As filed with the Securities and Exchange Commission on March 11, 1998
Registration File No. ______
Securities and Exchange Commission
Washington, D.C. 20549
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CITIZENS COMMUNITY BANCORP, INC.
(Exact Name of registrant as specified in its charter)
Florida 6711 65-0614044
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
650 East Elkcam Circle, Marco Island, Florida 34145 (941) 389-1800
(Address and Telephone Number of Principal Executive Offices)
Richard Storm, Jr., President and Chief Executive Officer
Citizens Community Bancorp, Inc.
650 East Elkcam Circle
Marco Island, Florida 34145
(941) 389-1800
(Name, Address and Telephone Number of Agent for Service)
Copies to:
A. George Igler, Esq.
Herbert D. Haughton, Esq.
IGLER & DOUGHERTY, P.A.
1501 Park Avenue, East
Tallahassee, Florida 32301
Telephone: (850) 878-2411
Facsimile: (850) 878-1230
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933 check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. |_| __________.
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. |_| ___________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
Title of each class of Amount to be Proposed Maximum Proposed Maximum Amount of
securities to be registered Registered Offering Price Per Aggregate Offering Registration Fee
Share Price
====================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock 1,000,000 Shares $7.50 $7.50 $2,272.50
====================================================================================================================================
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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CITIZENS COMMUNITY BANCORP, INC.
CROSS REFERENCE SHEET
Item
Number Caption Heading in Prospectus
------ ------- ---------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside Front Outside Front Cover Page; Inside Front and Outside
Cover Page of Prospectus Back Cover Pages; Cross Reference Sheet
2. Inside Front and Outside Back Cover Pages of Prospectus Available Information; Incorporation of Certain
Information by Reference; Inside Front and Outside
Back Cover Pages
3. Summary Information, Risk Factors and Ratio of Earnings Prospectus Summary; Risk Factors; Selected
to Fixed Charges Consolidated; Financial Data
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *Subscription Price and Exercise Price
6. Dilution *Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered Description of Common Stock
10. Interests of Names Experts and Counsel Experts; Legal Matters
11. Information with Respect to the Registrant Prospectus Summary; Risk Factors; Price Range of
and Dividends on Common Stock; Dividends;
Capitalization; Selected Consolidated Financial Data;
Management's Discussion and Analysis of Financial
Conditions and Results of Operations; Business;
Management; Consolidated Financial Statements
12. Incorporation of Certain Information by Reference Incorporation of Certain Information by Reference
13. Disclosure of Commission Position on Indemnification for Not Applicable
Securities Act Liabilities
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[Company Logo]
CITIZENS COMMUNITY BANCORP, INC.
Up To 1,000,000 Shares
Common Stock
Citizens Community Bancorp, Inc., a Florida corporation ("CCBI", or the
"Company" when discussed collectively with Citizens Community Bank of Florida
["Citizens Bank"] and Citizens Financial Corporation ["Citizens Financial"]) is
offering up to 1,000,000 shares of common stock, par value $.01 per share
("Common Stock") on a priority bases to "Depositors" (existing depositors that
are Florida residents and have a demand account within a minimum balance of
$1,000) shareholders, officers and directors of the Company as of the date of
this Prospectus (the "Record Date"). For the first 75 days following the date of
this Prospectus (the "Initial Offering Period") each Depositor and shareholder,
as of the Record Date will receive a non-transferable right ("Subscription
Right") to subscribe for and purchase at $7.50 per share (the "Subscription
Price") a maximum of 5,000 shares individually, or together with associates of,
or persons acting in concert with, such persons (hereinafter defined as "Related
Party"). Each Officer and director of the Company will be permitted to purchase
individually (or with a Related Party) up to 50,000 shares of Common Stock. The
offering of Common Stock to Depositors, shareholders, officers and directors is
referred to herein as the "Initial Offering". Immediately following the Initial
Offering, CCBI will offer shares not subscribed for in the Initial Offering to
members of the general public to whom a copy of this Prospectus is delivered
(the "Community Offering"). The maximum number of shares that an individual or
their Related Party may purchase in the Community Offering is 15,000 shares in
the aggregate. The Subscription Price in the Community Offering is $7.50 per
share. Individuals who purchase shares in the Initial Offering will be permitted
to subscribe for shares in the Community Offering up to the maximum of 15,000
shares. The Initial Offering and the Community Offering are collectively
referred to as the "Offering". The minimum number of shares that can be
subscribed for in the Offering is 100 shares. No fractional shares will be
issued. The Offering will be terminated, and all subscription funds, together
with any interest earned thereon will be promptly returned if a minimum of
300,000 shares are not sold within 120 days of the Record Date.
