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HAYNIE RAKE REPASS & KLIMKO, P.C.
ATTORNEYS AND COUNSELORS
WELLINGTON CENTRE
14643 Dallas Parkway
MARK.HAYNIE
DOUG RAKE
BRAD REPASS
CHRIS KLIMKO
PAM G. O'QUINN
Suite 550
Dallas, Texas 75254
January 7, 2016
TELEPHONE: (972) 716-1855
TELECOPY: (972) 716-1850
www.hrrpc.com
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h ... - 8 2016
'i
Via Hand Delivery
fI
Bt.NK!NG SUPERVISION DEPARJ Mm~· t
Ms. Karen Smith
Director of Applications
Banking Supervision Department
Federal Reserve Bank of Dallas
2200 N. Pearl Street
Dallas, Texas 75201
Re:
jl
,~,.
Application filed under Section 3(a)(3) and Section 3(a)(5) of the Bank Holding
Company Act by First Commercial Financial Corp .. Seguin, Texas ("FCFC") for the
acquisition of 100 percent of the common stock of Jourdanton Bancshares, Inc.,
Jourdanton, Texas ("JBI")
Dear Ms. Smith:
Please find enclosed an original and three copies of the above referenced Application. The
required notice of application will be published in the Seguin Gazette and in The Pleasanton
Express on January 13, 2016. A copy of the legal notice as it will appear in the newspapers is
included in the Application. We will send you the publisher's affidavits following our receipt of the
same from the newspapers.
FCFC hereby requests confidential treatment for the information included in the
Confidential Volume II of the enclosed Application. The information in Confidential Volume II is
financial in nature and would not ordinarily be disclosed to third parties. Further, certain of the
information in Confidential Volume II includes FCFC's business strategies relating to the
acquisition and is not available· to the public through any other source. Disclosure of this
information would be a breach ofFCFC's right to financial privacy and would result in competitive
harm to FCFC. This type of information has been afforded confidential treatment in the past, and
FCFC requests that such treatment be afforded in this case.
S:\W\3088 First Commercial Bank\033 Jourdanton St Bk, Seguin TX\Regulatory\Cover Ltr filing FRB Application.doc
Ms. Karen Smith
Januruy 7, 2016
Page2
Please do not hesitate to call me directly if you have questions or concerns regarding the
enclosed Application.
Pam Gates O'Quinn
Enclosure
cc:
Mr. Mark Long (w/ encl.)
Mark Haynie, Esq. (w/o ends.)
APPLICATION
To the Board of Governors of the Federal Reserve System
(the "Board")
First Commercial Financial Corp.
1336 E. Court Street
Seguin, TX 78155
hereby apply to the Board pursuant to Section 3(a)(3) and Section 3(a)(5) of the Bank Holding ·
Company Act of 1956, as amended {the "Act"), for prior approval of the acquisition of direct or
indirect ownership, control, or power to vote l 00 percent of the voting shares of:
Jourdanton Bancshares, Inc.
Jourdanton State Bank
1301 Oak Street
Jourdanton, TX 78026
Applicant requests confidential treatment for a portion of this submission. As required by the
General Instructions, a letter justifying the request for confidential treatment is included. The
information for which confidential treatment is being sought its separately bound and labeled
"CONFIDENTIAL".
VOLUME I
January 7, 2016
Name; title, address, and telephone nwnber of person(s) to whom inquiries concerning this Application may be
directed:
Pam Gates O'Quinn
Haynie Rake Repass & Klimko, P.C.
14643 Dallas Parkway, Suite 550
Dallas, Texas 75254
(972) 716-1855 (phone)
(972) 716-1850 (fax)
[email protected]
CERTIFICATION
I cenify that the information contained in this Application has been examioed
carefully by me and is true, correct, and complete, and is current as of the date
of this submission to the best of my knowledge and belief. I acknowledge that
any misrepresentation or omission of a material fact constitutes fraud in the
inducement and may subject 111c to legal sanctions provided by 18 USC l 00 I
and 1007.
I also certify, with respect to any infonnation pertaining to an individual and
submitted to the Board in {or in connection with) this Application, that the
applicant has the authority, on behalf of the individual, to provide such
information to the Board and to consent or to object to public release of such
infon11ation. I cenify that the applicant and the involved individual consent to
public release of any such information, except to the extent set forth in a
written request by the applicant or the individual, submitted io accordance
with the Instructions to this form and the Board's Rules Regarding
Availability of lnfonnation {12 CFR Pan 261), requesting confidential
treatment for the information.
Date of Application:
l acknowledge that approval of this Application is in t11e discretion of the
Board of Governors of the Federal Reserve System (the "Federal Reserve").
Actions or communications, whether oral, written, or electronic, by the
Federal Reserve or its employees in connection with this filing, including
approval if granted, do not constitute a contract, either express or implied, or
any other obligation binding upon the agency, the United States or any other
entity of the United Scates, or any officer or employee of the United States.
Such actions or communications· will not affect the ability of the Federal
Reserve to exercise its supervisory, regulatory, or examination powers under
applicable laws and regulations. I further acknowledge that the foregoing may
not be waived or modified by any employee or agency of the Federal Reserve
or of the United States.
:liow O/ 7 1 8,0/(p
FIRST COMMERCIAL FINANCIAL CORP.
By
t4GG.~
Mark A. Long
President and CEO
2
SUMMARY OF TRANSACTION
Background
First Commercial Financial Corp. First Commercial Financial Corp. ("FCFC") is a
registered bank holding company that is the top tier parent company of First Commercial Bank,
N.A., Seguin, Texas ("First Commercial Bank"). First Commercial Bank is wholly owned by
First Commercial Corporation, an intermediate holding company, which is in turn wholly owned
by FCFC. Although an indirect subsidiary, First Commercial Bank is FCFC's principal asset.
First Commercial Bank is a national bank with its head office in Seguin, Texas. It has 3
locations
its main office in Seguin and two branches in New Braunfels, Texas. First
Commercial Bank does not have any subsidiaries. As of September 30, 2015, First Commercial
Bank had total assets of approximately $156,873,000.
Jourdanton Bancshares, Inc. Jourdanton Bancshares, Inc. ("JBI") is a registered bank
holding company that is the parent company of Jourdanton State Bank, Jourdanton, Texas
("Jourdanton Bank"). Jourdanton Bank is Texas state bank and is JBI's principal asset.
Jourdanton Bank has four locations its main office in Jourdanton, Texas, two branches in San
Antonio, Texas and one branch in Pearsall, Texas. Jourdanton Bank has one subsidiary, JSB
Investments, Inc., which operates as an insurance agency. As of September 30, 2015, Jourdanton
Bank had total consolidated assets of approximately $169,775,000.
Description of Transaction
FCFC and JBI have entered into an Agreement and Plan of Reorganization
(the '"Reorganization Agreement"), a copy of which is included in the Confidential Volume 11 of
this Application. The Reorganization Agreement provides for the acquisition of JBI by FCFC
through a two-step merger process. First, FCFC will form and organize a wholly-owned
subsidiary, FCFC Acquisition Corporation ("Newco'') for the sole purpose of facilitating the
acquisition of JBI by FCFC. In the first merger, Newco will merge with and into JBI, with JBI
being the surviving entity (the "Newco Merger"). Promptly following the Newco Merger, FCFC
will effect the merger of JBI into FCFC, with FCFC continuing as the surviving corporation
(the "Subsequent Merger"). The Newco Merger and the Subsequent Merger are collectively
referred to herein as the "Merger". As a result of the Merger, FCFC will have acquired JBI and
therefore, indirectly, Jourdanton Bank. At that time, JBI will cease to exist as a separate
corporate entity, and FCFC will be the parent holding company of First Commercial Bank and of
Jourdanton Bank.
Jmmediately following the Merger, FCFC will cause Jourdanton Bank to merge with and
into First Commercial Bank (the "Bank Merger"). First Commercial Bank will be the surviving
entity in the Bank Merger. Following the Bank Merger, First Commercial Bank will continue as
a wholly-owned indirect subsidiary of FCFC.
3
Merger Consideration. FCFC will pay the Merger Consideration to the JBI Shareholders
in the form of cash and shares of FCFC common stock. Further details of the Merger
Consideration are included in the Confidential Volume II of this Application.
Source of Funds and Capital FCFC will obtain the funds to pay the cash portion of the
Merger Consideration from a renewal and expansion of its existing credit facility and from a
dividend from First Commercial Bank. A detailed discussion of FCFC's financing plans is
included in the Confidential Volume II of this Application.
The Reorganization Agreement provides that FCFC's obligation to consummate the
transaction is subject to JBI having minimum tangible equity equal to at least $16. l million.
Accordingly, FCFC will acquire at least $16.l million of tangible equity as part of the
transaction. This minimum equity requirement, together with the issuance of FCFC common
stock as part of the Merger Consideration, provides additional capital support to FCFC.
FCFC will be able to reduce its debt to equity ratio to less than 30 percent in less than
twelve years and First Commercial Bank will be "well capitalized" on the effective date of the
transaction and throughout the debt service period. Pro forma financial statements reflecting the
effect of the proposed transaction on FCFC and First Commercial Bank are included in the
Confidential Volume II of this Application.
