neither the delivery of this Joint Proxy Statement and Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of MidSouth or Sugarland since the date hereof. This Joint Proxy Statement and Prospectus is dated June 20, 1995. This Joint Proxy Statement and Prospectus was mailed to shareholders of Sugarland on approximately June 21, 1995, and to shareholders of MidSouth on approximately June 21, 1995. AVAILABLE INFORMATION MidSouth is subject to the informational requirements of the Securities Exchange Act of 1934 and in accordance therewith is required to file reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports, together with proxy statements and other information filed by MidSouth, can be inspected at and copies thereof may be obtained at prescribed rates from, the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and from the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. MidSouth has filed with the Commission a Registration Statement on Form S-4 ("Registration Statement") under the Securities Act with respect to the Preferred Stock offered by this Joint Proxy Statement and Prospectus. This Joint Proxy Statement and Prospectus summarizes all of the material information set forth in the Registration Statement. Statements contained in this Joint Proxy Statement and Prospectus as to the contents of any documents are necessarily summaries of the documents, and reference is made to the copy of the applicable document filed with the Commission for a more complete understanding. For further information with respect to MidSouth, reference is made to the Registration Statement, including the exhibits thereto. As more fully set forth under the heading captioned "Documents Incorporated by Reference" and "Information about MidSouth" elsewhere herein, certain information with respect to MidSouth has been incorporated by reference into this Joint Proxy Statement and Prospectus. In addition, the Agreement and Plan of Merger and related merger agreement described in this Joint Proxy Statement and Prospectus have been incorporated herein by reference. MidSouth hereby undertakes to provide without charge to each person to whom a copy of this Joint Proxy Statement and Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the information or documents which have been incorporated by reference herein, other than exhibits to such documents. Requests for such copies should be directed to C.R. Cloutier, President, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501, telephone (318) 237-8343. In order to ensure timely delivery of the documents, any request should be made by July 12, 1995. DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated herein by reference: MidSouth's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994, Commission File No. 1-11826, dated March 23, 1995, received by the Commission on March 24, 1995, as amended by Form 10-KSB/A, Commission File No. 1-11826, dated April 28, 1995, received by the Commission on April 28, 1995; MidSouth's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1995, Commission File No. 1-11826, dated May 15, 1995, received by the Commission on May 15, 1995; the following sections of MidSouth's Annual Report to Shareholders, delivered with this Joint Proxy Statement and Prospectus: page 30, "Market Prices"; inside back cover, "Stock Trading Information" and information on dividends; page 1, "Financial Statements"; pages 30-31, "Selected Quarterly Financial Data"; pages 2-11, "Management's Discussion and Analysis"; and MidSouth's Quarterly Report to Shareholders "Financial Statements and Management's Discussion and Analysis." TABLE OF CONTENTS SUMMARY Page The Companies..................................... i The Banks......................................... i The Meetings...................................... i Purpose of the Meetings; Vote Required............ ii Reasons for the Plan; Recommendation of the Companies' Boards of Directors.............. iii Opinion of Chaffe & Associates, Inc............... iv Conversion of Sugarland Common Stock.............. iv Description of MidSouth Preferred Stock........... iv Exchange of Certificates.......................... vi Conditions to Consummation of the Mergers......... vii Waiver, Amendment and Termination................. vii Interests of Certain Persons in the Mergers....... viii Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five- Percent Shareholders............................ ix Employee Benefits................................. ix Certain Federal Income Tax Consequences........... x Accounting Treatment.............................. x Dissenters' Rights................................ x Selected Financial Data of Sugarland.............. xi Selected Financial Data of MidSouth............... xii Comparative Per Share Data (Unaudited)............ xiii Market Prices and Dividends....................... xiv INTRODUCTORY STATEMENT...................................... 1 General........................................... 1 Purpose of the Meetings........................... 1 Shares Entitled to Vote; Quorum; Vote Required.... 1 Solicitation, Voting and Revocation of Proxies.... 3 THE PLAN.................................................... 4 General........................................... 4 Background of and Reasons for the Plan............ 4 Opinion of Chaffe & Associates, Inc............... 6 Conversion of Sugarland Common Stock.............. 11 Effective Date.................................... 12 Exchange of Certificates.......................... 12 Regulatory Approvals and Other Conditions of the Mergers.................................. 13 Conduct of Business Prior to the Effective Date............................................ 14 Waiver, Amendment and Termination................. 15 Interests of Certain Persons in the Mergers....... 16 Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five- Percent Shareholders............................ 17 Employee Benefits................................. 18 Expenses.......................................... 18 Status Under Federal Securities Laws; Certain Restrictions on Resales......................... 19 Accounting Treatment.............................. 19 CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 19 DISSENTERS' RIGHTS.......................................... 22 INFORMATION ABOUT SUGARLAND................................. 24 Description of the Business....................... 24 Competition....................................... 25 Property.......................................... 25 Employees......................................... 26 Market Prices and Dividends....................... 26 Legal Proceedings................................. 26 Security Ownership of Principal Shareholders and Management..................... 27 SUGARLAND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 29 INFORMATION ABOUT MIDSOUTH.................................. 44 COMPARATIVE RIGHTS OF SHAREHOLDERS.......................... 44 Preferred Stock................................... 45 Directors......................................... 45 Business Combinations............................. 46 Special Meetings of Shareholders.................. 46 Bylaws............................................ 46 Vote Required for Shareholder Action.............. 47 Limitation of Personal Liability and Indemnification of Directors and Officers........................................ 47 RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK.......... 48 Dividend Rights................................... 48 Redemption Rights................................. 50 Conversion Rights................................. 50 Voting Rights..................................... 51 Liquidation Rights................................ 52 Preemptive Rights................................. 52 PRO FORMA FINANCIAL STATEMENTS.............................. 52 ELECTION OF DIRECTORS OF MIDSOUTH........................... 60 SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF MIDSOUTH....................... 63 Security Ownership of Management.................. 63 Security Ownership of Certain Beneficial Owners.......................................... 65 EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS............. 65 Summary Compensation Table........................ 65 Option Exercises and Holdings..................... 66 Employment and Severance Contracts................ 67 Certain Transactions.............................. 67 RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS............ 67 SHAREHOLDER PROPOSALS....................................... 67 LEGAL MATTERS............................................... 67 EXPERTS..................................................... 68 OTHER MATTERS............................................... 68 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF SUGARLAND................................................ F-1 SUGARLAND BANCSHARES, INC. CONSOLIDATED FINANCIAL STATEMENTS.................................................. F-2 Appendix A - Fairness Opinion of Chaffe & Associates, Inc Appendix B - Form of Provisions of Articles of Incorporation of MidSouth Relating to the Preferred Stock SUMMARY The following summarizes the more detailed information appearing elsewhere herein and in the appendices hereto. Shareholders are urged to read carefully all such material, together with the accompanying documents and the documents incorporated herein by reference. The Companies MidSouth Bancorp, Inc., a Louisiana corporation ("MidSouth") is a one bank holding company that owns all of the outstanding stock of MidSouth National Bank ("MidSouth Bank"). At March 31, 1995, MidSouth had total consolidated assets of approximately $107.7 million and shareholders' equity of approximately $6.2 million. MidSouth's principal executive offices are at 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501, and its telephone number is (318) 237-8343. See "Information About MidSouth." Sugarland Bancshares, Inc., a Louisiana corporation ("Sugarland"), is a one bank holding company that owns all of the outstanding stock of Sugarland State Bank (the "Bank"). At March 31, 1995, Sugarland had total consolidated assets of approximately $17.8 million and shareholders' equity of approximately $2.2 million. Sugarland's principal executive offices are at 1527 W. Main Street, Jeanerette, Louisiana 70544, and its telephone number is (318) 276-6307. See "Information About Sugarland." MidSouth and Sugarland are collectively referred to herein as the "Companies." The Banks MidSouth Bank is a full service commercial bank offering consumer and commercial banking services in Lafayette, Iberia, Jefferson Davis and St. Martin Parishes. At March 31, 1995, MidSouth Bank had total assets of approximately $107.7 million and total deposits of approximately $98.7 million. In addition to its main banking facility in Lafayette, Louisiana, MidSouth Bank operates full service branches in Breaux Bridge, Opelousa, Cecilia and Jennings, Louisiana, and also operates four ATM machines, three in Lafayette and one in Breaux Bridge. The Bank, a Louisiana state chartered bank, is a full service commercial bank offering consumer and commercial banking services in Iberia Parish. At March 31, 1995, the Bank had total assets of approximately $17.8 million and total deposits of approximately $15.5 million. In addition to its main banking facility in Jeanerette, Louisiana, the Bank operates a full service branch in New Iberia, Louisiana. MidSouth Bank and the Bank are collectively referred to herein as the "Banks." The Meetings The annual meeting of the shareholders of MidSouth and a special meeting of the shareholders of Sugarland will be held on July 19, 1995, at the time and place set forth in the accompanying Notice of Annual Meeting of Shareholders of MidSouth (the "Annual Meeting") and Notice of Special Meeting of Shareholders of Sugarland (the "Special Meeting") (the Annual Meeting and the Special Meeting are collectively referred to herein as the "Meetings"). Only record holders of the common stock (the "MidSouth Common Stock") of MidSouth at the close of business on June 7, 1995 are entitled to notice of and to vote at the Annual Meeting. Only record holders of the common stock (the "Sugarland Common Stock") of Sugarland at the close of business on June 7, 1995 are entitled to notice of and to vote at the Special Meeting. On the respective record dates, there were 717,753 shares of MidSouth Common Stock outstanding and 187,286 shares of Sugarland Common Stock outstanding, each of which is entitled to one vote on each matter properly to come before the Meeting of the respective Company. Purpose of the Meetings; Vote Required The purpose of the Special Meeting is to vote upon a proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan"), pursuant to which the Bank will be merged into MidSouth Bank (the "Bank Merger"), and Sugarland will be merged into MidSouth (the "Holding Company Merger" which, together with the Bank Merger, are collectively called the "Mergers"), and on the effective date of the Holding Company Merger, each outstanding share of Sugarland Common Stock will be converted into one share of Cumulative Convertible Preferred Stock, Series A, of MidSouth (the "Preferred Stock"), in accordance with the terms of the Plan. As a result of the Mergers the business and properties of the Bank will become the business and properties of MidSouth Bank, the business and properties of Sugarland will become the business and properties of MidSouth, and shareholders of Sugarland will receive the consideration described below under "Conversion of Sugarland Common Stock." See "Introductory Statement - Purpose of the Meetings." The purpose of the Annual Meeting is to vote upon a proposal to approve the issuance up to 187,286 shares of the Preferred Stock of MidSouth to be issued to shareholders of Sugarland in exchange for their Sugarland Common Stock in connection with the Mergers. Shareholders of MidSouth, in addition to voting on the Plan, will also elect directors. See "Introductory Statement - Purpose of the Meetings." The Plan must be approved by the shareholders of Sugarland by the affirmative vote of two-thirds of the voting power present, in person or by proxy, at the Special Meeting. Directors, executive officers and certain principal shareholders of Sugarland beneficially owning an aggregate of 89,956 shares, or approximately 48.03% of the outstanding Sugarland Common Stock, have executed agreements pursuant to which, among other things, they agreed, subject to certain conditions described under "Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders" to vote in favor of approval of the Plan and, accordingly, management of Sugarland believes that Sugarland will obtain the vote required for approval of the Plan. Approval of the Plan by the shareholders of MidSouth is not required under either the Louisiana Business Corporation Law (the "LBCL") or the Articles of Incorporation of MidSouth. However, under the rules of the American Stock Exchange Emerging Company Market (the "AMEX") on which the MidSouth Common Stock is listed, shareholders of MidSouth are required to approve the issuance of the Preferred Stock to be exchanged for the Sugarland Common Stock in connection with the Mergers. The proposal to issue the Preferred Stock must be approved by the affirmative vote of a majority of the votes cast at the Annual Meeting. The directors and executive officers of MidSouth having voting power with respect to an aggregate of 292,924 shares, or approximately 39.65% of the outstanding MidSouth Common Stock, have informed MidSouth that they intend to vote their shares in favor of issuance of the Preferred Stock, and, accordingly, management of MidSouth believes that MidSouth will obtain the vote required for approval of the issuance of the Preferred Stock. See "Introductory Statement - Shares Entitled to Vote; Quorum; Vote Required." Reasons for the Plan; Recommendation of the Companies' Boards of Directors The Board of Directors of Sugarland believes that approval of the Plan is in the best interest of Sugarland and its shareholders and recommends that its shareholders vote "FOR" the approval of the Plan. The Board of Directors of Sugarland believes that the terms of the Plan will provide significant value to all Sugarland shareholders and enable them to participate in opportunities for growth that Sugarland's Board of Directors believes the Mergers make possible. In recommending the Plan to Sugarland's shareholders, Sugarland's Board of Directors considered, among other factors, the financial terms of the Plan; the likelihood and potential adverse impact of increased competition for Sugarland in its market area if Sugarland remains independent; the ability of the combined Companies and Banks to compete in the relevant banking markets; the market price of MidSouth Common Stock; the business, financial condition, results of operation and prospects of MidSouth, MidSouth Bank, Sugarland and the Bank; the dividends to which Sugarland's shareholders would be entitled under the terms of the Preferred Stock; and the federal income tax consequences of the Plan to Sugarland's shareholders, to the extent MidSouth Preferred Stock is received in the Holding Company Merger. The Board of Directors of MidSouth believes that approval of the issuance of the Preferred Stock is in the best interest of MidSouth and its shareholders. In addition to the financial terms, among the factors considered by the Board in recommending the issuance of the Preferred Stock were (i) the increased competitive advantages available to MidSouth and MidSouth Bank through the combined capital of the Banks and the economies of scale created as a result of the Mergers, and (ii) the increased market share and additional markets available to MidSouth and MidSouth Bank as a result of the Mergers. The financial and other terms of the Plan were arrived at through arm's length negotiations between representatives of the Companies. Determination of the consideration to be received by Sugarland's shareholders was based upon various factors considered by the Boards of Directors of MidSouth and Sugarland, including primarily the comparative financial condition, historical results of operations, current business and future prospects of the Companies and the Banks, and the desirability of combining the financial and managerial resources of the Banks to pursue available consumer and commercial banking business in Lafayette, Jefferson Davis, Iberia and St. Martin parishes. The Boards of Directors of the Companies have approved the Plan. The Board of Directors of Sugarland recommends that its shareholders vote FOR approval of the Plan, and the Board of Directors of MidSouth recommends that its shareholders vote FOR the issuance of the Preferred Stock. See "The Plan - Background of and Reasons for the Plan." Opinion of Chaffe & Associates, Inc. Chaffe & Associates, Inc. ("Chaffe") was engaged as an independent financial expert to render an opinion as to the fairness to Sugarland and its shareholders from a financial point of view of the consideration to be received by Sugarland's shareholders pursuant to the provisions of the Plan. Chaffe was selected because of its experience, reputation and expertise in the financial services industry. A copy of the opinion delivered by Chaffe dated December 30, 1994 is attached as Appendix A and should be read in its entirety. The opinion concludes that, as of December 30, l994, and based on and subject to the assumptions made, the factors considered, the review undertaken and the limitations stated, the proposed Exchange Ratio (as defined in the opinion) is fair to Sugarland and its shareholders from a financial point of view. The opinion does not constitute a recommendation to any shareholder on how to vote at the Special Meeting. See "The Plan - Opinion of Chaffe & Associates, Inc." for further information regarding, among other things, the selection of Chaffe and its compensation arrangement in connection with the Plan. Conversion of Sugarland Common Stock Under the terms of the Plan, on the date the Holding Company Merger becomes effective (the "Effective Date"), and assuming no Sugarland shareholders perfect dissenters' rights, each outstanding share of Sugarland Common Stock will be converted into one share of MidSouth Preferred Stock. Pursuant to resolutions adopted by the Board of Directors of MidSouth and Sugarland, the deadline for consummating the Mergers has been extended until July 31, 1995, and if the Mergers are not consummated by that date, the Companies may terminate the Plan or waive their right to do so and consummate the Mergers at a later date. However, the Companies intend for the Mergers to be effected as soon as possible after the Annual Meeting and Special Meeting. See "The Plan - Conversion of Sugarland Common Stock." In lieu of the issuance of any fractional share of Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each shareholder of Sugarland, upon surrender of the certificate or certificates which immediately prior to the Effective Date represented Sugarland Common Stock held by such shareholder, will be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by $14.25. See "The Plan-Conversion of Sugarland Common Stock." Description of MidSouth Preferred Stock Dividend Rights. Cash dividends on shares of MidSouth Preferred Stock are cumulative from the date of issuance of such shares and are payable when, as and if declared by the MidSouth Board of Directors, at an annual rate in 1995 of 8.28%, and thereafter at an annual rate fixed on December 31 of each year for the ensuing calendar year, and equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum; provided that the annual dividend rate will in no case be greater than 10% nor less than 6%; and provided further that the annual dividend rate will be fixed at 10% from and after the tenth anniversary of the date of issuance of the Preferred Stock. If more than one yield is shown for December maturities, the average will be applied, and if no yield is quoted for December maturities, the yield for the next earlier available month will be applied. Dividends payable on the Preferred Stock will be paid on the first day of January, April, July and October of each year, provided that the initial dividend will be payable on the first day of January, April, July or October that is at least 91 days from the date of original issuance of the Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days. Accordingly, assuming an Effective Date of July 20, 1995, the first dividend payment date would be January 1, 1996 for the 74 day period from October 19 through December 31. The aggregate amount of the initial dividend payable to holders of Preferred Stock will be reduced by the amount by which certain expenses of Sugarland related to the Plan exceed $110,000 (the "Subtracted Amount"). In any case in which the Subtracted Amount is greater than the initial dividend, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. As of the date hereof, it is estimated that the Subtracted Amount will be $25,000. Accordingly, assuming an initial dividend payment date of January 1, 1996, the dividend of $45,423.42 that would otherwise be payable on that date will be reduced by $25,000. To the extent the Subtracted Amount exceeds $25,000 it would further reduce or eliminate the dividend otherwise payable on January 1, 1996, and could also reduce or eliminate the dividend otherwise payable on April 1, 1996. See "Rights and Preferences of MidSouth Preferred Stock - Dividend Rights" for information concerning timing and amounts of dividends payable under certain assumptions related to the Subtracted Amount. Dividends are payable only out of funds legally available therefor, as defined in MidSouth's Articles of Incorporation. Under the LBCL, MidSouth may pay dividends only out of "surplus," as defined in the LBCL. At March 31, 1995 MidSouth had "surplus" of approximately $6,100,000. Statutory surplus does not represent actual funds, which MidSouth expects to obtain from dividends from MidSouth Bank, and funds "legally available therefor" is defined to mean only funds that may be obtained from MidSouth Bank. The payment of dividends by a national bank is restricted by various provisions of the national banking laws and regulations thereunder, but under the most restrictive of these provisions, at March 31, 1995 MidSouth Bank could pay up to $1,400,000 in dividends to MidSouth without regulatory approval. There can be no assurance, however, that in future periods, the Bank will be able to provide funds for the payment of dividends or that MidSouth will have statutory surplus sufficient to permit the payment of dividends by it. No dividends may be paid on MidSouth Common Stock until all accrued quarterly dividends on the Preferred Stock have been paid. Under MidSouth's Articles of Incorporation, MidSouth may not, without approval of the MidSouth Preferred Stock, issue other shares of Preferred Stock ranking in priority to or on a parity with the Preferred Stock. If any quarterly dividend is not paid when due, the unpaid amount will bear interest at a rate of 10% per annum until paid. If MidSouth is in arrears for two consecutive quarterly dividends, holders of Preferred Stock will have the right to elect two directors of MidSouth. See "Rights and Preferences of MidSouth Preferred Stock-Dividend Rights." Redemption. On or after the fifth anniversary of the date of issuance of the Preferred Stock, MidSouth may, at its option, redeem the whole, or from time to time, any part of the Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Preferred Stock to the date fixed for redemption, whether or not earned or declared and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Preferred Stock, if any. See "Rights and Preferences of MidSouth Preferred Stock-Redemption Rights." Conversion. At their option, holders of the shares of MidSouth Preferred Stock may convert such stock into shares of MidSouth Common Stock at a conversion rate of one share of common stock for each share of Preferred Stock converted at any time prior to redemption of the Preferred Stock. The conversion rate is subject to adjustment from time to time in the event of a dividend or distribution to the holders of MidSouth Common Stock, in shares of MidSouth Common Stock, a stock split or reverse stock split of the MidSouth Common Stock, a reclassification of the MidSouth Common Stock, or certain business combination transactions involving MidSouth, as provided in MidSouth's Articles of Incorporation. See "Rights and Preferences of MidSouth Preferred Stock-Conversion Rights." Voting Rights. Except as otherwise required by law or in MidSouth's Articles of Incorporation, holders of MidSouth Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to notice of any meeting of shareholders of MidSouth. If at any time MidSouth falls in arrears in the payment of dividends on the Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full Board of Directors of MidSouth shall be automatically increased by two, and the holders of the Preferred Stock, voting separately as a single class, will be entitled to elect two directors of MidSouth to fill the two created directorships, at a special meeting called for the purpose, and thereafter at each shareholders meeting held for the purpose of electing directors of MidSouth, so long as there continues to be any arrearage in the payment of dividends on the Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. When all accumulated and unpaid dividends on the Preferred Stock for all past quarterly dividend periods, and the interest thereon, have been paid in full, the right of the holders of the Preferred Stock to elect directors will cease, the number of the directors of MidSouth shall automatically be reduced by two, and the term of office of all directors elected by the shareholders of the Preferred Stock will immediately terminate. Holders of Preferred Stock must approve any issuance by MidSouth of any Preferred Stock ranking senior to or on a parity with the Preferred Stock as to dividends or rights upon liquidation. See "Rights and Preferences of MidSouth Preferred Stock-Voting Rights." Liquidation Preference. The liquidation preference of the Preferred Stock will be $14.25 per share, plus an amount equal to accrued and unpaid dividends and accrued interest thereon. See "Rights and Preferences of MidSouth Preferred Stock - Liquidation Rights." Exchange of Certificates Upon consummation of the Mergers, a letter of transmittal, together with instructions for the exchange of certificates representing shares of Sugarland Common Stock for certificates representing shares of MidSouth Preferred Stock, will be mailed to each person who was a shareholder of record of Sugarland on the Effective Date. Shareholders are requested not to send in their Sugarland Common Stock certificates until they have received a letter of transmittal and further written instructions. Sugarland shareholders who cannot locate their certificates are urged to contact promptly Ronald R. Hebert, Sr., Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544, telephone number (318) 276-6307. A new certificate will be issued to replace the lost certificate(s) only upon execution by the shareholder of an affidavit certifying that his certificate(s) cannot be located and an agreement to indemnify Sugarland and MidSouth, as its successor, against any claim that may be made against Sugarland or MidSouth, as its successor, by the owner of the certificate(s) alleged to have been lost or destroyed. Sugarland or MidSouth, as its successor, may also require the shareholder to post a bond in such sum as is sufficient to support the shareholder's agreement to indemnify Sugarland and MidSouth. See "The Plan - Exchange of Certificates." Conditions to Consummation of the Mergers In addition to approval by the shareholders of MidSouth and Sugarland, consummation of the Mergers is conditioned upon (i) the accuracy on the date of closing of the representations and warranties and the compliance with covenants made in the Plan by each party, and the absence of any material adverse change in the financial condition, results of operations, business or prospects of the other party's consolidated group; (ii) the receipt of required regulatory approvals; (iii) the receipt of assurances from the Board of Governors of the Federal Reserve System ("FRB") or delegated authority satisfactory to MidSouth, that the Preferred Stock will be treated as Tier 1 Capital of MidSouth for the purpose of capital adequacy guidelines of the FRB and (iv) certain other conditions. The Plan further provides that if MidSouth does not receive assurance from the FRB that the Preferred Stock will be treated as Tier 1 Capital due to any term or provision of the Preferred Stock, MidSouth shall propose a revision of such form or provision so as to cause the Preferred Stock to be treated as Tier 1 Capital, and Sugarland shall have 15 days from the receipt of such proposal to accept it and permit this condition to be met. As of the date of the Joint Proxy Statement and Prospectus, MidSouth had received such assurances. The Companies intend to consummate the Mergers as soon as practicable after all of the conditions to the Mergers have been met or waived. See "The Plan - Regulatory Approvals and Other Conditions of the Mergers." On January 25, 1995, MidSouth filed an application seeking prior approval of the Bank Merger from the Office of the Comptroller of the Currency (the "OCC") and by letter dated January 30, 1995 requested a waiver of approval of the Holding Company Merger from the FRB. MidSouth received the approval from the OCC on March 22, 1995 and the waiver from the FRB on March 17, 1995; however, there is no assurance that the other conditions to consummation of the Mergers will be satisfied. See "The Plan - Regulatory Approvals and Other Conditions of the Mergers." Waiver, Amendment and Termination The Plan provides that each of the parties thereto may waive any of the conditions to its obligation to consummate the Mergers other than approval by shareholders, the receipt of all necessary regulatory approvals and the satisfaction of all requirements prescribed by law for consummation of the Mergers. Neither MidSouth nor Sugarland intend to waive a condition if such waiver would have a material adverse effect on its own shareholders. The Plan may be amended at any time before or after its approval by Sugarland's shareholders by the mutual agreement of the Boards of Directors of the parties to the Plan; provided that, under the LBCL, any amendment made subsequent to such shareholder approval may not alter the amount or type of shares into which Sugarland Common Stock will be converted, or alter any term or condition of the Plan in a manner that would adversely affect any Sugarland shareholder. Any such amendment after the Plan has been approved by Sugarland's shareholders will require Sugarland to obtain additional shareholder approval, and to hold another meeting of its shareholders and solicit additional proxies. While MidSouth is entitled to amend the Plan in any respect without approval of its shareholders other than to increase the amount of shares of Preferred Stock issuable thereunder, it does not intend to enter into any material amendment. The Plan may be terminated at any time prior to the Effective Date by (i) the mutual consent of the Boards of Directors of MidSouth and Sugarland; (ii) the Board of Directors of either MidSouth or Sugarland in the event of a material breach by the other or its subsidiary of any representation, warranty or covenant in the Plan which cannot be cured by the earlier of ten days after written notice of such breach or July 31, 1995; (iii) the Board of Directors of either MidSouth or Sugarland if by July 31, 1995, all the conditions to closing required by the Plan have not been met or waived, cannot be met or the Mergers have not occurred; (iv) the Board of Directors of MidSouth if, at the time of the closing, the number of shares of Sugarland Common Stock as to which holders thereof are legally entitled to assert dissenters' rights exceeds five percent of the total number of shares of Sugarland Common Stock outstanding on the Closing Date; (v) the Board of Directors of MidSouth if Sugarland's Board of Directors (A) withdraws, modifies or changes its recommendation to its shareholders of the Plan or resolves to do so, (B) recommends to its shareholders (i) any other merger, consolidation, share exchange, business combination or other similar transaction, (ii) any sale, lease, transfer or other disposition of all or substantially all of the assets of Sugarland or the Bank or (iii) any acquisition by any person or group of the beneficial ownership of thirty-three and one-third percent or more of any class of Sugarland's capital stock or (C) makes any announcement of an intention or agreement to do any of the foregoing. See "The Plan - Waiver, Amendment and Termination." Interests of Certain Persons in the Mergers MidSouth and MidSouth Bank have agreed that, subject to certain conditions, they will indemnify each person who served as an officer or director of Sugarland or the Bank at any time from December 31, 1992, and who has executed an agreement described under "Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders," from and against all damages, liabilities, judgments and claims and related expenses based upon or arising out of such person's service in such capacity to the same extent as he would have been indemnified under the applicable Articles of Incorporation or Bylaws of Sugarland or the Bank, as appropriate, as they were in effect on December 28, 1994. The aggregate amount of indemnification payments required to be made by MidSouth and MidSouth Bank to such persons is $1.2 million and any claim for such indemnification must be submitted in writing to the Chief Executive Officer of MidSouth prior to December 28, 1999. The Plan also provides for indemnification of Sugarland's and the Bank's officers, directors and controlling persons from and against any claims arising out of or based on an untrue statement or omission of a material fact required to be stated in the Registration Statement of which this Joint Proxy Statement and Prospectus forms a part. This indemnification does not apply to statements made in reliance on information furnished to MidSouth by Sugarland. MidSouth and MidSouth Bank have agreed to continue the employment of D. J. Tranchina, the President and a director of Sugarland and the Bank, for not less than three years at an annual salary of $66,000, the same salary at which he is currently employed by Sugarland. MidSouth and MidSouth Bank have also agreed to continue the employment for not less than two years of Irving Boudreaux, Executive Vice-President of the Bank, Gwen Granger, Senior Vice-President and Cashier of the Bank, and Susan Davis, Assistant Vice-President of the Bank, at their current salaries of $45,600, $38,400 and $27,000 respectively. None of the foregoing persons will be directors or executive officers of MidSouth or MidSouth Bank. Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders. As a condition to the consummation of the Mergers, each director and executive officer of Sugarland and each shareholder who beneficially owns 5% or more of the outstanding shares of Sugarland Common Stock has executed an individual agreement pursuant to which such shareholder has agreed (i) to vote as a shareholder in favor of the Plan and against any other proposal relating to the sale or disposition of the Bank or Sugarland unless MidSouth or MidSouth Bank is in breach or default, in any material respect, with regard to any covenant, representation, or warranty as to it contained in the Plan to an extent that would permit Sugarland to terminate the Plan pursuant to the terms thereof; (ii) not to transfer any shares of Sugarland Common Stock, except under certain conditions and with respect to transfers by operation of law; (iii) prior to the Effective Date or until termination of the Plan, and except to the extent required to discharge properly his fiduciary duties as a director of Sugarland, not to solicit, encourage, initiate or participate in any negotiations or discussions concerning the acquisition of all or a substantial portion of the assets of, or of a substantial equity interest in, or any business combination with Sugarland or the Bank without the prior approval of the Chief Executive Officer of MidSouth or his designee, and to notify MidSouth immediately if any such proposal or inquiries are received by him; (iv) to release MidSouth and MidSouth Bank from any indemnification obligations that either of them may have to indemnify him in his capacity as an officer, director or employee of Sugarland or the Bank except as set forth in the Plan; (v) not to assume a significant proprietary position with or serve as a director, officer or employee of, or advisor to, a financial institution that competes in Iberia and Lafayette Parishes with the business of Bank as continued by MidSouth Bank for a period of two years following the Effective Date; and (vi) not to trade in MidSouth Common Stock until the Effective Time of the Holding Company Merger or until the Plan has been terminated. See "The Plan - Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders." Employee Benefits Pursuant to the Plan, MidSouth has agreed that, from and after the Effective Date, MidSouth and MidSouth Bank will offer to all persons who were employees of Sugarland or the Bank immediately prior to the Effective Date and who become employees of MidSouth or MidSouth Bank following the Mergers, the same employee benefits as are offered by MidSouth or MidSouth Bank, as the case may be, to its employees, except that there will not be a waiting period for coverage under any of its plans, and no employee of Sugarland or the Bank who is an active employee on the Effective Date will be denied benefits under such plans for a pre-existing condition. Full credit will be given for prior service by such employees with Sugarland or the Bank for eligibility and vesting purposes under all of MidSouth's and MidSouth Bank's benefit plans and policies. All benefits accrued through the Effective Date under the benefit plans of Sugarland or the Bank will be paid by MidSouth or MidSouth Bank as the case may be to the extent such benefits are not otherwise provided to such employees through the benefit plans of MidSouth or MidSouth Bank, as the case may be. MidSouth and MidSouth Bank are not obligated to continue any employee benefit or ERISA plans maintained by Sugarland or the Bank prior to the Effective Date. See "The Plan - Employee Benefits." Certain Federal Income Tax Consequences The Companies have received an opinion from Deloitte & Touche LLP to the effect that, among other things, each of the Mergers will qualify as a tax-free reorganization under applicable law, and that each Sugarland shareholder who receives MidSouth Preferred Stock pursuant to the Holding Company Merger will not recognize gain or loss except with respect to the receipt of cash (i) in lieu of fractional shares of MidSouth Common Stock, or (ii) pursuant to the exercise of dissenters' rights. It is recommended that each shareholder of Sugarland consult his tax advisor concerning the applicable state and local income tax consequences of the Mergers to him. See "Certain Federal Income Tax Consequences." Accounting Treatment It is anticipated that the Mergers will be accounted for as a "purchase," as that term is used pursuant to generally accepted accounting principles for accounting and financial reporting purposes. Under the purchase method of accounting, the assets and liabilities of Sugarland as of the Effective Date will be recorded at their estimated respective fair values and added to those of MidSouth. Financial statements of MidSouth issued after the Effective Date will reflect such values and will not be restated retroactively to reflect the historical financial position or results of operations of Sugarland. Dissenters' Rights Under certain conditions, and by complying with the specific procedures required by statute and described herein, shareholders of Sugarland will have the right to dissent from the Holding Company Merger, in which event, if the Holding Company Merger is consummated, they will be entitled to receive in cash the fair value of their shares of Sugarland Common Stock. See "Dissenters' Rights." Shareholders of MidSouth will not have dissenters' rights. Selected Financial Data of Sugarland The following selected financial data of Sugarland with respect to each year in the five-year period ended December 31, 1994, has been derived from Sugarland's consolidated financial statements and should be read in conjunction with Sugarland's consolidated financial statements, the notes thereto and "Sugarland Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Joint Proxy Statement and Prospectus.