CCBI reserves the right to reject subscriptions received in the
Community Offering, in whole or in part. Once a subscription is accepted by
CCBI, it cannot be withdrawn. CCBI will not be required to issue shares of
Common Stock pursuant to the Offering to any person or Related Party, who in the
opinion of CCBI, would be required to obtain prior clearance or approval from
any state or federal regulatory authority to own or control such shares. See
SUMMARY - Purchase Limitation". The Offering may be terminated by the Company at
any time without prior notice. The Offering will be made on a continuous basis
for approximately 12 months following the date of this Prospectus, with multiple
closings.
See "Risk Factors" beginning on page 9 for a discussion of certain
risks that should be carefully considered by prospective purchasers of the
Common Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION. NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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================================================== =========================== =========================== ========================
Subscription Estimated Fees and Proceeds to the
Price Underwriting Expenses(2) Company(1)(2)
================================================== =========================== =========================== ========================
<S> <C> <C> <C>
Per Share in the Depositor's Offering $7.50 $0 $7.50
Per Unit in the Community Offering $7.50 $0 $7.50
Minimum Offering(3) $2,250,000 $0 $2,250,000
Maximum Offering(4) $7,500,000 $0 $7,500,000
================================================== =========================== =========================== ========================
</TABLE>
(1) The securities offered hereby will be sold on a best-efforts 300,000
shares basis, by certain directors and executive officers of the
Company and no commission will be paid on such sales.
(2) Before deducting Offering expenses estimated to be $100,000, including
registration fees, legal and accounting fees, printing and other
miscellaneous expenses.
(3) Amount based on the sale of 300,000 shares at $7.50 per share.
(4) Amount based on the sale of 1,000,000 shares at $7.50 per share.
The date of this Prospectus is March __, 1998.
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[Inside Front Cover]
The Common Stock of is not listed on any exchange and there currently
is not an active market for the shares. There can be no assurance that an active
and liquid trading market for the Common Stock will develop or, if developed,
will be maintained. Currently the price quotation of CCBI's Common Stock appears
on the National Quotation Bureau System "Pink Sheet," under the symbol "CCBI".
It is the intent of CCBI to apply to Nasdaq to have its securities listed on the
Nasdaq SmallCap Market as soon as CCBI is able to meet the qualification
requirements. At the completion of the Offering, the Company should meet all of
the requirements, except for the minimum of three market makers making a market
in its securities. The Company believes that it will satisfy this requirement,
but no assurance can be given that there will be three active market makers in
the Company's securities at the completion of the Offering, or that the listing
requirements for Nasdaq SmallCap Market will not have changed at that time.
CCBI is offering a maximum of 1,000,000 shares of Common Stock (the
"Maximum Offering") and must sell, in the Initial Offering Period, a minimum of
300,000 shares of Common Stock (the "Minimum Offering") or the Offering will not
be consummated and all funds submitted to the Escrow Agent (as hereinafter
defined) will be promptly returned with interest. See "THE OFFERING --
Conditions to Consummation of the Offering". The Initial Offering Period will
terminate on _____ at 5:00 p.m., Local Time. All subscriptions are irrevocable
once submitted. The Company reserves the absolute right to cancel all
subscription and return all subscriptions funds, adjusted for any income
thereon, realized from the investment of such funds, for any reason whatsoever,
at any time prior to the time that the Company withdraws subscription funds from
the Subscription Escrow Account. See "TERMS OF THE OFFERING".
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and, in accordance
therewith, files electronically with the Securities and Exchange Commission
("Commission") through the Commission's Electronic Data Gathering Analysis and
Retrieval ("EDGAR") systems, reports, proxy statements and other information
which may be inspected and copied at the public reference facilities maintained
by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and 3475
Lenox Road, N.E., Suite 1000, Atlanta, GA 30326-1232. Copies of such material
may also be reviewed on the Commission's Web Site, http://www.sec.gov.