Due Diligence and Integration. FCFC believes the proposed acquisition of JBI and
Jourdanton Bank will be a substantial benefit to its business and long-term strategic plan. The
acquisition will enhance First Commercial Bank's presence in the South/Central Texas region
and will further diversify First Commercial Bank's overall asset base. FCFC conducted careful
due diligence of JBI and Jourdanton Bank and found no material issues related to their
operations that FCFC was not prepared to manage. A description of the due diligence process is
included in the Confidential Volume II of this Application.
The increase in total assets will effectively double the overall the size of FCFC on a
consolidated basis. The boards of directors and management of FCFC and of First Commercial
Bank anticipate that FCFC and First Commercial Bank will be able to utilize existing
infrastructure, integration systems and experience to absorb JBI and Jourdanton Bank into the
FCFC organization. First Commercial Bank has a proven sound credit culture, efficient
operations and effective compliance systems. First Commercial Bank also has an experienced
and cohesive management team that has worked together for many years. FCFC intends to
integrate the Jourdanton Bank into First Commercial Bank's culture, operations, and systems and
devote First Commercial Bank's management resources to operate the acquired locations and
operations of Jourdanton Bank in a safe and sound manner and on a compliant basis.
Accordingly, FCFC does not anticipate any operational problems in connection with the
integration of Jourdanton Bank into First Commercial Bank.
4
Approvals
FCFC has caused First Commercial Bank to submit an Interagency Bank Merger Act
Application to the OCC and the Texas Department of Banking for approval of the Bank Merger.
The Merger also is subject to the approval of the shareholders of JBI, and such
shareholder approval was obtained at a special meeting of the shareholders of JBI held on
October 29, 2015. FCFC, as the sole shareholder ofNewco, will consent to the Merger.
Any action required by law will be taken before consummation of the transaction.
Officers and Directors
While officers and employees of Jourdanton Bank will become officers and employees of
First Commercial Bank, other than Mr. Kirk McClelland, none of the officers of Jourdanton
Bank will become a senior executive officer of FCFC or First Commercial Bank. Mr. Kirk
McClelland currently is a senior vice president of Jourdanton Bank, and he will become a senior
vice president and branch manager of First Commercial Bank as part of the transaction. Also,
Mr. Alfred A. Steinle, currently a director of JBI and Jourdanton Bank, will become a director of
FCFC and First Commercial Bank. Other than Mr. Steinle, none of the current directors of JBl
or Jourdanton Bank will become directors of FCFC or First Commercial Bank. There will be no
other change in the senior officers and directors of FCFC or First Commercial Bank as a result of
the proposed transaction.
Public Notice
The notice attached as Exhibit "A" will be published in The Pleasanton Express, the
newspaper of general circulation for Jourdanton on Wednesday, January 13, 2016, and in the
Seguin Gazette, the newspaper of general circulation for Seguin also on Wednesday, January 13,
2016.
5
I.
PROVIDE THE FOLLOWING WITH RESPECT TO THE BANK/BANK HOLDING
COMPANY TO BE ACQUIRED:
A
TOT AL NUMBER
OUTSTANDING;
OF
SHARES
OF
EACH
CLASS
OF
STOCK
B.
NUMBER OF SHARES OF EACH CLASS NOW OWNED OR UNDER
OPTION BY APPLICANT, BY SUBSIDIARIES OF APPLICANT, BY
PRINCIPALS OF APPLICANT, BY TRUSTEES FOR THE BENEFIT OF
APPLICANT, ITS SUBSIDIARIES, SHAREHOLDERS, AND EMPLOYEES
BY CLASS, OR BY AN ESCROW ARRANGEMENT INSTITUTED BY
APPLICANT;
The authorized capital stock of JBI consists of l ,000,000 shares of common stock, of
which 148,477 shares are issued and outstanding and 500,000 shares of preferred stock, none of
which are issued and outstanding.
Other than the Reorganization Agreement which is the subject of this Application, there
are no arrangements by which FCFC owns JBI shares, options to acquire JBI shares, or has an
interest in trusts or escrow accounts instituted by or for the benefit of FCFC to own JBI shares.
6
C.
NUMBER OF SHARES OF EACH CLASS TO BE ACQUIRED BY CASH
PURCHASE, THE AMOUNT TO BE PAID, PER SHARE AND IN TOTAL,
AND THE SOURCE OF FUNDS TO BE APPLIED TO THE PURCHASE;
D.
NUMBER OF SHARES OF EACH CLASS TO BE ACQUIRED BY
EXCHANGE OF STOCK, THE EXCHANGE RA TIO, AND THE NUMBER
AND DESCRIPTION OF EACH CLASS OF APPLICANT'S SHARES TO BE
EXCHANGED.
The Reorganization Agreement provides that FCFC will pay the Merger Consideration to
the JBI Shareholders in part cash and part FCFC common stock. A detailed discussion of the
Merger Consideration is included in the Confidential Volume II of this Application.
7
E.
A BRIEF DESCRIPTION OF ANY UNUSUAL CONTRACTUAL TERMS,
ESPECIALLY THOSE TERMS NOT DISCLOSED ELSEWHERE IN THE
APPLICATION. ALSO, PROVIDE THE EXPIRATION DATES OF ANY
CONTRACTUAL ARRANGEMENT BETWEEN THE PARTIES INVOLVED
IN THIS APPLICATION. AS AN ALTERNATIVE TO DEVELOPING THE
FOREGOING INFORMATION, PROVIDE A COPY OF THE PURCHASE,
OPERA TING, OR OTHER AGREEMENTS AS SOCIATED WITH THE
PROPOSED TRANSACTION.
Expiration Date
The parties propose to consummate the transaction during the first quarter of 2016. The
parties may terminate the Reorganization Agreement if the Merger is not consummated prior to
January 31, 2016. FCFC anticipates that the Reorganization Agreement will be amended to
extend this expiration date to March 31, 2016.
Related Agreements
The Reorganization Agreement contemplates that certain individuals would sign various
agreements related to the Reorganization Agreement. The following is a description of those
agreements:
Voting Agreement. The directors of JBI executed a Voting Agreement which requires
those directors, in their capacity as shareholders, to vote in favor of the transaction. As noted
elsewhere in this Application, JBI has held its shareholder meeting at which the Merger was
approved by the requisite vote. A copy of the form of the Voting Agreement is attached as
Exhibit "B" to the Reorganization Agreement included in the Confidential Volume II of this
Application.
Releases. In connection with completion of the merger, the executive officers and
directors of JBI and Jourdanton Bank will enter into an instrument in favor of JBI and
Jourdanton Bank releasing each of them from any and all claims of such director or executive
officer, as the case may be, other than claims for indemnification rights under applicable
corporate documents, or in connection with any deposits or loans of the individual at Jourdanton
Bank, as applicable. A form of the release is attached as Exhibit "C" to the Reorganization
Agreement included in the Confidential Volume II of this Application.
Consulting Agreement. In consideration of and in connection with the completion of the
transaction, First Commercial Bank has entered into a Consulting Agreement with one of the
executive officers of Jourdanton Bank. The Consulting Agreement contains various nonsolicitation and non-competition covenants for periods of up to two years covering various
geographic areas including Atascosa, Bexar, Frio and Guadalupe counties, Texas.
The non-solicitation and non-competition provisions contained in this agreement are
customary in similar arrangements with officers and directors of financial institutions. They are
8
limited in scope) both geographically (to the specific geographic area in which the financial
institutions currently engage in the commercial banking business) and with respect to duration,
all in accordance with applicable law governing noncompetition agreements. The consideration
for these covenants is the consideration paid pursuant to the Reorganization Agreement as well
as the consideration provided for in the Consulting Agreement. FCFC considers this
arrangement reasonable given the influence of this individual in the market areas where
Jourdanton Bank operates. FCFC believes the franchise value of Jourdanton Bank would be
diminished if this individual actively competed for business in this area. A copy of the executed
Consulting Agreement is included in the Confidential Volume II of this Application.
9
2.
IF THE PROPOSED TRANSACTION IS AN ACQUISITION OF ASSETS AND
ASSUMPTION OF LIABILITIES, INDICATE THE TOT AL PRICE AND THE
SOURCE OF FUNDS THAT APPLICANT INTENDS TO USE FOR THE PROPOSED
PURCHASE, AND DISCUSS THE EFFECT OF THE TRANSACTION ON THE
OPERATIONS OF APPLICANT.
Not Applicable.
10
3.
IF THE PROPOSED TRANSACTION INVOLVES THE ACQUISITION OF AN
UNAFFILIATED BANKING OPERA Tl ON OR OTHERWISE REPRESENTS A
CHANGE IN OWNERSHIP OF EST AB LI SHED BANKING OPERATIONS,
DESCRIBE BRIEFLY THE DUE DILIGENCE REVIEW CONDUCTED ON THE
TARGET OPERATIONS BY APPLICANT. INDICATE THE SCOPE OF AND
RESOURCES COMMITTED TO THE REVIEW, EXPLAIN ANY SIGNIFICANT
ADVERSE FINDINGS, AND DESCRIBE THE CORRECTIVE ACTION(S) TO BE
TAKEN TO ADDRESS THOSE WEAKNESSES.
The presidents of each of FCFC and JBI have known one another for several years. In
conversations related to the state of the banking industry in 2014, they discussed strategic
planning and a possible merger. FCFC began reviewing information regarding JBI during these
discussions, becoming familiar with the financial condition and operations of JBI and Jourdanton
Bank. The two boards of directorS then determined to pursue a possible merger, and FCFC and
JBI entered into a confidentiality agreement and a letter of intent. Following the execution of a
confidentiality agreement and the letter of intent, FCFC and First Commercial Bank conducted a
thorough review of JBI and Jourdanton Bank. The scope of the due diligence included financial
performance, loan portfolio/asset quality, investment portfolio, and compliance, operational,
legal, and human resource matters. A discussion of the due diligence process and the results of
the due diligence is included in the Confidential Volume II of this Application.