(In thousands of dollars, except per share data) Years Ended December 31, 1994 1993 1992 1991 1990 Average Balance Sheet Data: Total assets $ 17,188 $ 18,037 $ 17,125 $ 15,967 $ 15,117 Earning assets 14,715 15,625 14,563 13,544 12,862 Loans (net of unearned 8,296 8,221 8,102 8,008 6,872 discount) Deposits 15,005 15,900 15,093 14,053 13,293 Shareholders' equity 2,120 2,056 1,932 1,840 1,746 Income Statement Data: Total interest income $ 1,219 $ 1,268 $ 1,295 $ 1,381 $ 1,357 Net interest income 853 860 793 716 638 Provision for possible -- -- -- -- -- loan losses Net income 162 188 137 121 114 Per Share Data: Net income $ 0.87 $ 1.01 $ 0.73 $ 0.64 $ 0.61 Cash dividends -- .20 .18 .15 .15 Book value (period end) 11.25 11.30 10.51 10.00 9.51 Selected Ratios: Net income as a period of 0.94% 1.04% 0.80% 0.76% 0.75% average total assets Net income as a percent of 7.64% 9.14% 7.09% 6.58% 6.53% average equity Average equity as a percent 12.33% 11.40% 11.28% 11.52% 11.55% of average assets
Selected Financial Data of MidSouth The following selected financial data with respect to each of the fiscal years in the five-year period ended December 31, 1994, has been derived from MidSouth's consolidated financial statements and should be read in conjunction with the documents incorporated by reference in this Joint Proxy Statement and Prospectus.
(In thousands of dollars, except per share data) Years Ended December 31, 1994 1993 1992 1991 1990 Average Balance Sheet Data: Total assets $ 101,547 $ 86,482 $ 82,296 $ 82,296 $ 82,456 Earning assets 93,047 78,750 75,432 74,859 74,148 Loans and leases 55,601 45,124 39,951 41,956 44,984 Securities 33,716 28,655 32,112 27,128 25,069 Deposits 94,164 80,466 77,667 78,610 77,659 Long-term debt 1,196 786 954 983 1,039 Shareholders' equity 5,443 4,267 2,887 1,973 2,790 Income Statement Data: Total interest income $ 7,388 $ 6,371 $ 6,683 $ 7,698 $ 8,300 Net interest income 5,412 4,567 4,272 3,958 4,001 Provision for loan losses 210 306 365 518 2,318 Other income (exclusive 1,422 1,161 1,046 1,000 1,012 of securities transactions) Operating expense 4,882 4,653 4,106 4,103 4,301 Net income 1,142 1,245 905 441 (1,685) Per Share Data: Earnings per share $ 1.61 $ 1.93 $ 1.46 $ 0.81 $ (3.23) Cash dividends N/A N/A N/A N/A N/A Book value 7.53 8.15 5.73 4.21 3.16 (period ended) High stock price 12.50 9.52 N/A N/A N/A Low stock price 8.75 8.81 N/A N/A N/A Key ratios: Net income as a percent 1.12% 1.13% 1.10% .54% (2.03%) of average total assets
(In thousands of dollars, except per share data) Years Ended December 31, 1994 1993 1992 1991 1990 Net income as a percent 20.98% 22.88% 31.33% 22.35% (60.44%) of average equity Net interest margin 5.81% 5.80% 5.66% 5.30% 5.43% Allowance for loan losses 1.45% 1.66% 2.09% 2.14% 3.11% to loans and leases Leverage ratio 6.45% 5.94% 5.06% 3.84% 2.78% Dividend payout ratio N/A N/A N/A N/A N/A ____________________
Notes: Actual figures have been provided for long-term debt obligations which include an ESOP borrowing and, in 1994, FHLB borrowings. Earnings per share have been adjusted for a 5% stock dividend paid by the Company on February 18, 1994. No market price information is available for the years 1992, 1991 and 1990. Exclusive of income taxes, extraordinary item and cumulative effect of accounting change for the year ended December 31, 1993. Comparative Per Share Data (Unaudited) The following table presents certain information for MidSouth and Sugarland on an historical, unaudited pro forma combined and unaudited pro forma equivalent basis. The unaudited pro forma combined information is based upon the historical financial condition and results of operations of the Companies and adjustments directly attributable to the proposed Holding Company Merger based on estimates derived from information currently available. They do not purport to be indicative of the results that would actually have been obtained if the Holding Company Merger had been in effect on the date or for the periods indicated below, or the results that may be obtained in the future.
Comparative Per Share Data (unaudited) December 31, 1994 Historical Pro Forma Sugarland MidSouth Sugarland Combined Equivalent Primary earnings per common share diluted $1.61 $0.87 $1.48 $1.48 Fully diluted earnings per common share NA NA 1.42 1.42 Dividends declared per common share - - - - Book value per common share $7.53 $11.25 $8.92 8.92 March 31, 1994 Historical Pro Forma Sugarland MidSouth Sugarland Combined Equivalent Primary earnings per common share $0.42 $0.26 $0.40 $0.40 Fully diluted earnings per common share NA NA $0.38 $0.38 Dividends declared per common share - - - - Book value per common share $8.62 $11.90 $9.79 $9.79
________________________ Pro forma equivalent amounts are calculated by multiplying the combined pro forma amount by l.0, the number of shares of MidSouth Preferred Stock that each holder of Sugarland Common Stock will receive for each share of his Sugarland Common Stock upon consummation of the Mergers and assuming that each share of Preferred Stock has been converted into MidSouth Common Stock. Based on common shares outstanding and assuming conversion of MidSouth Preferred Stock into MidSouth Common Stock. Market Prices and Dividends The Plan provides that MidSouth will use its best efforts to cause the Preferred Stock be listed for trading on the American Stock Exchange Emerging Companies Market. The American Stock Exchange recently announced that it was discontinuing its Emergining Companies Market but would continue quotations thereon for shares currently listed, including MidSouth Common Stock. At the time of its announcement, the American Stock Exchange encouraged companies listed on the Emerging Companies Market to apply for listing on the American Stock Exchange itself, and MidSouth intends to do so in time for the Perferred Stock to be so listed after the consummation of the mergers. There can no assurance that such listing will be acomplished. Any such listing will not be effective until the Preferred Stock is issued, and there can be no assurance as to what the initial price of the Preferred Stock will be if and when listed. The listing of the Preferred Stock does not assure that there will be an active trading market in the Preferred Stock and, given that the number of initial holders of Preferred Stock will be relatively small, and the fact that MidSouth's Common Stock is thinly traded relative to the Common Stock of other large bank holding companies, it is likely that there will be limited and sporadic trading in the Preferred Stock. Moreover, the listing of the Preferred Stock is not a condition to consummation of the Mergers. While MidSouth believes the likelihood that the Preferred Stock would not be listed is remote, if for some reason the Preferred Stock is not listed or, after listing, the Preferred Stock and Common Stock are delisted, the ability of holders of Preferred Stock or Common Stock to dispose of their shares would be significantly curtailed. The holders of shares of the Preferred Stock have the right to convert all or any part of the Preferred Stock into shares of MidSouth Common Stock at the conversion rate of one share of MidSouth Common Stock for each share of Preferred Stock converted, subject to adjustment from time to time in the event of a dividend or distribution paid to the holders of MidSouth Common Stock in shares of MidSouth Common Stock, a stock split or reverse stock split of MidSouth Common Stock, a reclassification of the MidSouth Common Stock, or certain business combination transactions involving MidSouth, as provided in MidSouth's Articles of Incorporation. On December 27, 1994, the day preceding the date that the Companies entered into the Plan, the closing sales price for a share of MidSouth Common Stock, as quoted on the AMEX, was $11.25. On June 8, 1995, the closing sales price for a share of MidSouth Common Stock was $11.50. No assurance can be given as to the market price of MidSouth Common Stock on the Effective Date. Sugarland Common Stock is not actively traded, and there is no established trading market for the stock. There are no bid or asked prices available for Sugarland Common Stock. MidSouth has not paid cash dividends on its common stock in the past two years. MidSouth intends, however, to consider paying dividends on its common stock beginning in the latter part of 1995 or early part of 1996. Sugarland paid a dividend of $.20 per share on its common stock during 1993 but has not paid a dividend since that time. The Plan does not permit Sugarland to pay any further dividends without the prior consent of MidSouth. See "Information About Sugarland - Market Prices and Dividends." INTRODUCTORY STATEMENT General This Joint Proxy Statement and Prospectus is furnished to the shareholders of Sugarland Bancshares, Inc. ("Sugarland") and MidSouth Bancorp, Inc. ("MidSouth") in connection with the solicitation of proxies on behalf of the respective Boards of Directors of Sugarland and MidSouth for use at a special meeting of the shareholders of Sugarland (the "Special Meeting") and the annual meeting of the shareholders of MidSouth (the "Annual Meeting," which collectively with the Special Meeting are referred to herein as the "Meetings") to be held on the dates and at the times and places specified in the accompanying Notice of Special Meeting of Shareholders of Sugarland and Notice of Annual Meeting of Shareholders of MidSouth, or any adjournments thereof. No proxy given by any shareholder who voted against the proposals described herein, however, will be voted in favor of any proposal to adjourn the Meetings. Sugarland and MidSouth (collectively, the "Companies") have each supplied all information included herein with respect to it and its subsidiary. Purpose of the Meetings The purpose of the Special Meeting is to consider and vote upon a proposal to approve an Agreement and Plan of Merger between MidSouth and Sugarland and a related Agreement of Merger between MidSouth National Bank ("MidSouth Bank") and the Bank (the "Bank Merger Agreement," which collectively with the Agreement and Plan of Merger, is referred to as the "Plan"). Pursuant to the Plan, the Bank will be merged into MidSouth Bank (the "Bank Merger") and Sugarland will be merged into MidSouth (the "Holding Company Merger," which, collectively with the Bank Merger, are referred to as the "Mergers") with the result that the business and properties of Sugarland will become the business and properties of MidSouth and, except for shares of Sugarland's common stock to which dissenters' rights have been perfected, each outstanding share of Sugarland common stock ("Sugarland Common Stock") will be converted into one share of Series A Cumulative Convertible Preferred Stock of MidSouth (the "Preferred Stock") as described under the caption "The Plan - Conversion of Sugarland Common Stock." The purpose of the Annual Meeting is, among other things, to elect directors of MidSouth and to consider and vote upon a proposal to approve the issuance of up to 187,286 shares of Preferred Stock of MidSouth to be issued to shareholders of Sugarland in exchange for their Sugarland Common Stock in connection with the Mergers. See "Election of Directors of MidSouth." Shares Entitled to Vote; Quorum; Vote Required Only holders of record of MidSouth's common stock ("MidSouth Common Stock") at the close of business on June 7, 1995 are entitled to notice of and to vote at the Annual Meeting. On that date there were 717,753 shares of MidSouth Common Stock outstanding, each of which is entitled to one vote on each matter properly brought before the Annual Meeting. Only holders of record of Sugarland Common Stock at the close of business on June 7, 1995 are entitled to notice of and to vote at the Special Meeting. On that date there were 187,286 shares of Sugarland Common Stock outstanding, each of which is entitled to one vote on each matter properly brought before the Special Meeting. With respect to any matter properly brought before the Meetings, the presence at the Meetings, in person or by proxy, of the holders of a majority of the outstanding shares of the respective Companies' common stock is necessary to constitute a quorum. The Plan must be approved by the shareholders of Sugarland by the affirmative vote of two-thirds of the voting power present, in person or by proxy, at the Special Meeting. An abstention will have the effect of a vote against the Plan. However, unless the Plan is approved by the holders of at least 80% of the Sugarland Common Stock, dissenters' rights will apply and an abstention will cause a shareholder otherwise entitled to dissenters' rights to forfeit any claim to such rights. See "Dissenters' Rights." If brokers who do not receive instructions from beneficial owners as to granting or withholding of proxies may not or do not exercise discretionary power to grant a proxy with respect to such shares (a "broker non-vote") on a proposal, including the proposal to approve the Plan, shares not voted on such proposal will be counted as not present with respect to the proposal. Under the Louisiana Business Corporation Law (the "LBCL") and the Articles of Incorporation of MidSouth, the shareholders of MidSouth are not required to approve the Mergers. However, under the rules of the American Stock Exchange Emerging Company Market (the "AMEX") on which MidSouth Common Stock is listed, shareholder approval is required for the issuance of the Preferred Stock. The issuance of the Preferred Stock must be approved by the affirmative vote a majority of the votes cast at the Annual Meeting. Abstentions and broker non-votes will not be counted in the determination of the total number of votes cast. Directors, executive officers and certain principal shareholders of Sugarland beneficially owning an aggregate of 89,956 shares, or approximately 48.03% of the outstanding Sugarland Common Stock, have executed agreements pursuant to which they have agreed, among other things, to vote in favor of the Plan. See "Voting and Other Agreements with Sugarland's Directors, Executive Officers and Five-Percent Shareholders." Accordingly, management of Sugarland believes that Sugarland will obtain the vote required for approval of the Plan. The directors and executive officers of MidSouth having voting power with respect to an aggregate of 292,924 shares, or approximately 39.65% of the outstanding MidSouth Common Stock, have informed MidSouth that they intend to approve the issuance of the Preferred Stock, and, accordingly, management of MidSouth believes that MidSouth will obtain the vote required for approval of the issuance of the Preferred Stock. Solicitation, Voting and Revocation of Proxies In addition to soliciting proxies by mail, directors, officers and employees of the Companies, without receiving additional compensation therefor, may solicit proxies by telephone and in person. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares of the Companies' stock, and the Companies will reimburse such parties for reasonable out-of-pocket expenses incurred in connection therewith. The cost to Sugarland of soliciting proxies is being paid for by Sugarland, and the cost to MidSouth of soliciting proxies is being paid for by MidSouth. The proxies that accompany this Joint Proxy Statement and Prospectus permit each holder of record of the Companies' common stock on the applicable record date to vote on all matters that properly come before the Special Meeting or Annual Meeting. When a shareholder of Sugarland specifies his choice on the proxy with respect to the proposal to approve the Plan, the shares represented by the proxy will be voted in accordance with such specification. If no such specification is made, the shares represented by an executed proxy will be voted in favor of the proposal to approve the Plan. If a shareholder of Sugarland does not sign and return a proxy and specify on the proxy an instruction to vote against the Plan, he will not be able to exercise dissenters' rights with respect to the Holding Company Merger unless he attends the Special Meeting in person and votes against the Plan, and gives written notice of his dissent from the Plan at or prior to the Special Meeting. See "Dissenters' Rights." A shareholder of Sugarland may revoke his proxy by (i) giving written notice of revocation to Ronald R. Hebert, Sr., Secretary, Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544; or (ii) executing and delivering to Sugarland at any time before its exercise a later dated proxy or (iii) attending the Special Meeting and voting in person. Where a shareholder of MidSouth specifies his choice on the proxy with respect to the approval of the issuance of the Preferred Stock, the shares represented by proxy will be voted in accordance with such specification. If no such specification is made, the shares represented by an executed proxy will be voted in favor of the issuance of the Preferred Stock and in favor of the election of the Directors of MidSouth named in the proxy. An abstention or broker non-vote will not be counted in the determination of the total number of votes cast. A shareholder of MidSouth may revoke his proxy by (i) giving written notice of revocation to Karen L. Hail, Secretary, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501; or (ii) executing and delivering to MidSouth at any time before its exercise a later dated proxy or (iii) attending the Annual Meeting and voting in person. No matters are expected to be considered at the Special Meeting other than the proposal to approve the Plan, and no matters are expected to be considered at the Annual Meeting other than the proposal to approve the issuance of the Preferred Stock and the election of directors of MidSouth. If any other matters should properly come before either of the meetings, it is intended that proxies in the form accompanying this Joint Proxy Statement and Prospectus will be voted on all such matters in accordance with the judgment of the person(s) voting such proxies, except that no proxy given by any shareholder who voted against the Plan or the issuance of the Preferred Stock will be voted in favor of a proposal to adjourn the Meetings. THE PLAN General The transactions contemplated by the Plan are to be effected in accordance with the terms and conditions set forth in the Plan, which is incorporated herein by reference. The following brief description does not purport to be complete and is qualified in its entirety by reference to the Plan. For information concerning obtaining a copy of the Plan, see "Available Information." The ultimate result of the transactions contemplated by the Plan will be that the business and properties of the Bank will become the business and properties of MidSouth Bank, the business and properties of Sugarland will become the business and properties of MidSouth, and the shareholders of Sugarland will become shareholders of Preferred Stock of MidSouth. The steps taken to achieve this result involve the following transactions: (i) the Bank will be merged into MidSouth Bank and the separate existence of the Bank will cease; (ii) Sugarland will be merged into MidSouth and the separate existence of Sugarland will cease; and (iii) shareholders of Sugarland will receive the consideration described below under the heading "The Plan - Conversion of Sugarland Common Stock." Background of and Reasons for the Plan Background. In 1987, C.R. Cloutier, President of MidSouth and MidSouth Bank, and D.J. Tranchina, President of Sugarland and the Bank, first discussed generally the possibility of a business combination between the Companies and the Banks. After preliminary discussions, the Companies and the Banks each determined not to pursue a business combination at that time. In September 1993, Messrs. Cloutier and Tranchina again discussed in general terms the possibility of a business combination between the Companies and the Banks and expressed interest in exploring fully such a transaction. On April 13, 1994, Will G. Charbonnet, Sr., Chairman of the Board of MidSouth and MidSouth Bank, and Mr. Cloutier presented to Sugarland's Board of Directors a written proposal to merge the Companies and the Banks. Representatives of the Companies and the Banks continued to discuss the terms of a business combination. On May 26, 1994, Sugarland retained Chaffe & Associates, Inc. ("Chaffe") as its financial advisor in connection with a possible business combination with MidSouth, and on August 19, 1994, the Companies agreed to a confidentiality agreement and exchanged certain confidential information concerning their respective companies as a means of exploring further a business combination between the Companies. Over the next several months, the Companies exchanged drafts of a proposed merger agreement and engaged in detailed negotiations concerning the terms of the proposed Mergers. On December 8, 1994, the Boards of Directors of Sugarland and the Bank held a special joint meeting to consider the proposed Mergers. At the meeting, Sugarland's Board of Directors, management and legal and financial advisors reviewed the background of, and rationale for, the proposed Mergers, the terms of the Plan, the potential risks and benefits of the Mergers and the financial and evaluation analyses of the transaction. Chaffe delivered its opinion to Sugarland's Board of Directors, subsequently confirmed in writing, that the exchange ratio in the proposed merger of Sugarland and MidSouth was fair to Sugarland's shareholders, from a financial point of view, as of such date. On December 14, 1994, MidSouth's Board of Directors met and approved the proposed Mergers and the Plan. Reasons for the Plan. The Board of Directors of Sugarland believes that approval of the Plan is in the best interest of Sugarland and its shareholders. In reaching its decision to recommend the Plan, Sugarland's Board of Directors consulted with its financial and other advisors, as well as with Sugarland's management, and considered the following material factors: (a) The business, financial condition, results of operations and prospects of each of MidSouth and Sugarland; (b) The market for the Bank's services and the likelihood that the Bank would continue to face competitive pressures in its market area from banks and other financial institutions with greater financial resources capable of offering a broad array of financial services and operating on a narrower profit margin than the Bank; (c) The amount and type of consideration to be received by Sugarland's shareholders pursuant to the Plan; (d) The market price of MidSouth Common Stock; (e) The dividends to which Sugarland's shareholders would be entitled under the terms of the Preferred Stock; (f) Each of the Mergers is expected to qualify as a tax- free reorganization so that neither Sugarland nor its shareholders (except to the extent that cash is received in respect of their shares) will recognize any gain in the transaction (see "Certain Federal Income Tax Consequences"); and (g) The opinion received from Chaffe that the proposed Exchange Ratio (as defined in such opinion) is fair to Sugarland and its shareholders from a financial point of view (see "Opinion of Chaffe & Associates, Inc."). Sugarland's Board did not assign any specific or relative weight to the foregoing factors in its consideration of the Plan. Sugarland's Board of Directors believes that the Plan provides significant value to all Sugarland shareholders and will enable them to participate in opportunities for growth that Sugarland's Board of Directors believes the Mergers make possible. The Board of Directors of MidSouth believes that the Mergers are in the best interests of MidSouth and its shareholders. In addition to the financial terms, among the factors considered by the Board in approving the Plan were (i) the increased competitive advantages available to MidSouth Bank through the combined capital of the Banks and the economies of scale created as a result of the Mergers and (ii) the increased market share and additional markets available to MidSouth as a result of the Mergers. The financial and other terms of the Plan were arrived at through arm's length negotiations between representatives of the Companies. Determination of the consideration to be received by Sugarland's shareholders in exchange for their stock was based upon various factors considered by the Boards of the Companies, including primarily the comparative financial condition, historical results of operations, current business and future prospects of the Companies and the Banks, the market price and historical earnings per share of the common stock of the Companies, and the desirability of combining the financial and managerial resources of MidSouth Bank and the Bank to pursue available consumer and commercial banking business in Lafayette, Jefferson, Iberia and St. Martin Parishes and surrounding areas. The Board of Directors of Sugarland approved the Plan and recommends that its shareholders vote FOR approval of the Plan. The Board of Directors of MidSouth unanimously approved the Plan and recommends that its shareholders approve the issuance of the Preferred Stock. Opinion of Chaffe & Associates, Inc. General.Pursuant to an engagement letter dated as of May 26, 1994 (the "Engagement Letter"), Sugarland retained Chaffe to act as its financial advisor in connection with its evaluation of a possible business combination with MidSouth, including providing certain analyses of the financial terms of the Mergers. Chaffe is a recognized investment banking firm and is experienced in the securities industry, in investment analysis and appraisal and in related corporate finance and investment banking activities, including mergers and acquisitions, corporate recapitalizations and valuations for estate, corporate and other purposes. It regularly is retained to perform similar services for other banks and bank holding companies. Sugarland selected Chaffe as its financial advisor on the basis of its experience and expertise in transactions similar to the Mergers and its reputation in the banking and investment communities. In connection with its engagement as Sugarland's financial advisor with respect to the Mergers, Chaffe was instructed to evaluate the fairness to Sugarland shareholders, from a financial point of view, of the Exchange Ratio (as defined in Chaffe's opinion) in the Mergers. Sugarland did not place any limitations on the scope or manner of Chaffe's investigations and review, and instructed Chaffe to conduct such investigations as it deemed appropriate for purposes of its evaluation. Chaffe was also engaged to provide a valuation of Sugarland Common Stock and to advise Sugarland in its negotiations with MidSouth concerning the consideration to be received by Sugarland's shareholders pursuant to the Plan. Such consideration was determined by Sugarland and MidSouth in their negotiation of the terms of the Plan. At July 13 and August 10, 1994 meetings of Sugarland's Board of Directors, Chaffe made presentations and presented reports to the Board concerning the proposed Mergers. On December 30, 1994, Chaffe delivered its written opinion that, based upon and subject to the assumptions made, the factors considered, the review undertaken and the limitations stated in such opinion and such other matters as Chaffe considered relevant, the Exchange Ratio in the Holding Company Merger was fair to Sugarland and its shareholders from a financial point of view, as of the date of such written opinion. The full text of Chaffe's written opinion to the Sugarland Board of Directors, which sets forth the assumptions made, matters considered, and limitations of the review by Chaffe, is attached hereto as Appendix A and is incorporated herein by reference. The opinion should be read carefully and in its entirety in connection with this Joint Proxy Statement and Prospectus. The following summary of Chaffe's opinion is qualified in its entirety by reference to the full text of the opinion. Chaffe's opinion does not constitute a recommendation to any shareholder of Sugarland as to how such shareholder should vote at the Special Meeting. In connection with rendering its December 30, 1994 opinion, Chaffe reviewed materials relating to the Mergers and the financial and operating condition of the Companies, including, among other information: (i) the Plan; (ii) Sugarland's audited financial statements and other data for recent years and interim periods through September 30, 1994; (iii) the Bank's 1994 budget; (iv) MidSouth's audited financial statements and other data for recent years and interim periods through September 30, 1994; and (v) statistical and financial information for Sugarland and MidSouth and for comparable companies derived from various statistical services, as well as certain publicly available information and analyses relating to them. In addition, Chaffe reviewed certain historical market information for Sugarland Common Stock, for which no independent trading market exists, and certain historical market prices and trading volumes of MidSouth Common Stock on the AMEX. In reporting such information to Sugarland's Board of Directors, Chaffe noted that although there is an independent market for MidSouth Common Stock and there is expected to be an independent market for the Preferred Stock, such stocks are or will be, respectively, thinly traded. Set forth below is a brief summary of selected analyses performed by Chaffe in connection with its opinion and the reports presented by Chaffe to the Sugarland Board of Directors on July 13, 1994 and August 10, 1994 in connection therewith. The summary set forth below describes the material evaluation methodologies performed by, and material factors considered by, Chaffe. Chaffe's opinion was based on economic, market and other conditions existing as of December 30, 1994, the date of its opinion, and Chaffe expressed no opinion on the tax consequences of the Plan or the effect of any tax consequences on the value received by the holders of Sugarland Common Stock in the Mergers. Chaffe has not been engaged to reconfirm its opinions. In connection with rendering its opinion and preparing its presentations to the Sugarland Board of Directors, Chaffe performed a variety of financial analyses. Chaffe reviewed the financial terms of business combinations in the commercial banking industry considered a number of valuation methodologies, including, among others, those that incorporate book value, deposit base premium and capitalization of earnings; and performed such other studies and analyses as Chaffe deemed relevant for purposes of its opinion. Chaffe also analyzed the terms of the MidSouth Preferred Stock. Analysis of the Companies. Chaffe analyzed the historical performance of Sugarland and MidSouth, and considered the current financial condition, results of operations and prospects of each. Chaffe analyzed information and data provided by the management of each of Sugarland and MidSouth concerning such company's respective loans, other real estate owned, securities portfolio, fixed assets and operations. With respect to all information reviewed by it relating to the Companies, Chaffe relied, without independent verification, upon the accuracy and completeness of such information. Chaffe did not perform an independent review of the assets or liabilities of Sugarland or MidSouth, and relied solely on the Companies for information as to the condition of each company's loan portfolio, the adequacy of its loan loss reserve and the value of other real estate owned. In reviewing Sugarland, Chaffe observed that the Bank's improved earnings in 1993 were primarily the result of a decreased cost of funds and a low effective tax rate derived from the availability of a net operating loss carry forward. This lower funding cost and tax benefit was a key factor in Sugarland's 1993 profitability. Chaffe noted that Sugarland's 1994 budget projected earnings to be 26.6% less than 1993 earnings, primarily as a result of a shrinking net interest margin. The tax benefit available to Sugarland as a result of the net operating loss carry forward was projected to be unavailable in 1994, making it likely that Sugarland will return to statutory tax rates. Sugarland is experiencing increased competition in its marketplace from new entrants paying higher yields on deposits, and offering lower rates on loans. Chaffe also noted Sugarland's concentration of agricultural loans and observed that prospects for the local agricultural industry were uncertain as a result of the North American Free Trade Agreement. Finally, Chaffe observe that Sugarland's high level of overhead expense was likely to continue to place downward pressure on earnings as Sugarland responded to government regulation and competitive pressures. Analysis of Selected Merger Transactions. In connection with its July 13, 1994 meeting with Sugarland's Board of Directors, Chaffe analyzed premiums paid in acquisitions of selected banks and bank holding companies whose asset size, leverage ratio and return on average assets were comparable to Sugarland's (the "U.S. Peer Group"). Transactions considered in this analysis were those throughout the United States between March 31, 1993 and June 24, 1994, in which the seller's total assets were between $10 million and $50 million, leverage ratio was between 9.0% and 15.0%, and return on average assets was between 0.75% and 1.50%. Chaffe also analyzed premiums paid in acquisitions of selected banks and bank holding companies located in 16 states in the southern United States (the "Southern Peer Group"). Finally, Chaffe analyzed premiums paid in substantially all acquisitions of Louisiana banks from March 31, 1993 through July 12, 1994 (the "Louisiana Acquisitions"). For each bank acquired or to be acquired in such transactions, Chaffe compared the prices to be received by the shareholders of each institution being acquired as a multiple of its tangible equity, its earnings per share for the four quarters prior to such a transaction, its premium over tangible equity to core deposits, and its total assets. The figures for the U.S. Peer Group, Southern Peer Group and Louisiana Acquisitions produced: (i) median percentages of premium (purchase price in excess of tangible equity) to core deposits of 5.44%, 5.72% and 10.73%, respectively; (ii) median ratios of purchase price to tangible equity of 1.44x, 1.45x and 1.86x, respectively; (iii) median ratios of purchase price to earnings per share for the four quarters prior to transaction of 15.52x, 16.59x and 13.05x, respectively, and (iv) median percentages of purchase price to assets of 14.88%, 15.32% and 17.32%, respectively. In comparison, assuming the consideration to be paid in the Mergers for each share of Sugarland Common Stock equals that number of shares of MidSouth Preferred Stock with a stated value of $14.25, Chaffe determined that the consideration to be received by the holders of Sugarland Common Stock in the Mergers represented a percentage of premium to core deposits of 3.46%, a ratio of price to tangible equity of 1.20x, a ratio of price to Sugarland's earnings for the twelve months ended March 31, 1994 of 14.12x, a ratio of price to Sugarland's 1994 budgeted earnings of 18.93x, and a percentage of price to assets of 14.34%. Prior to rendering its opinion, Chaffe updated the above-referenced analysis through November 25, 1994. With respect to each of the above-referenced groups of transactions and the proposed Merger, Chaffe compared the prices to be received by the peer groups in the manner described above, and such analysis yielded results substantially similar to those stated above. Chaffe observed that the stated value of the MidSouth Preferred Stock represented percentages of premium to core deposits and price to assets, and ratios of price to tangible equity and price to earnings for the twelve months ended March 31, 1994, that were less than many of the median percentages and ratios produced for the preer group acquisitions. Conclusions based on the foregoing analysis are not mathematical; rather, an analysis of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value or the acquisition value of the companies to which Sugarland is being compared. Chaffe believed that, given Sugarland's earnings profile, the value to be received by holders of Sugarland Common Stock in the Mergers was within an acceptable range of value indicated by the above analysis as a whole. Chaffe noted that Sugarland's 1994 budgeted earnings were generally in line with Sugarland's actual performance through March 31, 1994 and slightly below actual performance through November 25, 1994. Chaffe noted that the consideration to be paid in the Mergers represented a very high multiple of price to Sugarland's 1994 budgeted earnings. Chaffe believed Sugarland's 1994 budgeted earnings more fairly represented Sugarland's future core earnings capacity than its earnings for the twelve months ended March 31, 1994. Discounted Earnings Analysis. In connection with its July 13, 1994 meeting with Sugarland's Board of Directors, Chaffe calculated, using discounted earnings analysis, the present value of the stream of after-tax cash flows that Sugarland could produce in the future. Chaffe estimated the earnings stream through 2000 and a terminal value after 2000 based upon information provided by Sugarland management, and then discounted such values, using an estimated required rate of return for Sugarland of 12.0%. Chaffe determined that the stated value of the MidSouth Preferred Stock to be received by the holders of Sugarland Common Stock was substantially in excess of the value indicated for Sugarland Common Stock by this type of analysis. Additional earnings analyses were performed at the time of the December 30, 1994 opinion, applying similar methodology and discount rates to the above-described earnings analysis and yielding substantially similar results. Dilution Analysis. Sugarland earned $0.18 per share for the three months ended March 31, 1994. MidSouth earned $0.32 per share for the three months ended March 31, 1994. If the Mergers had been consummated at January 1, 1994 and all the Preferred Stock been converted into MidSouth Common Stock immediately after the consummation of the Mergers, each former Sugarland share would have earned approximately $0.29 per share on a pro forma basis for the three months ended March 31, 1994, giving effect to the immediate conversion of the Preferred Stock, the applicable exchange ratio and amortization of goodwill. This represented an increase of 60% over Sugarland's earnings per share for the three months ended March 31, 1994. The expected impact of the Mergers on Sugarland's earnings per share under the foregoing analysis was similar for the three months ended March 31, 1994 and the nine months ended September 30, 1994. Sugarland's book value per share was $11.47 at March 31, 1994. The stated value per share of the MidSouth Preferred Stock is $14.25. This represented an increase of 24% over the book value per share of Sugarland Common Stock at March 31, 1994. If the Mergers had been consummated at March 31, 1994 and all the Preferred Stock been converted into MidSouth Common Stock immediately after the consummation of the Mergers, each former Sugarland share would have a book value of $8.81 on a pro forma basis, giving effect to the immediate conversion of the Preferred Stock and the applicable exchange ratio. This represented a decrease of 23% from the book value per share of Sugarland Common Stock at March 31, 1994. The expected impact of the Mergers on the book value of Sugarland Common Stock under the foregoing analysis was similar at March 31, 1994 and September 30, 1994. Analysis of MidSouth Preferred Stock. In connection with its August 10, 1994 meeting with Sugarland's Board of Directors, Chaffe examined the proposed terms of the MidSouth Preferred Stock. By using discounted cash flow and option valuation models, Chaffe considered the appropriate market rate for the Preferred Stock, certain information concerning MidSouth Common Stock and proposed conversion provisions for the MidSouth Preferred Stock. Chaffe considered the value of the Preferred Stock based upon assumptions that the Preferred Stock would be redeemed after five years and that the Preferred Stock would not be redeemed. In addition, Chaffe considered the value of the Preferred Stock by taking into account the fact that the Preferred Stock is convertible into MidSouth Common Stock and by excluding any valuation of the convertibility of the Preferred Stock. Under all circumstances, Chaffe determined that the value of the Preferred Stock was within an appropriate range of fair value for the Sugarland Common Stock. Sugarland declared cash dividends of $.20 per share of Sugarland Common Stock in 1993. At the time of Chaffe's August 10, 1994 meeting with Sugarland's Board of Directors, under the proposed terms of the Preferred Stock, each share of Preferred Stock would have yielded dividends at a rate of 6.58% per annum. This yield equated to a dividend per each Sugarland share of $.94, which represented a 370% increase over Sugarland's 1993 Common Stock dividend. In this analysis, Chaffe considered MidSouth's ability to pay dividends on the Preferred Stock, and the fact that there were restrictions in a MidSouth debt instrument on the payment by MidSouth of any dividends, but was advised by MidSouth that such restrictions had been waived in writing by the holder of such instrument. The foregoing summary does not purport to be a complete description of the analyses performed by Chaffe. The preparation of an opinion necessarily is not susceptible to partial analysis or summary description. Chaffe believes that the summary set forth above and Chaffe's analyses must be considered as a whole and that selecting only a portion of its analyses, without considering all of its analyses, creates an incomplete view of the process underlying Chaffe's opinion. The analyses performed by Chaffe are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at the present time or any time in the future. Chaffe may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Chaffe's view of the actual value of Sugarland, MidSouth or the combined Companies. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis. To date, Sugarland has paid Chaffe $28,581.74 in fees and out-of-pocket expenses for the financial advisory services referred to above, including its services in rendering the opinion. For other services requested of Chaffe by Sugarland, Sugarland has agreed to pay Chaffe on an hourly basis. Sugarland's Management estimates that the total fees and costs to be paid to Chaffe in connection with the Mergers will be approximately $30,000, including all amounts previously paid. According to Chaffe, these amounts are insignificant when compared to Chaffe's total gross revenues. The fees received by Chaffe in connection with its services to Sugarland are not dependent upon consummation of the Mergers or any similar transaction, or shareholder or regulatory approval of the Plan. Prior to its retention in May 1994 as Sugarland's financial advisor, Chaffe had provided no services to Sugarland. Chaffe has not provided any services to MidSouth. Neither Chaffe nor any of its officers or employees has any interest in Sugarland Common Stock, MidSouth Common Stock or MidSouth Preferred Stock. Pursuant to the Engagement Letter, Sugarland has agreed to indemnify and hold harmless Chaffe, its subsidiaries and affiliates, the officers, directors, shareholders, employees, attorneys, agents and representatives of Chaffe and its subsidiaries and affiliates, and their respective heirs, legatees, legal representatives, successors and assigns from and against any and all damage, loss, cost, expense, obligation, claim or liability, including reasonable attorneys fees and expenses arising directly or indirectly from, or in any way related to, the opinion or any other services performed by Chaffe pursuant to the Engagement Letter, provided that Chaffe and its officers, directors, employees, agents and representatives have not been grossly negligent or guilty of reckless or willful misconduct in connection with the opinion or such other services. Conversion of Sugarland Common Stock In consideration of the Mergers, each share of Sugarland Common Stock outstanding on the date the Holding Company Merger becomes effective (the "Effective Date") will be converted into one share of MidSouth Preferred Stock having the rights and preferences described below under the heading "Rights and Preferences of MidSouth Preferred Stock." Pursuant to resolutions adopted by the Board of Directors of MidSouth and Sugarland, the deadline for consummating the Mergers has been extended until July 31, 1995, and if the Mergers are not consummated by that date, the Companies may terminate the Plan or waive their right to do so and consummate the Mergers at a later date. However, the Companies intend for the Mergers to be effected as soon as possible after the Annual Meeting and the Special Meeting. Shareholders who perfect dissenters' rights will not receive MidSouth Preferred Stock but instead will be entitled to receive the "fair cash value" of their shares as determined under Section 131 of the Louisiana Business Corporation Law (the "LBCL"). See "Dissenters' Rights." In lieu of the issuance of any fractional share of MidSouth Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each shareholder of Sugarland, upon surrender of the certificate or certificates which immediately prior to the Effective Date represented Sugarland Common Stock held by such shareholder, will be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by $14.25, the stated value of a share of Preferred Stock. For information regarding restrictions on the transfer of the Preferred Stock by certain Sugarland shareholders, see "Status under Federal Securities Laws; Certain Restrictions on Resales." Effective Date The Bank Merger Agreement has been filed with the Office of the United States Comptroller of the Currency (the "OCC"), and will be filed for recordation with the Louisiana Commissioner of Financial Institutions (the "Commissioner"), and the Bank Merger will be effective at the time and date specified in a certificate or other written record issued by the OCC, or in the Certificate of Merger issued by the Commissioner, whichever date is later. A Certificate of Merger with respect to the Holding Company Merger will be filed for recordation with the Louisiana Secretary of State as soon as practicable after shareholder approval is obtained and all other conditions to the consummation of the Mergers have been satisfied or waived, and the Holding Company Merger will be effective at the date and time specified in a certificate issued by the Secretary of State. It is intended that the Bank Merger will be consummated immediately after consummation of the Holding Company Merger. The Companies are not able to predict the Effective Date of the Bank Merger or the Holding Company Merger, and no assurance can be given that the transactions contemplated by the Plan will be effected at any time. See "The Plan - Regulatory Approvals and Other Conditions of the Mergers." Exchange of Certificates On the Effective Date, each Sugarland shareholder will cease to have any rights as a shareholder of Sugarland, and his sole rights will pertain to the shares of MidSouth Preferred Stock into which his shares of Sugarland Common Stock have been converted pursuant to the Holding Company Merger, except for any such shareholder who exercises statutory dissenters' rights and except for the right to receive cash for any fractional share. See "Dissenters' Rights." Upon the consummation of the Mergers, a letter of transmittal, together with instructions for the exchange of certificates representing shares of Sugarland Common Stock for certificates representing shares of MidSouth Preferred Stock will be mailed to each person who was a shareholder of record of Sugarland on the Effective Date of the Mergers. Shareholders are requested not to send in their Sugarland Common Stock certificates until they have received a letter of transmittal and further written instructions. After the Effective Date and until surrendered, certificates representing Sugarland Common Stock will be deemed for all purposes, other than the payment of dividends or other distributions, if any, in respect of MidSouth Preferred Stock, to represent the number of whole shares of MidSouth Preferred Stock into which such shares of Sugarland Common Stock have been converted. MidSouth, at its option, may decline to pay former shareholders of Sugarland who become holders of MidSouth Preferred Stock pursuant to the Holding Company Merger any dividends or other distributions that may have become payable to holders of record of MidSouth Preferred Stock following the Effective Date until they have surrendered their certificates evidencing ownership of shares of Sugarland Common Stock. Any dividends not paid after one year from the date that such dividends were eligible to be paid will revert in ownership to MidSouth, and MidSouth will have no further obligation to pay such dividends. Sugarland shareholders who cannot locate their certificates are urged to contact promptly Ronald A. Hebert, Sr., Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544, telephone number (318) 276-6307. A new certificate will be issued to replace the lost certificate(s) only upon execution by the shareholder of an affidavit certifying that his or her certificate(s) cannot be located and an agreement to indemnify Sugarland or MidSouth, as its successor, against any claim that may be made against them by the owner of the certificate(s) alleged to have been lost or destroyed. Either of the Companies may also require the shareholder to post a bond in such sum as is sufficient to support the shareholder's agreement to indemnify them. Regulatory Approvals and Other Conditions of the Mergers In addition to shareholder approvals, consummation of the Mergers will require the approval of the OCC, and approval or waiver of prior approval from the FRB. On January 25, 1995, MidSouth filed an application seeking the prior approval of the Bank Merger from the OCC and, by letter dated January 30, 1995, requested a waiver of prior approval from the FRB. MidSouth received OCC approval of the Mergers on March 22, 1995, and confirmation of waiver of prior approval from the FRB on March 17, 1995. The obligations of the parties to the Plan are also subject to other conditions set forth in the Plan, including, among others: (i) that no action or proceeding has been brought before a court or governmental body to restrain or prohibit the Mergers; (ii) that prior to the Effective Date there has not been a material adverse change in the financial condition, results of operations, business or prospects of the other party or its subsidiary; (iii) the receipt of customary legal opinions; (iv) that on the date of closing, the representations and warranties made in the Plan by each party are true and correct in all material respects; and (v) the receipt by MidSouth and Sugarland of an opinion from Deloitte & Touche LLP to the effect that the Mergers will constitute a reorganization within the meaning of Section 368(c) of the Internal Revenue Code and that the shareholders of Sugarland will not recognize gain or loss with respect to the shares of Preferred Stock received in the Holding Company Merger. The obligations of MidSouth and MidSouth Bank to consummate the Mergers are also conditioned upon, among other things, that MidSouth has received satisfactory assurance from the FRB or delegated authority that the Preferred Stock will be treated as Tier 1 Capital for the purpose of the capital adequacy guidelines of the FRB; and confirmation from the directors, executive officers and certain principal shareholders of Sugarland as to representations and covenants previously made by them as described under "The Plan - Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders." The Companies intend to consummate the Mergers as soon as practicable after all of the conditions to the Mergers have been met or waived; however, there can be no assurance that the conditions to the Mergers will be satisfied. Conduct of Business Prior to the Effective Date Sugarland and the Bank have agreed pursuant to the Plan that, prior to the Effective Date, each will conduct its business only in the ordinary course and that, without the prior written consent of the Chief Executive Officer of MidSouth or his duly authorized designee, and except as otherwise provided in the Plan, Sugarland and the Bank will not, among other things, (a) declare or pay any dividend or change the number of outstanding shares of its capital stock; (b) amend its articles of incorporation or bylaws or adopt or amend any resolution or agreement concerning indemnification of its directors and officers; (c) merge or consolidate with another entity, or sell or dispose of a substantial part of its assets, or except in the ordinary course of business, sell any of its assets; (d) acquire or dispose of investment securities having an aggregate market value greater than 10% of the aggregate book value of its investment securities portfolio as of September 30, 1994; or acquire any investment securities that are less than investment grade, or acquire or dispose of investment securities except in the ordinary course of business; (e) charge off (except as may otherwise be required by law or regulatory authorities or generally accepted accounting principles consistently applied) or sell (except for a price not less than the book value thereof) any of its portfolio of loans, discounts or financing leases; or sell any asset held as other real estate or other foreclosed assets for an amount less than 100% of its book value as of September 30, 1994; or sell any asset held as other real estate or other foreclosed assets that had a book value at September 30, 1994 in excess of $25,000; (f) enter into or modify any agreement pertaining to compensation arrangements with its present or former directors, officers or employees or increase the compensation of such persons, except for budgeted bonuses or other incentive payments in amounts previously disclosed to the Chief Executive Officer of MidSouth; (g) except in the ordinary course of business consistent with past practices, place or suffer to exist on any of its assets any mortgage, pledge or other encumbrance (except as allowed under the Plan) or cancel any material indebtedness owing to it or any claims which it may possess, or waive any right of substantial value or discharge or satisfy any material noncurrent liability; (h) make any extension of credit which, together with all other extensions of credit to the borrower and its affiliates, would exceed $100,000, or, without reasonable prior notice to the Chief Executive Officer of MidSouth, or his designee, commit to make any extensions of new credit in excess of $50,000; (i) fail to pay, or make adequate provision in all material respects for the payment of, all taxes, interest payments and penalties due and payable, except those being contested in good faith by appropriate proceedings and for which sufficient reserves have been established; or (j) enter into any new line of business. In addition, Sugarland and the Bank have agreed that, without the prior approval of the Chief Executive Officer of MidSouth or his designee, they will not solicit or initiate inquiries or proposals with respect to, or, except as may be necessary as advised in writing by their counsel to discharge properly their fiduciary duties to Sugarland, the Bank and their Shareholders, furnish any information relating to, or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, or any business combination with Sugarland or the Bank, other than as contemplated by the Plan. Each of Sugarland and the Bank has also agreed to instruct its officers, directors, agents and affiliates to refrain from doing any of the above and to notify MidSouth immediately if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated with, it or any of its officers, directors, agents and affiliates. Further, Sugarland has committed that neither Sugarland's Board of Directors nor any committee thereof will (i) withdraw or modify or propose to withdraw or modify in a manner adverse to MidSouth the approval or recommendation to its shareholders of the Plan and the Mergers, (ii) approve or recommend, or propose to recommend any takeover proposal with respect to Sugarland or the Bank, except such action that its counsel advises in writing is necessary to discharge its fiduciary duties to Sugarland and its shareholders, or (iii) modify, or waive or release any party from any material provision of or fail to enforce any material provision of, if enforcement is requested by MidSouth, any confidentiality agreement entered into by Sugarland or the Bank with any prospective acquiror after the date of the Plan or during the two years prior to such date. Waiver, Amendment and Termination The Plan provides that the parties thereto may waive any of the conditions to their respective obligations to consummate the Mergers other than the receipt of necessary regulatory approvals, shareholder approvals of the Plan, the satisfaction of all conditions prescribed by law for consummation of the Mergers and certain other conditions that have already been satisfied. A waiver must be in writing and approved by the Board of Directors of the waiving party. Neither MidSouth nor Sugarland intend to waive any condition if such waiver would have a material adverse effect on its own shareholders. The Plan, including all related agreements, may be amended or modified at any time, before or after shareholder approval, by the mutual agreement in writing of the Boards of Directors of the parties to the Plan; provided that, under the LBCL any amendment made subsequent to such shareholder approval may not alter the amount or type of shares into which Sugarland's Common Stock will be converted, or alter any term or condition of the Plan in a manner that would adversely affect any shareholder of Sugarland. Additionally, the Plan may be amended at any time by the sole action of the Chief Executive Officers of the respective parties to the Plan or their designees to correct typographical errors or other misstatements, or in any other manner, which is not material to the substance of the transactions contemplated by the Plan. Any such amendment after the Plan has been approved by Sugarland's shareholders will require Sugarland to obtain additional shareholder approval and to hold another meeting of its shareholders and solicit additional proxies. While MidSouth is entitled to amend the Plan without approval of its shareholders in any respect other than to increase the amount of shares of Preferred Stock issuable thereunder, it does not intend to enter into any material amendment. The Plan may be terminated at any time prior to the Effective Date by (i) the mutual consent of the respective Boards of Directors of the Companies; (ii) the Board of Directors of either MidSouth or Sugarland in the event of a material breach by the other or its subsidiary of any representation, warranty or covenant contained in the Plan which cannot be cured by the earlier of 10 days after written notice of such breach or July 31, 1995; (iii) the Board of Directors of either MidSouth or Sugarland if by July 31, 1995 all conditions to consummating the Mergers required by the Plan have not been met or waived, cannot be met, or the Mergers have not occurred; (iv) the Board of Directors of MidSouth if the number of shares of Sugarland Common Stock as to which holders thereof are, at the time of the closing, legally entitled to assert dissenters' rights exceeds 5% of the total number of issued and outstanding shares of Sugarland Common Stock on the Effective Date; or (v) the Board of Directors of MidSouth if the Board of Directors of Sugarland (A) withdraws, modifies or changes its recommendation to its shareholders regarding the Plan and the Mergers or shall have resolved to do any of the foregoing, (B) recommends to its shareholders (1) any merger, consolidation, share exchange, business combination or other similar transaction (other than transactions contemplated by the Plan), (2) any sale, lease, transfer or other disposition of all or substantially all of the assets of Sugarland or the Bank, or (3) any acquisition, by any person or group, of beneficial ownership of one third or more of any class of Sugarland's capital stock, or (C) makes any announcement of a proposal, plan or intention to do any of the foregoing or agreement to engage in any of the foregoing. Interests of Certain Persons in the Mergers Pursuant to the Plan, MidSouth and MidSouth Bank have agreed that, following the Effective Date, they will indemnify each person who as of the Effective Date served as an officer or director of Sugarland or the Bank, or who has previously served as an officer or director of Sugarland or the Bank at any time since December 31, 1992 (an "Indemnified Person") from and against all damages, liabilities, judgments and claims, and related expenses, based upon or arising out of such person's service as an officer or director of Sugarland or the Bank, to the same extent as he would have been indemnified under the Articles or Bylaws of Sugarland or the Bank, as appropriate, as such Articles or Bylaws were in effect on December 28, 1994. The aggregate amount of indemnification payments required to be made by MidSouth and MidSouth Bank pursuant to the Plan is $1.2 million. Indemnification otherwise required to be paid by MidSouth or MidSouth Bank will be reduced by any amounts that the Indemnified Person recovers by virtue of the claim for which indemnification is sought, and no Indemnified Person is entitled to indemnification for any claim made prior to the closing date of which the Indemnified Person, Sugarland or the Bank was aware but did not disclose to MidSouth prior to the execution of the Plan (if such claim was known at such time) or prior to the closing date (if such claim became known after execution of the Plan). Receipt of the indemnification benefits set forth in the Plan by a director or officer of Sugarland and the Bank is conditioned upon his execution of an agreement described in more detail under the heading "Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders." Any claim for indemnification pursuant to the Plan must be submitted in writing to MidSouth's Chief Executive Officer prior to December 28, 1999. MidSouth has also agreed to indemnify Sugarland, the Bank, and each of the directors, officers and controlling persons of Sugarland against any claim insofar as it arises from, or is based upon, an untrue statement or omission, or alleged untrue statement or omission, of a material fact in the Registration Statement or the Joint Proxy Statement and Prospectus to the extent that such untrue statement or omission was not made in reliance on, and in conformance with, information furnished to MidSouth by Sugarland. The $1.2 million limit on MidSouth's indemnification obligation discussed above does not apply to MidSouth's indemnification obligations with respect to the Registration Statement and Joint Proxy Statement and Prospectus. Any person making a claim for indemnification for damages arising from misstatements or omissions in the Registration Statement or Joint Proxy Statement and Prospectus must promptly notify MidSouth of any such claim. MidSouth shall have the right to assume the defense thereof and will not be liable for any expenses subsequently incurred by such person in connection with the defense thereof, except that if MidSouth does not assume such defense, or counsel for the person making a claim is advised in writing that there are material substantive issues that raise conflicts of interest between MidSouth and such person, the person claiming indemnification may retain counsel satisfactory to him and MidSouth shall pay all reasonable fees and expenses of such counsel, provided that (i) MidSouth shall be obligated to pay for only one counsel for all persons making a claim in any jurisdiction, (ii) all such persons will cooperate in the defense of their claims, and (iii) MidSouth will not be liable for any settlement effected without its prior written consent. MidSouth and MidSouth Bank have agreed to continue the employment of D. J. Tranchina, the President and a director of Sugarland and the Bank, for not less than three years at an annual salary of $66,000, the same salary at which is currently employed by Sugarland. MidSouth and MidSouth Bank have also agreed to continue the employment, for not less than two years, of Irving Boudreaux, Vice-President of the Bank, Gwen Granger, Senior Vice-President and Cashier of the Bank, and Susan Davis, Assistant Vice-President of the Bank, at their current salaries of $45,600, $38,400 and $27,000 respectively. None of the foregoing persons will be directors or executive officers of MidSouth or MidSouth Bank. Voting and Other Agreements of Sugarland's Directors, Executive Officers and Five-Percent Shareholders As a condition to consummation of the Mergers, each Sugarland director and executive officer and each shareholder owning 5% or more of Sugarland Common Stock has executed an individual agreement (a "Joinder Agreement") pursuant to which he has agreed (i) solely in his capacity as a shareholder of Sugarland, to vote in favor of the Plan and against any other proposal relating to the sale or disposition of the Bank or Sugarland, unless MidSouth or MidSouth Bank is in breach or default in any material respect with regard to any covenant, representation or warranty as to it contained in the Plan to an extent that would permit Sugarland to terminate the Plan pursuant to the terms thereof; (ii) not to transfer any of the shares of Sugarland Common Stock over which he has dispositive power, or grant any proxy thereto not approved by MidSouth, until the earlier of the Effective Date or the date that the Plan has been terminated, except for transfers by operation of law or transfers in connection with which the transferee agrees to be bound by the Joinder Agreement; (iii) not to purchase, sell or otherwise deal in MidSouth Common Stock until the Effective Date or termination of the Plan; (iv) to release, as of the Effective Date, MidSouth and MidSouth Bank from any obligation that either of them may have to indemnify such shareholder for acts taken as an officer, director or employee of Sugarland or the Bank, except to the extent set forth in the Plan; (v) prior to the Effective Date or until termination of the Plan, and except to the extent required to discharge properly his fiduciary duties as a director of Sugarland, not to solicit, encourage, initiate or participate in any negotiations or discussions concerning the acquisition of all or a substantial portion of the assets of, or of a substantial equity interest in, or any business combination with, Sugarland or the Bank, without the prior approval of the Chief Executive Officer of MidSouth or his designees, and to notify MidSouth immediately if any such proposals or inquiries are received by him; and (vi) for a period of two years following the Effective Date, not to serve as a director, officer, employee or advisor of, or have any investment in any financial institution that competes with the business of Bank as continued by MidSouth Bank in Iberia and Lafayette Parishes; however, such person may continue to hold any investment that he held on the date of the Joinder Agreement and may make an investment in any such financial institution if the investment does not materially enhance the ability of such institution to compete with MidSouth Bank. Employee Benefits Pursuant to the Plan, MidSouth has agreed that, from and after the Effective Date, MidSouth and MidSouth Bank will offer to all persons who were employees of Sugarland or the Bank immediately prior to the Effective Date and who become employees of MidSouth or MidSouth Bank following the Mergers, the same employee benefits as are offered by MidSouth or MidSouth Bank, as the case may be, to its employees, except that there will not be a waiting period for coverage under any of its plans, and no employee of Sugarland or the Bank who is an active employee on the Effective Date will be denied such benefits for a pre- existing condition. Full credit will be given for prior service by such employees with Sugarland or the Bank for eligibility and vesting purposes under all of MidSouth's or MidSouth Bank's benefit plans and policies. In addition, all benefits accrued through the Effective Date under Sugarland's and the Bank's benefit plans will be paid by MidSouth or MidSouth Bank to the extent such benefits are not otherwise provided to such employees under the benefit plans of MidSouth or MidSouth Bank. Expenses The Plan provides that regardless of whether the Mergers are consummated, expenses incurred in connection with the Plan and the transactions contemplated thereby shall be borne by the party that has incurred them. If certain expenses incurred by Sugarland relating to the Mergers exceed $110,000, the amount of such expenses in excess of $110,000 will be deducted from the aggregate initial dividend payment and, if necessary, subsequent dividend payments due to holders of Preferred Stock, resulting in a pro rata reduction of the dividend payment due to each holder of Preferred Stock. See "Rights and Preferences of MidSouth Preferred Stock - Dividend Rights." Status Under Federal Securities Laws; Certain Restrictions on Resales The shares of Preferred Stock to be issued to shareholders of Sugarland pursuant to the Plan have been registered under the Securities Act of 1933 (the "Securities Act") thereby allowing such shares to be freely transferred without restriction by persons who will not be "affiliates" of MidSouth or who were not "affiliates" of Sugarland, as that term is defined in the Securities Act. In general, affiliates of Sugarland include its executive officers and directors and any person who controls, is controlled by or is under common control with Sugarland. Rule 145, among other things, imposes certain restrictions upon the resale of securities received by affiliates in connection with certain reclassifications, mergers, consolidations or asset transfers. MidSouth Preferred Stock received by affiliates of Sugarland will be subject to the applicable resale limitations of Rule 145. Such persons will not be able to resell the Preferred Stock received by them pursuant to the Holding Company Merger unless such stock is registered for resale under the Securities Act or an exemption from the registration requirements of the Securities Act is available. All such persons should carefully consider the limitations imposed by Rules 144 and 145 under the Securities Act prior to effecting any resales of Preferred Stock. Sugarland has agreed to use its best efforts to cause each of its directors and executive officers and each person who is a beneficial owner of 5% or more of the outstanding Sugarland Common Stock (each of whom may be deemed to be an "affiliate" under the Securities Act) to enter into an agreement not to sell shares of MidSouth Preferred Stock received by him in violation of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder. Accounting Treatment It is anticipated that the Mergers will be accounted for as a "purchase," as that term is used pursuant to generally accepted accounting principles for accounting and financial reporting purposes. Under the purchase method of accounting, the assets and liabilities of Sugarland as of the Effective Date will be recorded at their estimated respective fair values and added to those of MidSouth. Financial statements of MidSouth issued after the Effective Date will reflect such values and will not be restated retroactively to reflect the historical financial position or results of operations of Sugarland. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Deloitte & Touche has rendered the following opinion on the material federal income tax consequences of the mergers. Based on certain facts presented to Deloitte & Touche by the Companies and in the Plan, the Joint Proxy Statement and Prospectus contained in the Registration Statement filed with the Securities and Exchange Commission on April 7, 1995, the representations of facts as set forth in MidSouth's and Sugarland's letters of representations dated May 30, 1995, it is our opinion that the federal income tax consequences of the proposed merger of Sugarland with and into MidSouth, with MidSouth surviving, and the proposed merger of the Bank with and into MidSouth Bank, with MidSouth Bank surviving, are as follows: Holding Company Merger (1)The merger of Sugarland with and into MidSouth, with MidSouth surviving, and with the Sugarland shareholders exchanging their stock for the Preferred Stock, the transaction will qualify as a reorganization under Section 368(a)(1)(A) of the Internal Revenue Code of 1986 (the "Code"). MidSouth and Sugarland will both be "a party to a reorganization" within the meaning of Section 368(b). (2)No gain or loss will be recognized by Sugarland upon the transfer of its assets to MidSouth in exchange for the Preferred Stock and the assumption by MidSouth of the liabilities of Sugarland, by reason of the application of Sections 361(a) and 357(a) of the Code. (3)No gain or loss will be recognized by MidSouth on the receipt of Sugarland's assets in exchange for the Preferred Stock and the assumption by MidSouth of Sugarland's liabilities, by reason of the application of Section 1032(a) of the Code. (4)The basis of the assets of Sugarland in the hands of MidSouth will be the same as the basis of such assets in the hands of Sugarland immediately prior to the reorganization, by reason of the application of Section 362(b) of the Code. (5)The holding period of the property acquired by MidSouth from Sugarland will include the holding period of such property in the hands of Sugarland immediately prior to the reorganization, by reason of the application of Section 1223(2) of the Code. (6)No gain or loss will be recognized by Sugarland shareholders upon the exchange of their Sugarland Common Stock (including fractional share interests that they might otherwise be entitled to receive) solely for the Preferred Stock, by reason of the application of Section 354(a)(1) of the Code. (7)The basis of the Preferred Stock (including fractional share interests that the Sugarland shareholders might otherwise be entitled to receive) to be received by the Sugarland shareholders will be the same as the basis of the Sugarland Common Stock to be exchanged therefor, by reason of the application of Section 358(a)(1) of the Code. (8)The holding period of the Preferred Stock (including fractional interests that the Sugarland shareholders might otherwise be entitled to receive) to be received by the Sugarland shareholders will include the holding period of the Sugarland Common Stock to be surrendered in the exchange, provided the Sugarland Common Stock is held as a capital asset on the Effective Date, by reason of the application of Section 1223(1) of the Code. (9)As provided in Section 381(a)(2) of the Code and Section 1.381(a)-1(a) of the regulations of the Internal Revenue Service under the Code ("Regulations"), MidSouth will succeed to and take into account as of the Effective Date the items of the Bank described in Section 381(c) subject to the conditions and limitations specified in Sections 381(b) and 381(c). (10)As provided in Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of the Regulations, MidSouth will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of Sugarland as of the Effective Date. Any deficit in earnings and profits of either MidSouth or Sugarland can be used only to offset earnings and profits accumulated after the Effective Date. (11)Cash received by a shareholder otherwise entitled to receive a fractional share of the Preferred Stock in exchange for Sugarland Common Stock will be treated as if the fractional shares were distributed as part of the exchange and then were redeemed by MidSouth. These cash payments will be treated as having been received as distributions in full payment in exchange for the Sugarland Common Stock redeemed, as provided in Section 302(a) of the Code. This receipt of cash will result in gain or loss measured by the difference between the basis of such fractional share interest and the cash received. Such gain or loss will be capital gain or loss to the Sugarland shareholder, provided the Sugarland Common Stock was a capital asset in such shareholder's hands and as such, will be subject to the provisions and limitations of Subchapter P of Chapter 1 of the Code (Rev. Rul. 66-365 and Rev. Proc. 77-41). (12)Where cash is received by a dissenting Sugarland shareholder, such cash will be treated as received by the Sugarland shareholder as a distribution in redemption of his Sugarland Common Stock, subject to the provisions and limitations of Section 302 of the Code. (13)Section 305(b)(4) and (c) will not apply to the Preferred Stock. (14)Based on Section 4 of Rev. Proc. 77-37, the Preferred Stock will not be "Section 306 stock" in the hands of the former shareholders of Sugarland. However, since an advanced ruling was not obtained from the IRS on this issue, each shareholder should consult his own tax advisor. Bank Merger: (1)The merger of the Bank with and into MidSouth Bank, with MidSouth Bank surviving, will qualify as a reorganization under Section 368 (a)(1)(A) of the Code. MidSouth Bank and the Bank will both be "a party to a reorganization" within the meaning of Section 368(b). (2)No gain or loss will be recognized by the Bank upon the transfer of its assets to MidSouth Bank in accordance with the Plan and the assumption by MidSouth Bank of the liabilities of the Bank, by reason of the application of Sections 361(a) and 357(a) and (c) of the Code. (3)No gain or loss will be recognized by MidSouth Bank on the receipt of the Bank's assets in constructive exchange for stock and the assumption by MidSouth Bank of the Bank's liabilities, by reason of the application of Section 1032(a). (4)The basis of the assets of the Bank in the hands of MidSouth Bank will be the same as the basis of such assets in the hands of the Bank immediately prior to the reorganization, by reason of the application of Section 362(b) of the Code. (5)The holding period of the property acquired by MidSouth Bank from the Bank will include the holding period of such property in the hands of the Bank immediately prior to the reorganization, by reason of the application of Section 1223(2) of the Code. (6)No gain or loss will be recognized by MidSouth upon the constructive exchange of MidSouth Bank common stock for the Bank's common stock, by reason of the application of Section 354(a)(1) of the Code. (7)The basis of the MidSouth Bank common stock held by MidSouth after the Bank Merger will be the same as the basis in the stock immediately before the Bank Merger, plus its basis in the Bank common stock canceled in the Bank Merger by reason of Section 358(a). (8)The holding period of the MidSouth Bank common stock constructively received by MidSouth in the transaction will include the period in which the Bank stock was held by MidSouth provided the Bank stock was held as a capital asset on the Effective Date by reason of Section 1223(1). (9)As provided in Section 381(a)(2) of the Code and Section 1.381(a)-1(a) of the Regulations, MidSouth Bank will succeed to and take into account as of the Effective Date the items of the Bank described in Section 381(c), subject to the conditions and limitations specified in Section 381(b) and 381(c). (10)As provided in Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of the Regulations, MidSouth Bank, as the deemed survivor, will succeed to and take into account the earnings and profits, or deficit in earnings and profits, of the Bank as of the date or dates of transfer. Any deficit in earnings and profits of either MidSouth Bank or the Bank can be used only to offset earnings and profits accumulated after the Effective date. As a result of the complexity of the tax laws, and because the tax consequences to any particular shareholder may be affected by matters not discussed herein, it is recommended that each shareholder of Sugarland consult his personal tax advisor concerning the applicable state and local income tax consequences of the Mergers to him. DISSENTERS' RIGHTS Unless the Plan is approved by the shareholders of Sugarland holding at least 80% of its total voting power, Section 131 of the LBCL allows a shareholder of Sugarland who objects to the Holding Company Merger and who complies with the provisions of that section to dissent from the Holding Company Merger and to have paid to him in cash the fair cash value of his shares of Sugarland Common Stock as of the day before the Special Meeting, as determined in each case by agreement between the shareholder and MidSouth or by the state district court for the Parish of Lafayette if the shareholder and MidSouth are unable to agree upon the fair cash value. MidSouth has the right to terminate the Plan if, at the time of closing, the number of shares of Sugarland Common Stock as to which the holders thereof are legally entitled to assert dissenters' rights exceeds 5% of the total number of outstanding shares of Sugarland Common Stock on the Effective Date. To exercise the right of dissent, a shareholder must (i) file with Sugarland, a written objection to the Plan prior to or at the Special Meeting and also (ii) vote his shares (in person or by proxy) against the Plan. Neither a vote against the Plan, nor a specification in a proxy to vote against the Plan, will, in and of itself, constitute the necessary written objection to the Plan. Moreover, by voting in favor of, or abstaining from voting on, the Plan, or by returning the enclosed proxy without instructing the proxy holders to vote against the Plan, a shareholder waives his rights under Section 131. The right to dissent may be exercised only by the record owners of the shares and not by persons who hold shares only beneficially. Beneficial owners who wish to dissent from the Holding Company Merger should have the record ownership of the shares transferred to their names or instruct the record owner to follow the Section 131 procedure on their behalf. If the Plan is approved by less than 80% of the total number of shares of Sugarland Common Stock outstanding, then promptly after the Effective Date written notice of the consummation of the Holding Company Merger will be given by MidSouth by regis- tered mail to each shareholder of Sugarland who filed a written objection to the Plan and voted against it at such shareholder's last address on Sugarland's records. Within 20 days after the mailing of such notice, the shareholder must file with MidSouth a written demand for payment for his shares at their fair cash value as of the day before the Special Meeting and must state the amount demanded and a post office address to which MidSouth may reply. He must also deposit the certificate(s) formerly representing his shares of Sugarland Common Stock in escrow with a bank or trust company located in Lafayette Parish, Louisiana. The certificates must be duly endorsed and transferred to MidSouth upon the sole condition that they be delivered to MidSouth upon payment of the value of the shares in accordance with Section 131. With the above-mentioned demand, the share- holder must also deliver to MidSouth the written acknowledgment of such bank or trust company that it holds the certificate(s), duly endorsed as described above. Unless the shareholder objects to and votes against the Holding Company Merger, demands payment, endorses and deposits his certificates and delivers the required acknowledgment in accordance with the procedures and within the time periods set forth above, the shareholder will conclusively be presumed to have acquiesced to the Mergers and will forfeit any right to seek payment pursuant to Section 131. If MidSouth does not agree to the amount demanded by the shareholder, or does not agree that payment is due, it will, within 20 days after receipt of such demand and acknowledgment, notify such shareholder in writing at the designated post office address of either (i) the value it will agree to pay or (ii) its belief that no payment is due. If the shareholder does not agree to accept the offered amount, or disagrees with MidSouth's assertion that no payment is due, he must, within 60 days after receipt of such notice, file suit against MidSouth in the 15th Judicial District Court for the Parish of Lafayette for a judicial determination of the fair cash value of the shares. Any shareholder of Sugarland entitled to file such suit may, within such 60-day period but not thereafter, intervene as a plaintiff in any suit filed against MidSouth by another former shareholder of Sugarland for a judicial determination of the fair cash value of such other shareholder's shares. If a shareholder of Sugarland fails to bring or to intervene in such a suit against MidSouth within the applicable 60-day period, he will be deemed to have consented to accept MidSouth's statement that no payment is due or, if MidSouth does not contend that no payment is due, to accept the amount specified by MidSouth in its notice of disagreement. If upon the filing of any such suit or intervention, MidSouth deposits with the court the amount, if any, which it specified in its notice of disagreement, and if in that notice MidSouth offered to pay such amount to the shareholder on demand, then the costs (not including legal fees) of the suit or inter- vention will be taxed against the shareholder if the amount fi- nally awarded to him, exclusive of interest and costs, is equal to or less than the amount so deposited; otherwise, the costs (not including legal fees) will be taxed against MidSouth. Upon filing a demand for the value of his shares, a share- holder ceases to have any rights of a shareholder except the rights created by Section 131. The shareholder's demand may be withdrawn voluntarily at any time before MidSouth gives its no- tice of disagreement, but thereafter only with the written con- sent of MidSouth. If his demand is properly withdrawn, or if the shareholder otherwise loses his dissenters' rights, he will be restored to his rights as a shareholder as of the time of filing of his demand for fair cash value. Prior to the Effective Date, shareholders of Sugarland who dissent from the Mergers should send any communications regarding their rights to Ronald R. Hebert, Sr., Secretary, Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544. On or after the Effective Date, dissenting shareholders of Sugarland should send any communications regarding their rights to Karen L. Hail, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501. All such communications should be signed by or on behalf of the dissenting shareholder in the form in which his shares are registered on the books of Sugarland. Shareholders of MidSouth are not entitled to vote on the Mergers under the LBCL or MidSouth's Articles and do not have dissenters' rights, although such shareholders must approve the issuance of the Preferred Stock. See "Introductory Statement - Shares Entitled to Vote; Quorum; Vote Required." INFORMATION ABOUT SUGARLAND Description of the Business Sugarland Bancshares, Inc., a business corporation organized under the laws of Louisiana and a registered bank holding company under the Bank Holding Company Act of 1956, was incorporated in 1981 to acquire the outstanding stock of the Bank. Sugarland owns all of the outstanding stock of the Bank and has no other subsidiaries. At March 31, 1995, Sugarland had total consolidated assets of approximately $17.8 million and shareholders' equity of approximately $2.2 million. Sugarland's principal executive office is located at 1527 West Main Street, Jeanerette, Louisiana, and its telephone number is (318) 276- 6307. Sugarland State Bank, a Louisiana state bank organized in 1967, provides full-service consumer and commercial banking services in Jeanerette, Louisiana and surrounding areas of Iberia Parish, Louisiana, through its main banking office at 1527 West Main Street, Jeanerette, Louisiana, and a full service branch located in New Iberia, Louisiana. Deposits of the Bank are insured by the Federal Deposit Insurance Corporation ("FDIC") up to applicable legal limits. The Bank offers an array of deposit services, including demand accounts, NOW accounts, certificates of deposit, and money market accounts, and provides safe deposit boxes, night depository, individual retirement accounts, and drive-in banking services. The Bank's lending activities consist principally of real estate, consumer, and commercial loans. At March 31, 1995, the Bank had total deposits of approximately $15.5 million and total assets of approximately $17.8 million. The Bank's deposits represent a cross-section of the area's economy and there is no material concentration of deposits from any single customer or group of customers. Sugarland's loan portfolio contains a concentration of loans to the Iberia Parish farming industry. At March 31, 1995, Sugarland had approximately $2.5 million of loans outstanding to borrowers in the local farming industry, which represented approximately 108% of the Bank's Tier 1 Capital and 31% of the Bank's total outstanding loans on such date. Competition The Bank's general market area consists of Iberia Parish, which has an approximate population of 70,000 and in which there are numerous banks and other financial institutions. Competition among banks for loan customers is generally governed by such factors as loan terms, including interest charges, restrictions on borrowers and compensating balances, and other services offered by such banks. The Bank competes with numerous other commercial banks, savings and loan associations and credit unions for customer deposits, as well as with a broad range of financial institutions in consumer and commercial lending activities. In addition to thrift institutions, other businesses in the financial services industry compete with the Bank for retail and commercial deposit funds and for retail and commercial loan business. Competition for loans and deposits is intense among the financial institutions in the area. At present, Sugarland is experiencing competitive pressure on interest rates from other businesses in the financial services industry, including larger institutions whose size permits them to operate on a narrower profit margin than would be appropriate for Sugarland. Management expects such competitive pressure will continue in the Bank's market area. See "Sugarland Management's Discussion and Analysis of Financial Condition and Results of Operations." Property The executive office of Sugarland and the Bank, located at 1527 W. Main Street, Jeanerette, Louisiana, is owned by the Bank. The Bank also owns the building and land where its New Iberia branch is located. None of the properties owned by the Bank is subject to a mortgage. Employees Sugarland and the Bank have, in the aggregate, approximately 15 full-time employees and one part-time employee and considers its relationship with its employees to be good. None of Sugarland's or the Bank's employees are subject to a collective bargaining agreement. Market Prices and Dividends Market Prices. Sugarland Common Stock is not traded on any exchange or in any other established public trading market. There are no bid or asked prices available for Sugarland Common Stock. At June 7, 1995, there were 298 shareholders of record of Sugarland. Cash Dividends. Sugarland declared cash dividends on Sugarland Common Stock of $.20 per share during the fiscal year ended December 31, 1993 and did not declare a dividend during the fiscal year ended December 31, 1994 or the three months ended March 31, 1995. Sugarland has agreed in the Plan that it will not make, declare, set aside or pay any dividend prior to the Effective Date of the Mergers without the written consent of MidSouth. Substantially all of the funds available to Sugarland to pay dividends to its shareholders are derived from dividends paid to it by the Bank. The Bank's payment of dividends is subject to certain legal restrictions applicable to all Louisiana state banks. The prior approval of the Louisiana Commissioner of Financial Institutions (the "Commissioner") is required if the total of all dividends declared in any one year will exceed the sum of the Bank's net profits of that year and net profits of the immediately preceding year. Additionally, dividends may not be declared or paid by a Louisiana state bank unless the bank has unimpaired surplus equal to 50% of the outstanding capital stock of the bank, and no dividend payment may reduce the bank's unimpaired surplus below 50%. At March 31, 1995, the Bank had approximately $211,000 available for the payment of dividends without prior approval of the Commissioner. Legal Proceedings Sugarland and the Bank normally are parties to and have pending routine litigation arising from their regular business activities of furnishing financial services, including providing credit and collecting secured and unsecured indebtedness. In some instances, such litigation involves claims or counterclaims against Sugarland and the Bank, or either of them. As of the date of this Joint Proxy Statement and Prospectus, neither Sugarland nor the Bank had any litigation pending. Security Ownership of Principal Shareholders and Management Ownership of Principal Shareholders. Except for Sugarland Common Stock, Sugarland has no other class of voting securities issued or outstanding. The following table provides information concerning all persons known to Sugarland to be beneficial owners, directly or indirectly, of more than 5% of the outstanding shares of Sugarland Common Stock, as of the Record Date. Unless otherwise noted, the named persons own the shares directly and have sole voting and investment power with respect to the shares indicated, subject to applicable community property laws.
Number of Name and Address Shares Owned Percentage of Beneficial Owner Beneficially of Class ____________________ ________________ _____________ J. Bryan Allain 9,516 5.08% 1519 Church Street Jeanerette, LA 70544 Ronald R. Hebert, Sr. 17,252 9.21% 3009 D'Albor Street Jeanerette, LA 70544 Adolphe A. Larroque 10,000 5.34% P.O. Box 111 Jeanerette, LA 70544 Pierre L. Larroque 11,864 6.33% 200 N. Druilhet Street Jeanerette, LA 70544 Herman J. Louviere 12,024 6.42% 2210 Hubertville Rd. Jeanerette, LA 70544 Lawrence L. Lewis, III 20,000 10.74% and Reverend H. Alexander Larroque, Trustees for The Larroque Family Trust 102 Versailles Blvd., Suite 600 Lafayette, LA 70502
__________________________ Includes 1,000 shares held of record by Mr. Allain and 8,516 shares held of record by Insurance Trust Number Two of Mr. Allain and Suzanne Pole Allain, Mr. Allain's wife. Includes 2,000 shares held of record by Mr. Larroque, 4,000 shares held of record in two equal lots by Aqua-Kleen, Inc. and Dyna-Tec, Inc., corporations of which Mr. Larroque is a majority shareholder, President and director, and 5,864 shares held of record by Superior Fabricators, Inc., a corporation of which Mr. Larroque is a majority shareholder, President and director. Includes 5,212 shares held of record by Mr. Louviere and 5,212 shares held of record by Mr. Louviere, as usufructuary with respect to shares the naked ownership of which is held by Ronald, Eldridge and Farrell Louviere and Carolyn L. Clement. Also includes 1,600 shares held of record by Herman J. Louviere & Sons, Inc., a corporation of which Mr. Louviere is a principal shareholder, officer and director. ____________________________ Ownership of Directors and Executive Officers of Sugarland. The following table provides information concerning the shares of Sugarland Common Stock beneficially owned, directly or indirectly, by each director and executive officer of Sugarland, and all directors and executive officers as a group, as of the Record Date. Unless otherwise noted, the named persons have sole voting and investment power with respect to the shares indicated, subject to applicable community property laws.
Number of Shares Owned Percentage Name of Beneficial Owner Beneficially of Class ________________________ ____________ __________ J. Bryan Allain 9,516 5.08% Alton G. Barbin 4,500 2.40% Ronald R. Hebert, Sr. 17,252 9.21% Pierre L. Larroque 11,864 6.33% Herman J. Louviere 12,024 6.42% J.B. Pecot, M.D. 4,000 2.14% D.J. Tranchina 800 * All Directors and 59,956 32.01% Executive Officers as a Group (7 persons) _______________________
* Less than one percent of class Includes 1,000 shares held of record by Mr. Allain and 8,516 shares held of record by Insurance Trust Number Two of Mr. Allain and Suzanne Pole Allain, Mr. Allain's wife. Includes 2,000 shares held of record by Mr. Larroque, 4,000 shares held of record in two equal lots by Aqua-Kleen, Inc. and Dyna-Tec, Inc., corporations of which Mr. Larroque is a majority shareholder, President and director, and 5,864 shares held of record by Superior Fabricators, Inc., a corporation of which Mr. Larroque is a majority shareholder, President and director. Includes 5,212 shares held of record by Mr. Louviere and 5,212 shares held of record by Mr. Louviere, as usufructuary with respect to shares the naked ownership of which is held by Ronald, Eldridge and Farrell Louviere and Carolyn L. Clement. Also includes 1,600 shares held of record by Herman J. Louviere & Sons, Inc., a corporation of which Mr. Louviere is a principal shareholder, officer and director. _____________________________ SUGARLAND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Sugarland reported net income of $48,000 for the three months ended March 31, 1995, which represents a 41.2% increase from net income of $34,000 for the comparable period in 1994. Net income per share was $0.26 for the first three months of 1995 and $0.18 for the same period in 1994. Sugarland's net income was $162,000 for 1994, which represents a 13.83% decrease from the net income of $188,000 for 1993. Net income per share was $0.87 for 1994 and $1.01 for 1993. The increase in net income during the three months ended March 31, 1995 over the same period last year was principally attributable to a slight increase in interest income and decreased operating expenses. The primary reason for the decline in net income during 1994 over 1993 was an increase in income tax expense. Income tax expense for 1994 was $56,000, compared to $24,000 for 1993. The 133% increase in income tax expense for 1994 resulted from the use in 1993 of a net operating loss carryover, which resulted in a tax benefit of $44,000 in 1993. Pre-tax income in 1994 was $218,000, an increase of $6,000 over 1993 pre-tax income of $212,000. The slight increase in pre-tax income during 1994 was principally attributable to decreases in expenses. Improving loan quality resulted in no provision for loan losses during the three months ended March 31, 1995 and the years ended December 31, 1994 or 1993. Net interest income for the three months ended March 31, 1995 was $213,000, which represents a 3.9% increase over the $205,000 reported for the same period last year. The increase is principally attributable to increases in the interest rate on Federal funds sold. Net interest income for 1994 decreased $7,000 to $853,000, which represents a .81% decrease over 1993. The primary reason for the decrease was a slight overall average interest rate reduction in the loan portfolio. At March 31, 1995, Sugarland had total assets and deposits of $17,814,000 and $15,536,000, respectively, reflecting increases of 1.95% and 1.4%, respectively, from amounts reported at December 31, 1994. Loans, net of the reserve for possible loan losses, were $7,842,000 at March 31, 1995, a decrease of 4.7% from December 31, 1994. The decreases in the amount of Sugarland's outstanding loans and increases in assets and deposits between March 31, 1995 and year-end 1994 reflect seasonal changes related to Sugarland's agricultural lending. Sugarland's agricultural loan demand generally declines during the first three months of each year. Funds available to Sugarland as a result of decreases in outstanding loans at March 31, 1995 were placed predominantly into Federal funds sold, thereby increasing Sugarland's assets at the end of the quarter. At December 31, 1994, Sugarland had total assets and deposits of $17,473,000 and $15,320,000, respectively, which represented decreases of 4.15% and 4.68%, respectively, from amounts reported at December 31, 1993. Loans, net of the reserve for possible loan losses, were $8,226,000 at December 31, 1994, an increase of 2.21% from the amount reported at the end of 1993. The decrease in assets as of December 31, 1994 when compared to December 31, 1993 is principally due to a decrease in interest- bearing deposits, resulting in a decrease in funds available for investment and federal funds sold, partially offset by an increase in loan demand. Management attributes the decrease to increased competition from other businesses in the financial services industry, including larger institutions whose size permits them to pay higher interest rates and operate on a narrower profit margin than would be appropriate for Sugarland. Management expects such competitive pressures will continue in its market area, which may result in further decreases in interest-bearing deposits. See "Information about Sugarland - Competition." The following table sets forth certain information regarding Sugarland's results of operations for the periods indicated. Return on average assets and return on average equity for the three months ended March 31, 1995 and 1994 are presented on an annualized basis.
Three Months Ended Years Ended March 31, December 31, _________ ____________ 1995 1994 1994 1993 ____ ____ ____ ____ (Dollars in thousands, except per share data) Net income $ 48 $ 34 $ 162 $ 188 Net income per share* $ 0.26 $ 0.18 $ 0.87 $ 1.01 Return on average assets 1.12% 0.75% 0.94% 1.04% Return on average equity 9.25% 6.30% 7.64% 9.14% Average equity to average 12.08% 11.85% 12.33% 11.40% assets Dividend pay-out ratio -- -- -- 19.80%
* Per share data are based upon a weighted average number of shares outstanding of 187,286. A more detailed review of Sugarland's financial condition and results of operations for the years ended December 31, 1994 and 1993 and the three months ended March 31, 1995 and 1994 follows. This discussion and analysis should be read in conjunction with Sugarland's financial statements and the notes thereto appearing elsewhere in this Joint Proxy Statement and Prospectus. Results of Operations Net Interest Income. The principal component of Sugarland's net earnings is net interest income, which is the difference between interest and fees earned on interest-earning assets and interest paid on deposits and borrowed funds. Net interest income, when expressed as a percentage of total average interest-earning assets, is referred to as net interest margin. Net interest income for the three months ended March 31, 1995 increased to $213,000 from $205,000 recorded for the comparable period in 1994, an increase of 3.9%. 1994 net interest income of $853,000 represents a decrease of $7,000, or .81%, from net interest income of $860,000 reported for 1993. The increase in net income during the three months ended March 31, 1995 over the same period last year was principally attributable to a slight increase in interest income and decreased operating expenses. The slight decline in 1994 was primarily the result of decreases in overall average interest rates. Average interest-earning assets were $14,732,000 for the three months ended March 31, 1995, $14,715,000 for 1994 and $15,625,000 for 1993. Average loans, the Company's highest yielding assets, rose 1.15% from 1993 to 1994 and decreased 5.09% from 1994 to March 31, 1995. Net interest margin decreased two basis points to 5.78% for the three months ended March 31, 1995 from 5.80% for the year ended December 31, 1994. 1994 net interest margin represented a 30 basis point increase from 5.50% recorded for 1993. Sugarland's net interest income is affected by the change in the amount and mix of interest-earning assets and interest- bearing liabilities, and by changes in yields earned on assets and rates paid on deposits and other borrowed funds. The following table sets forth certain information concerning average interest-earning assets and interest-bearing liabilities and the yields and rates thereon for the periods presented. Average balances are computed using daily average balances.
Three Months Ended March 31, 1995 Year Ended December 31, 1994 Year Ended December 31, 1993 ______________ ________________________________ ___________________________ Interest Average Interest Average Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate _______ _______ ________ _______ ________ _______ _______ ________ _______ (Dollars in thousands) Interest-Earning Assets: Loans $ 7,744 $ 201 10.38% $ 8,159 $ 868 10.64% $ 8,066 $ 885 10.97% Investment securities 3,943 60 6.09% 4,240 263 6.20% 4,575 295 6.45% Federal funds sold 3,045 44 5.78% 2,316 88 3.80% 2,984 88 2.95% Total interest- earning assets $ 14,732 $ 305 8.28% $ 14,715 $ 1,219 8.28% $ 15,625 $ 1,268 8.12% Interest-Bearing Liabilities: Deposits: Money market demand $ 2,284 $ 16 2.80% $ 2,565 $ 71 2.77% $ 2,439 $ 70 2.87% Savings and other interest- bearing demand 3,183 21 2.64% 2,911 78 2.68% 2,931 85 2.90% Time deposits $ 5,408 55 4.14% 5,838 217 3.72% 6,611 253 3.83% Total interest- bearing liabilities $ 10,875 $ 92 3.42% $ 11,314 $ 366 3.23% $ 11,981 $ 408 3.41% Net interest income $ 213 $ 853 $ 860 Net interest
The following table sets forth changes in interest income and interest expense for each major category of interest-earning assets and interest-bearing liabilities and the amount of change attributable to volume change and rate change for the periods indicated.
1994 OVER 1993 1993 OVER 1992 _____________________________________________________ ___________________________________________ Total Change Change Change Total Change Change Change Increase in in in Increase in in in (Decrease) Volume Rate Rate/Vol (Decrease) Volume Rate Rate/Vol (Dollars in thousands) Earning Assets: Loans $ (17) $ 10 $ 27 $ -- $ (43) $ 12 $ (53) $ (2) Investment (32) (22) (10) -- 31 77 (35) (11) securities Federal funds sold -- (19) 25 (6) (15) (1) (14) -- Total $ (49) $ (31) $ (12) $ (6) $ (27) $ 88 $ (102) $ (13) Interest-Bearing Liabilities: Interest bearing $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2) deposits Total $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2) Net interest $ (7) $ (8) $ 10 $ (9) $ 67 $ 71 $ 7 $ (11) income before allocation of rate/volume Allocation of -- (17) 8 9 -- (10) (1) 11 rate/volume Changes in net $ (7) $ (25) $ 18 $ -- $ 67 $ 61 $ 6 $ -- interest income
Provision for Loan Losses. The provision for loan losses is the periodic charge to earnings for potential losses in the loan portfolio. The amounts provided for loan losses are determined by management after evaluations of the loan portfolio. This evaluation process requires that management apply various judgments, assumptions and estimates concerning the impact certain factors may have on amounts provided. Factors considered by management in its evaluation process include known and inherent losses in the loan portfolio, the current economic environment, the composition of and risk in the loan portfolio, prior loss experience and underlying collateral values. While management considers the amounts provided through March 31, 1995 to be adequate, subsequent changes in these factors and related assumptions may warrant significant adjustments in amounts provided, based on conditions prevailing at the time. In addition, various regulatory agencies, as an integral part of the examination process, review Sugarland's allowance for loan losses. Such agencies may require Sugarland to make additions to the allowance based on their judgments of information available to them at the time of their examinations. No provision for loan losses was made for the three months ended March 31, 1995 or the years ended December 31, 1994 and 1993. Non-interest Income. Non-interest income was $45,000 for the three months ended March 31, 1995, compared to $47,000 for the same period of 1994. Non-interest income was $180,000 for the year ended December 31, 1994, compared to $199,000 for 1993. The slight decline in non-interest income from the three months ended March 31, 1994 to 1995 resulted from decreased commissions from the sale of credit life insurance. The decrease in non-interest income from 1993 to 1994 was due principally to a decrease in income from sales of other real estate owned. Non-interest Expense. Non-interest expense for the three months ended March 31, 1995 was $196,000, a decrease of approximately $6,000, or 2.97%, from the comparable period of 1994. Non-interest expense for the year ended December 31, 1994 and December 31, 1993 was $815,000 and $846,000, respectively, a 3.66% decrease. The decrease in non- interest expense during these periods was attributable principally to decreased general and administrative expenses, salaries and occupancy expenses. Income Taxes. Sugarland's provision for income taxes was $13,350 for the three months ended March 31, 1995, compared to $15,200 for the same period last year. Such provision was $56,000 for the year ended December 31, 1994, compared to $24,000 for 1993. The moderate decrease in Sugarland's provision for income taxes during the three months ended March 31, 1995, compared to the same period last year, was due to Sugarland's charge-off of loans during the first quarter of 1995, partially offset by Sugarland's increased interest income during the period. The 133% increase in income tax expense for 1994 resulted from the use in 1993 of a net operating loss carryover, which resulted in a tax benefit of $44,000 in 1993. Sugarland adopted a new standard for accounting for income taxes effective January 1, 1993. Under Statement of Financial Accounting Standards No. 109 ("SFAS 109"), deferred income taxes are provided for by the liability method. The adoption of SFAS 109 did not have a material effect on Sugarland's results of operations or financial condition. Financial Condition The following table sets forth Sugarland's average assets, liabilities and shareholders' equity and the percentage distribution of these items for the periods indicated.
Years Ended December 31, ________________________ Three Months Ended March 31, 1995 1994 1993 ______________ ____ ____ Average Average Average Balance Percent Balance Percent Balance Percent _______ _______ _______ _______ _______ _______ (Dollars in thousands) Assets: Cash and due from banks $ 1,670 9.72% $ 1,685 9.80% $ 1,552 8.60% Investment securities 3,943 22.95% 4,240 24.67% 4,575 25.36% Federal funds sold 3,045 17.72% 2,316 13.47% 2,984 16.54% Loans (net of allowance for credit losses) 7,744 45.08% 8,159 8,066 44.73% Other assets 779 4.53% 788 4.58% 860 4.77% Total assets $ 17,181 100.00% $ 17,188 100.00% $ 18,037 100.00% Liabilities and Shareholders' Equity: Demand deposits $ 4,182 24.34% $ 3,691 21.47% $ 3,919 21.73% Interest-bearing deposits 10,875 63.29% 11,314 65.83% 11,981 66.42% Other liabilities 49 .29% 63 .37% 81 .45% Total liabilities 15,106 87.92% 15,068 87.67% 15,981 88.60% Shareholders' equity 2,075 12.08% 2,120 12.33% 2,056 11.40% Total liabilities $ 17,181 100.00% $ 17,188 100.00% $ 18,037 100.00% and shareholders' equity Total Assets.
At March 31, 1995, total assets were approximately $17,814,000, compared to $17,473,000 at December 31, 1994 and $18,230,000 at December 31, 1993. Total average assets for the three months ended March 31, 1995 were $17,181,000, a slight decrease of 4.71% from the $18,037,000 average for 1993. The decrease in assets as of December 31, 1994 when compared to December 31, 1993 is principally due to a decrease in interes- bearing deposits, resulting in a decrease in funds available for investment and federal funds sold, partially offset by an increase in loan demand. Management attributes the decrease to increased competition from other businesses in the finanical services industry, including larger institutions whose size permits them to pay higher interest rates and operate on a narrower profit margin than would be appropriate for Sugarland. Management expects such competitive pressures will continue in its market area, which may result in further decreases in interest-bearing deposits. See "Information about Sugarland - Competition." Investment Securities. At March 31, 1995, Sugarland's investment securities portfolio aggregated $4,198,000, a decrease of $54,000 from the $4,252,000 reported at December 31, 1994, which reflects an increase of $332,000 from the $3,920,000 reported at December 31, 1993. The following table sets forth the composition of Sugland's investment portfolio at the end of each period presented.
March 31, December 31, _________ ____________ 1995 1994 1993 ____ ____ ____ Amortized Fair Amortized Fair Book Market Cost Value Cost Value Value Value ____ _____ ____ _____ _____ _____ (Dollars in thousands) U.S. government agencies $ 1,900 $ 1,819 $ 1,901 $ 1,787 $ 1,407 $ 1,416 Government guaranteed mortgage backed securities 1,613 1,579 1,647 1,555 1,978 2,029 Government guaranteed & private issue CMO's & REMIC's 385 365 404 371 289 291 Mutual funds 200 134 200 132 146 146 Other equity securities 100 100 100 100 100 100 Total $ 4,198 $ 3,997 $ 4,252 $ 3,945 $ 3,920 $ 3,982
Effective January 1, 1994, Sugarland adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), which requires the classification of securities into one of three categories: Trading, Available-for-sale, or Held-to-maturity. Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates this classificaiton periodically. Trading account securities are held for resale in anticipation of short-term market movements. Sugarland has not engaged in trading activities related to any of its investment securities and has no securities classified as Trading. Debt securities are classified as held-to-maturity when Sugarland has the postivie intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securitiesnot classified as trading or held- to-maturity are classified as available-for-sale. All of the securities in Sugarland's portfolio at March 31, 1995 and December 31, 1994 were classified as available-for sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. Sugarland may sell these securities in response to liquidity demands. Available- for-sale securities also may be used as a means of adjusting the interest rate sensitivity of Sugarland's balance sheet through sale and reinvesment. The following table presents selected contractual maturity data for the investment securities in Sugarland's portfolio at March 31, 1995. Dollar values are based upon the amortized cost of such securities at March 31, 1995.
After One Year After Five Years One Year or Less Through Five Years Through 10 Years After 10 Years _______________________ _______________________ ____________________ ________________ Amount Yield Amount Yield Amount Yield Amount Yield ______ ______ ______ _____ ______ _____ ______ _____ (Dollars in thousands) U.S. government agencies $ -- $ 1,900 4.86% $ -- $ -- Government guaranteed mortgage backed securities -- 559 6.30% -- 1,054 7.52% Government guaranteed & private issue CMO's & REMIC's -- -- -- 385 5.58% Total $ -- $ 2,459 $ -- $ 1,439
The following table presents selected contractual maturity data for the investment securities in Sugarland's portfolio at December 31, 1994. Dollar values are based upon the amortized cost of such securities at December 31, 1994.