The Company has electronically filed with the Commission through EDGAR
a Registration Statement on Form SB-2 ("Registration Statement") under the
Securities Act of 1933 ("Securities Act"), with respect to the Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and in the exhibits thereto. Certain items
were omitted in accordance with the rules and regulations of the Commission. Any
interested party may inspect the Registration Statement without charge at the
public reference facilities of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and may obtain copies of all or any part of it from the
Commission upon payment of the fees prescribed by the Commission. Statements
contained herein which refer to a document filed as an exhibit to the
Registration Statement are qualified in their entirety by reference to the copy
of such document filed with the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's 1997 Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, excluding the Company's financial statements which have
been included elsewhere herein, is incorporated by reference.
Any documents filed pursuant to Section 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year ended December 31, 1997, shall be deemed to
be incorporated by reference in this Prospectus and shall be part hereof from
the date of filing of such documents. Any statement contained herein or in a
document incorporated by reference herein shall be deemed to be modified or
suspended for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person (including any
beneficial owner) to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document incorporated
by reference herein (other than an exhibit to such a document unless such
exhibit is specifically incorporated by reference into such document). Requests
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for such copies should be directed to: Citizens Community Bancorp, Inc., 650
East Elkcam Circle, Marco Island, Florida 34145, Attention: Stephen McLaughlin,
Vice President-Shareholder Relations (941) 642-8088.
[Florida map with Citizen Bank's locations in Marco Island and
Naples, Florida highlighted]
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSIT ACCOUNTS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements, including the Notes thereto,
appearing elsewhere or incorporated by reference in this Prospectus. All per
share amounts have been adjusted to reflect the December 15, 1997, two for one
stock split.
The Company
General. Citizens Community Bancorp, Inc. ("CCBI") is a one-bank holding company
organized under the laws of the State of Florida and headquartered in Marco
Island, Florida. CCBI operates primarily through its wholly-owned banking
subsidiary, Citizens Community Bank of Florida ("Citizens Bank"), a
Florida-chartered commercial bank. CCBI's non-bank subsidiary is Citizens
Financial Corp. ("Citizens Financial") which is inactive. CCBI, Citizens Bank
and Citizens Financial are collectively referred to as the "Company". The
Company operates from two full-service banking offices, the main office in Marco
Island, Florida, and the East Tamiami Trail Branch Office in Naples, Florida.
The Company's primary business is attracting deposits from the general public
and using those deposits, together with borrowing and other funds, to originate
loans and purchase investments. Citizens Bank is the only independent community
bank headquartered in Marco Island.
The Company operates a traditional community banking business through
strategically located banking facilities and a friendly, professional staff that
is committed to developing long-term relationships with customers by offering
personalized, quality service. The Company offers a broad range of retail and
commercial banking services, including various types of deposit accounts and
loans for consumers and businesses. As part of its community banking approach,
the Company encourages its officers to actively participate in community
organizations.
The Company actively engages in mortgage banking which includes the
origination and subsequent sale of residential mortgage loans. During 1997, the
Company originated $27.0 million and sold $4.7 million of residential mortgage
loans. This activity has provided and is expected to continue to provide
significant non-interest income to the Company.
The Company continues to increase its commercial and consumer lending
activities to further diversify its loan portfolio. As of December 31, 1997, the
Company's loan portfolio totaled $26.7 million, of which 27% consisted of
residential mortgage loans, 35% consisted of commercial real estate loans, 29%
consisted of commercial loans, and 9% consisted of consumer loans.
The Company's primary service area is Marco Island and Naples, Florida
(the "Primary Service Area") which have populations of approximately 13,000
people and 100,000 people, respectively. The major industries in the primary
service area are tourism, retail trade, insurance and real estate. Marco Island
and Naples are located in Collier County, which is the second largest County per
square mile in Florida. See "BUSINESS - Primary Geographic Market".
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As of December 31, 1997, the end of the first full year of operation,
the Company had total assets of $44.4 million, total deposits of $36.9 million
and total stockholders' equity of $6.8 million. The Company reported
consolidated net earnings of $110,000 or $.07 per basic and diluted share for
the year ended December 31, 1997.