11
4.
FOR APPLJCA TIONS FILED PURSUANT TO SECTION 3(a)(l) OF THE BHC ACT,
IF THE PROPOSED TRANSACTION WOULD RESULT IN AN ORGANIZATION
OTHER THAN A SHELL ONE-BANK HOLDING COMPANY, SUBMIT A PRO
FORMA ORGANIZATION CHART SHOWING APPLICANT'S PERCENTAGE
OWNERSHIP OF ALL BANKS AND COMPANIES, BOTH DOMESTIC AND
FOREIGN, IN WHICH IT OIRECTLY OR INDIRECTLY WILL OWN OR CONTROL
MORE THAN 5 PERCENT OF THE OUTSTANDING VOTING SHARES.
Not AppJicable.
12
FINANCIAL AND MANAGERIAL INFORMATION
5.
A.
FOR APPLICANT THAT IS NOT OR WOULD NOT BE SUBJECT TO
CONSOLIDATED
CAPITAL
STANDARDS
FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION, PROVIDE A
PARENT COMPANY BALANCE SHEET AS OF THE END OF THE MOST
RECENT FISCAL QUARTER, SHOWING SEPARATELY EACH PRINCIPAL
GROUP OF ASSETS, LIABILITIES, AND CAP IT AL ACCOUNTS; DEBIT
AND CREDIT ADJUSTMENTS (EXPLAINED BY FOOTNOTES)
REFLECTING THE PROPOSED TRANSACTION; AND THE RESULTING
PRO FORMA BALANCE SHEET;
B.
FOR AN APPLICANT THAT IS OR WOULD BE SUBJECT TO
CONSOLIDATED
CAPITAL
STANDARDS
FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION, PROVIDE
PARENT COMPANY AND CONSOLIDATED BALANCE SHEETS AS OF
THE END OF THE MOST RECENT FISCAL QUARTER, SHOWING
SEPARATELY EACH PRINCIPAL GROUP OF ASSETS, LIABILITIES, AND
CAPITAL
ACCOUNTS;
DEBIT
AND
CREDIT
ADJUSTMENTS
(EXPLAINED BY FOOTNOTES) REFLECTING THE PROPOSED
TRANSACTION; AND THE RESULTING PROFORMA BALANCE SHEETS;
AND
THE BALANCE SHEETS PROVIDED IN RESPONSE TO A AND B SHOULD BE
SUFFICIENT IN DETAIL TO REFLECT ANY:
•
•
•
•
•
COMMON EQUITY AND PREFERRED STOCK;
TRUST PREFERRED SECURITIES AND OTHER QUALIFYING CAPITAL;
LONG AND SHORT- TERM DEBT;
GOODWILL AND ALL OTHER TYPES OF INTANGIBLE ASSETS, AS WELL AS
ANY RELEVANT AMORTIZATION PERIOD(S);
MATERIAL CHANGES BETWEEN THE DA TE OF THE BALANCE SHEET AND
THE DATE OF THE APPLICATION (EXPLAINED BY FOOTNOTES).
FCFC is not and will not be subject to consolidated capital standards. A current parentonly balance sheet as of September 30, 2015 and a pro fonna parent-on1 y balance sheet as if the
transaction had been completed on September 30, 2015 are included in the Confidential Volume
II of this Application.
13
C.
FOR AN APPLICANT THAT IS OR WOULD BE SUBJECT TO
CONSOLIDATED
CAPITAL
STANDARDS
FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION, PROVIDE A
BREAKDOWN OF THE ORGANIZATION'S EXISTING AND PRO FORMA
RISK-ADJUSTED ASSETS AS OF THE END OF THE MOST RECENT
FISCAL QUARTER, SHOWING EACH PRINCIPAL GROUP OF ON- AND
OFF-BALANCE SHEET ASSETS AND THE RELEVANT RISK-WEIGHT.
ALSO, IDENTIFY THE EXISTING AND PRO FORMA COMPONENTS OF
TIER I, TIER 2, AND TIER 3 (IF ANY) CAPITAL PURSUANT TO THE
RISK-BASED CAPITAL GUIDELINES AS OF THE END OF THE MOST
RECENT FISCAL QUARTER, AND PROVIDE CALCULATIONS OF
APPLICANT'S EXISTING AND PRO FORMA TIER 1 AND TOT AL
CAPITAL RATIOS PURSUANT TO THE RISK-BASED GUIDELINES AND
THE RELATED LEVERAGE RATIOS.
IN APPLICATIONS FILED PURSUANT TO SECTION 3(A)(I) OF THE BHC ACT, IF THE
APPLICATION INVOLVES THE TRANSFER OF OWNERSHIP OF BANK FROM ONE
CONTROL GROUP TO ANOTHER AT THE TIME OF FORMATION, THEN APPLICANT'S
CARRYING VALUE FOR THE SHARES OF BANK WOULD BE THE PURCHASE PRICE.
IF THE APPLICATION INVOLVES THE TRANSFER OF OWNERSHIP OF BANK FROM
INDIVIDUAL TO CORPORATE FORM (A REORGANIZATION OF EXISTING
OWNERSHIP INTERESTS), THEN APPLICANT'S CARRYING VALUE FOR THE
SHARES OF BANK SHOULD BE THE HISTORICAL COST TO THE EXCHANGING
SHAREHOLDERS PLUS THE PROPORTIONATE INTEREST IN ANY UNDISTRIBUTED
EARNINGS OF BANK FROM THE DA TE THOSE SHARES WERE ACQUIRED BY THE
EXCHANGING SHAREHOLDERS. (BANK'S VALUATION RESERVES ARE NOT
INCLUDED IN
THESE COMPUTATIONS.)
IF
HISTORICAL COST PLUS
UNDISTRIBUTED EARNINGS CANNOT REASONABLY BE DETERMINED, THEN
PRESENT BOOK VALUE SHOULD BE ASSIGNED TO THE SHARES OF BANK AS
CARRYING VALUE. THE COMPUTATION OF CARRYING VALUE SHOULD BE
EXPLAINED BY FOOTNOTES.
Not applicable.
14
6.
PROVIDE FOR APPLICANT AND ANY OTHER BANK(S)/BANK HOLDING
COMPANY (IES) THAT WOULD RESULT FROM THE PROPOSAL:
A.
A DESCRIPTION OF ANY PLANS (IN CONNECTION WITH THE
PROPOSED TRANSACTION, OR OTHERWISE) TO ISSUE, INCUR, OR
ASSUME ADDITIONAL COMMON EQUITY, PREFERRED STOCK, TRUST
PREFERRED SECURITIES, OTHER QUALIFYING CAP ITAL, AND/OR
DEBT. AS RELEVANT, SPECIFY THE AMOUNT, PURPOSE, NAME AND
LOCATION OF THE ISSUER AND/OR LENDER; PROVIDE A COPY OF
ANY LOAN AGREEMENT, LOAN COMMITMENT LETTER FROM THE
LENDER, OR OTHER UNDERLYING AGREEMENT WHICH PROVIDES
THE INTEREST RATE, MATURITY, COLLATERAL, AND PROPOSED
AMORTIZATION SCHEDULE; AND DISCUSS WHAT RESOURCES
WOULD.BE USED TO SERVICE ANY DEBT OR CAPITAL INSTRUMENTS
ARISING FROM THE PROPOSED TRANSACTION; AND
B.
CASH FLOW PROJECTIONS UNDER THE FOLLOWING LIMITED
CIRCUMSTANCES;
(I)
FOR AN APPLICANT THAT IS OR WOULD BE SUBJECT TO
CON SO LIDA TED
CAPITAL
STANDARDS
FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION AND THAT
WOULD INCUR OR ASSUME ANY DEBT OR TRUST PREFERRED
SECURITIES IN THE PROPOSAL SUCH THAT PARENT COMPANY
LONG-TERM DEBT WOULD EXCEED 30 PERCENT OF PARENT
COMPANY EQUITY CAPITAL, PROVIDE CASH FLOW PROJECTIONS
FOR THE PARENT COMPANY FOR EACH OF THE NEXT THREE YEARS,
ALONG WITH SUPPORTING SCHEDULES FOR EACH MATERIAL CASH
RECEIPT AND DISBURSEMENT. IF APPLICANT PROJECTS THAT
DIVIDENDS OR OTHER PAYMENTS FROM SUBSIDIARY BANKS WILL
BE USED TO SERVICE PARENT COMPANY DEBT AND/OR TRUST
PREFERRED SECURITIES, PROVIDE PROJECTIONS OF SUBSIDIARY
BANK(S) ASSETS, TIER 1 AND TOTAL CAPITAL RATIOS PURSUANT TO
THE RISK-BASED CAPITAL GUIDELINES, LEVERAGE RATIO,
EARNINGS, AND DIVIDENDS. (IF THE COMBINED ASSETS OF THE
SUBSIDIARY BANKS EXCEED $500 MILLION, SUBSIDIARY BANK
DA TA MAY BE SHOWN ON AN AGGREGATE BASIS.);
(II)
FOR AN APPLICANT THAT IS NOT OR WOULD NOT BE
SUBJECT TO CONSOLIDATED CAPITAL STANDARDS FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION AND THAT
WOULD INCUR OR ASSUME ANY DEBT OR TRUST PREFERRED
SECURITIES JN THE PROPOSAL SUCH THAT PARENT COMPANY
LONG-TERM DEBT WOULD EXCEED 30 PERCENT OF PARENT
COMPANY EQUITY CAPITAL, PROVIDE CASH FLOW PROJECTIONS
FOR THE PARENT COMPANY FOR EACH OF THE NEXT TWELVE
YEARS, ALONG WITH SUPPORTING SCHEDULES FOR EACH
MATERIAL
CASH
RECEIPT
AND
DISBURSEMENT.