After One Year After Five Years One Year or Less Through Five Years Through 10 Years After 10 Years _______________________ _______________________ ____________________ ____________________ Amount Yield Amount Yield Amount Yield Amount Yield ______ ______ ______ _____ ______ _____ ______ _____ (Dollars in thousands) U.S. government agencies $ -- $ 1,900 5.15% $ -- $ -- Government guaranteed -- 92 8.00% 476 6.00% 1,080 7.52% mortgage backed securities Government guaranteed & -- -- -- 404 5.58% private issue CMO's & REMIC's Total $ -- $ 1,992 $ 476 $ 1,484
See Note 2 to Sugarland's Financial Statements appearing elsewhere in this Joint Proxy Statement and Prospectus for information concerning the amortized cost and estimated fair values of Sugarland's investment securities at December 31, 1994 and 1993. Loans. Sugarland engages in real estate lending through real estate construction and mortgage loans, and commercial and consumer lending. The lending activities of Sugarland are guided by the basic lending policy established by its Board of Directors. Each loan is evaluated based on, among other things, character and leverage capacity of the borrower, capital and investment in a particular property, if applicable, cash flow, collateral, market conditions for the borrower's business or project and prevailing economic trends and conditions. The following table sets forth the type and amount of loans outstanding as of the dates indicated:
March 31, December 31, _________ ____________ 1995 1994 1993 (Dollars in thousands) Commercial/Industrial/Agricultural $ 3,940 $ 4,274 $ 4,127 Commercial Real Estate 912 852 1,056 Residential Real Estate 1,381 1,423 1,432 Consumer/Installment 1,811 1,907 1,676 Other 5 4 4 _____ _____ _____ Total loans $ 8,049 $ 8,460 $ 8,295 ===== ===== =====
In addition to the matters set forth in the table above, as of March 31, 1995, Sugarland's loan portfolio contained a concentration of loans to borrowers engaged in the Iberia Parish agriculture industry. A concentration is defined as amounts loaned to a multiple number of borrowers engaged in similar activities, which would cause them to be similarly impacted by economic or other conditions, where the amount exceeds 10% of total outstanding loans. At March 31, 1995, Sugarland had approximately $2.5 million of loans outstanding to borrowers in the local farming industry, which represented approximately 31% of Sugarland's total outstanding loans. At March 31, 1995, loans, net of unearned discount and the allowance for possible loan losses, were $7,842,000, as compared to $8,226,000 and $8,048,000 at December 31, 1994 and 1993, respectively. Average loans increased from $8,066,000 to $8,159,000, respectively, for 1993 and 1994, but decreased to $7,744,000 for the three months ended March 31, 1995. The 1994 increases in the amount of outstanding loans are attributable principally to increased loan demand in the market served by Sugarland as the local economy strengthened. The decreases in average and total loans during the first quarter of 1995 reflect seasonal changes in the level of Sugarland's agricultural lending. Sugarland's average loan to deposit ratio was 51.4% for the first three months of 1995, compared to 54.4% for 1994 and 50.7% for 1993. The 1995 first quarter decrease is due principally to the decreased loan demand, partially offset by increased deposits at March 31, 1995 over year-end 1994, and the 1994 increase over 1993 is primarily the product of increased loan demand and decreased deposit base. At March 31, 1995, residential real estate, commercial real estate and commercial/industrial/agricultural loans comprised approximately 17%, 11% and 49%, respectively, of total outstanding loans. This compares to 17%, 10% and 51% categorized as residential real estate, commercial real estate and commercial/industrial/agricultural loans, respectively, at December 31, 1994 and 17%, 13% and 50% categorized as residential real estate, commercial real estate and commercial/industrial/agricultural loans, respectively, at December 31, 1993. The following table provides information concerning loan portfolio maturity as of December 31, 1994. Loan portfolio maturity by type of loan as presented in the table above is not readily available. (Dollars in thousands) One year or less Floating interest rate $ 593 Fixed interest rate 2,762 After one year through five years: Floating interest rate 1,574 Fixed interest rate 1,494 After five years: Floating interest rate 1,199 Fixed interest rate 939 ______ Total $ 8,460 ====== Nonaccrual, Past Due and Modified Loans. The performance of Sugarland's loan portfolio is evaluated regularly by Senior Management and the Board of Directors. Interest on loans is accrued daily as earned. A loan is generally placed on nonaccrual status when principal or interest is past due 90 days or more, except when management determines the loan remains likely to be fully collectible. Upon being placed on nonaccrual status, the accrual of income from a loan is discontinued and previously accrued but unpaid interest is reversed against income. Each loan that is 90 days or more past due is evaluated to determine its collectibility and the adequacy of its collateral. The following table sets forth the amount of Sugarland's nonperforming loans (nonaccrual loans and loans past due 90 days or more and still accruing interest) and loans with modified terms as of the dates indicated:
March 31, December 31, _________ ____________ 1995 1994 1993 ____ ____ ____ (Dollars in thousands) Nonaccrual loans $ -- $26 $72 Loans past due 90 days or more and still accruing interest 72 16 62 Renegotiated debt, still accruing interest -- -- --
As a percent of total loans, loans past due 90 days or more and not on nonaccrual status were .89% of total loans at March 31, 1995, compared to .19% at December 31, 1994 and .75% at December 31, 1993. There were no nonaccrual loans at March 31, 1995. Nonaccrual loans were .31% of total loans at December 31, 1994, and .87% at year-end 1993. There were no loans with modified terms at March 31, 1995 or year-end 1994 or 1993. As of March 31, 1995, Sugarland was not aware of any other loans where known information about possible credit problems of the borrower caused management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. Sugarland's primary regulators and external auditors review the loan portfolio as part of their regular examinations and their assessment of specific credits, based on information available to them at the time of their examination, may affect the level of Sugarland's non-performing loans. Additionally, the loan portfolio is regularly monitored by Senior Management and the Board. Accordingly, there can be no assurance that other loans will not be placed on nonaccrual, become 90 days or more past due, or have terms modified in the future. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS 114"). This standard requires the measurement of certain impaired loans based on the present value of expected future cash flows discounted at the loan's effective interest rate. Adoption of this new standard is required for fiscal years beginning after December 15, 1994. Sugarland adopted this statement beginning January 1, 1995. The effect of adopting SFAS 114 on Sugarland's financial statements is not expected to be material. Allowance for Loan Losses. A certain degree of risk is inherent in the extension of credit. Management has credit policies in place to monitor and attempt to control the level of loan losses and nonperforming loans. One product of Sugarland's credit risk management is the maintenance of the allowance for loan losses at a level considered by management to be adequate to absorb estimated known and inherent losses in the existing portfolio, including commitments and standby letters of credit. The allowance for loan losses is established through charges to operations in the form of provisions for loan losses. The allowance is based upon a regular review of current economic conditions, which might affect a borrower's ability to pay, underlying collateral values, risk in and the composition of the loan portfolio, prior loss experience and industry averages. In addition, Sugarland's primary regulators, as an integral part of their examination process, periodically review Sugarland's allowance for loan losses and may recommend additions to the allowance based on their assessment of information available to them at the time of their examination. Loans that are deemed to be uncollectible are charged-off and deducted from the allowance. The provision for loan losses and recoveries on loans previously charged-off are added to the allowance. The following table sets forth Sugarland's loan loss experience and certain information relating to its allowance for loan losses as of the dates and for the periods indicated.
Three Months Ended Years Ended March 31, December 31, _________ ____________ 1995 1994 1993 ____ ____ ____ (Dollars in thousands) Average net loans outstanding $ 7,744 $8,159 $8,066 Balance of allowance for credit losses at beginning of period 134 145 135 Charge offs: Commercial loans (15) (15) -- Consumer loans (4) (1) (6) Recoveries -- 5 16 ______ _____ _____ Net recoveries (charge-offs) (19) (11) 10 ______ _____ _____ Provisions charged to expense -- -- -- ______ _____ _____ Balance of allowance for credit losses at end of period $ 115 $134 $145 ======= ===== ===== Ratio of net charge-offs to average loans outstanding 0.25% 0.13% (0.12%)
The allowance for loan losses was $115,000 or 1.49% of average loans, $134,000 or 1.64% of average loans, and $145,000 or 1.80% of average loans at March 31, 1995, December 31, 1994 and December 31, 1993, respectively. Net charged-off loans during this period were $19,000 for the three months ended March 31, 1995 as compared to $11,000 for the year ended December 31, 1994 and ($10,000) in 1993. The allowance for loan losses should not be interpreted as an indication of future charge-off trends. Management believes that the allowance for loan losses at March 31, 1995 was adequate to absorb the known and inherent risks in the loan portfolio at that time. However, no assurance can be given that future changes in economic conditions that might adversely affect Sugarland's principal market area, borrowers or collateral values, and other circumstances will not result in increased losses in Sugarland's loan portfolio in the future. The following table sets forth the approximate dollar amount of the allowance for loan losses allocable to the stated loan categories, and the percent of total loans in each such category for the periods presented.
Three Months Ended March 31, Years Ended December 31, _________ ________________________ 1995 1994 1993 ____ ____ ____ Allow. Loan Allow. Loan Allow. Loan _____ ____ _____ ____ _____ ____ (Dollars in thousands) Commercial/Industrial/Agricultural $ 90 48.95% $ 94 50.53% $ 110 49.75% Real Estate -- 28.49% 15 26.89% 10 30.00% Consumer/Installment/Other 25 22.56% 25 22.58% 25 20.25% ______ ______ ______ ______ _______ ______ $ 115 100.00% $ 134 100.00% $ 145 100.00% ====== ====== ====== ====== ======= ======
The allocation of the allowance for loan losses should not be interpreted as an indication of future credit trends or that losses will occur in these amounts or proportions. Furthermore, the portion allocated to each loan category is not the total amount available for future losses that might occur within such categories, since the total allowance is a general allowance applicable to the entire portfolio. In determining the adequacy of the allowance for credit losses, management considers such factors as known problem loans, evaluations made by bank regulatory agencies and external auditors, individual loan reviews for loans in excess of $40,000, collateral, assessment of economic and market conditions, concentrations and other appropriate data in order to identify the risks in the portfolio. The Loan Review Committee reviews on a quarterly basis the loan loss reserve of the Bank and makes recommendations to the Board of Directors of the Bank concerning the adequacy of the allowance. Additionally, the Bank's policy is to maintain a loan loss reserve equal to at least 1.0% of the total loans outstanding or an amount sufficient to cover all reasonably anticipated loan losses. If, following a review of the allowance, the allowance is determined to be inadequate or excessive, the amount of the allowance is adjusted accordingly. Deposits. Deposits are the primary source of funding for Sugarland's earning assets. Total deposits at March 31, 1995 and at the end of 1994 and 1993 were approximately $15,536,000, $15,320,000 and $16,072,000, respectively. Time certificates of deposit of $100,000 or more, which were approximately $508,000 at March 31, 1995, $501,000 at the end of 1994 and $703,000 at the end of 1993, had remaining maturities as follows:
March 31, December 31, _________ ____________ 1995 1994 1993 ____ ____ ____ Maturing within: (Dollars in thousands) Three months or less $ 102 $ 301 $ 503 Over three months to six months 406 -- -- Over six months to twelve months -- 200 200 Over twelve months -- -- -- ______ ______ ______ Total $ 508 $ 501 $ 703 ====== ====== ======
Average deposit balances are summarized for the periods indicated:
Three Months Ended March 31, Years Ended December 31, _________ ________________________ Average Average Average 1995 Rate 1994 Rate 1993 Rate ____ ____ ____ ____ ____ ____ (Dollars in thousands) Demand deposits $ 4,182 0.00% $ 3,691 0.00% $ 3,919 0.00% Money market demand 2,284 2.80% 2,565 2.77% 2,439 2.87% Savings and other interest-bearing 3,183 2.64% 2,911 2.68% 2,931 2.90% demand deposits Time deposits 5,408 4.14% 5,838 3.72% 6,611 3.83% ______ ______ ______ Total $ 15,057 3.42% $ 15,005 3.23% $ 15,900 3.41% ====== ====== ======
At March 31, 1995, December 31, 1994 and December 31, 1993, Sugarland had no brokered deposits. Interest Rate Sensitivity. Interest rate risk is the potential impact of changes in interest rates on net interest income and results from disparities in repricing opportunities of assets and liabilities over a period of time. Management estimates the effects of changing interest rates and various balance sheet strategies on the level of net interest income. Management may alter the mix of floating- and fixed-rate assets and liabilities, change pricing schedules, and adjust maturities through sales and purchases of securities available for sale as a means of limiting interest rate risk. The degree of interest rate sensitivity is not equal for all types of assets and liabilities. Sugarland's experience has indicated that the repricing of interest-bearing demand, savings and money market accounts does not move with the same magnitude as general market rates. Additionally, these deposit categories, along with noninterest-bearing demand, have historically been stable sources of funds to Sugarland, which indicates a much longer implicit maturity than their contractual availability. Sugarland's cumulative behavioral gap to total assets at December 31, 1994 was a positive 11.36% in the 0-1 year cumulative range. A positive gap implies that earnings would increase in a rising interest rate environment and decrease in a falling interest rate environment. Liquidity. Sugarland seeks to manage its liquidity position to attempt to ensure that sufficient funds are available to meet customers' needs for borrowing and deposit withdrawals. Liquidity is derived from both the asset and liability sides of the balance sheet. Asset liquidity arises from the ability to convert assets to cash and self-liquidation or maturity of assets. Liquid asset balances include cash, interest-bearing deposits with financial institutions, short-term investments and federal funds sold. Liability liquidity arises from a diversity of funding sources as well as from the ability of Sugarland to attract deposits of varying maturities. If Sugarland were limited to only one source of funding or all its deposits had the same maturity, its liquidity position would be adversely impacted. Sugarland's funding source is primarily its deposit base which is comprised of interest-bearing and noninterest-bearing accounts. Sugarland's noninterest-bearing demand deposits are, by their very nature, subject to withdrawal upon demand. Declines in one form of funding source require Sugarland to obtain funds from another source. If Sugarland were to experience a decline in noninterest-bearing demand deposits and was to have a significant increase in loan volume without a commensurate increase in such deposits, it would utilize alternative sources of funds, probably at higher cost, to maintain its liquidity and to meet its loan funding needs. This would place downward pressure on Sugarland's net interest margin and might have a negative impact on Sugarland's liquidity position. Sugarland's liquidity expressed as a percentage of net liquid assets to net liabilities was 33.2%, 28.6% and 33.6% at March 31, 1995, December 31, 1994 and December 31, 1993, respectively. The decreased percentage at December 31, 1994 compared to year-end 1993 was due principally to a decrease in deposits. Capital Adequacy. Sugarland's total shareholders' equity was $2,228,000 at March 31, 1995, which represents a 5.7% increase from year-end 1994. At December 31, 1994, Sugarland's total shareholders' equity was $2,107,000, a decrease of .43% from $2,116,000 at December 31, 1993. The decrease from 1993 to 1994 was due principally to Sugarland's adoption of SFAS 115, which resulted in Sugarland's investment securities being stated at fair value and unrealized losses therein causing a reduction in shareholders' equity. The increase from year-end 1994 to March 31, 1995 reflects earnings for the period and a decline in Sugarland's unrealized losses on investment securities. Book value per common share is presented in the table below.
March 31, December 31, _________ ____________ 1995 1994 1993 ____ ____ ____ (Dollars in thousands, except per share amounts) Shares outstanding 187,286 187,286 187,286 Shareholders' equity $ 2,228 $ 2,107 $ 2,116 Book value per common share $ 11.90 $ 11.25 $ 11.30
Adequate levels of capital are necessary over time to sustain growth and absorb losses. In the case of banks and bank holding companies, capital levels must also meet minimum regulatory requirements. All risk-based and other capital ratios improved from year-end 1993 to 1994, and from year-end 1994 to March 31, 1995, and remain well above regulatory minimums. At March 31, 1995, the Bank's Tier 1 capital was 25.96% of risk-weighted assets and its total capital was 27.25% of risk-weighted assets, compared to the regulatory minimums of 4.0% and 8.0%, respectively. At December 31, 1994, the Bank's Tier 1 capital was 24.39% of risk-weighted assets and its total capital was 25.83% of risk-weighted assets. The Bank's regulatory leverage ratio, which compares Tier 1 capital to adjusted total assets, was 13.33% and 13.42% at March 31, 1995 and December 31, 1994, respectively, compared to the regulatory minimum of 4.0%. Under present regulations, the Bank was classified as "well- capitalized" based upon its capital ratios at March 31, 1995 and December 31, 1994 and 1993. The following table sets forth the Bank's risk based capital and capital ratios at March 31, 1995 and at year-end 1994 and 1993.
Regulatory March 31, December 31, Minimum _________ ____________ _______ 1995 1994 1993 ____ ____ ____ (Dollars in thousands) Capital: Tier 1 $ 2,318 $ 2,264 $ 2,176 Tier 2 115 134 145 Total capital $ 2,433 $ 2,398 $ 2,321 Risk-weighted assets $ 8,928 $ 9,284 $ 9,594 Ratios: Tier 1 capital to risk-weighted assets 25.96% 24.39% 22.68% 4.0% Tier 2 capital to risk-weighted assets 1.29% 1.44% 1.51% -- Total capital to risk-weighted assets 27.25% 25.83% 24.19% 8.0% Leverage Ratio 13.33% 13.42% 12.13% 4.0%
INFORMATION ABOUT MIDSOUTH A copy of MidSouth's Annual Report to Shareholders for the year ended December 31, 1994, and its Quarterly Report to Shareholders for the quarter ended March 31, 1995, is being delivered to the shareholders of MidSouth and Sugarland along with this Joint Proxy Statement and Prospectus. The following documents are incorporated herein by reference: MidSouth's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994, Commission File No. 1-11826 dated March 23, 1995, received by the Commission on March 24, 1995, as amended by Form 10-KSB/A, Commission File No. 1-11826, dated April 28, 1995, received by the Commission on April 28, 1995; MidSouth's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1995; Commission File No. 1-11826, dated May 15, 1995, received by the Commission on May 15, 1995. The following sections of MidSouth's Annual Report to Shareholders: page 30, "Market Prices"; inside back cover, "Stock Trading Information" and information on dividends; page 1, "Financial Statements"; pages 30-31, "Selected Quarterly Financial Data"; pages 2-11, "Management's Discussion and Analysis"; and MidSouth's Quarterly Report to Shareholders "Financial Statements." See "Available Information" for information with respect to obtaining copies of documents incorporated by reference in this Joint Proxy Statement and Prospectus. COMPARATIVE RIGHTS OF SHAREHOLDERS If the Mergers are subsequently consummated, all shareholders of Sugarland, other than those perfecting dissenters' rights, will become shareholders of MidSouth and their rights will be governed by and be subject to the Articles of Incorporation and Bylaws of MidSouth rather than the Articles of Incorporation and Bylaws of Sugarland. The following is a brief summary of certain of the principal differences between the rights of holders of MidSouth Preferred Stock and Sugarland Common Stock not described elsewhere herein. Preferred Stock The Board of Directors of MidSouth is authorized by the Company's Articles of Incorporation, without action of its shareholders, to issue preferred stock from time to time and to establish the designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions thereof, as well as to establish and fix variations in the relative rights as between holders of any one or more series of such preferred stock, except that any issuance of preferred stock ranking senior to or on a parity with the Preferred Stock must be approved by a vote of holders of the Preferred Stock. The authority of the Board of Directors includes but is not limited to the determination or fixing of the following with respect to each series of preferred stock which may be issued: (i) the designation of such series; (ii) the number of shares initially constituting such series; (iii) the dividend rate and conditions, and the dividend preferences, if any, in respect of the preferred stock and among the series of preferred stock; (iv) whether, and upon what terms, the preferred stock would be convertible into or exchanged for shares of any other class or other series of the same class; (v) whether, and to what extent, holders of one or more shares of a series of preferred stock will have voting rights; and (vi) the restrictions, if any, that are to apply on the issue or reissue of any additional preferred stock. Shares of preferred stock that are authorized would be available for issuance in connection with the acquisition of other businesses, infusion of capital, or for other lawful corporate purposes, at the discretion of the Board of Directors. The Board of Directors could issue preferred stock to a person or persons who would support management in connection with a proxy contest to replace an incumbent director or in opposition to an unsolicited tender offer. As a result such proposals or tender offers could be defeated even though favored by the holders of a majority of MidSouth Common Stock. The Articles of Incorporation of Sugarland do not authorize the issuance of preferred stock. Directors The Articles of Incorporation of MidSouth provide that the Board of Directors shall be divided into three equal classes, with directors in each class holding office for a staggered term of three years. Accordingly, only one-third of the directors are subject to election each year. The Articles further provide that the affirmative vote of not less than 80% of the "Total Voting Power" is required to remove a director from office during his term of service, and that a director may only be removed for cause. The Articles define Total Voting Power as the total number of votes that shareholders and holders of any bonds, debentures or other obligations granted voting rights by the Corporation pursuant to La. R.S. 12:75(H) are entitled to cast with respect to the election of directors or, if such term is used in reference to any other particular matter properly brought before the shareholders for a vote, means the total number of such votes that are entitled to be cast with respect to such matter. Nominations for directors must comply with the nominating procedures set forth in Article IV(H), which requires, among other things, that a written notice of nomination be delivered to the Board prior to the shareholders' meeting at which the nomination will be considered, and that such notice must contain certain specific information about the candidate and the shareholder making the nomination, as required under the Securities Exchange Act of 1934. MidSouth's Articles also permit directors to vote by proxy. Provisions governing the election and powers of Sugarland's directors are contained in its Bylaws rather than its Articles, and the Bylaws do not contain any of the special provisions discussed above. Business Combinations With respect to a tender offer or offer to merge or consolidate, MidSouth's Articles permit its directors to consider: (i) the consideration offered in relation to the current market price of the stock versus the estimated future market price of the stock that could be achieved over several years; (ii) the social and economic effects of the transaction on the corporation, its subsidiaries, or their employees, customers, creditors and the communities in which the corporation and its subsidiaries do business; (iii) the business and financial condition and earning prospects of the acquiring party; and (iv) the competence, experience and integrity of the acquiring party and its management. These provisions are intended to give MidSouth's directors substantial discretion in evaluating an offer to merge or consolidate. Sugarland's Articles do not contain provisions on business combinations. Special Meetings of Shareholders MidSouth's Articles require that at least 80% of the total voting power of MidSouth is necessary for the shareholders to call a special meeting. Sugarland's Articles and Bylaws do not address the call of a special meeting by shareholders, so under the LBCL shareholders of Sugarland would be entitled to call a special meeting upon the written request of 20% of the outstanding stock of Sugarland. Bylaws Bylaws of MidSouth may be adopted only by a majority vote of all of the Continuing Directors. "Continuing Directors" is defined in the Articles as the persons who (1) are members of the Board of Directors of the Corporation on March 3, 1993 or (2) become members of the Board of Directors after March 3, 1993 upon the nomination of the Board of Directors at a time when a Majority of the Members are Continuing Directors. The Bylaws may be amended or repealed only by a majority vote of all of the Continuing Directors or by the affirmative vote of the holders of at least 80% of the Total Voting Power at any annual or special meeting of shareholders, the notice of which expressly states that the proposed amendment or repeal is to be considered at the meeting. Any purported amendment to the Bylaws which would add thereto a matter not covered in the Bylaws prior to such purported amendment shall be deemed to constitute the adoption of a Bylaw provision and not an amendment to the Bylaws. Sugarland's Articles provide that its Bylaws may be adopted, amended or repealed concurrently by the Board or the shareholders, and that the shareholders may provide that any alterations, amendments or repeal of a provision of the Bylaws by the shareholders may not be altered, amended, repealed or reinstated by the Board. Vote Required for Shareholder Action MidSouth's Articles provide that any proposal to approve a merger, consolidation, share exchange, disposition of all the corporation's assets, dissolution or an amendment to the Articles which has the recommendation and approval of a majority of the Continuing Directors need only be approved by the shareholders by a majority of the voting power present at a meeting to consider such matters. All other proposals submitted to the shareholders upon the recommendation and approval of a majority of the Continuing Directors need only be approved by a majority of the votes cast at any meeting to consider the proposal. Any matter submitted to the shareholders other than with the recommendation and approval of a majority of the Continuing Directors must be approved by the affirmative vote of 80% of the Total Voting Power. Sugarland's Articles provide that shareholder approval of any matter properly brought before the shareholders is effected by a majority of the votes actually cast, with the exception of directors, who are elected by a plurality vote. Limitation of Personal Liability and Indemnification of Directors and Officers The Articles of Incorporation of MidSouth contain a provision limiting the personal liability of MidSouth's directors and officers under certain circumstances (the "Limitation of Liability Provision"). Pursuant to the Limitation of Liability Provision, the officers and directors of MidSouth have no personal liability to MidSouth or its shareholders for monetary damages for breach of their fiduciary duty as directors or officers of MidSouth except for (a) any breach of the director's or officer's duty of loyalty to MidSouth or its shareholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) liability pertaining to acts related to an unlawful stock repurchase or payment of a dividend, or (d) any transaction from which the director or officer derived an improper personal benefit. The Articles also permit the Board to cause the Company to enter into contracts with its directors and officers to further limit an individual's liability to the fullest extent permitted by law, and to adopt similar limitation of liability and indemnification provisions with respect to the Company's subsidiaries. Sugarland's Articles contain indemnification provisions which provide indemnification to its directors and officers to the fullest extent permitted by the LBCL. Neither Sugarland's Articles nor its Bylaws contain provisions limiting the liability of its directors and officers. RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK Shareholders of Sugarland who receive MidSouth Preferred Stock in exchange for their shares of Sugarland Common Stock will have the rights and preferences set forth in the Form of Articles of Amendment of MidSouth attached hereto as Appendix B and summarized below. Shareholders of Sugarland are urged to review the Form of Articles of Amendment of MidSouth at Appendix B. Dividend Rights Holders of record of the MidSouth Preferred Stock are entitled to receive, but only when as and if declared by the MidSouth Board of Directors, and out of the funds of MidSouth legally available for that purpose, cumulative cash dividends at an annual rate of 8.28% for 1995 and thereafter at an annual rate fixed on December 31 of each year for the ensuing calendar year, equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum, and no more; provided that the annual dividend rate shall in no case be greater than 10% nor less than 6%, and that, from and after the tenth anniversary of the date of issuance of the Preferred Stock the annual dividend rate will be fixed at 10%. If more than one yield is shown for December maturities, the average will be applied. If no yield is quoted for December maturities, the yield for the next earlier available month will be applied. If any quarterly dividend is not paid when due, the unpaid amount will bear interest at a rate of 10% per annum until paid. Dividends on the Preferred Stock are payable only from legally available funds, defined in MidSouth's Articles of Incorporation to mean such amount of the surplus of MidSouth as may be paid under the LBCL as may be provided in cash by MidSouth Bank to MidSouth as a dividend under applicable statutes and regulations of the U.S. Comptroller of the Currency and that would not result in MidSouth or MidSouth Bank having capital ratios of less than the required minimum regulatory capital ratios or failing to be "adequately capitalized" within the meaning of applicable law and regulations or being in violation of any law, regulation or regulatory directive, agreement or order. At March 31, 1995, the amount of legally available funds under this definition was approximately $1,400,000. Dividends payable on the Preferred Stock will be paid on the first day of April, July, October or January of each year or on such earlier dates as the MidSouth Board of Directors may from time to time fix as the dates for payment of quarterly dividends on MidSouth Common Stock. The initial dividend on the Preferred Stock will be payable on the first day of April, July, October, or January that is at least 91 days from the date of original issuance of the Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days, provided that the aggregate amount payable will be reduced by the amount by which certain expenses of Sugarland exceed $110,000 (the "Subtracted Amount"). Such expenses include Sugarland's actual legal, accounting and financial advisory fees and expenses of printing and mailing this Joint Proxy Statement and Prospectus and holding the Special Meeting, and any other expenses in connection with the negotiation, execution, implementation and consummation of the Plan. In any case in which the Subtracted Amount is greater than the amount of the initial dividend otherwise payable, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. Sugarland's estimated expenses in connection with the Plan are approximately $135,000. Accordingly, it is estimated that there will be a Subtracted Amount of $25,000. The Mergers will not be consummated until after June 30, 1995 and, accordingly, the earliest date by which the initial dividend will be paid is January 1, 1996. The table below provides examples of the timing and amount of the initial dividend, assuming a consummation date of July 20, 1995, that the annual dividend rate in 1996 will continue to be 8.28% and that the Subtracted Amount will be either $25,000, $50,000 or $75,000.