Business Strategy. The Company's goal is to establish itself as the leading
community banking company and to expand its presence in Southwest Florida
through consistent growth and a prudent operating strategy. As part of these
strategies, the Company is continuing to focus on:
X Growing internally and externally
X Developing commercial lending relationships
X Emphasizing mortgage banking activities
X Maintaining high credit quality
Risk Factors
Prospective investors should consider the information discussed under "RISK
FACTORS" beginning on page 9 herein.
Use of Proceeds
To enhance its capital levels to support future growth, expansion of the Marco
Island facility, expansion in Southwest Florida market through acquisition of
small financial institutions existing or de novo branch facilities, and for
general corporate purposes. See "USE OF PROCEEDS".
Dividends
The Company has not paid a dividend (cash or stock) since its inception. The
Company expects that its earnings will support growth and expansion into new
business opportunities. The Company does not expect to pay a cash dividend in
the foreseeable future. See "DIVIDENDS ON COMMON STOCK".
The Offering
Common Stock Offered by the Company. The Company is offering a minimum of
300,000 shares of Common Stock ("Minimum Offering") and a maximum of 1,000,000
shares of Common Stock ("Maximum Offering").
Common Stock Outstanding Immediately After the Offering. As of December 31,
1997, there were 1,571,624 shares of Common Stock outstanding. Had the Offering
closed on that date, at the Minimum Offering and the Maximum Offering, there
would be 1,871,624 shares and 2,571,624 shares of Common Stock outstanding,
respectively, excluding the 642,775 shares which are covered by Warrants, which
as of December 31, 1997 had not been exercised.
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Initial Offering. Depositors of Citizens Bank (defined herein as existing
Depositors that are Florida residents and have a demand account with Citizens
Bank with a minimum balance of $1,000, as of the Record Date) and shareholders
(as of the Record Date) and the Related Party of a Depositor and shareholder
(defined herein as individually or together with associates or persons acting in
connection with such persons) are being provided, on a priority basis, the right
to purchase, at $7.50 per share, up to 5,000 shares during the first 75 days
following the date of this Prospectus, the "Initial Offering Period".
Depositors, shareholders, and their Related Parties will be permitted to
purchase their respective limits provided the aggregate number of shares owned
at the conclusion of the Offering does not result in the individual or Related
Party's beneficial ownership exceeding 9.9%. See "Purchase Limitation" and "RISK
FACTORS - Voting Control".
Community Offering. Immediately following the Initial Offering Period, the
Company will offer shares not subscribed for in the Initial Offering to the
general public, at $7.50 per share, with a purchase limit of a minimum of 100
shares and a 15,000 shares-Related Party maximum. Individuals who purchase
shares in the Initial Offering will be permitted to subscribe for shares in the
Community Offering up to a maximum of 15,000 shares in the aggregate. Shares
purchased by Depositors and shareholders in the Community Offering will not be
on a priority basis. See "Purchase Limitation".
Officers and Directors Purchase Exception. Each officer and director of the
Company and their Related Party, as of the Record Date, will be permitted to
purchase up to 50,000 shares during the Initial Offering, or in the Community
Offering. Purchases made in the Community Offering will not be on a priority
basis.
Conditions of the Offering. The Offering is being made on a best efforts basis
and will expire 12 months from the date of the Prospectus, unless terminated
beforehand at the sole discretion of the Board of Directors. Funds received by
the Company during the Initial Offering Period will be deposited with the Escrow
Agent. Funds so deposited may be released to the Company only in accordance with
the terms of the Escrow Agreement between the Company and the Escrow Agent. The
Offering will be terminated by the Company if, by 5:00 p.m., Local Time, on
______________, 1998, subscriptions for a minimum of 300,000 shares have not
been received and deposited with the Escrow Agent, or the Company has previously
canceled the Offering prior to withdrawing funds from the Escrow Account.
Subscription Price. The "Subscription Price" in the Offering is $7.50 per share.
The Common Stock is not publicly traded. The Board of Directors determined the
Subscription Price per share after considering, among other criteria, the
Company's assets, book value and the last three private trades reported to the
Company.