THESE
15
PROJECTIONS MUST CLEARLY DEMONSTRATE THE ABILITY OF THE
PARENT COMPANY TO REDUCE THE LONG-TERM DEBT TO EQUITY
RA TIO TO 30 PERCENT OR LESS WITHIN TWELVE YEARS OF
CONSUMMATION AND MUST TAKE INTO ACCOUNT THE SCHEDULE
OF PRINCIPAL REDUCTION REQUIRED BY THE PARENT COMPANY'S
CREDITOR(S). INCLUDE PROJECTIONS OF SUBSIDIARY BANK(S)
ASSETS, TIER I AND TOTAL CAPITAL RATIOS PURSUANT TO THE
RISK-BASED CAPITAL GUIDELINES, LEVERAGE RATIO, EARNINGS,
DIVIDENDS, AND OTHER PAYMENTS TO AFFILIATES. EXPLAIN THE
METHODS AND ASSUMPTIONS UTILIZED IN THE PROJECTIONS, AND
SUPPORT ALL ASSUMPTIONS WHICH DEVIATE FROM HISTORICAL
PERFORMANCE.
(III) FOR AN APPLICANT THAT IS NOT OR WOULD NOT BE
SUBJECT TO CONSOLIDATED CAPITAL STANDARDS FOLLOWING
CONSUMMATION OF THE PROPOSED TRANSACTION AND THAT
WOULD INCUR OR ASSUME ANY DEBT OR TRUST PREFERRED
SECURITIES IN THE PROPOSAL SUCH THAT PARENT COMPANY
LONG-TERM DEBT WOULD BE EQUAL TO OR LESS THAN 30 PERCENT
OF PARENT COMPANY EQUITY CAPITAL AND COMBINED PARENT
COMPANY LONG-TERM DEBT AND TRUST PREFERRED SECURITIES
WOULD EXCEED 30 PERCENT OF PARENT COMPANY EQUITY
CAPITAL, PROVIDE CASH FLOW PROJECTIONS FOR THE PARENT
COMPANY FOR EACH OF THE NEXT THREE YEARS, ALONG WITH
SUPPORTING SCHEDULES FOR EACH MATERIAL CASH RECEIPT AND
DISBURSEMENT. AS INDICATED ABOVE, RELEVANT BANK
SUBSIDIARY PROJECTIONS SHOULD BE PROVIDED IF THE PARENT
COMPANY PROJECTS RELYING ON DIVIDENDS AND OTHER
PAYMENTS FROM BANK SUBSIDIARIES TO SERVICE ITS DEBT AND
TRUST PREFERRED SECURITIES.
FCFC will issue shares of FCFC common stock to certain "eligible" shareholders of JBI as
part of the Merger Consideration. See Description of the Transaction in the Confidential Volume II
for the terms of this issuance of additional common equity. FCFC has sufficient shares of authorized
but unissued common stock available for issuance in order to satisfy this piece of the proposed
Merger Consideration.
In addition, FCFC will incur debt to facilitate the payment of the cash portion of the Merger
Consideration. FCFC renewed and expanded its existing credit facility with TIB-The Independent
Banker's Bank to provide the funds for the acquisition. A discussion of the financing and copies of
the substantive loan documents are included in the Confidential Volume II of this Application.
Financial projections which clearly demonstrate the ability of FCFC to reduce its long-term
debt to equity ratio to 30 percent or Jess within twelve years of consummation are included in the
Confidential Volume II of this Application. These financial projections also demonstrate that First
Commercial Bank will remain "well capitalized" throughout the debt service period.
16
7.
FOR APPLICATIONS FILED PURSUANT TO SECTION 3(A)(l) OF THE BHC ACT,
PROVIDE FOR APPLICANT AND BANK A LIST OF PRINCIPALS (INCLUDING
CHANGES OR ADDITIONS TO THIS LIST TO REFLECT CONSUMMATION OF
THE TRANSACTION), PROVIDING INFORMATION WITH RESPECT TO EACH
AS FOLLOWS:
A.
NAME AND ADDRESS (CITY AND STATE/COUNTRY). IF THE
PRINCIPAL'S COUNTRY OF CITIZENSHIP IS DIFFERENT FROM HIS OR
HER COUNTRY OF RESIDENCE, THEN STATE THE COUNTRY OF
CITIZENSHIP;
B.
TITLE OR POSITION WITH APPLICANT AND BANK;
C.
NUMBER AND PERCENT AGE OF EACH CLASS OF SHARES OF
APPLICANT AND BANK OWNED, CONTROLLED, OR HELD WITH
POWER TO VOTE BY THIS INDIVIDUAL.
D.
PRINCIPAL OCCUPATION IF OTHER THAN WITH APPLICANT OR
BANK;AND
E.
PERCENTAGE OF DIRECT OR INDIRECT OWNERSHIP, IF SUCH
OWNERSHIP REPRESENTS 10 PERCENT OR MORE OF ANY CLASS OF
SHARES, OR POSITIONS HELD IN ANY OTHER DEPOSITORY
INSTITUTION OR DEPOSITORY INSTITUTION HOLDING COMPANY.
GIVE THE NAME AND LOCATION OF SUCH OTHER DEPOSITORY
INSTITUTION OR DEPOSITORY INSTITUTION HOLDING COMPANY.
(INFORMATION THAT HAS BEEN COLLECTED OR UPDATED WITHIN
THE PAST 12 MONTHS MAY BE SUBMITTED, UNLESS APPLICANT HAS
REASON TO BELIEVE THAT SUCH INFORMATION IS INCORRECT.
This Application is filed pursuant to Section 3(a)(3) and Section 3(a)(5) of the BHC Act
and, accordingly, Item 7 is not applicable.
17
8.
FOR APPLICATIONS FILED PURSUANT TO SECTION 3(A)(3) OR 3(A)(5) OF THE
BHC ACT, LIST ANY CHANGES IN MANAGEMENT OR OTHER PRINCIPAL
RELATION SHIPS FOR APPLICANT AND THE BANK/BANK HOLDING
COMPANY WHICH WILL RESULT FROM THE PROPOSAL. FOR ANY EXISTING
OR PROPOSED PRINCIPAL OF APPLICANT OR BANK/BANK HOLDING
COMPANY THAT IS ALSO A PRINCIPAL OF ANY OTHER DEPOSITORY
INSTITUTION OR DEPOSITORY INSTITUTION HOLDING COMPANY, PROVIDE
THE FOLLOWING INFORMATION:
A.
NAME, ADDRESS AND TITLE OR POSITION WITH APPLICANT,
BANK/BANK HOLDING COMPANY, AND THE OTHER DEPOSITORY
INSTITUTION OR DEPOSITORY INSTITUTION HOLDING COMPANY
(GIVE THE NAME AND LOCATION OF THE OTHER DEPOSITORY
INSTITUTION OR DEPOSITORY INSTITUTION HOLDING COMPANY);
B.
NUMBER AND PERCENTAGE OF EACH CLASS OF SHARES OF
APPLICANT AND BANK/BANK HOLDING COMPANY OWNED,
CONTROLLED, OR HELD WITH POWER TO VOTE BY THIS
INDIVIDUAL;
C.
PRINCIPAL OCCUPATION IF OTHER THAN WITH APPLICANT OR
BANK/BANK HOLDING COMPANY; AND
D.
PERCENTAGE OF DIRECT OR INDIRECT OWNERSHIP HELD IN THE
OTHER DEPOSITORY INSTITUTION OR DEPOSITORY INSTITUTION
HOLDING COMPANY IF SUCH OWNERSHIP REPRESENTS 10 PERCENT
OR MORE OF ANY CLASS OF SHARES. (INFORMATION THAT HAS
BEEN COLLECTED OR UPDATED WITHIN THE PAST 12 MONTHS MAY
BE SUBMITTED, UNLESS APPLICANT HAS REASON TO BELIEVE THAT
SUCH INFORMATION IS INCORRECT.)
The proposal will not result in a change in management or other principal relationships of
FCFC. Jourdanton Bank will cease to exist following the transaction. While officers of
Jourdanton Bank will become officers of First Commercial Bank, other than Mr. Kirk
McClelland, none of the officers of Jourdanton Bank will become a senior executive officer of
FCFC or First Commercial Bank. Mr. Kirk McClelland currently is a senior vice president of
Jourdanton Bank, and he will become a senior vice president and branch manager of First
Commercial Bank as part of the transaction. Also, Mr. Alfred A. Steinle, currently a director of
JBI and Jourdanton Bank will become a director of FCFC and First Commercial Bank. Other
than Mr. Steinle, none of the current directors of JBI or Jourdanton Bank will become directors
of FCFC or First Commercial Bank. There will be no other change in the senior executive
officers and directors of FCFC or First Commercial Bank as a result of the proposed transaction.