Subtracted Amount First Dividend Payment Amount Per Share _________________ ______________________ ________________ $25,000 January 1, 1996 $.11 $50,000 April 1, 1996 $.27 $75,000 April 1, 1996 $.14 ________________________
No dividend would be paid on January 1, 1996 Quarterly dividends after the indicated date, at the assumed annual rate of 8.28%, would be approximately $.295 per share. As long as any shares of MidSouth Preferred Stock are outstanding, MidSouth may not declare, pay or set apart for payment any dividend on any shares of its Common Stock or other capital stock ranking junior to the Preferred Stock as to dividends or liquidation rights (collectively, "Junior Securities") or make any payment on account of, or set apart for payment money for a sinking or other similar fund, for the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, whether in cash, other property, obligations or shares of MidSouth (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and may not permit any corporation or other entity directly or indirectly controlled by MidSouth to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with the payment or setting apart for payment of any dividend on any of the Junior Securities, all accumulated and unpaid dividends on shares of Preferred Stock, and interest thereon, if any, have been or will be paid in full. No shares of preferred stock ranking senior to or on a parity with the Preferred Stock may be issued without the approval of holders of Preferred Stock. Holders of Sugarland Common Stock are not entitled to any dividend preference. Redemption Rights On or after the fifth anniversary of the date of issuance of the Preferred Stock, MidSouth may, at its option, redeem the whole, or from time to time, any part of the Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Preferred Stock to the date fixed for redemption, whether or not earned or declared and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Preferred Stock, if any. Conversion Rights At their option, the holders of the shares of MidSouth Preferred Stock may convert such stock into shares of MidSouth Common Stock at the conversion rate of one share of MidSouth Common Stock for each share of Preferred Stock converted at any time prior to the redemption of the Preferred Stock. The conversion rate is subject to adjustment from time to time as follows: If MidSouth at any time (i) pays a dividend or makes a distribution to all holders of its Common Stock in shares of Common Stock, and does not concurrently issue shares of Common Stock to the holders of the Preferred Stock in an amount equivalent to what holders of the Preferred Stock would have received if they had exercised their conversion rights prior to the dividend or distribution; or (ii) effects a stock split or reverse stock split of its Common Stock, then, in each such case, the conversion rate as in effect immediately before one of these events will be proportionately decreased or increased, as the case may be, so that the holders of any shares of the Preferred Stock thereafter surrendered for conversion will be entitled to receive the number of whole shares of Common Stock that they would have owned or been entitled to receive immediately following such event if their shares of Preferred Stock had been converted into Common Stock prior thereto. In the event of (i) any reclassification of the Common Stock (other than in a stock split or reverse stock split), (ii) a consolidation or merger of MidSouth in which MidSouth will not be the surviving entity, (iii) a sale by MidSouth of substantially all of its property or assets or (iv) a statutory share exchange, each share of Preferred Stock will be convertible into or represent the right to receive the number of shares of Common Stock, or other securities or property, equivalent to what the holder of the Preferred Stock would have received if he had exercised his conversion rights prior to such an event. No adjustment in the conversion rate shall be required unless the adjustment would require an increase or decrease in the conversion rate by more than one percent, but any adjustments which would fall below one percent will be carried forward cumulatively and taken into account in any subsequent adjustments. Voting Rights Except as otherwise required by law or the MidSouth Articles of Incorporation, holders of MidSouth Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to notice of any meeting of shareholders of MidSouth. If at any time MidSouth falls in arrears in the payment of dividends on the Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full Board of Directors of MidSouth will be automatically increased by two, and the holders of the Preferred Stock, voting separately as a single class, will be entitled to elect two directors of MidSouth to fill the two created directorships, at a special meeting called for the purpose, and thereafter at each shareholders meeting held for the purpose of electing directors of MidSouth, so long as there continues to be any arrearage in the payment of dividends on the Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. When all accumulated and unpaid dividends on the Preferred Stock for all past quarterly dividend periods, and the interest thereon, have been paid in full, the right of the holders of the Preferred Stock to elect directors will cease, the number of directors of MidSouth will automatically be reduced by two, and the term of office of all directors elected by the holders of the Preferred Stock will immediately terminate. Holders of the Preferred Stock must approve any issuance by MidSouth of preferred stock ranking senior to or on a parity with the Preferred Stock. Liquidation Rights Upon the dissolution, liquidation or winding up of MidSouth, the holders of the shares of Preferred Stock will be entitled to receive upon liquidation, and to be paid out of the assets of MidSouth available for distribution to its shareholders before any payment or distribution may be made on the MidSouth Common Stock or on any other junior securities, the amount of $14.25 per share, plus a sum equal to all accrued and unpaid dividends, whether or not earned or declared on such shares, and accrued interest thereon, if any, to the date of final distribution. Neither the sale of all or substantially all of the property or business of MidSouth, nor the merger or consolidation of MidSouth into or with any other entity, or the merger or consolidation of any other entity into MidSouth will be considered a dissolution, liquidation or winding up, voluntary or involuntary, of MidSouth. Preemptive Rights Holders of shares of MidSouth Preferred Stock do not have preemptive rights. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following unaudited pro forma combined financial statements are presented assuming the Mergers will be accounted for as a purchase, and, subject to the purchase adjustments noted below regarding the Companies, reflect the combination of the historical consolidated financial statements of the Companies for the following periods. The unaudited pro forma combined balance sheet assumes the Mergers were consummated on March 31, 1995. The unaudited pro forma statements of earnings are computed assuming the Mergers were consummated on January 1, 1994 and give effect to (1) the issuance of 187,286 shares of Preferred Stock at $14.25 per share (2) the payment of preferred dividends at the rate effective March 31, 1995, (3) the amortization of restated goodwill and (4) the adjustment of certain assets of Sugarland to fair market value. The unaudited pro forma information does not purport to represent what the Companies' combined results of operations actually would have been if the Mergers had occurred as of the dates indicated or will be for any future period. The unaudited pro forma combined financial statements should be read in conjunction with the historical financial statements and notes thereto of MidSouth and Sugarland contained elsewhere or incorporated by reference herein. MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Balance Sheet March 31, 1995
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS ASSETS Cash and Due From Banks 6,261,908 $ 2,193,058 8,454,966 200,000(A) 8,254,966 Federal Funds Sold 7,100,000 2,975,000 10,075,000 10,075,000 Total Cash and Cash Equivalents 13,361,908 5,168,058 18,529,966 18,329,966 Interest- Bearing Deposits in Banks 98,385 98,385 98,385 Securities Available for Sale 28,875,336 3,997,494 32,872,830 32,872,830 Investment Securities 931,404 931,404 931,404 Loans, Gross 61,440,380 7,957,334 69,397,714 69,397,714 Allowance for Possible Loan Losses (905,175) (115,445) (1,020,620) (1,020,620) Unearned Discounts 0 0 Loans, Net 60,535,205 7,841,889 68,377,094 68,377,094 Bank Premises and Equipment, Net 2,203,510 478,356 2,681,866 287,000(B) 2,968,866 Other Real Estate Owned, Net 193,350 193,350 193,350 Accrued Interest Receivable and Other Assets 1,309,296 327,954 1,637,250 97,580(C) 1,734,830 Goodwill, Net 185,508 185,508 440,614(D) 287,000(B) 441,542 200,000(A) 97,580(C) TOTAL ASSETS $107,693,902 17,813,751 125,507,653 $125,948,267
(See accompanying notes at end of financial statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Balance Sheet March 31, 1995
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS LIABILITIES Deposits: Non-Interest Bearing 30,085,357 4,547,723 34,633,080 34,633,080 Interest 68,621,837 10,988,154 79,609,991 79,609,991 Bearing Total 98,707,194 15,535,877 114,243,071 114,243,071 Deposits Securities Sold Under Repurchase 315,479 315,479 315,479 Agreements Accrued Interest 234,055 19,854 253,909 253,909 Payable Notes 2,154,366 2,154,366 2,154,366 Payable Other 112,752 29,809 142,561 142,561 Liabilities Total 101,523,846 15,585,540 117,109,386 117,109,386 Liabilities Stockholders' Equity Preferred 0 2,668,825(D) 2,668,825 Stock Common Stock 71,596 1,161,430 1,233,026 1,161,430(D) 71,596 Capital 6,167,103 1,452,364 7,619,467 1,452,364(D) 6,167,103 Surplus Unearned (67,926) (67,926) (67,926) ESOP Shares Unrealized (Losses) Gains on Securities Available- (592,500) (103,542) (696,042) 103,542(D) (592,500) For-Sale, Net of Tax Retained 591,783 231,569 823,352 231,569(D) 591,783 Earnings Treasury (513,610) (513,610) 513,610(D) 0 Stock Total Shareholders' Equity 6,170,056 2,228,211 8,398,267 8,838,881 Total Liabilities and Shareholders' Equity $107,693,902 17,813,751 125,507,653 125,948,267
(See accompanying notes at end of finanical statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings Year Ended December 31, 1994
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS INTEREST INCOME: Interest and Fees on Loans $5,463,501 868,282 6,331,783 6,331,783 Interest on Investment Securities 1,782,504 262,604 2,045,108 2,045,108 Interest on Federal Funds Sold 142,473 88,030 230,503 230,503 TOTAL INTEREST INCOME 7,388,478 1,218,916 8,607,394 8,607,394 INTEREST EXPENSE Interest on Deposits 1,924,906 365,679 2,290,585 2,290,585 Interest on Notes Payable 51,195 51,195 51,195 Total Interest Expense 1,976,101 365,679 2,341,780 2,341,780 NET INTEREST INCOME 5,412,377 853,237 6,265,614 6,265,614
(See accompanying notes at end of finanical statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings Year Ended December 31, 1994
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS PROVISION FOR POSSIBLE LOAN LOSSES 210,000 210,000 210,000 NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 5,202,377 853,237 6,055,614 6,055,614 NON-INTEREST INCOME Service Charges on Deposits 1,015,529 154,173 1,169,702 1,169,702 Other Service Charges and Fees 406,187 25,980 432,167 432,167 Securities Gains, Net 1,178 1,178 1,178 TOTAL NON- INTEREST INCOME 1,422,894 180,153 1,603,047 1,603,047 NON-INTEREST EXPENSE Salaries and Employee Benefits 2,242,892 436,220 2,679,112 2,679,112 Occupancy and Equipment Expenses 822,615 205,824 1,028,439 1,028,439 Other Operating Expenses 1,816,623 173,118 1,989,741 32,000(E) 2,021,741 TOTAL NON- INTEREST EXPENSE 4,882,130 815,162 5,697,292 5,729,292 INCOME BEFORE INCOME TAXES 1,743,141 218,228 1,961,369 1,929,369 PROVISION FOR INCOME TAXES 601,500 55,685 657,185 657,185 NET INCOME 1,141,641 162,543 1,304,184 1,272,184
(See accompanying notes at end of financial statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings December 31, 1994
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS PREFERRED DIVIDEND REQUIREMENT 220,979(F) 220,979 INCOME AVAILABLE TO COMMON SHARE- HOLDERS $1,141,641 162,543 1,304,184 1,051,205 PRIMARY EARNINGS PER COMMON SHARE $ 1.61 0.87 1.48 FULLY DILUTED EARNINGS PER COMMON SHARE $ 1.42
MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings Three Months Ended March 31, 1995
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS INTEREST INCOME: Interest and Fees on Loans $1,546,455 201,445 1,747,900 $ 1,747,900 Interest on Investment Securities 439,900 59,746 499,646 499,646 Interest on Federal Funds Sold 43,782 44,168 87,950 87,950 TOTAL INTEREST INCOME 2,030,137 305,359 2,335,496 2,335,496
(See accompanying notes at end of financial statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings Three Monts Ended March 31, 1995
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS INTEREST EXPENSE: Interest on Deposits 568,873 92,831 661,704 661,704 Interest on Notes Payable 29,139 29,139 29,139 TOTAL INTEREST EXPENSE 598,012 92,831 690,843 690,843 NET INTEREST INCOME 1,432,125 212,528 1,644,653 1,644,653 PROVISION FOR POSSIBLE LOAN LOSSES 55,000 0 55,000 55,000 NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 1,377,125 212,528 1,589,653 1,589,653 NONINTEREST INCOME: Service Charges on Deposits 249,211 37,383 286,594 286,594 Other Service Charges and Fees 108,569 7,848 116,417 116,417 Securities Gains, Net 0 0 0 0 TOTAL NONINTEREST INCOME 357,780 45,231 403,011 403,011 NONINTEREST EXPENSE: Salaries and Employee Benefits 587,802 101,185 688,987 688,987 Occupancy and Equipment Expenses 218,935 49,257 268,192 268,192
(See accompanying notes at end of financial statements) MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings Three Months Ended March 31, 1995
Sugarland Pro Forma MidSouth Bancshares, MidSouth Bancorp, Inc. Inc. Combined Pro Forma Adjustment Bancorp, Inc. DEBITS CREDITS Other Operating Expenses 468,826 45,676 514,502 5,000(E) 519,502 TOTAL NONINTEREST EXPENSE 1,275,563 196,118 1,471,681 1,476,681 INCOME BEFORE INCOME TAXES 459,342 61,641 520,983 515,983 PROVISION FOR INCOME TAXES 161,257 13,350 174,607 174,607 NET INCOME 298,085 48,291 346,376 341,376 PREFERRED DIVIDEND REQUIREMENT 0 55,245(F) 55,245 INCOME AVAILABLE TO COMMON SHAREHOLDERS $298,085 48,291 346,376 $286,131 PRIMARY EARNINGS PER COMMON SHARE $ 0.42 0.26 0.40 FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.38
_________________________________ (A) To record estimated expenses relating to the Mergers as a purchase price adjustment. (B) To adjust Bank Premises and Equipment to market. (C) To record deferred taxes for write-up of Bank Premises and Equipment. (D) To record preferred stock (187,286 shares @ $14.25/share) and eliminate equity of Sugarland. (E) To amortize adjusted goodwill on a straight line basis over 15 years. (F) To record payment on Preferred Stock dividends. ____________________________ (See accompanying notes at end of financial statements) ELECTION OF DIRECTORS OF MIDSOUTH MidSouth's Articles provide that the number of directors will be set by the By- Laws, and the By-Laws currently provide for a Board of Directors of eight directors. The Articles also provide for three classes of directors, with one class to be elected at each annual meeting for a three-year term. At the Annual Meeting, Class II Directors will be elected to serve until the third succeeding annual meeting of shareholders and until their successors have been duly elected and qualified. Unless authority is withheld, the persons named in the enclosed proxy will vote the shares represented by the proxies they receive for the election of the two Class II director nominees named below. In the unanticipated event that one or more nominees cannot be a candidate at the Annual Meeting, the shares represented by the proxies will be voted in favor of such other nominees as may be designated by the Board. Directors will be elected by plurality vote, and, as a result, abstentions and broker non-votes will be ineffective. MidSouth's Articles provide that only persons who are nominated in accordance with the procedures set forth in Article IV(H) of the Articles are eligible for election as directors. Other than the Board of Directors, only shareholders of MidSouth entitled to vote at a meeting for the election of directors who have complied with the notice procedures set forth in the Articles may nominate a person for director. In order for such shareholder to timely nominate a person for election at the Annual Meeting, the shareholder must have provided written notice to MidSouth by January 15, 1995. The shareholders' notice must set forth the following: (1) as to each person whom the shareholder proposes to nominate for election or reelection as director, (a) the name, age, business address and residential address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of capital stock of MidSouth of which such person is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 ("Rule 13d-3") and (d) any other information relating to such person that would be required to be disclosed in solicitations of proxies for the election of directors pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934; and (2) as to the shareholder of record giving the notice, (a) the name and address of such shareholder, (b) the class and number of shares of capital stock of MidSouth of which such shareholder is the beneficial owner (as defined in Rule 13d- 3) and (c) a description of any agreements, arrangements or relationships between the shareholder giving the notice and each person the shareholder proposes to nominate. Two inspectors, not affiliated with MidSouth, appointed by MidSouth's secretary, will determine whether the notice provisions were met. If the inspectors determine that the Shareholder has not complied with Article IV(H), the defective nomination shall be disregarded. The following table sets forth certain information as of February 28, 1995 with respect to each director nominee and each director whose term as a director will continue after the Meeting. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years. The Board recommends a vote FOR each of the two nominees named below. Director Nominees for terms expiring in 1998 (Class II Directors)
Year First Became Name Age Principal Occupation Director of MidSouth ____ ___ ____________________ ____________________ Will G. Charbonnet, Sr. 47 President, Acadiana Fast 1985 Foods Inc. (owner/operator fast food stores); Chairman of the Board, MidSouth and MidSouth Bank Clayton Paul 69 President, Badger Oil 1992(1) Hilliard(1) Corporation Directors whose terms expire in 1996 (Class III Directors) Year First Became Name Age Principal Occupation Director of MidSouth ____ ___ ____________________ ____________________ James R. Davis, Jr. 42 Owner, Safe-America 1991 Security System (1994- present); Director of Gas Supply for Louisiana, Victoria Gas Corporation (October 1992 - 1993); President, Elsbury Production, Inc. (oil and gas exploration and production) (June 1982 - September 1992) Karen L. Hail 41 Chief Financial Officer and 1988 Secretary, MidSouth Milton B. Kidd, Jr. 75 Optometrist, Kidd Vision 1984 Centers Directors whose terms expire in 1997 (Class I Directors) Name Age Principal Occupation Year First Became Director of MidSouth ____ ___ ____________________ ____________________ C. R. Cloutier 48 President and C.E.O., 1984 MidSouth and MidSouth Bank J. B. Hargroder, M.D. 64 Physician, retired 1984 William M. Simmons 61 Private Investments 1984
_________________________________ Mr. Hilliard also was a director of MidSouth and MidSouth Bank from 1985 to 1987. During 1994 the Board held 17 meetings. Each incumbent director attended at least 75% of the aggregate number of meetings held during 1994 of the Board and committees of which he or she was a member, except Robert Burke Keaty and James R. Davis, who attended 41% and 74% respectively. The Board has an Executive Committee, an Audit and Loan Review Committee and a Personnel Committee. The members of the Executive Committee are Will G. Charbonnet, Sr., C. R. Cloutier, J. B. Hargroder, M.D. and Robert Burke Keaty. The Executive Committee's duties include nominations, shareholder relations, bank examination and Securities and Exchange Commission ("SEC") reporting. The Executive Committee will consider nominees that are proposed by shareholders in accordance with the procedures, described below, set forth in MidSouth's Articles. The Executive Committee did not meet in 1994 as such matters usually taken up by this Committee were brought to the full Board. The current members of the Audit and Loan Review Committee are James R. Davis, Jr., Milton B. Kidd, III, and Clayton Paul Hilliard. The Committee, which held 12 meetings in 1994, is responsible for maintaining a program of internal accounting controls and monitoring all loans and lines of credit for consistency with MidSouth Bank's loan policy. The current members of the Personnel Committee are Will G. Charbonnet, Sr., James R. Davis, Jr., J. B. Hargroder, Clayton Paul Hilliard and William M. Simmons. The Personnel Committee, which met one time in 1994, is responsible for evaluating the performance and setting the compensation of MidSouth's executive officers. Directors of MidSouth are also members of the Board of Directors of MidSouth Bank, with the exception that Milton B. Kidd, III, is a director of MidSouth Bank only and Milton B. Kidd, Jr., is a director of MidSouth and director emeritus of MidSouth Bank. Directors were entitled to fees of $200 per month for service on both boards, except for the Chairman of the Board of MidSouth and MidSouth Bank who receives an additional $400 per month. In addition to the monthly fee, each director receives $250 for each regular meeting, and $125 for each special meeting of the Board of MidSouth Bank and $75 for the first hour, and $25 per hour for each additional hour, of each committee meeting. Directors received fees only for meetings they attended. Section 16(a) of the Securities and Exchange Act of 1934 requires MidSouth's directors and executive officers and persons who own more than ten percent of a registered class of MidSouth's equity securities to file with the SEC initial reports of ownership, reports of changes in ownership, annual reports regarding certain transactions in common stock and other equity securities of MidSouth. Executive officers, directors and greater than ten-percent shareholders are required to furnish MidSouth with copies of all Section 16(a) reports they file. To MidSouth's knowledge, all such Section 16(a) filings with respect to changes in ownership in 1994 were filed on a timely basis. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF MIDSOUTH Security Ownership of Management The following table sets forth certain information as of May 31, 1995, concerning the beneficial ownership of MidSouth's Common Stock by each director and nominee of MidSouth, by MidSouth's Chief Executive Officer, C. R. Cloutier (who is also a director) and by all directors and executive officers of MidSouth as a group, determined in accordance with Rule 13d-3 of the SEC. Unless otherwise indicated, the Common Stock is held with sole voting and investment power.
Amount and Nature of Beneficial Ownership Percent Name and Address of Class Will G. Charbonnet, Sr. 41,045 5.7% 1003 Hugh Wallis Road, South, Suite F Lafayette, LA 70508 C. R. Cloutier 49,555 6.8% P. O. Box 3745 Lafayette, LA 70502 15,618(4) 2.2% James R. Davis, Jr. 9151 Interline Ave., Ste. 1-B Lafayette, LA 70503 Karen L. Hail 22,200 3.1% P. O. Box 3745 Lafayette, LA 70502 J. B. Hargroder, M.D. 70,209 9.8% P. O. Box 1049 Jennings, LA 70546 Clayton Paul Hilliard 34,195 4.8% P. O. Box 52745 Lafayette, LA 70505 Robert Burke Keaty 4,710 0.9% 345 Doucet Road Suite 104 Lafayette, LA 70503 Milton B. Kidd, Jr., O.D. 17,221 2.4% 1500 N.W. Blvd. P. O. Box 1071 Franklin, LA 70538 William M. Simmons 24,599 3.4% P. O. Box 111 Avery Island, LA 70513 All directors and 292,924 39.65% executive officers as a group (13 persons)
MidSouth Common Stock held by MidSouth's Directors' Deferred Compensation Trust (the "Trust") is beneficially owned by the Plan Administrator, which has sole voting and investment power. Because the Plan Administrator is the Executive Committee of the Board of MidSouth, all directors of MidSouth could be deemed to share voting and investment power with respect to all MidSouth Common Stock held in the Trust (52,260 shares or 7.3% as of May 31, 1995). For each individual director, the table reflects the number of shares held for his or her account only. The group figure reflects all shares held in the Trust on May 31, 1995. MidSouth Common Stock held by MidSouth's Employee Stock Ownership Plan (the "ESOP") is not included in the table, except that shares allocated to an individual's account are included as beneficially owned by that individual. Beneficial ownership of shares held in the ESOP is attributed to the ESOP, ESOP Trustees and ESOP Administrative Committee, as reflected in the table below. The Board has the power to appoint and remove the ESOP Trustees and Administrative Committee. Shares subject to options are deemed outstanding for purposes of computing the percentage of outstanding Common Stock owned by persons beneficially owning such shares and by all directors and executive officers as a group but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person. Includes 8,883 shares as to which he shares voting and investment power and 6,938 held for his account in the Trust. Includes 7,362 shares held by the ESOP for his account as to which he shares voting power, 20,488 shares as to which he shares voting and investment power, 7,106 shares held for his account in the Trust and 10,500 shares underlying stock options. Includes 10,131 shares as to which he shares voting and investment power and 5,487 shares held for his account in the Trust. Includes 5,234 shares held for her account in the ESOP as to which she shares voting power, 210 shares as to which she shares voting and investment power, 5,416 shares held for her account in the Trust and 10,500 shares underlying stock options. Includes 63,435 shares as to which he shares voting and investment power, and 6,069 shares held for his account in the Trust. Includes 30,992 shares as to which he shares voting and investment power and 2,347 shares held for his account in the Trust. Includes 4,710 shares held for his account in the Trust. Includes 5,250 shares as to which he shares voting and investment power, and 4,713 shares held for his account in the Trust. Includes 570 shares as to which he shares voting and investment power and 5,764 shares held for his account in the Trust. Security Ownership of Certain Beneficial Owners The following table sets forth certain information as of May 31, 1995 concerning persons or groups, other than the directors listed in the table above, known to MidSouth to be the beneficial owner of more than five percent of MidSouth's Common Stock, determined in accordance with Rule 13d-3 of the SEC.
Name and Address Amount and Nature Percent of Beneficial Owner of Beneficial Ownership of Class ___________________ _______________________ ________ Robert C. Schumacher, M.D. 36,411 5.1% 16134 N. Gallaugher Jennings, LA 70546 Hilton B. Watson 36,855 5.1% 102 S. Cutting Avenue Jennings, LA 70546 MidSouth Bancorp, Inc. 68,204 9.5% Employee Stock Ownership Plan, ESOP Trustees and ESOP Administrative Committee P. O. Box 3745 Lafayette, LA 70502
The ESOP Administrative Committee directs the ESOP Trustees how to vote the approximately 6,065 unallocated shares of Common Stock held in the ESOP as of May 31, 1995. Voting rights of the shares allocated to ESOP participants' accounts are passed through to the participants. The ESOP Trustees have investment power with respect to the ESOP's assets, but must exercise this power in accordance with an investment policy established by the ESOP Administrative Committee. Thus, the ESOP Trustees share investment power with the ESOP Administrative Committee for all shares held pursuant to the ESOP. The ESOP Trustees are Donald R. Landry, an executive officer of MidSouth, and Russell Henson and Kim Cormier, MidSouth Bank employees. The ESOP Administrative Committee consists of Teri S. Stelly and Todd Kidder, executive officers of MidSouth, and Dailene Melancon, a MidSouth Bank employee. ___________________________ EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS Summary of Executive Compensation The following table shows all compensation awarded to, earned by or paid to MidSouth's Chief Executive Officer, C. R. Cloutier, for all services rendered by him in all capacities to MidSouth and its subsidiaries for the year ended December 31, 1994. No other executive officer of MidSouth had total annual salary and bonus exceeding $100,000 for the year ended December 31, 1994.
Long Term Compensation ____________________________________________________________________________________________________ Annual Compensation Awards Payouts Other ____________________________________________________________________________________________________ Other Securities All Annual Restricted Under- Other Name Compen- Stock lying LTIP Compen- and Year Salary($) Bonus($) sation Awards(s) Options/ Payouts sation Principal ($) ($) SARs(#) ($) ($) Position _____________________________________________________________________________________________________ C. R. 1994 $111,517 1,507 0 0 0 0 9,165 Includes $11,900 in directors fees for 1994, $100,650 in directors for 1993, and $8,750 in directors fees for 1992. Awarded pursuant to the Incentive Compensation Plan of MidSouth Bank. Consists of an estimated $8,338 contributed by MidSouth to the ESOP for the account of Mr. Cloutier and $827 paid by MidSouth in insurance premiums for term life insurance for the benefit of Mr. Cloutier. Option Exercises and Holdings The following table sets forth information with respect to MidSouth's Chief Executive Officer, C. R. Cloutier, concerning his exercise of options during 1994 and unexercised options held as of December 31, 1994. As of December 31, 1994, as adjusted for a stock dividend paid February 18, 1994, other executive officers of MidSouth held options to purchase an aggregate of 10,500 shares of common stock exercisable at $9.52 per share and expiring on December 31, 1996. AGGREGATED OPTION EXERCISES IN 1994 AND OPTION VALUES AS OF DECEMBER 31, 1994
_________________________________________________________________________________________ No. of Shares Acquired on Value Number of Securities Value of Unexercised Name Exercise Realized Underlying Unexercised In-the-Money Options/SARs Options/SARs at at December 31, 1994 December 31,1994 ______________________________________________________ Exercisable Unexercisable Exercisable Unexercisable __________________________________________________________________________________________ C. R. Cloutier 0 $0 10,500 0 $20,790 N.A. __________________________________________________________________________________________
As adjusted for a stock dividend paid February 18, 1994, Mr. Cloutier's options are exercisable at an exercise price of $9.52 per share and expire on December 31, 1996. Employment and Severance Contract Mr. Cloutier has a written employment agreement with MidSouth Bank for a term of one year, commencing February 15th of each year. The employment agreement is automatically extended for a period of one year every year thereafter commencing on the termination date, unless written notice of termination is given by any party to the agreement not later than 60 days before the termination date. Pursuant to the contract, Mr. Cloutier receives term life insurance equal to four times his annual salary payable to a beneficiary of his choice and disability insurance of not less than two- thirds of his annual salary. Mr. Cloutier's contract has a severance provision which entitles him to one year's salary if the agreement is terminated by MidSouth Bank, unless he is removed by a regulatory body. Certain Transactions Directors, nominees and executive officers of MidSouth and their associates have been customers of, and have had loan transactions with, MidSouth Bank in the ordinary course of business, and such transactions are expected to continue in the future. In the opinion of MidSouth's management, such transactions have been on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. ___________________________ RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS MidSouth's consolidated financial statements for the year ended December 31, 1994 were audited by the firm of Deloitte & Touche LLP and the Board has appointed such firm to audit MidSouth's financial statements for the year ending December 31, 1995. Representatives of Deloitte & Touche LLP are not expected to be present at the Annual Meeting. SHAREHOLDER PROPOSALS Eligible shareholders who desire to present a proposal qualified for inclusion in the proxy materials relating to the 1996 annual meeting of MidSouth must forward such proposals to the Secretary of MidSouth at the address listed on the first page of this Proxy Statement in time to arrive at MidSouth prior to February 21, 1996. LEGAL MATTERS Correro, Fishman & Casteix, L.L.P., New Orleans, Louisiana, has rendered its opinion that the shares of MidSouth Preferred Stock to be issued in connection with the Holding Company Merger have been duly authorized and, if and when issued pursuant to the terms of the Plan, will be validly issued, fully paid and non-assessable. EXPERTS The audited consolidated financial statements of Sugarland and its subsidiary as of and for each of the years in the two year period ended December 31, 1994 and 1993 have been audited by Mixon, Roy, Metz & Mixon, independent public accountants, as indicated in their report with respect thereto, and have been included herein in reliance upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of MidSouth incorporated in this Joint Proxy Statement and Prospectus by reference from the MidSouth Annual Report on Form 10-KSB have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference and has been so incorporated in reliance upon the report of such firm given upon authority as experts in accounting and auditing. OTHER MATTERS With respect to the Companies, at the time of the preparation of this Joint Proxy Statement and Prospectus, neither of them had been informed of any matters to be presented by or on behalf of the Companies or the management thereof for action at the Meetings other than those listed in the Notice of Special Meeting of Shareholders of Sugarland and Notice of Annual Meeting of Shareholders of MidSouth referred to herein. If any other matters come before the meeting or any adjournment thereof, the persons named in the enclosed proxy will vote on such matters according to their best judgment. Shareholders are urged to sign the enclosed proxy, which is solicited on behalf of the Board of Directors of Sugarland or MidSouth, and return it at once in the enclosed envelope. ANY SHAREHOLDER MAY BY WRITTEN REQUEST OBTAIN WITHOUT CHARGE A COPY OF MIDSOUTH'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1994, WITHOUT EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO SALLY D. GARY, INVESTOR RELATIONS, MIDSOUTH BANCORP, INC., P. O. BOX 3745, LAFAYETTE, LOUISIANA 70502. BY ORDER OF THE BOARD OF DIRECTORS OF SUGARLAND Jeanerette, Louisiana __________________________ June 20, 1995 RONALD R. HEBERT, SR., SECRETARY BY ORDER OF THE BOARD OF DIRECTORS OF MIDSOUTH Lafayette, Louisiana ___________________________ June 20, 1995 KAREN L. HAIL, SECRETARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF SUGARLAND BANCSHARES, INC. Page Independent Auditors' Report..................................F-2 Consolidated Balance Sheets as of December 31, 1994 and 1993 and March 31, 1995.......................................F-3 Consolidated Statements of Income for the Years Ended December 31, 1994 and 1993 and the Three Months ended March 31, 1995 and 1994............................F-4 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1994 and 1993 and the Three Months ended March 31, 1995...........................................F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994 and 1993 and the Three Months ended March 31, 1995 and 1994............................F-6 Notes to Consolidated Financial Statements....................F-7 F-1 Independent Auditors' Report The Board of Directors and Shareholders Sugarland Bancshares, Inc. P.O. Box 71 Jeanerette, LA 70544 We have audited the accompanying consolidated balance sheets of Sugarland Bancshares, Inc. and Sugarland State Bank as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Corporations' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sugarland Bancshares, Inc. and Sugarland State Bank at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with generally accepted accounting principles. MIXON, ROY, METZ & MIXON CERTIFIED PUBLIC ACCOUNTANTS New Iberia, Louisiana March 1, 1995 F-2 Sugarland Bancshares, Inc. Consolidated Balance Sheets December 31, 1994 and 1993 and March 31, 1995
(Unaudited) March 31, 1995 1994 1993 __________ __________ __________ Assets: Cash and Due From Banks $2,193,058 $2,323,694 $2,364,404 Federal Funds Sold 2,975,000 2,075,000 3,050,000 Securities Available for Sale 3,997,494 3,944,856 3,919,566 Loans, Net of Unearned Discount and Allowance for Possible Loan Losses 7,841,889 8,225,775 8,048,063 Bank Premises and Equipment, Net of Accumulated Depreciation 478,356 493,338 551,978 Accrued Income and Other Assets 327,954 409,896 295,698 __________ __________ __________ Total Assets: $17,813,751 $17,472,559 $18,229,709 ========== ========== ========== Liabilities and Shareholders' Equity: Liabilites: Deposits Demand $4,547,723 $4,821,975 $4,614,157 Savings and NOW Deposits 5,802,279 5,090,390 5,324,182 Other Time Deposits 5,185,875 5,407,579 6,133,173 __________ __________ __________ Total Deposits $15,535,877 $15,319,944 $16,071,512 Accrued Interest on Deposits 19,854 17,194 15,805 Other Liabilities 29,809 28,083 25,927 __________ __________ __________ Total Liabilities: $15,585,540 $15,365,221 $16,113,244 __________ __________ __________ Shareholders' Equity: Common Stock, Par Value $5, 400,000 Shares Authorized, 232,286 Issued and 187,286 Shares Outstanding $1,161,430 $1,161,430 $1,161,430 Capital Surplus 1,452,364 1,452,364 1,452,364 Retained Earnings 231,569 181,602 19,373 Net Unrealized Losses on Securities Available For Sale, Net of Tax (103,542) (174,448) (3,092) Treasury Stock, 45,000 Shares (513,610) (513,610) (513,610) __________ __________ __________ Total Shareholders' Equity: $2,228,211 $2,107,338 $2,116,465 __________ __________ __________ Total Liabilities and Shareholders' Equity: $17,813,751 $17,472,559 $18,229,709 ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-3 Sugarland Bancshares, Inc. Consolidated Statements of Income For The Years Ended December 31, 1994 and 1993 And The Three Months Ended March 31, 1995 and 1994
(Unaudited) Three Months Ended March 31, Year Ended December 31, __________________________ __________________________ 1995 1994 1994 1993 __________ ___________ __________ ___________ Interest Income: Interest and Fees on Loans $ 201,445 $ 197,411 $ 868,282 $ 885,008 Interest on Securities Available for Sale 59,746 68,443 262,604 295,127 Interest on Federal Funds Sold 44,168 31,139 88,030 87,614 __________ __________ __________ __________ Total Interest Income: $ 305,359 $ 296,993 $ 1,218,916 $ 1,267,749 Interest Expense: Interest on Deposits 92,831 92,418 365,679 408,049 __________ __________ __________ __________ Net Interest Income: $ 212,528 $ 204,575 $ 853,237 $ 859,700 Provision for Possible Loan Losses -0- -0- -0- -0- __________ __________ __________ __________ Net Interest Income After Provisions for Credit Losses: $ 212,528 $ 204,575 $ 853,237 $ 859,700 __________ __________ __________ __________ Other Income: Customer Service Charges $ 37,383 $ 37,123 $ 154,173 $ 153,034 Ohter Income 7,848 10,291 25,980 37,375 Net Investment Securities Gains -0- -0- -0- 8,297 __________ __________ __________ __________ Total Other Income: $ 45,231 $ 47,414 $ 180,153 $ 198,706 __________ __________ __________ __________ Other Expenses: Salaries and Exmployee Benefits $ 101,185 $ 103,673 $ 436,220 $ 444,628 Occupancy Expenses 34,194 38,626 148,649 153,133 Equipment Expenses 15,063 15,427 57,175 59,178 Other Expesnes 45,676 44,726 173,118 189,324 __________ __________ __________ __________ Total Other Expenses: $ 196,118 $ 202,452 $ 815,162 $ 846,263 __________ __________ __________ __________ Income Before Income Taxes: $ 61,641 $ 49,537 $ 218,228 $ 212,143 Income Tax Expense: 13,453 15,270 55,685 23,826 __________ __________ __________ __________ Net Income: $ 48,188 $ 34,267 $ 162,543 $ 188,317 ========== ========== ========== ========== Net Income Per Share of Common Stock $ .26 $ .18 $ .87 $ 1.01 ========== ========== ========== ========== Average Shares Outstanding 187,286 187,286 187,286 187,286 ========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-4 Sugarland Banchsares, Inc. Consolidated Statements of Changes in Shareholders' Equity For The Years Ended December 31, 1994 and 1993 And The Three Months Ended March 31, 1995
Unrealized Loss on Securities Common Capital Retained Available Treasury Stock Surplus Earnings For Sale Stock __________ __________ __________ ___________ ____________ Balances at December 31, 1992 as previously reported: $ 1,161,430 $ 1,452,364 $ (80,271) $ (50,912) $ (513,610) Prior Period Adjustment (50,912) 50,912 __________ __________ __________ __________ ___________ Balances at December 31, 1992 as restated: 1,161,430 1,452,364 (131,183) -0- (513,610) Net Income For Year 188,317 Unrealized Loss on Securities Available For Sale (3,092) Dividends (37,457) Minority Interest in Income of Subsidiary (304) __________ __________ __________ __________ ___________ Balances at December 31, 1993: $ 1,161,430 $ 1,452,364 $ 19,373 $ (3,092) $ (513,610) Net Income For Year 162,543 Net Change in Unrealized Loss on Securities Available For Sale, Net Taxes of $81,131 (171,356) Minority Interest in Income of Subsidiary (314) __________ __________ __________ __________ ___________ Balances at December 31, 1994: $ 1,161,430 $ 1,452,364 $ 181,602 $ (174,448) $ (513,610) __________ __________ __________ __________ ___________ Net Income through March 31, 1995 * 48,188 Over-accrual of Prior-year Taxes * 1,779 Net Change in Unrealized Loss on Securities Available For Sale* 70,906 __________ __________ __________ __________ ___________ Balances at March 31, 1995: * $ 1,161,430 $ 1,452,364 $ 231,569 $ (103,542) $ (513,610) ========== ========== ========== ========== =========== ___________________________ * Unaudited information
The accompanying notes are an integral part of these consolidated financial statements. F-5 Sugarland Bancshares, Inc. Consolidated Statements of Cash Flows For The Years Ended December 31, 1994 and 1993 And The Three Months Ended March 31, 1995 and 1994
(Unaudited) Three Months Ended March 31, Year Ended Dember 31, _________________________ __________________________ 1995 1994 1994 1993 __________ __________ __________ __________ Cash Flows From Operating Activities: Net Income $ 48,188 $ 34,267 $ 162,543 $ 188,317 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 14,982 15,750 60,145 62,298 Increase in Accrued Income and Other Assets 83,719 51,394 (14,932) (26,943) Increase/(Decrease) in Interest Payable 2,660 2,158 1,389 (7,378) Increase/(Decrease) in Other Liabilities 1,726 5,852 2,298 (10,008) Loss/(Gain) on Sale of Other Real Estate Owned -0- -0- 2,527 (12,500) __________ __________ __________ __________ Net Cash Provided by Operating Activities: $ 151,275 $ 109,421 $ 213,970 $ 193,786 __________ __________ __________ __________ Cash Flows From Investing Activities: Proceeds From Maturities of Securities Available for Sale $ 500,000 $ 1,000,000 $ 520,923 $ 917,697 Purchases of Securities Available for Sale (481,730) (1,558,539) (799,156) (1,450,227) Net Decrease in Federal Funds Sold (900,000) (1,100,000) 975,000 2,600,000 Net Income in Loans 383,886 751,853 (177,712) (454,319) Purchase of Equipment -0- -0- (1,505) (21,022) Acquisition of Other Real Estate Owned -0- -0- (55,000) -0- Proceeds From Sale of Other Real Estate Owned -0- -0- 34,338 67,500 __________ __________ __________ __________ Net Cash Provided by Investing Activities: $ 497,844 $ 906,686 $ 496,888 $ 1,659,629 __________ __________ __________ __________ Cash Flows From Financing Activities: Net Decrease in Demand Deposits, NOW and Savings Accounts $ 437,637 $ 309,139 $ (25,974) $ (792,775) Net Decrease in Time Deposits (221,704) (29,408) (725,594) (570,226) Dividends Paid -0- -0- -0- (37,457) __________ __________ __________ __________ Net Cash Used in Financing Activites: $ 215,933 $ 279,731 $ (751,568) $ 1,400,458 __________ __________ __________ __________ Net (Decrease)/Increase in Cash and Cash Equivalents $ (130,636) $ (517,534) $ (40,710) $ 452,957 __________ __________ __________ __________ Cash and Due from Banks at January 1 2,323,694 2,364,404 2,364,404 1,911,447 __________ __________ __________ __________ Cash and Due from Banks at End of Period $ 2,193,058 $ 1,846,870 $ 2,323,694 $ 2,364,404 ========== ========== ========== ==========
Supplemental Disclosures: 1. The Corporation paid interest costs of $364,290 and $415,427 in the years ended December 31, 1994 and 1993, respectively. 2. The Corporation made income tax payments of $49,894 and $26,653 for the years ended December 31, 1994 and 1993, respectively. The accompanying notes are an integral part of these consolidated financial statements. F-6 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies: ___________________________________________________ The Corporation _______________ Sugarland Bancshares, Inc., a Louisiana corporation (the Corporation), is a bank holding company. Sugarland State Bank (the Bank) is a state non-member banking institution and a 99.8% owned subsidiary of the Corporation. The Bank is located in Jeanerette, LA with a branch in New Iberia, LA and its customers are primarily from that area. Principles of Consolidation ___________________________ The consolidated financial statements include the accounts of Sugarland Bancshares, Inc. and its 99.8% owned subsidiary, Sugarland State Bank. Intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents _________________________ For purposes of reporting cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "Cash and Due From Banks". Investments in Securities _________________________ For 1993, investments in securities are stated at cost, adjusted for amortization of premium and accretion of discount, which are recognized as adjustments to interest income. Gain or losses on the sale of investment securities are based upon the adjusted cost of the specific security sold and the net proceeds. The investment marketable equity security is carried at the lower of cost or market value. Generally, the Corporation sells these securities only to meet liquidity needs. For 1994, the Corporation adopted SFAS No. 115 and classified all its U.S. Government Agency Bonds and Notes as securities available for sale. These securities are reflected at fair value, and unrealized holding gains and losses, net of tax on securities available for sale, are reported as a net amount in a separate component of shareholders' equity until realized. Loans _____ Loans are stated at the amount of unpaid principal, reduced by unearned discounts and an allowance for possible loan losses. Interest income on installment loans is recognized using the sum-of-the-digits method which is similar to the interest method. Income on other loans is credited to operations based on the principal amount outstanding using the simple interest method. Based upon the evaluation of individual loans, the Corporation does not recognize interest income where collection of interest is not expected. Allowance for Possible Loan Losses __________________________________ The allowance for possible loan losses is established through a provision for loan losses charged to F-7 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) expenses. Loans are charged against the allowance for possible loan losses when management believes that the collectability of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb possible loan losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans and prior loan loss experience. Off Balance Sheet Financial Instruments _______________________________________ In the ordinary course of business, the Bank has entered into off balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. Net Income Per Share of Common Stock ____________________________________ Net income per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Premises and Equipment ______________________ The premises and equipment are carried at cost less accumulated depreciation. Depreciation of premises and equipment is provided over the estimated useful lives of the respective assets on the straight-line basis for financial reporting purposes and accelerated methods for income tax reporting purposes. Other Real Estate Owned _______________________ Other real estate owned is comprised of properties acquired through partial or total satisfaction of loans. These properties are carried at the lower of cost or market value. Loan losses arising from the acquisition of such properties are charged against the allowance for possible loan losses. Other expenses incurred are charged directly to operations. Income Taxes ____________ Provisions for income taxes are based on amounts reported in the statement of income (after exclusion of non-taxable income such as interest on state and municipal securities) and include deferred income taxes on temporary differences in the recognition of income and expense for tax and financial statement purposes. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in SFAS No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. F-8 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) The Corporation does not consider the allowance for possible loan losses as a timing difference since it believes the allowance will not reverse in the future. Compensated Absences ____________________ Employees of the Bank are entitled to paid vacation days and sick days depending on length of service. The amount of compensation for future absences is immaterial and, accordingly, no liability has been recorded in the financial statements. The Bank's policy is to recognize the costs of compensated absences when actually paid to employees. Post Retirement Benefits ________________________ The Bank presently offers no post retirement benefits which would be required to be recorded in the financial statements. The Bank has a nonqualified deferred compensation plan in which some of its directors participate. These fees were deducted in the financial statements but were not deducted for tax purposes. No deferrals have been made for a number of years. The economic liability is reflected in the financial statements. Prior Period Adjustment _______________________ Retained earnings at the beginning of 1993 has been adjusted to correct the inappropriate treatment of the decline in market value of a mutual fund in 1992 and prior years. The error had no effect on net income for 1994 or 1993. F-9 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 2 - Investments in Securities: __________________________________ The carrying amounts of securities available for sale as shown in the consolidated balance sheets and their approximate fair values at December 31 were as follows:
Gross Gross Gross Amortized Unrealized Unrealized Realized Fair Cost Gains Losses Losses Value __________ ___________ ___________ __________ __________ December 31, 1994: Mutual Fund $ 200,000 $ -0- $ 17,415 $ 50,912 $ 131,673 U. S. Government and Agency Securities 3,951,803 930 239,550 -0- 3,713,183 Other Securities 100,000 -0- -0- -0- 100,000 ____________ __________ __________ __________ ___________ $ 4,251,803 $ 930 $ 256,965 $ 50,912 $ 3,944,856 ============ ========== ========== ========== ===========
Gross Gross Book Unrealized Unrealized Market Value Gains Losses Value ____________ __________ __________ __________ December 31, 1993: Mutual Fund $ 145,996 $ -0- $ -0- $ 145,996 U. S. Government and Agency Securities 3,673,570 63,888 1,454 3,736,004 Other Securities 100,000 -0- -0- 100,000 ____________ __________ __________ __________ $ 3,919,566 $ 63,888 $ 1,454 $ 3,982,000 ============ ========== ========== ==========
Securities carried at approximately $1,000,000 at December 31, 1994 and $800,000 at December 31, 1993, were pledged to secure public deposits and for other purposes required by law. "Mutual fund" is a marketable equity security with an original cost of $200,000 and market values of $131,673 at December 31, 1994 and $145,996 at December 31, 1993. "Other Securities" is stock in a nonpublicly traded corresponding bank. The maturities of securities available for sale at December 31, were as follows:
1994 1993 ____________ ____________ Due from one to five years $ 3,509,439 $ 3,193,512 Due over five years 442,364 480,058 ____________ ____________ $ 3,951,803 $ 3,673,570 ============ ============
F-10 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 3 - Loans and Allowance for Possible Loan Losses: The components of loans outstanding at December 31 were as follows:
1994 1993 ____________ ____________ Commercial/Industrial/Agricultural $ 4,273,896 $ 4,127,427 Commercial Real Estate 851,826 1,056,279 Residential Real Estate 1,423,072 1,431,247 Consumer/Installment 1,906,974 1,676,411 Other 3,490 4,343 ____________ ____________ Gross Loans $ 8,459,258 $ 8,295,707 Less: Unearned Discounts (99,630) (102,252) Allowance for Possible Loan Losses (133,853) (145,392) ____________ ____________ Total Loans $ 8,225,775 $ 8,048,063
Nonperforming loans, which include loans contractually past due 90 days or more and those on nonaccrual, were $26,000 and $72,000 at December 31, 1994 and 1993, respectively. Approximately 30% of the Bank's loans were related to the farming industry of the Jeanerette, LA area. The maturities and repricing frequencies of loans outstanding at December 31 were as follows:
1994 1993 ___________ ___________ One year or less: Floating interest rate $ 592,605 $ 1,162,187 Fixed interest rate 2,762,203 2,686,380 After one year through five years: Floating interest rate 1,574,759 1,601,168 Fixed interest rate 1,493,846 1,243,622 After five years: Floating interest rate 1,198,208 869,852 Fixed interest rate 837,637 732,498 ___________ ___________ $ 8,459,258 $ 8,295,707 =========== ===========
Changes in the Allowance for Possible Loan Losses for the years ended December 31 were as follows:
1994 1993 _________ _________ Balance at January 1 $ 145,392 $ 134,763 Provisions Charged to Operations -0- -0- Recoveries of Loans Previously Charged Off 4,646 16,582 Loans Charged Off (16,003) (5,953) _________ _________ Balance at December 31 $ 133,853 $ 145,392 ========= =========
F-11 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 4 - Bank Premises and Equipment: Components of properties and equipment were as follows:
1994 1993 _________ _________ Building - Main Office $ 469,788 $ 469,788 Furniture, Fixtures and Vehicles 713,760 712,255 Land - Jeanerette, LA 50,238 50,238 Land - New Iberia, LA 87,563 87,563 _________ _________ Total $1,321,349 $1,319,844 Less Accumulated Depreciation (828,011) (767,866) _________ _________ Fixed Assets (Net) $ 493,338 $ 551,978 ========= =========
Depreciation expense for the years ended December 31, 1994 and 1993 was $60,145 and $62,298, respectively. Note 5 - Treasury Stock: Treasury stock is shown at cost. Note 6 - Commitments and Contingent Liabilities: In the normal course of business there are outstanding various commitments and contingent liabilities, such as guarantees and commitments to extend credit, which are not reflected in the accompanying financial statements until they become payable. In the opinion of management, these do not represent unusual risks. At December 31, 1994 and 1993 unused lines of credit totaled $1,565,000 and $2,104,000, respectively. At December 31, 1994 and 1993 letters of credit totaled $33,000 and $51,000, respectively. The Corporation and the Bank are also subject to claims and lawsuits which arise primarily in the ordinary course of business. Based on information presently available it is the opinion of management that such claims and lawsuits, if any, will not have a material adverse effect on the consolidated financial position of the Corporation. F-12 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 7 - Income Taxes: The provision for income taxes at December 31 consisted of the following:
1994 1993 _________ _________ Currently Payable Federal $ 52,623 $ 22,173 State 3,062 1,653 _________ _________ $ 55,685 $ 23,826 ========= =========
As discussed in Note 1, no deferred taxes have been recorded in the financial statements for the components of allowance for possible loan losses. Writedowns of other real estate owned of $15,124 creates a benefit of $5,142, and the use of accelerated depreciation creates a liability of $1,905. Due to the immaterial benefit, no deferred asset or liability was recorded. The provision for federal income taxes is less than that computed by applying the federal statutory rate of 34% in 1994 and 1993, as indicated in the following analysis.
1994 1993 ________ ________ Tax based on statutory rate $ 74,198 $ 72,129 Effect on tax-exempt income -0- (3,844) Effect of net loan recoveries (losses) (3,923) 3,614 Deferred compensation paid (10,499) -0- Non deductible expenses 509 554 Contribution carryover -0- (481) Net operating loss carryover -0- (43,895) Depreciation 2,346 (4,251) Other (Net) (6,946) -0- ________ ________ $ 55,685 $ 23,826 ======== ========
Note 8 - Related Parties: Some of the directors and executive officers of Sugarland State Bank and companies with which they are associated had banking transactions with the Bank in the ordinary course of business. Loans and commitments for loans to those individuals and their related companies were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Bank. The aggregate in indebtedness of those individuals and their related companies to the Bank at December 31, 1994 and 1993 was $1,388,000 and $1,100,000, respectively. During 1994, new loans to such related parties amounted to $1,000,000 and repayments amounted to $712,000. F-13 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 9 - Concentrations of Credit: _________________________________ All the Bank's loans, commitments, and standby letters of credit have been granted to customers in the Bank's market area. All such customers are depositors of the Bank. The concentrations of credit by type of loans are set forth in Note 3. The distribution of commitments to extend credit approximates the distribution of loans outstanding. Standby letters of credit were granted primarily to commercial borrowers. The Bank, as a matter of policy, does not extend credit to any single borrower or group of related borrowers in excess of $500,000. Note 10 - Regulatory Matters: ____________________________ The Bank is subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, in those circumstances, could have a direct material effect on the institution's financial statements. The regulations require the Bank to meet specific capital adequacy guidelines that involve qualitative measures of the Bank's assets and liabilities as calculated under regulatory accounting principles. The regulations also require agencies to make qualitative judgments about the Bank. Those qualitative judgments could also effect the Bank's capital structure. Management believes that, as of December 31, 1994, the institution meets all such capital requirements to which it is subject. Note 11 - Subsequent Events: ___________________________ On December 28, 1994, MidSouth Bancorp, Inc. (MidSouth) and Sugarland Bancshares, Inc. issued a joint news release announcing an agreement under which Sugarland Bancshares, Inc. and its 99.8% owned subsidiary, Sugarland State Bank, would be acquired by MidSouth. This transaction is structured to qualify as a tax-free reorganization and will result in 187,286 shares of convertible preferred stock of Midsouth being issued to shareholders of the Corporation. The transaction is subject to receipt of federal and state regulatory approvals, the approval of the shareholders of MidSouth and the Corporation, and the satisfaction of certain other conditions. The transaction is expected to be consummated in the summer of 1995. F-14 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 12 - Sugarland Bancshares, Inc. (Parent Only) Condensed Financial Statements: ____________________ The following condensed financial statements summarize the financial position and results of operations of Sugarland Bancshares, Inc. (parent company only) as of December 31, 1994 and 1993 and for the years then ended.
(Parent Only) Sugarland Bancshares, Inc. Condensed Balance Sheets December 31, 1994 and 1993 Assets: 1994 1993 _________ _________ Current Assets: Cash on Hand and in Banks $ 12,566 $ 6,046 Investments: Stock - Sugarland State Bank (Equity Basis) 2,102,549 2,172,028 Other Assets: Due From Sugarland State Bank 2,333 1,827 Merger Costs 54,739 -0- _________ _________ Total Assets: $2,172,187 $2,179,901 ========= ========= Liabilities and Shareholders' Equity: Current Liabilities: Income Taxes Payable $ 1,414 $ -0- ________ _________ Shareholders' Equity: Common Stock, par value $5; 400,000 Shares Authorized, 232,286 Issued and 187,286 Shares Outstanding $1,161,430 $1,161,430 Capital Surplus 1,452,363 1,452,363 Retained Earnings 245,141 82,804 Unrealized Losses on Available-for- Sale Securities (174,551) (3,086) Treasury Stock, 45,000 Shares at Cost (513,610) (513,610) _________ _________ Total Shareholders' Equity: $2,170,773 $2,179,901 _________ _________ Total Liabilities and Shareholders' Equity: $2,172,187 $2,179,901 ========= =========
F-15 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) (Parent Only) Sugarland Bancshares, Inc. Condensed Statements of Income and Retained Earnings For The Years Ended December 31, 1994 and 1993
1994 1993 ________ ________ Revenues: Dividends $ 64,000 $ 37,457 ________ ________ Expenses: Legal and Accounting $ 2,500 $ 2,500 Taxes and Assessments 375 885 Miscellaneous 45 302 ________ ________ Total Expenses: $ 2,920 $ 3,687 ________ ________ Income Before Taxes and Equity in Undistributed Income of Sugarland State Bank: $ 61,080 $ 33,770 Income Taxes (729) 174 Equity in Earnings of Sugarland State Bank 102,193 154,372 ________ ________ Net Income: $ 162,544 $ 188,316 Retained Earnings, Beginning: 82,804 (67,743) Dividends -0- (37,457) Minority Interest in Income of Subsidiary (207) (312) ________ ________ Retained Earnings, Ending: $ 245,141 $ 82,804 ======== ========
F-16 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) (Parent Only) Sugarland Bancshares, Inc. Condensed Statements of Cash Flows For The Years Ended December 31, 1994 and 1993
1994 1993 _________ _______ Cash Flows From Operating Activities: Net Income $ 162,544 $ 188,316 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Net Increase/(Decrease) in Due From Subsidiary (506) 3,895 Merger Costs (54,739) -0- Increase in Taxes Payable 1,414 -0- _________ _________ Net Cash Provided by Operating Activities: $ 108,713 $ 192,211 _________ _________ Cash Flows From Investing Activities: Equity in Earnings of Subsidiary (102,193) (154,372) Net Cash Provided by Operationg Activities: $ 6,520 $ 37,839 _________ _________ Cash Flows from Financing Activities: Dividends Paid -0- (37,458) _________ _________ Net Increase in Cash 6,520 381 Cash at Janaury 1 $ 6,046 $ 5,665 _________ _________ Cash at December 31 $ 12,566 $ 6,046 ========= =========
F-17 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 13 - Sugarland State Bank (Subsidiary Only) Condensed Financial Statements: _____________________ The following condensed financial statements summarize the financial position and results of operations of Sugarland State Bank (subsidiary only) as of December 31, 1994 and 1993 and for the years then ended.
(Subsidiary Only) Sugarland State Bank Condensed Balance Sheets December 31, 1994 and 1993 1994 1993 __________ _________ Assets: Cash and Due From Banks $ 2,311,128 $ 2,358,358 Federal Funds Sold 2,075,000 3,050,000 Investment Securities 3,944,856 3,919,566 Loans, Net 8,225,775 8,048,063 Bank Premises, Net 556,775 615,415 Other Real Estate Owned 60,000 41,865 Accrued Interest and Other Assets 295,175 253,832 __________ __________ Total Assets: $17,468,691 $18,287,099 ========== ========== Liabilities and Stockholders' Equity: Liabilities: Deposits $15,319,944 16,071,512 Accrued Interest and Other Liabilities 41,942 39,163 __________ __________ Total Liabilities: $15,361,886 $16,110,675 __________ __________ Stockholders' Equity: Common Stock ($5 par Value; 50,000 Shares Issued and Outstanding) $ 250,000 $ 250,000 Capital Surplus 750,000 750,000 Unrealized Loss on Available for Sale Securities (157,489) -0- Unrealized Loss on Equity Securities (17,416) (3,093) Retained Earnings 1,281,710 1,179,517 __________ __________ Total Stockholders' Equity: $ 2,106,805 $ 2,176,424 __________ __________ Total Liabilities and Stockholders' Equity: $17,468,691 $18,287,099 ========== ==========
F-18 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued)
(Subsidiary Only) Sugarland State Bank Condensed Statements of Income and Retained Earnings For The Years Ended December 31, 1994 and 1993 1994 1993 _______ _______ Interest Income: Interest and Fees on Loans $ 868,282 $ 885,008 Interest on Investment Securities 262,604 295,127 Interest on Federal Funds Sold 88,030 87,614 _________ _________ Total Interest Income: $1,218,916 $1,267,749 Interest Expense: Interest on Deposits 365,679 408,049 _________ _________ Net Interest Income: $ 853,237 $ 859,700 Provision for Possible Loan Losses -0- -0- _________ _________ Net Interest Income After Provision for Credit Losses: $ 853,237 $ 859,700 _________ _________ Other Income: Customer Service Chares $ 154,173 $ 153,034 Other 25,980 45,671 _________ _________ Total Other Income: $ 180,153 $ 198,705 _________ _________ Other Expense: Salaries $ 355,656 $ 362,101 Employee Benefits 80,564 82,527 Occupancy Expenses 148,649 153,123 Other Expenses 227,372 244,824 _________ _________ Total Other Expense: $ 812,241 $ 842,575 _________ _________ Income Before Income Taxes: $ 221,149 $ 215,830 Income Taxes 54,956 24,000 _________ _________ Net Income: $ 166,193 $ 191,830 Retained Earnings, Beginning: 1,179,517 1,025,144 Dividends (64,000) (37,457) _________ _________ Retained Earnings, Ending: $1,281,710 $1,179,517 ========= =========
F-19 Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 14 - Unaudited Consolidated Financial Statements: _____________________________________________________ In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly Sugarland Bancshares, Inc.'s financial position as of March 31, 1995, the results of operations for the three month periods ended March 31, 1995 and 1994, the consolidated statements of changes in shareholders' equity for the years ended December 31, 1994, 1993, and for the three months ended March 31, 1995, and the cash flows for the three month periods ended March 31, 1995 and 1994, respectively. F-20 APPENDIX A Letterhead of Chaffe & Associates, Inc. Investment Bankers December 30, 1994 The Board of Directors Sugarland Bancshares, Inc. 1527 West Main Street Jeanerette, LA 70544-3527 Gentlemen: You have requested our opinion as to the fairness, from a financial point of view, to Sugarland Bancshares, Inc. ("Sugarland") and its shareholders, of the proposed acquisition of its common stock, $5.00 par value per share (the "Common Stock" or "Shares"), by MidSouth Bancorp, Inc. ("MidSouth"). The terms of the transaction contemplated are set forth in a Agreement and Plan of Merger dated December 29, 1994 (the "Agreement") and the related merger agreement (collectively, the "Plan"); and provide that Sugarland will merge into MidSouth (the "Company Merger"), and Sugarland State Bank ("Bank"), Sugarland's majority-owned subsidiary, will merge into MidSouth National Bank, MidSouth's wholly-owned subsidiary (together with the Company Merger, collectively called the "Mergers"). Under the terms of the Plan, on the date the holding company merger becomes effective, the shareholders of Sugarland will become preferred stock shareholders of MidSouth, as follows: Sugarland, except for the Shares as to which dissenters' rights of appraisal have been perfected and not withdrawn or forfeited in accordance with applicable law, shall be converted into a number of shares of Series A cumulative convertible preferred stock (the "Preferred Stock") of MidSouth, having the terms set forth in the form of Articles of Amendment attached as Exhibit C to the Agreement, equal to the quotient of (i) 187,286, divided by (ii) the number of outstanding Shares of Sugarland on the date the merger becomes effective (the "Exchange Ratio"). In lieu of the issuance of any fractional share of Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each such shareholder of Sugarland shall be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by the state value of a share of Preferred Stock. Chaffe & Associates, Inc. ("Chaffe"), through its experience in the securities industry, investment analysis and appraisal, and in related corporate finance and investment banking activities, including mergers and acquisitions, corporate recapitalization, and valuations for estate, corporate and other purposes, states that it is competent to provide an opinion as to the fairness of the transaction contemplated herein. Neither Chaffe nor any of its officers or employees has an interest in the common stocks of Sugarland or MidSouth. During the past year, Chaffe has provided financial advisory services to Sugarland, including assistance in negotiating the proposed transaction ("Advisory Services"). The fee received for the preparation of this report is not, and fees received for Advisory Services were not, dependent or contingent upon any transaction. The Board of Directors December 30, 1994 Sugarland Bancshares, Inc. Page 2 In connection with this opinion, we have reviewed materials bearing upon the transaction and upon the financial and operating information: a) the Plan; b) Sugarland's audited financial statements with examination and opinion by Mixon, Roy & Romero, Certified Public Accountants, for the years 1988 through 1990; c) Sugarland's audited financial statements with examination and opinion by Mixon, Roy, Metz & Mixon, Certified Public Accountants, for the years 1991 through 1993; d) Sugarland's Federal Reserve Forms FR-Y6 dated December 31, 1992 and 1993, and Form FRY9-SP dated June 30, 1994; e) Sugarland's Income Tax Returns for the years 1992 and 1993, prepared by Mixon, Roy, Metz & Mixon, Certified Public Accountants; f) Bank CALL Reports for each quarter ended December 31, 1992 through September 30, 1994; g) Bank's Uniform Bank Performance Reports dated December 31, 1992 and 1993; h) Bank's 1994 Budget; i) Articles of Incorporation and By-Laws of both Sugarland and Bank; and j) various Sugarland and Bank reports, unaudited financial statements, information, documents and regulatory correspondence. In addition, we have reviewed materials bearing upon the financial and operating condition of MidSouth, including: a) MidSouth's audited financial statements for the years 1989 through 1993, with examination and opinion by Deloitte & Touche, and for the year 1988, with examination and opinion by Deloitte, Haskins & Sells; b) MidSouth's Proxy Statements for Annual Shareholders Meetings held in 1993 and 1994; c) MidSouth's Annual Reports on Form 10-K for the years 1988 through 1993 and quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 1993, and March 31, June 30, and September 30, 1994; d) MidSouth's Registration Statements on Form S-2 dated April 16, 1993, June 4, 1993, and March 31, 1994; and S.E.C. Forms 8-A dated March 23, 1993 and April 7, 1993; e) Articles of Incorporation and By-Laws of both MidSouth and MidSouth National Bank; f) MidSouth National Bank's CALL reports for each quarter ended March 31, 1993 through September 30, 1994; g) MidSouth National Bank's Uniform Bank Performance Reports dated December 31, 1993, and June 30, 1994; and, h) various MidSouth information and correspondence. We have also reviewed statistical and financial information derived from various statistical services for Sugarland, MidSouth, and information and analysis relating to them. We have reviewed certain historical market information for the Common Stock of Sugarland and note that no independent market exists for the Shares. We note that, at present, Sugarland has authorized 400,000 Shares, of which 232,286 Shares are issued, 187,286 Shares are outstanding and 45,000 Shares are held in its treasury. In addition, we have reviewed certain historical market information for the common stock of MidSouth. We note that at September 30, 1994, MidSouth had authorized 5,000,000 shares of MidSouth common stock, par value $0.10 per share, of which at such date 711,869 shares were issued and outstanding, and no shares were held as treasury stock. In addition, MidSouth had authorized 5,000,000 shares of preferred stock , no par value, of which none were issued and outstanding. We note that MidSouth's common stock is traded on the American Stock Exchange Emerging Company Marketplace, and we have been informed by the management of MidSouth that a market will be made in the Preferred Stock also. Further, we note that although there is an independent market for MidSouth's common stock, this stock is thinly traded and this condition will likely exist for the Preferred Stock as well. The Board of Directors December 30, 1994 Sugarland Bancshares, Inc. Page 3 We have analyzed the historical performance of Sugarland and MidSouth and have considered the current financial condition, operations and prospects for both companies. We have held discussions with the managements of both companies about these matters. We analyzed information and data provided by the management of Sugarland and MidSouth concerning the loans (including non-performing loans), other real estate, securities perform an independent review of Sugarland's or MidSouth's assets or liabilities. We have relied solely on Sugarland and MidSouth for information as to the condition of the loan portfolio, the adequacy of the loan loss reserve and the value of other real estate held. Also, we compared certain financial and stock market data for a peer group of bank holding companies, composed primarily of institutions with market share in Louisiana, whose securities are publicly traded; reviewed the financial terms of business combinations in the commercial banking industry specifically, using national, southern and Louisiana peer groups and other industries generally; considered a number of valuation methodologies, including among others, those that incorporate book value, deposit base premium and capitalization of earnings; and performed such other studies and analyses as we deemed appropriate to this analysis. This opinion is necessarily based upon market, economic and other conditions as they exist on, and can be evaluated as of, the date of this letter. We note that Chaffe was retained by Sugarland to assist the Board of Directors and senior management of Sugarland in its negotiations of this transaction with MidSouth. Chaffe was not asked to and did not participate in any efforts by Sugarland to market itself for sale; nor did Chaffe evaluate potential alternative transactions. The senior management of Sugarland has informed Chaffe that it is unaware of any transaction more favorable than the one contemplated by the Plan and that no other transaction has been proposed to Sugarland at this time. Management of Sugarland has instructed Chaffe to provide this opinion on that basis. In our review, we have relied, without independent verification, upon the accuracy and completeness of the historical and projected financial information and other information reviewed by us for purposes of this opinion, and we are relying on the tax opinion issued in connection with the transaction contemplated. We express no opinion on the tax consequences of the proposed received by the holders of Sugarland Common Stock. Based upon and subject to the foregoing and based upon such other matters as we considered relevant, it is our opinion that the proposed Exchange Ratio is fair to Sugarland Bancshares, Inc., and its shareholders, from a financial point of view. Very truly yours, /s/ CHAFFE & ASSOCIATES, INC. CHAFFE & ASSOCIATES, INC. GFGL:mr APPENDIX B ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MIDSOUTH BANCORP, INC. MidSouth Bancorp, Inc., a Louisiana corporation (the "Corporation"), through its undersigned President and Secretary, hereby certifies that: 1. On ________, 1995, the Board of Directors of the Corporation adopted, pursuant to Section 33A of the Louisiana Business Corporation Law (the "LBCL"), the following amendment to Article III of its Amended and Restated Articles of Incorporation (the preferences, limitations and relative rights of a series of preferred stock, and authorized the delivery of these Articles of Amendment to the Secretary of State for filing pursuant to Section 32B of the LBCL. 2. Article III of the Articles of Incorporation is amended to add a new Section E to read in its entirety as follows: "E.Of the 5,000,000 shares of authorized no par value per share Preferred Stock, [187,286] shares shall constitute a separate series of Preferred Stock with the voting powers and the preferences and rights hereinafter set forth. (1)Designation. The series of Preferred Stock created hereunder is designated "Cumulative Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). (2)Stated Value. The stated value of each share of Series A Preferred Stock is $14.25. (3)Dividend Rights. (a)Except as provided in Subparagraph (ii), (i)the holders of record of the shares of Series A Preferred Stock are entitled to receive, but only when, as and if declared by the Board of Directors, and out of the funds of the Corporation legally available for that purpose, cumulative cash dividends at an annual rate, fixed on December 31 of each year for the ensuing calendar year, equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum, and no more; provided that, the annual dividend rate shall in no case be greater than 10% nor less than 6%; provided further that, from and after the tenth anniversary of the annual dividend rate shall be fixed at 10%. If more than one yield is shown for December maturities, the average shall be applied. If no yield is quoted for December maturities, the yeild for the next earlier available month shall be applied. From the date of issuance of the Series A Preferred Stock through December 31, 1995, the annual dividend rate shall be ________%. The Corporation by resolution of its Board of Directors shall, to the extent of Legally Available Funds, as defined below, declare a dividend on the Series A Preferred Stock payable quarterly on the first day of April, July, October, and January in each year, or on such earlier dates as the Board of Directors may from time to time fix as the dates for payment of quarterly dividends on the Common Stock, except that any dividend payable on a payment date that is a legal holiday shall be paid on the next succeeding business day. Dividends on each share of Series A Preferred Stock shall be cumulative from the date of original issuance thereof whether or not there shall be funds legally available for the payment of such dividends. Dividends payable on the Series A Preferred Stock (i) for any period other than a full year shall be computed on the basis of a 360-day year consisting of twelve 30- day months and (ii) for each full dividend period shall be computed by dividing the annual dividend rate by four. If any quarterly dividend is not paid when due, the unpaid amount shall bear interest at a rate of 10% per annum until paid. (ii)The first dividend payable on the Series A Preferred Stock shall be paid on the first day of April, July, October or January that is at least 91 days from the date of original issuance of the Series A Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days, provided that the aggregate which Expenses, as defined below, are less than $110,000 (the "Additional Amount"), or (B) will