18
9.
DISCUSS ANY MATERIAL CHANGE IN THE FINANCIAL CONDITION OF
BANK/BANK
HOLDING
COMPANY
SINCE
THE
MOST RECENT
EXAMINATION/INSPECTION. INDICATE THE AMOUNT OF ANY DIVIDEND
PAYMENT BY BANK/BANK HOLDING COMPANY SINCE THE DATE OF THE
MOST RECENT REPORT OF CONDITION AND REPORT OF INCOME AND
DIVIDENDS. ALSO, INDICATE THE AMOUNT OF ANY BANK/BANK HOLDING
COMPANY DIVIDENDS THAT ARE PLANNED PRIOR TO CONSUMMATION.
FOR APPLICATIONS FILED PURSUANT TO SECTION 3(A)(l) OF THE BHC ACT,
PROVIDE FOR BANK A COPY OF ALL SCHEDULES FROM THE MOST RECENT
REPORT OF CONDITION AND REPORT OF INCOME AND DIVIDENDS AS
FILED WITH A FEDERAL SUPERVISORY AUTHORITY.
To the best knowledge of FCFC, there has been no material adverse change in the
financial condition of Jourdanton Bank since the date of its most recent examination.
Jourdanton Bank has not paid a dividend since September 30, 2015, the date of its most
recent Call Report. However, at its December 2015 meeting, the board of directors of
Jourdanton Bank approved a dividend in the amount of $222,715.50 to be paid in January 2016.
Jourdanton Bank anticipates that this dividend will be paid on or before January 19, 2016. In
addition, JBI has declared a dividend to its shareholders in the amount of $1.50 per share, which
also will be paid in January 2016.
Further, the Reorganization Agreement provides that if the Tangible Equity of JBI is
more than $16, 100,000 on the Calculation Date, then JBI may distribute any such excess to its
shareholders immediately prior to closing.
19
IO.
IF THE CONSOLIDATED ASSETS OF THE RESULTING ORGANIZATION ARE
LESS THAN $500 MILLION, FOR EACH PRINCIPAL OF APPLICANT WHO
EITHER WOULD RETAIN PERSONAL INDEBTEDNESS OR ACT AS
GUARANTOR FOR ANY DEBT THAT WAS INCURRED IN THE ACQUISITION
OF SHARES OF APPLICANT OR BANK/BANK HOLDING COMPANY, PROVIDE
THE FOLLOWING:
A.
NAME OF BORROWER AND TITLE, POSITION, OR OTHER
DESIGNATION THAT MAKES THE BORROWER A PRINCIPAL OF
APPLICANT;
B.
AMOUNT OF PERSONAL INDEBTEDNESS TO BERET AINED;
C.
A DESCRIPTION OF THE TERMS OF THE BORROWING, THE NAME AND
LOCATION OF THE LENDER, AND A COPY OF ANY RELATED LOAN
AGREEMENT OR LOAN COMMITMENT LETTER FROM THE LENDER;
D.
ST ATEMENT OF NET WORTH AS OF A DA TE WITHIN THREE MONTHS
OF APPLICANT'S FINAL FILING OF THE APPLICATION. THE
STATEMENT OF NET WORTH SHOULD BE IN SUFFICIENT DETAIL TO
INDICA TE EACH PRINCIPAL GROUP OF ASSETS AND LIABILITIES OF
THE REPORTING PRINCIPAL, AND THE BASIS FOR THE VALUATION
OF ASSETS. IN ADDITION TO DEBTS AND LIABILITIES, THE
REPORTING PRINCIPAL SHOULD STATE ON A SEP ARATE SCHEDULE,
ANY ENDORSED, GUARANTEED, OR OTHERWISE INDIRECT OR
CONTINGENT LIABILITY FOR THE OBLIGATION OF OTHERS; AND
E.
STATEMENT OF MOST CURRENT YEAR'S INCOME. IN ADDITION TO
INDICATING EACH PRINCIPAL SOURCE OF ANNUAL INCOME, THE
REPORTING PRINCIPAL SHOULD LIST ANNUAL FIXED OBLIGATIONS
ARISING FROM AMORTIZATION AND OTHER DEBT SERVICING. (IF
THE MOST CURRENT YEAR'S STATEMENT IS NOT REPRESENTATIVE
OF THE FUTURE, THE REPORTING PRINCIPAL SHOULD SUBMIT A
PROFORMA INCOME ST ATEMENT AND DISCUSS THE SIGNIFICANT
CHANGES.)
None of the principals of FCFC will retain personal indebtedness or guarantee the
indebtedness of FCFC as part of the proposed transaction.
20
COMPETITION
IF THE SUBJECT TRANSACTION IS A BANK HOLDING COMPANY
FORMATION INVOLVING ONLY ONE BANK OR AN APPLICATION FILED PURSUANT
TO SECTION 3(A)(3) OR 3(A)(5) OF THE BHC ACT TO ACQUIRE A DE NOVO BANK, A
RESPONSE TO ITEMS 11 AND 12 IS NOT REQUIRED. OTHERWISE, APPLICANT
SHOULD CONTACT THE APPROPRIATE RESERVE BANK TO DETERMINE WHETHER
A RESPONSE TO ITEMS 11 AND 12 WILL BE NECESSARY. IF A RESPONSE IS
REQUIRED, APPLICANT SHOULD OBTA1N A PRELIMINARY DEFINITION OF THE
RELEVANT BANKING MARKETS FROM THE RESERVE BANK. IF APPLICANT
DISAGREES MATERIALLY WITH THE RESERVE BANK1S PRELIMINARY DEFINITION
OF THE BANKING MARKET(S), IT MAY IN ADDITION TO SUPPL YING THE
INFORMATION REQUESTED ON THE BASIS OF THE RESERVE BANK'S DEFINITION
OF THE BANKING MARKET(S), INCLUDE ITS OWN DEFINITION OF THE BANKING
MARK.ET(S), WITH SUPPORTIVE DATA, AND ANSWER THE QUESTIONS BASED ON
ITS DEFINITION. IF LATER ANALYSIS LEADS THE FEDERAL RESERVE STAFF TO
ALTER THE PRELIMINARY DEFINITION PROVIDED, APPLICANT WILL BE SO
INFORMED.
11.
DISCUSS THE EFFECTS OF THE PROPOSED TRANSACTION ON COMPETITION
CONSIDERING THE STRUCTURAL CRITERIA SPECIFIED IN THE BOARD'S
RULES REGARDING DELEGATION OF AUTHORITY (SECTION 265.llc(l l)(v)).
APPLICANT MAY BE REQUIRED TO PROVIDE ADDITIONAL INFORMATION IF
THE FEDERAL RESERVE STAFF DETERMINES THAT THE PROPOSAL
EXCEEDS EXISTING COMPETITIVE GUIDELINES. ALSO, IF DIVESTITURE OF
ALL OR ANY PORTION OF ANY BANK OR NON-BANKING COMPANY
CONSTITUTES PART OF THIS PROPOSAL, DISCUSS IN DETAIL THE SPECIFICS
AND TIMING OF THE DIVESTITURE.
The only market in which both First Commercial Bank and Jourdanton Bank have offices
is the San Antonio, Texas area. The relevant banking market for the offices in San Antonio,
Texas is the San Antonio MSA.
The San Antonio MSA is a considered a highly concentrated banking market, with a premerger HHI of unweighted deposits of 4824, and an HHI of weighted deposits of 3045. The
high concentration is a result of USAA having 68.5% of the unweighted deposits in the market.
As of June 30, 2015, total deposits in this market were $90,702,304,000.
Even though the San Antonio market is considered concentrated, the proposed transaction
will not increase the HHI for the market. The combined deposits of First Commercial Bank and
Jourdanton Bank in the San Antonio banking market as of June 30, 2015 would have been only
approximately $158,592,000, or only 0.17% of the market's total deposits. A copy of the pro
forma HHI and deposit levels resulting from the proposed transaction is submitted on the
following pages. Given that the proposed transaction will not increase the HHI for the market
and the small market share of deposits to be held by the combined bank after the transaction, the
combination of these banks will have no material adverse effect upon existing or potential
competition.
21
CASSIDrM
Competitive Analysis and Structure Source Instrument for Depository Institutions
Federal Reserve Bank of St. Louis
San Antonio, TX Banking Market HHI Deposit Analysis*
(For Commercial Bank and Thrift Organizations)
Run Date: January 6, 2016
Market Number: 48190
Pre Merger
RSSDID
Type
Branches Name
State
City
Deposits..
Rank
Post Merger
Weighted•••
Unweighted
%
Deposits
Rank
Unweighted
%
Deposits-
Weighted ·-
Rank
%
Deposits
Rank
%
Target Organization
:3~9_6-1:~2~~:~o~~~B~H~~~N~K~~2~2~~~~J~O~~o~Ru_D-rd_A-aN~n:~~~N-s-:~~~eN~:_a-:~:~A-R-_E-S~,~IN~C~.~~~J~O-J-~~Ru~DR~:_N_A_T-NO_~:a~_N-
_T-X~T~X~~.~~~~:~~-·-:_e-8~~~~-4-3~~~-o--.~02~,__I- -~-:~~~·:~:_~---~-_-43~~~~0.-~4-1rr1--o-.o-o-o--o---o-.o-o~,---o-.o-oo--o--o-.-00_,
_-_-_-_-
_-
..
Buyer Organization
2299992
BHC
FIRST COMMERCIAL FINANCIAL
3
SEGUIN
TX
CORP
400365
BANK
3
First Commercial Bank, National
SEGUIN
TX
137.212
Association
Resulting Organization
2299992
BHC
FIRST COMMERCIAL FINANCIAL
5
SEGUIN
CORP
400365
BANK
3
First Commercial Bank,
Association
602150
BANK
2
Jourdanton State Bank
Premerger
Postmerger
Total Organizations:
54
53
Total Banking Organizations:
52
51
Total Thrift Organizations:
2
/2
-Post Merger
IChange in HHI
4824
4824
10
3045
3045
jo
Herfindahl-Hlrschman Index
Pre Merger
HHI Unweighted Deposits
HHI Weighted Deposits
1
TX
0.21
Other Organizations
Pre Merger
Weighted-·
Unweighted
RSSOIO
Type
Branches Name
1447376
THC
1
UNITED SERVICES AUTOMOBILE
City
State
Deposits-
Rank
SANANTONIO
TX
62,160.501
--
Post Merger
%
Deposits
1
68.53
31,080.251
2
8.52
Rank
Unweighted
%
1
52.41
2
13.04
3
6.81
I
Deposits ..
Rank
62,160.501
Weighted-
%
Deposits
1
68.53
31,080.251
2
8.52
7,730.565
3
4.45
4,037.196
Rank
%
1
52.41
2
13.04
3
6.81
4
6.22
5
3.92
6
3.38
7
2.49
8
2.10
9
1.23
10
1.01
11
0.73
12
0.61
13
0.60
14
0.54
15
0.52
16
0.45
ASSOCIATION
619877
1102367
682563
1120754
451965
THRIFT 1
BHC
27
BANK
BHC
27
46
BANK
46
USAA Federal Savings Bank
CULLEN/FROST BANKERS, INC.
Frost Bank
WELLS FARGO & COMPANY
Wells Fargo Bank, National
SANANTONIO
SANANTONIO
SANANTONIO
SAN FRANCISCO
SIOUX FALLS
TX
TX
TX
CA
so
62.160.501
7,730.565
31,080.251
7,730.565
4,037.196
7,730.565
62, 160.501
7,730.565
7,730.565
3
4.45
4,037.196
4,037.196
I
4,037.196
31,080.251
7.730.565
4,037.196
7,730.565
4,037.196
4,037.196
Association
1073757
480228
1106879
474254
1039502
852218
BHC
31
31
BANK
BHC
29
BANK
BHC
29
52
BANK
52
BANK OF AMERICA CORPORATION
Bank of America, National Association
BROADWAY BANCSHARES, INC.
Broadway National Bank
JPMORGAN CHASE & CO.
JPMorgan Chase Bank, National
CHARLOTTE
CHARLOTTE
SANANTONIO
SANANTONIO
NEW YORK
COLUMBUS
NC
NC
TX
TX
NY
OH
3,688.954
4
4.07
3,688.954
2,324.758
4
6.22
3,688.954
3,688.954
5
2.56
2,324.758
2,005.910
3,688.954
2,324.758
5
3.92
2,324.758
2,324.758
6
2.21
2,005.910
2,005.910
4
4.07
3,688.954
3,688.954
5
2.56
2,324.758
6
3.38
2,005.910
2,005.910
3,688.954
2,324.758
2,324.758
6
2.21
2,005.910
2,005.910
2,005.910
Association
1391237
BHC
24
BANCO BILBAO VIZCAYA
1,477.647
BILBAO
7
1.63
1,477.647
8
1.37
1,245.747
7
2.49
1,477.647
8
2.10
1,245.747
7
1.63
1,477.647
8
1.37
1,245.747
ARGENTARIA, S.A.
697633
1109290
45560
1104231
BANK
BHC
24
14
14
BANK
BHC
33
Compass Bank
JEFFERSON BANCSHARES, INC.
Jefferson Bank
INTERNATIONAL BANCSHARES
BIRMINGHAM
SANANTONIO
SANANTONIO
LAREDO
AL
TX
TX
TX
1,477.647
1,245.747
1,477.647
1,245.747
729.685
1,477.647
1,245.747
9
0.80
11
0.66
729.685
1,477.647
1,245.747
9
1.23
729.685
10
1.01
599.777
1,245.747
9
0.80
11
0.6b
729.685
CORPORATION
1001152
2706735
2618780
BANK
BHC
33
International Bank of Commerce
TEXAS CAPITAL BANCSHARES, INC.
2
BANK
2
Texas Capital Bank, National
LAREDO
DALLAS
DALLAS
TX
TX
TX
729.685
599.777
729.685
599.777
599.777
729.685
599.777
729.685
599.777
599.777
599.777
Association
3593286
3548567
1027004
676656
2277860
BHC
BHC
4
Bank of San Antonio, The
ZIONS BANCORPORATION
5
BANK
BHC
SOUTHWEST BANCSHARES, INC.
4
BANK
5
Amegy Bank National Association
CAPITAL ONE FINANCIAL
7
SANANTONIO
SANANTONIO
SALT LAKE CITY
HOUSTON
MCLEAN
TX
TX
UT
TX
VA
432.767
12
0.48
432.767
361.645
13
0.40
361.645
355.892
432.767
11
0.73
432.767
432 767
361.645
12
0.61
I
361.645
14
0.39
355.892
10
0.70
317.906
12
0.48
13
0.40
432.767
361.645
432.767
361.645
13
0.60
355.892
14
0.54
635.812
432.767
361.645
361.645
14
0.39
10
0.70
355.892
CORPORATION
112837
3818822
2819167
1109991
BANK
THC
7
1
THRIFT 1
BHC
Capital One, National Association
FB BANCORP
Farm Bureau Bank FSB
NORTH AMERICAN BANCSHARES,
6
MCLEAN
SANANTONIO
SPARKS
SHERMAN
VA
TX
NV
TX
355.892
635.812
355.892
635.812
310.188
355.892
317.906
15
0.34
16
0.29
310.188
355.892
635.812
15
0.52
310.188
317.906
317.906
15
0.34
16
0.29
310.188
INC.
627658
1109599
664756
BANK
BHC
BANK
6
American Bank of Texas
PROSPERITY BANCSHARES, INC.
7
7
Prosperity Bank
SHERMAN
HOUSTON
EL CAMPO
TX
TX
TX
310.188
264.183
264.183
310.188
264.183
264.183
310.188
16
0.45
I
264.183
264 183
310.188
264.183
264.183
Pre Merger
Post Merger
---~----------·~----------------~----+----u__n_w_e_1g_h_ted
_ _ _+-·········--w_e_ig_h_te_d_....
__ ·-----1f~--u_n_w_e_1g_h_tea
_ _ _- 1 - - - Weighted•~~~~~~~~
_______c_1~~-______s_t_~_e_~~-P_~_i_~_-__R_a_•___%+_o_e_~_s_~_ _R_~_k_ _·_~ ~~~ % ~_s_b___R_a_M_%
!
1105443
I
II
583268
4091819
3211937
1199844
60143
3838727
637451
1074156
852320
3551080
26765
2788556
· 1107308
247355
BHC
BANK
BHC
BHC
BHC
1105685
9
BHC
4
13
13
2
BANK
Comerica Bank
2
SCHERTZ
PlainsCapital Bank
BB&T CORPORATION
Branch Banking and Trust Company
VANTAGE BANCORP, INC.
Vantage Bank Texas
TX
209.623
17
0.23
209.623
17
0.35
SCHERTZ
UNIVERSAL CITY
UNIVERSAL CITY
DALLAS
DALLAS
DALLAS
WINSTON-SALEM
WINSTON-SALEM
SAN ANTONIO
SAN ANTONIO
,__TX
_ _;--_209.623
TX
TX
TX
TX
TX
TX
NC
NC
TX
TX
190.507
209.623
18
0.21
190.507
171.925
0.32 !
19
0.19
171.925
19
0.29
171.925
20
0.18
160.618
20
0.27
160.618
125.674
22
0.14
125.674
22
0.21
125.674
23
0.14
123.418
123.418
23
0.21
123.418
·~-----------------+--------~---+---~
17
0.35:
105.799
24
0.12
105.799
24
0.18
BHC
4
SECURITY HOLDING COMPANY
FREDERICKSBURG
TX
101.634
25
0.11
101.634
25
0.17
TX
171.925
160.618
101.634
125.674
123.418
101.634
190.507
18
0.32
19
0.29
20
0.27
22
0.21
23
0.21
105.799
24
0.18
101.634
25
0.17'
190.507
19
0.19
171.925
171.925
20
0.18!
160.618
160.618
22
0.14 i
125.674
125.674
23
0.14
105.799
24
0.12
101.634
25
0.11
123.418
TX
FREDERICKSBURG
0.21
125.674
SAN ANTONIO
123.418
123.418
101.634
101.634
·~---------------------------+----------ii----------~~----------+---·~----~
VISION BANCSHARES, INC.
3
BANK
BHC
209.623
209.623
18
160.618
125.674
123.418
190.507
171.925
Lone Star Capital Bank, National
Association
Security State Bank & Trust
0.23
190.507
4
4
17
209.623
18
190.507
171.925
160.618
190.507
BANK
BANK
209.623
I
DALLAS
HILL TOP HOLDINGS, INC.