be reduced by the amount by which Expenses exceed $110,000 ("The Subtracted Amount"). In any case in which (A) the Additional Amount is greater than the dividend that would have been paid for the 90 excluded days set forth above, such excess will be payable on the next succeeding dividend payment date, or (B) the Subtracted Amount is greater than the amount otherwise payable under this paragraph, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. (iii) The term "Expenses" means the actual expenses of Sugarland Bancshares, Inc. ("Sugarland") in connection with the negotiation, execution, implementation and consummation of that certain agreement between Sugarland and the Corporation dated ______________, 1994 (the "Agreement"), including, without limitation, legal, accounting and financial advisory fees and expenses and expenses of printing and mailing Sugarland's proxy statement and holding its shareholders meeting to consider the Agreement. (iv) The term "Legally Available Funds" means such amount of the surplus of the Corporation that may be paid as dividends under the Business Corporation Law of Louisiana as may be provided in cash by MidSouth Bank to the Corporation as a dividend under applicable statutes and regulations of the U. S. Comptroller of the Currency and that would not result in the Corporation or MidSouth Bank having capital ratios, of less than the required regulatory minimum capital ratios, or failing to be "adequately-capitalized" within the meaning of applicable law and regulations or being in violation of any law, regulation or regulatory directive, agreement or order. Stock are outstanding, the Corporation shall not declare, pay or set apart for payment any dividend on any shares of capital stock of the Corporation ranking junior to the Series A Preferred Stock as to dividends or liquidation rights (collectively, "Junior Securities") or make any payment on account of, or set apart for payment money for a sinking or other similar fund, for the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, whether in cash, other property, obligations or shares of the Corporation (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with the payment or setting apart for payment of any dividend on any of the Junior Securities, all accumulated and unpaid dividends on shares of Series A Preferred Stock, and interest thereon, if any, shall have been or shall be paid. (c)If dividends are paid in part and not in full upon the shares of Series A Preferred Stock and on any other Preferred Stock ranking on a parity, as to dividends, with the Series A Preferred Stock, such dividends must be divided pro rata among such parity shares in proportion to the respective dividends accrued and unpaid thereon as of the dividend payment date. (d)Except as otherwise expressly provided in this Section E, holders of shares of the Series A Preferred Stock are not entitled to any dividend, whether payable in cash, property or stock, or any interest, or sum of money A Preferred Stock which may be in arrears. (4)Redemption. (a)On or after the fifth anniversary of the date of issuance of the Series A Preferred Stock, the Corporation may, at its option, and subject to appropriate approval by the Board of Governors of the Federal Reserve System or delegated authority, redeem the whole or, from time to time, any part of the Series A Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Series A Preferred Stock to the date fixed for redemption, whether or not earned or declared, and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Series A Preferred Stock, if any. (b)If the Corporation redeems fewer than all of the outstanding shares of Series A Preferred Stock, it must select the shares to be redeemed by lot or pro rata, in such manner as the Board of Directors may determine to be fair and appropriate. The Board of Directors has full power and authority, subject to the limitations and provisions herein contained, to prescribe the manner in which shares of the Series A Preferred Stock are to be redeemed. (c)Notice of redemption must be given by first class mail, postage prepaid, mailed not fewer than 30 nor more than 90 days before the redemption date, to each holder of record of shares to be redeemed, at the holder's address as it appears on the stock register of the Corporation. Each notice must state: (i) the redemption date; (ii) the total number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by the holder are to be redeemed, the number of shares to be redeemed from the holder; (iii) the redemption price; are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date; and (vi) that the holder has the right to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date at the Conversion Price then in effect and the place where certificates for the shares of the Series A Preferred Stock may be surrendered for conversion. (d)Unless the Corporation fails to pay the redemption price, the right to convert shares of the Series A Preferred Stock called for redemption shall expire at the close of business on the fifth day preceding the date fixed for redemption of such shares, and, from and after the redemption date, dividends on the shares of Series A Preferred Stock called for redemption shall cease to accrue, and such shares shall no longer be deemed to be outstanding, and all rights of the holders of such shares as shareholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender of the certificates for any shares so redeemed in accordance with the requirements of the notice of redemption (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation so requires and the notice so states), such shares shall be redeemed by the Corporation at the redemption price. If fewer than all the shares represented by any such certificates are redeemed, the Corporation is obligated to issue without cost to the holder a new certificate representing the shares not redeemed. (e)Any shares of Series A Preferred Stock converted under Subsection (5), or redeemed or otherwise acquired by the Corporation, shall have the status of authorized but unissued shares of Preferred Stock, without designation as to series, preferences, limitations or relative rights until the shares are once more designated as part of a particular series by the Board of Directors of the (f)The Corporation may, before the redemption date specified in the notice of redemption, deposit in trust for the account of the holders of shares of the Series A Preferred Stock to be redeemed, with a bank or trust company organized under the laws of the United States of America or of the State of Louisiana and having capital, surplus and undivided profits aggregating at least $20,000,000, designated in the notice of redemption, all funds necessary for the redemption, together with irrevocable written instructions authorizing the bank or trust company, on behalf and at the expense of the Corporation, to have the notice of redemption mailed as provided in Paragraph (c) and to include in the notice of redemption a statement that all funds necessary for the redemption have been so deposited in trust and are immediately available. Immediately upon the mailing of such notice, notwithstanding that any certificate for shares of Series A Preferred Stock so called for redemption has not been surrendered for cancellation, all shares of Series A Preferred Stock with respect to which the deposit has been made shall cease to be outstanding and all rights with respect to such shares of Series A Preferred Stock shall terminate other than the right of the holders thereof to receive from the bank or trust company, at any time after the time of the deposit, the redemption price of the shares so to be redeemed, and the right, if any, to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date. (g)If the holder of any shares of the Series A Preferred Stock called for redemption does not, within one year after the redemption date, claim the redemption price thereof, the unclaimed amount shall then escheat and revert in full ownership to the Corporation in accordance with Article VII of these Articles of Incorporation, and if the funds to pay the redemption price have been shall, upon the request of the Corporation expressed in a resolution of its Board of Directors, pay over to the Corporation the unclaimed amount. (h)Notwithstanding the foregoing provisions of this Subsection (4), so long as any dividends on the Series A Preferred Stock, or interest thereon, are in arrears, the Corporation may not redeem any shares of the Series A Preferred Stock unless all outstanding shares of the Series A Preferred Stock are simultaneously redeemed and may not purchase or otherwise acquire any shares of Series A Preferred Stock. The foregoing shall not, however, prevent the purchase or acquisition of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock. (5)Conversion. The holders of shares of the Series A Preferred Stock have the right, at their option, to convert all or any part of such shares into shares of Common Stock of the Corporation at any time before the close of business on the fifth day preceding the date, if any, fixed for redemption of those shares, subject to the following terms and conditions: (a)The shares of Series A Preferred Stock shall be convertible into shares of Common Stock at the Conversion Rate of one share of Common Stock for each share of Series A Preferred Stock converted. Such Conversion Rate shall be subject to adjustment from time to time as provided in Paragraph (e). The Corporation shall pay all accrued but unpaid dividends, and interest thereon, on any shares of Series A Preferred Stock surrendered for conversion. If any shares of Series A Preferred Stock are called for redemption, the right of conversion shall expire as to the shares designated for redemption at the close of business on the fifth day immediately preceding the date fixed for redemption, unless default is made in the payment of the (b)To convert any shares of Series A Preferred Stock into Common Stock, the holder must surrender the cer- tificate or certificates therefor, duly endorsed to the Corporation or in blank, at the principal office of the Corporation or at such other place or places as the Board of Directors may designate and must give written notice to the Corporation at that office or place that the holder elects to convert all or a part of such shares, setting forth the name or names (with the address or addresses) in which the shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, cause to be issued and delivered at that office or place to the holder, or the holder's designee or designees, a certificate or certificates for the number of whole shares of Common Stock to which such holder is entitled, together with a certificate or certificates representing any shares of Series A Preferred Stock which are not to be converted but constitute part of the shares of Series A Preferred Stock represented by the certificate or certificates surrendered and cash in lieu of the issuance of a fractional share. A conversion shall be effective as of the close of business on the date of the due surrender of the certificates for the shares to be converted, and the rights of the holder of such shares shall, to the extent of such conversion, cease at such time, and the person or persons entitled to receive shares of the Common Stock upon conversion of such shares of Series A Preferred Stock shall be treated for all purposes as having become the record holder or holders of the Common Stock at that time. (c)No fractional shares of Common Stock shall be issued on conversion. If any fractional interest in a share of Common Stock would, except for the provisions of this Paragraph (c), be deliverable upon conversion hereunder, the Corporation, in lieu of such fractional share shall pay cash to the converting shareholder in an amount equal to the product derived by multiplying such fraction of a on the day next preceding the date of conversion. (d)In the case of any shares of Series A Preferred Stock converted after any record date for payment of a dividend on the Series A Preferred Stock but on or before the date for payment of the dividend, the dividend declared and payable on the dividend payment date shall continue to be payable on the dividend payment date to the holder of record of the shares as of such preceding record date notwithstanding their conversion. Shares of the Series A Preferred Stock surrendered for conversion during the period from the close of business on any such record date to the opening of business on the dividend payment date shall be accompanied by payment in full of an amount equal to the dividend payable on the dividend payment date on the shares of the Series A Preferred Stock surrendered for conversion. Except as provided in this Paragraph, no payment or adjustment shall be made upon any conversion on account of any dividends on shares of the Series A Preferred Stock surrendered for conversion or on account of any dividends on the shares of Common Stock issued upon conversion. (e)The Conversion Rate shall be adjusted from time to time as follows: (i)If the Corporation at any time (A) pays a dividend or makes a distribution to all holders of its Common Stock in shares of its Common Stock, (B) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (C) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such case the Conversion Rate in effect immediately before that event shall be proportionately decreased or increased, as the case may be, so that the holder of any shares of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive holder would have owned or been entitled to receive immediately following such event if those shares of Series A Preferred Stock had been converted into Common Stock immediately before that event. An adjustment made under this Subparagraph (i) becomes effective immediately after the payment date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision or combination. No adjustment in the Conversion Rate shall be made if, at the same time the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Common Stock which, as provided in this Subparagraph (i), would otherwise call for an adjustment in the Conversion Rate, the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Series A Preferred Stock equivalent to the number of shares distributable on the shares of Common Stock into which the shares of Series A Preferred Stock is then convertible. (ii)No adjustment in the Conversion Rate shall be required unless the adjustment would require an increase or decrease in the Conversion Rate by more than one percent, but any adjustments not required to be made by reason of this Subparagraph shall be carried forward cumulatively and taken into account in any subsequent adjustments. All calculations under this Paragraph (e) shall be made to the nearest one-tenth of one percent. (iii)In case of any reclassification of the Common Stock (other than a subdivision or combination of outstanding shares of Common Stock for which adjustment is provided in Subparagraph (i) above), or a consolidation or merger of the Corporation with or into any other corporation (other than a consolidation or a merger in which the Corporation is the continuing Corporation's Common Stock are not changed into or exchanged for stock or other securities of any other person or cash or any other property as a result of or in connection with such consolidation or merger) or a sale of the properties and assets of the Corporation as, or substantially as, an entirety to any other business organization, or a statutory share exchange in which all shares of Common Stock or any series or class of Common Stock are exchanged for shares of another corporation or other entity, each share of Series A Preferred Stock shall, after such reclassification, consolidation, merger, sale or exchange and upon the terms and conditions specified in this Subsection (5), be convertible into or represent the right to receive the number of shares of stock or other securities or property (including cash) to which the shares of Common Stock deliverable (at the time of such reclassifi- cation, consolidation, merger, sale or exchange) upon conversion thereof would have been entitled upon such reclassification, consolidation, merger, sale or exchange, if the conversion of the Series A Preferred Stock into Common Stock had taken place immediately before that event; and in any case, if necessary, the provisions set forth in this Subparagraph (iii) with respect to the rights and interests thereafter of the holders of the shares of Series A Preferred Stock shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any shares of stock or other securities or property (including cash) thereafter deliverable upon conversion of shares of Series A Preferred Stock. (iv)Whenever the Conversion Rate is adjusted as provided in this Paragraph (e): (A) The Corporation shall compute the adjusted Conversion Rate in accordance with this Paragraph (e) and shall prepare a certificate signed by the setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and the certificate shall promptly be filed with the transfer agent for the Series A Preferred Stock, but such transfer agent shall have no duty with respect to any such certificate filed with it except to keep the same on file and available for inspection during reasonable hours; and (B)The Corporation shall cause to be mailed to each holder of shares of Series A Preferred Stock at his then registered address by first-class mail, postage prepaid, a notice stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate. (v) Without limiting the obligation of the Corporation to give the notices provided in Sub- paragraph (iv), the failure of the Corporation to give such notice shall not invalidate any corporate action by the Corporation. (f)The Corporation shall at all times reserve and keep available, free from preemptive rights for the purpose of effecting the conversion of the shares of Series A Preferred Stock, the full number of shares of Common Stock then deliverable upon the conversion of all shares of Series A Preferred Stock then outstanding. (g)The Corporation is not obligated to pay any tax payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and the Corporation is not obligated to make any such issue or delivery unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has such tax has been paid. (h) In the event that: (i)the Corporation declares a dividend or any other distribution on its Common Stock, payable otherwise than in cash out of surplus; or (ii)the Corporation grants to all the holders of its Common Stock rights to subscribe for or purchase any shares of capital stock of any class or any other rights; or (iii)any reclassification, consolidation, merger, sale or exchange of the type described in Subparagraph (iii) of Paragraph (e) occurs; or (iv)the voluntary or involuntary dissolution, exchange, liquidation or winding up of the Corporation occurs; the Corporation shall cause to be mailed to the holders of record of the Series A Preferred Stock at least 20 days before the applicable date hereinafter specified a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up is expected to take place, and the date, if any is to be fixed, as of which holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. Failure to give such notice, or any defect dividend, distribution, reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. (6)Voting. (a)Except as otherwise expressly required by applicable law or by the terms of this Section E, the holders of shares of the Series A Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to no notice of any meeting of shareholders of the Corporation. (b)Except as otherwise provided herein, whenever the vote, approval or other action of holders of shares of the Series A Preferred Stock is required or permitted by applicable law or by the terms of this Section E, each share is entitled to one vote and the affirmative vote of a majority of shares of Series A Preferred Stock present or represented at the meeting at which a quorum is present is sufficient to constitute such vote, approval or other action. (c)If, at any time, the Corporation falls in arrears in the payment of dividends on the Series A Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full board of directors of the Corporation shall be automatically increased by two and the holders of Series A Preferred Stock, voting separately as a single class, shall be entitled to elect two directors of the Corporation to fill the two newly created directorships, at a special meeting called for that purpose in accordance with Paragraph (f) and thereafter at each meeting of the shareholders held for the purpose of electing directors, so long as there continues to be any arrearage in the payment of dividends on the Series A Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. A Preferred Stock for all past quarterly dividend periods, and interest thereon, have been paid in full, the right of the holders of Series A Preferred Stock to elect directors shall cease (subject to revesting from time to time as provided in Paragraph (c)), the number of directors of the Corporation shall be automatically reduced by two and the term of office of all directors elected by the holders of the Series A Preferred Stock shall immediately terminate. (e)A director elected by the holders of Series A Preferred Stock shall hold office until the annual meeting next succeeding his election or until his successor, if any, is elected by such holders. A director so elected may be removed at any time with or without cause but only by the vote of holders of the Series A Preferred Stock at a meeting duly called for that purpose. So long as the holders of the Series A Preferred Stock have the right to elect two directors, any vacancy in the office of a director elected by those holders may be filled by the remaining director so elected or by the vote of the holders of Series A Preferred Stock at any annual meeting or any special meeting called for the purpose. (f)At any time when the power to elect directors vests in the holders of the Series A Preferred Stock, a proper officer of the Corporation shall, on the written request of record holders of at least 20 percent of the number of shares of Series A Preferred Stock then outstanding, addressed to the secretary of the Corporation at its principal office, call a special meeting of the holders of the Series A Preferred Stock for the purpose of electing directors. The meeting must be held at the earliest practicable date, not later than 45 days after receipt of the written request (subject to compliance with applicable proxy rules and rules of the American Stock Exchange), in the city in which the last preceding annual meeting of the shareholders of the Corporation was held, but may be held at the time and place of the annual meeting if the annual elect directors first vests in the holders of the Series A Preferred Stock. If the proper officer of the Corporation does not call the meeting within the required time, then the holders of record of 20 percent of the number of shares of Series A Preferred Stock then outstanding may, by written notice to the secretary of the Corporation at its principal office, designate any person to call such meeting, and the person so designated may call such meeting in the city above provided upon not fewer than 30 nor more than 45 days notice and for that purpose shall have access to the stock books of the Corporation. At any meeting so called for the election of directors by holders of the Series A Preferred Stock or at any annual meeting held while the holders of Series A Preferred Stock have the right to elect directors, holders of a majority of the shares of Series A Preferred Stock then outstanding is sufficient to constitute a quorum for the purpose of electing directors at such a meeting. If at any such meeting a quorum of the Series A Preferred Stock is not present, the election of directors shall not take place, and the meeting shall be adjourned from time to time for periods not exceeding 30 days until a quorum is obtained. (g)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any proposed amendment to these Articles of Incorporation (including but not limited to any amendment adopted by resolution of the Board of Directors pursuant to Article III of these Articles of Incorporation) if the proposed amendment would affect shares of the Series A Preferred Stock in any one or more of the following ways: (i)Create or authorize any class or series of stock ranking senior to or on a parity with the Series A Preferred Stock in respect of dividends or distribution of assets on liquidation or otherwise alter or abolish the liquidation preferences or any other preferential right of (ii)Reduce the redemption price or otherwise alter or abolish any right with respect to redemption of the Series A Preferred Stock expressly provided by this Section E. (iii)Alter or abolish any right of such shares expressly provided by this Section E to receive dividends or interest thereon except as such right may be affected by dividend rights of new shares being authorized of another class or series of shares ranking on a parity with or junior to the Series A Preferred Stock. (iv)Alter or abolish any right of holders of shares of the Series A Preferred Stock under this Section E to convert such shares into shares of Common Stock. (v)Exclude, change or limit any voting rights of the Series A Preferred Stock conferred by this Section E. (h)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any merger, consolidation, statutory share exchange or sale of all, or substantially all, of the assets of the Corporation or any of its banking subsidiaries unless either (i) the holders of the Series A Preferred Stock will receive in exchange for the Series A Preferred Stock a security with terms substantially identical to the terms of the Series A Preferred Stock, or (ii) provision is made for the complete redemption in cash of the Series A Preferred Stock on the date of consummation of such transaction and the Series A Preferred Stock may be redeemed at such time under these Articles of Incorporation. (7)Liquidation Rights. (a)Upon the dissolution, liquidation or winding up of the Stock shall be entitled to receive upon liquidation and to be paid out of the assets of the Corporation available for distribution to its shareholders, before any payment or distribution may be made on the Common Stock or on any other Junior Securities, the amount of $14.25 per share, plus a sum equal to all accrued and unpaid dividends (whether or not earned or declared) on such shares, and accrued interest thereon, if any, to the date of final distribution. (b)Neither the sale of all or substantially all the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other corporation or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Subsection (7). (c)Upon payment to the holders of the shares of Series A Preferred Stock of the full preferential amounts provided for in this Subsection (7), the holders of Series A Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. (d)If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, are insufficient to pay in full all amounts to which such holders are entitled under Paragraph (a) of this Subsection (7), no such distribution may be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of Series A Preferred Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts are paid on account of the shares of Series A Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon dissolution, liquidation or winding up. class or classes of the Corporation shall be deemed to rank: (a)prior to the shares of Series A Preferred Stock, either as to dividends or upon liquidation, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of Series A Preferred Stock; (b)on a parity with shares of Series A Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of Series A Preferred Stock, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in proportion to their respective liquidation preferences, without preference or priority, one over the other, as between the holders of such class or classes and the holders of shares of Series A Preferred Stock; and (c)junior to shares of Series A Preferred Stock, either as to dividends or upon liquidation, if such class or classes are Common Stock or if the holders of shares of Series A Preferred Stock are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of such class or classes. (9)No Preemptive Rights. Holders of shares of Series A Preferred Stock have no preemptive rights. 3. Except as amended by these Articles of Amendment, the force and effect. IN WITNESS WHEREOF, the undersigned President and Secretary have executed these Articles of Amendment on ________, 1995 at Lafayette, Louisiana. MidSouth Bancorp, Inc. By: C. R. Cloutier, President By: Karen L. Hail, Secretary ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF LAFAYETTE BEFORE ME, the undersigned authority personally came and appeared C. R. Cloutier and Karen L. Hail to me known to be the persons who signed the foregoing instrument as President and Secretary, respectively, of MidSouth Bancorp, Inc. and who, having been duly sworn, acknowledged and declared, in the presence of the witnesses whose names are subscribed below, that they signed that instrument as their free act and deed for the purposes mentioned therein. IN WITNESS WHEREOF, the appearers and witnesses and I have signed below on this ______ day of ________, 1995. WITNESSES: ______________________________ _____________________________ C. R. Cloutier, President ______________________________ ______________________________ ____________________________ Karen L. Hail, Secretary ______________________________ ________________________________________ NOTARY PUBLIC PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20.Indemnification of Directors and Officers Section 83 of the Louisiana Business Corporation Law ("LBCL") permits a corporation to indemnify its directors and officers against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any action, suit or proceeding to which he is or was a party or is threatened to be made a party (including any action by or in the right of the corporation) if such action arises out of the fact that he is or was a director, officer, employee or agent of the corporation and he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The indemnification provisions of Section 83 are not exclusive, but no corporation may indemnify any person for willful or intentional misconduct. A corporation has the power to obtain and maintain insurance, or to create a form of self-insurance on behalf of any person who is or was acting for the corporation, regardless of whether the corporation has the legal authority to indemnify the insured person against such liability. Section 10 of MidSouth's by-laws provides for mandatory indemnification for current and former directors and officers except to the extent that the director or officer fails to meet the Standard of Conduct, as defined in the bylaws. MidSouth's Articles of Incorporation permit MidSouth to enter into contracts with its directors and officers providing for indemnification to the fullest extent permitted by law, but no such contracts have been entered into. Item 21. Exhibits and Financial Statement Schedules (a) Exhibits The following Exhibits are filed as part of this Registration Statement: Exhibit No.Description 2.1 Agreement and Plan of Merger* 2.2 Resolutions of MidSouth and MidSouth Bank waiving the provisions in Section 7.1(C) of the Plan and extending the deadline for consummation of the Mergers. * AJC\001S-4\103 Exhibit No. Description 2.3 Resolutions of Sugarland and the Bank waiving the provisions in Section 7.1(C) of the Plan and extending the deadline for consummation of the Mergers. * 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. are included as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K for the Year Ended December 3l, l993, Commission File No. 1-11826, dated March 31, 1994 received by the Commission on March 31, 1994, and is incorporated herein by reference. 3.2 Amended and Restated By-laws of MidSouth Bancorp, Inc. and amendment thereto adopted by the Board of Directors of MidSouth on April 12, 1995. * 4.l MidSouth agrees to furnish to the Commission on request a copy of the instruments defining the rights of the holder of its long-term debt, which debt does not exceed l0% of the total consolidated assets of MidSouth. 4.2 Form of Amendment to Articles of Incorporation Defining Rights of Holders of MidSouth Cumulative, Convertible Preferred Stock, Series A, included in Exhibit 2.1. 5 Opinion of Correro, Fishman & Casteix, L.L.P.* 8 Opinion of Deloitte & Touche LLP independent public accountants as to certain tax matters. * 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to MidSouth's Annual Report on Form 10-K for the Year Ended December 31, 1992, Commission File No. 1-11826, dated March 29, 1993 received by the Commission on March 30, 1993, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank, included as Exhibit l0.2 to MidSouth's Annual Report on Form l0K-SB for the Year Ended December 31, l994, Commission File No. 1-11826, dated March 23, 1993 received by the Commission on March 24, 1995, and incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to MidSouth's Annual Report on Form 10-K for the year ended December 31, 1992, Commission File No. 1-11826, dated March 29, 1993, received by the Commission on March 30, 1993, and is incorporated herein by reference. Exhibit No. Description 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form l-A, Commission File No. 24-1813-FW, dated September 26, 1991 received by the Commission on September 27, 1991, and are incorporated herein by reference. 13.1 MidSouth's Annual Report to Shareholders for the Year Ended December 31, 1994. 13.2 MidSouth's Quarterly Report to Shareholders for the Quarter Ended March 31, 1995 is included in MidSouth's Quarterly Report on Form 10-QSB for the Quarter Ended March 31, 1995, Commission File No. 1- 11826, dated May 15, 1995 received by the Commission on May 15, 1995, and is incorporated herein by reference. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Mixon, Roy, Metz & Mixon. 23.3 Consent of Correro, Fishman & Casteix, L.L.P., included in Exhibit 5.* 23.4 Consent of Chaffe & Associates, Inc.* 24 Powers of Attorney of Directors of MidSouth Bancorp, Inc.* 99.1 Form of Proxy of Sugarland Bancshares, Inc. * 99.2 Form of Proxy of MidSouth Bancshares, Inc. * ____________________ *Previously filed. (b) Financial Statement Schedules None Item 22. Undertakings The undersigned Registrant hereby undertakes as follows: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this Registration Statement to (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any acts or events which, together or individually, represent a fundamental change in the information in the Registration Statement; and (iii) include any additional or changed material information on the Plan. (2) For determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bonafide offering. (3) To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (4) To respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4 within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (5) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. (6) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the Registrant undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (7) That every prospectus (i) that is filed pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (8) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in response to Item 20 of this Registration Statement, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this Amendment No. 2 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lafayette, State of Louisiana, on the 9th day of June, 1995. MIDSOUTH BANCORP, INC. BY: /s/ C. R. Cloutier C. R. CLOUTIER President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date President, Chief Executive June 9, 1995 C.R. Cloutier Officer and Director /s/ J. B. Hargroder* Director June 9, 1995 J. B. Hargroder /s/ Milton B. Kidd, Jr.* Director June 9, 1995 Milton B. Kidd, Jr. /s/ William M. Simmons* Director June 9, 1995 William M. Simmons /s/ James R. Davis* Director June 9, 1995 James R. Davis /s/ Robert B. Keaty* Director June 9, 1995 Robert B. Keaty /s/ Clayton P. Hilliard* Director June 9, 1995 Clayton P. Hilliard /s/ Will G. Charbonnet, Sr.* Director June 9, 1995 Will G. Charbonnet, Sr. Chief Financial June 9, 1995 Karen L. Hail Officer and Director Controller June 9, 1995 Teri S. Stelly *By: C.R. Cloutier, Attorney-in-Fact Date: June 9, 1995 EXHIBIT INDEX 2.1 Agreement and Plan of Merger.* 2.2 Resolutions of MidSouth and MidSouth Bank waiving the provisions in Section 7.1(C) of the Plan and extending the deadline for consummation of the Mergers. * 2.3 Resolutions of Sugarland and the Bank waiving the provisions in Section 7.1(C) of the Plan and extending the deadline for consummation of the Mergers. * 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. are included as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K for the Year Ended December 31, 1993, Commission File No. 1- 11826, dated March 30, 1994 received by the Commission on March 30, 1994, and is incorporated herein by reference. 3.2 Amended and Restated By-laws of MidSouth Bancorp, Inc. and amendment thereto adopted by the Board of Directors of MidSouth on April 12, 1995. * 4.1 MidSouth agrees to furnish to the Commission on request a copy of the instruments defining the rights of the holder of its long-term debt, which debt does not exceed 10% of the total consolidated assets of MidSouth. 4.2 Form of Amendment to Articles of Incorporation Defining Rights of Holders of MidSouth Cumulative Convertible Preferred Stock Series A, included in Exhibit 2.1. 5 Opinion of Correro, Fishman & Casteix, L.L.P.* 8 Opinion of Deloitte & Touche LLP, independent public accountants as to certain tax matters. * 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit l0.7 to MidSouth's Annual Report on Form l0-K for the Year Ended December 3l, l992, Commission File No. 1-11826, dated March 29, 1993 received by the Commission on March 30, 1993, and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank, included as Exhibit 10.2 to MidSouth's Annual Report on Form l0K-SB for the Year Ended December 3l, l994, Commission File No. 1- 11826, dated March 23, 1995 received by the Commission on March 24, 1995, and is incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit l0.3 to MidSouth's Annual Report on Form l0-K for the Year Ended December 3l, l992, Commission File No. 1-11826, dated March 29, 1993 received by the Commission on March 30, 1993, and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form l-A, Commission File No. 24-1813-FW, dated September 26, 1991 received by the Commission on September 27, 1991, and are incorporated herein by reference. 13.1 MidSouth's Annual Report to Shareholders for the Year Ended December 31, 1994. * 13.2 MidSouth's Quarterly Report to Shareholders for the Quarter Ended March 31, 1995 is included in MidSouth's Quarterly Report on Form 10-QSB for the Quarter Ended March 31, 1995, Commission File No. 1- 11826, received by the Commission on May 15, 1995, and is incorporated herein by reference. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Mixon, Roy, Metz & Mixon. 23.3 Consent of Correro, Fishman & Casteix, L.L.P., included in Exhibit 5. 23.4 Consent of Chaffe & Associates, Inc.* 24 Powers of Attorney of Directors of MidSouth Bancorp, Inc.* 99.1 Form of Proxy of Sugarland Bancshares, Inc. * 99.2 Form of Proxy of MidSouth Bancorp, Inc. * ________________ *Previously filed EX-23.1 2 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 33-58499 of MidSouth Bancorp, Inc. on Form S-4 of our report dated January 27, 1995, appearing in the Annual Report on Form 10-KSB of MidSouth Bancorp, Inc. for the year ended December 31, 1994, and to the reference to us under the headings "Certain Federal Tax Consequences", "Experts" and "Relationship with Independent Public Accountants" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP New Orleans, Louisiana June 9, 1995 EX-23.2 3 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports and to all references to our Firm included in or made a part of this registration statement. New Iberia, Louisiana Mixon, Roy, Metz & Mixon June 9, 1995 -----END PRIVACY-ENHANCED MESSAGE-----