4
BANK
TexStar National Bank
COMERICA INCORPORATED
9
BANK
Schertz Bank & Trust
TEXSTAR BANCSHARES, INC.
6
BANK
'------3211012
BHC
528960
4
6
BANK
BHC
SCHERTZ BANCSHARES
CORPORATION
4
3
2
Texas Community Bank
LIVE OAK BANCSHARES
CORPORATION
LAREDO
LAREDO
GEORGE WEST
TX
TX
TX
93.763
26
0.10
93.763
83.229
93.763
26
0.16
93.763
27
0.09
83.229
93.763
26
0.10
93.763
27
0.14
83.229
93.763
26
0.16
27
0.141
93.763
27
0.09
83.229
5211_~5~B_ _ _B_A_N_K__2_ _ _ _s_o_ut_h_T_ru_st_B_a_n_k._N_.A_._ _ _ _ _ _G_E_O_R_G_E_WE_S_T_ _ _T_X_-+-_ _8_3._22_9_ _ _ _~·-+---83_.2_2_9~·-----~~--8-3._22_9_ _ _ _ _-+-__8_3_.2_2_9_ _ _ _----4
3828250
484057
SHC
MARION BANCSHARES, INC.
BANK
Marion State Bank
MARION
MARION
TX
TX
81.067
"--------------------·-----------------+----441050
BANK 2
Falls Ci~ National Bank, The
FALLS CITY
TX
70.222
'-1-1-05-2-83-- BHC
702359
2
BANK
2
SOUTHWESTER_N_B_A_N_C_O_R_P_,1-N-C-._ _B_O_E_R_N_E___
Texas Heritage Bank
1--------------2270254
BHC
2
FALCON BANCSHARES
BOERNE
LAREDO
TX
TX
TX
28
81.067
66.723
0.09
29
30
28
0.141
81.067
28
0.09
81.067
81.067
28
0.08
70.222
-0.-0-7+-!--66-.723
29
30
0.12 I
70.222
29
0.08
0.11
66.723
30
0.07
66.723
31
0.07
62.680
66.723
31
0.11
62.680
70.222
29
0.12
66.723
30
0.11
31
0.11
66.723
31
0.07
62.680
INCORPORATED
564557
: 3633034
359360
2
BANK
BHC
3
BANK
3
Falcon International Bank
JLL ASSOCIATES G. P. FCH, L.L.C.
First Community Bank, National
LAREDO
NEW YORK
SUGAR LAND
TX
NY
TX
62.680
48.655
0.14
81.057
·---+----------'~'~---------1----------l
66.723
62.680
81.067
81.067
32
0.05
48.655
48.655
l
62.680
62.680
32
0.081
48.655
48.655
l
62.680
32
0.05
48.655
48.655
48.655
Association
1250286
641355
BHC
SECURITY STAR BANCSHARES, INC.
2
BANK
2
Security Bank
MIDLAND
MIDLAND
'---------------------------·
BHC
6
LONE STAR NATIONAL
MCALLEN
2325350
TX
TX
TX
45.697
33
0.05
45.697
45.543
45.697
33
0.08
45.697
34
0.05
45.543
45.697
33
0.05
45.697
34
0.08
45.543
45.697
34
0.05
35
0.05
45.543
BANCSHARES··TEXAS, INC.
842460 _ _ _
aA_N_K__s_____
Lo....n_e_s_ta_r_N_a_u_on_a_I_Ba_n_k_______P_H_A_R_R_ _ _ _ _ _
TX_-t_ _4_5_.54_3___
1062621
398350
BHC
BANK
SOUTHWEST BANCORP, INC.
2
2
Bank SNB
STILLWATER
STILLWATER
OK
OK
43.055
43.055
35
-+---45.543
0.05
43.055
_ _,,__ _
45.543
35
0.07
43.055
33
0.08
34
0.08 I
35
0.07
45.697
~
45 543
43 055
43.05_5_ _ _ _ __lL_ _4__3_.o_5_5_ _ _ _ _J__43°055
Merger
""'''""-·~·· ......
..
RSSDID
Type
Branches Name
2184333
BHC
1
591366
~--
..•
3681905
1
BANK
BHC
FIRST SONORA BANCSHARES, INC.
2
City
State
SONORA
TX
First National Bank of Sonora. The
SONORA
COMMERCE FINANCIAL
CORPUS CHRISTI
Deposits-
I
TX
39.572
%
Deposits
36
0.04
39.572
37
0.04
39.106
38
0.04
37.570
Rank
39.572
TX
39.106
Post Merger
Weighted·Rank
Unweighted
..
Deposits** Rank
%
36
0.07
37
0.07
39.106
38
0.06
37.570
39.572
39.572
Weighted-
%
Deposits
36
0.04
39.572
37
0.04
39.106
38
0.04
37.570
39572
Rank
%
36
0.07
37
0.07
38
0.06
39
~
39.572
CORPORATION
174367
3174005
219259
1130771
BANK
2
1
BHC
BANK
BHC
1
Commerce Bank Texas
STOCKDALE
BLANCO NATIONAL HOLDINGS, INC.
Blanco National Bank, The
BLANCO
FIRST BEEVILLE FINANCIAL
1
BLANCO
BEEVILLE
TX
39.106
TX
37.570
TX
39.106
37.570
TX
37.223
39.106
37.570
39
0.04
37.223
40
0.041
36.966
39.106
37.570
39
0.06
40
0.06
37.223
37.570
39
0.04
37.223
40
0.04
36.966
CORPORATION
28255
4199229
1
First National Bank of Beeville, The
18
WOODFOREST FINANCIAL GROUP
BANK
BHC
BEEVILLE
THE WOODLANDS
TX
I
TX
37.223
36.966
37.223
I
EMPLOYEE STOCK OWNERSHIP
37.223
36.966
37 223
40
I
PLAN (WITH 401(K) PROVISIONS)
0.06
!
I
(AMENDED AND RESTATED EFF.
03101106)
412751
1097089
i
107244
3792285
574051
3037566
18
BANK
BANK OF THE OZARKS INC
1
BHC
1
BANK
1
BANK
BHC
LITTLE ROCK
LITTLE ROCK
PEARLAND
Heritage Bank
SPECTOR HOLDINGS LIMITED
1
THE VllOODLANDS
Bank of !he Ozarks
HERITAGE BANCORP, INC.
1
BHC
Woodforest National Bank
PEARLAND
SANANTONIO
TX
36.966
AR
30.358
AR
41
0.03
I
30.358
TX
29.656
TX
21.269
30.358
30.358
42
29.656
0.03
29.656
TX
36.966
36.966
I
41~
30.358
42
29.656
0.05
29.656
44
21.269
0.02
36.966
41
0.03
30.358
42
0.03
1951350
750664
1103391
973364
2693956
283867
1108097
1
BANK
1
BHC
1
BANK
-··----
BHC
1
1
BANK
BHC
Banamex USA
COMMERCE BANCSHARES, INC.
Centennial Bank
WALLIS BANCSHARES, INC.
1
BANK
BHC
Citizens State Bank of Luling
..
CITIGROUP INC.
1
9
wams State Bank
FIRST COMMUNITY BANCSHARES,
29.656
29.656
44
0.04
21.269
·~
42
0.05
43
0.04
44
0.031
45
o.o2J
46
0.02
29.656
43
0.02
21.269
i
PARTNERSHIP
954653
30.358
30 358
I
LULING
NEW YORK
CENTURY CITY
--·
LUBBOCK
LUBBOCK
WALLIS
WALLIS
KILLEEN
TX
21.269
NY
CA
TX
TX
16.922
I
I
TX
45
0.02
j
16.922
13.267
46
13.267
0.01
11.065
45
0.031
47
0.01
11.412
48
0.01
11.065
49
0.01
10.905
16.922
44
0.02
16.922
46
0.02
13.267
,
13.267
0.02
48
0.02
11.065
49
0.02
10.905
11.412
21.269
16.922
16.922
45
0.01
13.267
46
0.01
11.412
47
0.01
11.065
48
0.01
10.905
13.267
47
11.412
11.412
TX
16.922
I
21.269
··----
16.922
13.267
11.412
TX
21.269
I
13.267
11412
11.412
47
INC.
613950
12536642
448554
BANK
BHC
9
BANK
First National Bank Texas
ANB BANCSHARES, INC.
1
1
Sage Capital Bank, National
KILLEEN
GONZALES
GONZALES
TX
TX
TX
:
I
11.065
10.905
11.065
10.905
I
Association
4037349
4262534
I""'" 579364
BHC
CADENCE BANCORP LLC
1
1
BANK
MESQUITE FINANCIAL SERVICES,
1
HOUSTON
BIRMINGHAM
ALICE
TX
7.144
AL
50
0.01
4.154
10.905
51
0.00
1
Texas Champion Bank
CORPUS CHRISTI
TX
I
4.154
48
0.02
10.905
l
7.144
50
0.01
7. 144
7.144
TX
10.905
o:~
11.065
4.154
7.144
49
0.01
7.144
51
0.01
4.154
7.144
4.154
4.154
49
7.144
50
0.00
4.154
INC.
BHC
BANK
Cadence Bank. NA
11.065
J
4.154
50
1
0.01
··-----·Pre Merger
Type
Branches Name
1141861
BHC
1
--
CROCKETI COUNTY NATIONAL
City
State
OZ ONA
TX
Deposits..
3.086
Rank
%
52
o.oo I
3.086
53
0.00
1.905
54
o.oo
BANCSHARES, INC
(
1015467
BANK
1
Crockett National Bank
OZONA
TX
3.086
Deposits
BHC
TRUSTTEXAS MUTUAL HOLDING
1
CUERO
TX
1.905
!
Unweighted
% I Deposits-
Rank
52
0.01
3.086
53
o.oo
1.905
54
0.00
1.073
3.086
Weighted-
%
Deposits
51
0.00
3.086
52
0.00
Rank
..
3.086
-···
-·······
3601332
Weighted-
Unweighted
····RSSDID
Post Merger
··~
51
0.01
52
0.00
53
0.00
3.086
1.905
COMPANY
539872
3491869
780263
Totals:
THRIFT 1
BHC
BANK
Trus!Texas Bank, SSB
ONB BANCSHARES, INC.
1
1
Ozona National Bank, The
CUERO
OZONA
OZ ONA
TX
1.905
TX
1.073
TX
409
1 905
1.073
1.073
90,702.304
1.073
100.00
59,304.148
1.905
-
100.00
1.905
53
0.00
1.073
i
90,702.304
1.073
100.00
Notes:
• The geographic market is defined as:Bexar, Comal, Guadalupe, Kendall and Wilson Counties, TX.
- Deposit data (in millions of dollars) are as of June 30, 2015, and reflect currently known ownership structure.
-
1.073
Deposits of thrift institutions are weighted at so percent, unless otherwise noted. Deposits of thrift subsidiaries of commercial banking organizations, however, are weighted at 100 percent.
59,304.148
100.00 t
12.
IF THE PROPOSAL INVOL YES THE ACQUISITION OF NONBANK
OPERATIONS UNDER SECTION 4(c)(8) AND 40) OF THE BANK HOLDING COMPANY
ACT, A FORM FR Y-4 SHOULD BE SUBMITTED IN CONNECTION WITH FR Y-3
FILING. AT A MINIMUM, THE INFORMATION RELATED TO THE NONBANK
OPERATIONS SHOULD INCLUDE THE FOLLOWING:
A. A DESCRIPTION OF THE PROPOSED ACTIVITY(IES);
B.
THE NAME AND LOCATION OF APPLICANT'S AND BANK'S
DIRECT OR INDIRECT SUBSIDIARIES THAT ENGAGE IN THE
ACTIVITY(IES);
C.
IDENTIFICATION OF THE GEOGRAPHIC AND PRODUCT
MARKETS IN WHICH COMPETITION WOULD BE AFFECTED BY
THE PROPOSAL;
D.
A DESCRIPTION OF THE EFFECT OF THE PROPOSAL ON
COMPETITION IN THE RELEVANT MARKETS; AND
E.
A LIST OF MAJOR COMPETITORS IN THAT MARKET IN THE
PROPOSED ACTIVITY.
IN ADDITION, THE APPLICANT SHOULD IDENTIFY ANY OTHER NONBANK
OPERATIONS TO BE ACQUIRED, WITH BRIEF DESCRIPTIONS OF THE .ACTIVITIES
PROVIDED.
Jourdanton Bank has one wholly-owned subsidiary, JSB Investments, Inc., which
engages in the sale of insurance. JSB Investments provides insurance products, including private
passenger auto, homeowners, commercial business auto, general liability, commercial property,
workers compensation, commercial package and professional liability coverages. These
products amount to approximately 80% of the JSB Investments business during 2015. The
remaining 20% of the ongoing business during 2015 was a result of a variety of coverages,
including bonds and umbrella, farm owners, boat, motorcycle, and windstorm policies. JSB
Investments is licensed for operation in Texas, California and Colorado. The resident license is
in the State of Texas.
JSB Investments will become a wholly-owned subsidiary of First Commercial Bank by
virtue of the Bank Merger.
22
13.
IN AN APPLICATION IN WHICH ANY PRINCIPAL OF APPLICANT OR
BANK/BANK HOLDING COMPANY IS ALSO A PRINCIPAL OF ANY OTHER
INSURED DEPOSITORY INSTITUTION OR DEPOSITORY INSTITUTION
HOLDING COMPANY, GIVE THE NAME AND LOCATION OF EACH OFFICE OF
SUCH OTHER INSTITUTION THAT IS LOCATED WITHIN THE RELEVANT
BANKING MARKET OF BANK HOLDING COMPANY, AND GIVE THE
APPROXIMATE ROAD MILES BY THE MOST ACCESSIBLE AND TRAVELED
ROUTE BETWEEN THOSE OFFICES AND EACH OF THE OFFICES OF
BANK/BANK HOLDING COMPANY.
Not Applicable.
23
CONVENIENCE AND NEEDS
14.
A.
DESCRIBE
HOW
THE
PROPOSAL
WILL
MEET
THE
NEEDS
OF
THE
TARGET
BANK'S
CONVENIENCE
AND
COMMUNITY(IES). LIST ANY SIGNIFICANT CHANGES IN SERVICES OR
PRODUCTS THAT WILL RESULT FROM THE CONSUMMATION OF THE
TRANSACTION. IF ANY SERVICES OR PRODUCTS WILL BE
DISCONTINUED, DESCRIBE AND EXPLAIN THE REASONS.
B.
DISCUSS THE PROGRAMS, PRODUCTS, AND ACTIVITIES OF THE
DEPOSITORY SUBSIDIARIES OF THE APPLICANT OR THE TARGET
BANK THAT WILL MEET THE EXISTING OR ANTICIPATED NEEDS OF
ITS COMMUNITY(IES) UNDER THE APPLICABLE CRITERIA OF THE
COMMUNITY REINVESTMENT ACT (CRA) REGULATION, INCLUDING
THE NEEDS OF LOW- AND MODERATE-INCOME GEOGRAPHIES AND
INDIVIDUALS. FOR A SUBSIDIARY OF THE APPLICANT OR TARGET
BANK THAT HAS RECEIVED A CRA COMPOSITE RA TING OF "NEEDS
TO IMPROVE" OR "SUBSTANTIAL NONCOMPLIANCE" INSTITUTIONWIDE OR, WHERE APPLICABLE, IN A STATE OR MULTI-STATE MSA,
OR HAS RECEIVED AN EVALUATION OF LESS THAN SATISFACTORY
PERFORMANCE IN AN MSA OR IN THE NON-MSA PORTION OF A
STATE IN WHICH THE APPLICANT IS EXPANDING AS A RESULT OF
THE TRANSACTION, DESCRIBE THE SPECIFIC ACTIONS, IF ANY, THAT
HAVE BEEN TAKEN TO ADDRESS THE DEFICIENCIES IN THE
INSTITUTION'S CRA PERFORMANCE RECORD SINCE THE RA TING.
FCFC and First Commercial Bank have a proven record of serving the banking needs of all
of the communities they serve, including the low and moderate income neighborhoods located within
these communities. First Commercial Bank has an effective and ongoing outreach program for
ascertaining credit needs. First Commercial Bank develops lending programs based upon credit
needs and has a good record of lending within its communities. First Commercial Bank does not
engage in any discriminatory practices. First Commercial Bank intends to redefine its communities
to include the communities served by Jourdanton Bank and to employ these same strategies in those
communities.
First Commercial Bank received a "satisfactory" rating at its most recent CRA evaluation.
Jourdanton Bank, however, has been working through a fair lending issue with the Federal Deposit
Insurance Corporation and as a result of that process, the CRA rating at Jourdanton Bank currently is
"needs improvement". Please see the discussion regarding First Commercial Bank's action plan for
the Jourdanton Bank fair lending and compliance concerns in the Confidential Volume II to this
Application.
First Commercial Bank does not anticipate material changes in service charges on transaction
deposits. However, First Commercial Bank pays a higher interest rate on its deposit accounts than
Jourdanton Bank, and accordingly, First Commercial Bank anticipates an increase in interest expense
to conform Jourdanton Bank deposit rates to First Commercial Bank deposit rates. First Commercial
Bank plans to ascertain the credit needs of the Jourdanton Bank communities and make changes to
interest rates, maximum maturities and other loan terms as necessary.
24
EXHIBIT "A"
PubJic Notice of Application
TO BE PUBLISHED
January 13, 2016
First Commercial Financial Corp., 1336 East Court Street, Seguin, Texas 78155 ("FCFC"),
intends to apply to the Federal Reserve System for permission to acquire control of Jourdanton
Bancshares, Inc., 1301 Oak Street, Jourdanton, Texas 78026. FCFC owns control of First
Commercial Bank, N.A., 1336 East Court Street, Seguin, Texas 78155. The Federal Reserve
System considers a number of factors in deciding whether to approve the application, including
the record of performance of the banks we own in helping to meet local credit needs.
You are invited to submit comments on this application, in writing, to the Federal Reserve Bank
of Dallas, Holding Company Supervision Department, P.O. Box 655906, Dallas, Texas 75265·
5906. The comment period will not end before February 12, 2016, and may be somewhat longer.
The Federal Reserve Board's Policy Statement regarding notice of applications may be found at
12 C.F.R. 262.25. To obtain a copy of the Federal Reserve Board's procedures, or if you need
more information about how to submit your comments on the application, contact the Director of
Applications at the Federal Reserve Bank of Dallas, Ms. Karen Smith, at (214)922-6786. The
Federal Reserve System will consider your comments and any request for a hearing on the
application if they are received by the Federal Reserve Bank of Dallas on or before the last day
of the comment period.
25