Expiration Date. The Initial Offering will expire at 5:00 p.m., Local Time, on
________, 1998. The Minimum Offering will expire at 5:00 p.m., Local Time, on
_________, 1998. The Community Offering will expire at 5:00 p.m., Local Time, on
__________, 1999.
Procedure for Subscribing for Common Stock. Depositors and shareholders,
officers and directors, as well as other persons who desire to participate in
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the Initial Offering or the Community Offering, must properly complete the Order
Form which accompanies this Prospectus. The Order Form must be forwarded, with
full payment of the aggregate Subscription Price, to the Escrow Agent on or
prior to the respective Expiration Dates. If the mail is used to forward Order
Forms, it is recommended that insured, registered mail, return receipt
requested, be used. See "THE OFFERING - Issuance of Common Stock".
Subscriptions for the Common Stock which are accepted by the Escrow Agent (The
Independent Banks' Bank of Florida) from Depositors, shareholders, officers and
directors in the Initial Offering or from persons participating in the Community
Offering, may not be revoked. See "THE OFFERING - Procedure for Subscribing for
Common Stock".
Procedure for Purchases by Foreign Depositors and Shareholders. Order Forms will
not be mailed to Depositors or shareholders whose addresses are outside the
United States or who have an APO or FPO address, but will be held by the Escrow
Agent for their account. In order to purchase shares in the Initial Offering,
such Depositors or shareholder must notify the Escrow Agent and take all other
steps necessary to affect the purchase of the shares subscribed for on or prior
to the Initial Offering Expiration Date. See "THE OFFERING - Foreign and Certain
Other Shareholders".
Blue Sky Considerations. The securities in this Offering will be registered in
the following states: Colorado, Florida, Maine, Iowa, Illinois, Indiana,
Kentucky, Maryland, Michigan, North Carolina, Nevada, New York, Ohio,
Pennsylvania, Wisconsin and West Virginia. The Company, however, reserves the
right to increase the maximum number of shares to be offered in any state, to
the extent that such increase in the Offering is permitted by the securities
laws and regulations of any such states.
The securities in this Offering will not be registered in the following states:
Connecticut, Georgia, Massachusetts, Missouri, New Hampshire, New Jersey, South
Carolina, Tennessee, Texas, Virginia and Washington. In these states, the
Offering will be limited solely to existing shareholders of the Company pursuant
to available exemptions from registration provided under the Blue Sky Laws of
those states.
Persons Holding Shares of Common Stock, or Wishing to Exercise Subscription
Rights Through Nominees. Subscription rights of existing Depositors and
shareholders are non-transferable. Shareholders holding shares of Common Stock
through a broker, dealer, commercial bank, trust company or other nominee, as
well as persons holding certificates of Common Stock personally who would prefer
to have such entities effect transactions relating to the subscription rights on
their behalf, should contact the appropriate institution or nominee and request
it to effect the transactions for them. See "THE OFFERING - Procedure for
Subscribing for Common Stock".
Issuance of Common Stock. Provided that all conditions necessary to consummate
the Offering are satisfied, including the sale in the Offering of the minimum
number of shares of Common Stock, certificates representing shares of Common
Stock purchased pursuant to the Offering will be delivered to purchasers as soon
as practical after the Expiration Dates of the Minimum Offering and the
Community Offering and after all prorations and adjustments contemplated by the
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Initial Offering and Community Offering have been effected. No fractional shares
will be issued in the Offering. See "THE OFFERING - Issuance of Common Stock".
Purchase Limitation. The Company will not be required to issue shares of Common
Stock pursuant to the Offering to any person who, in the opinion of the Company,
would be required to obtain prior clearance or approval from any state or
federal regulatory authority to own or control such shares. The minimum number
of shares of Common Stock any person may purchase in the Offering is 100 shares
and the maximum amount any person may purchase individually or in the aggregate
(except for officers, directors who with their Related Parties may each in the
aggregate, purchase up to 50,000 shares) in the Initial Offering is 5,000 shares
and 15,000 shares in the Community Offering; provided, no person shall be
allowed to purchase (individually, or with their Related Party) shares of Common
Stock in the Offering which when aggregated with current holdings would exceed
9.9% of the total number of shares outstanding at the conclusion of the
Offering. See "RISK FACTORS - Voting Control."
Right to Amend or Terminate the Offering. CCBI expressly reserves the right to
amend the terms and conditions of the Offering, whether the terms and conditions
are more or less favorable to Depositors, shareholders and other participants.
In the event of any material change to the terms of the Offering, such as a
change in the Minimum Offering the Subscription Price or an extension beyond
________, 1999, which changes would affect the investment decision of
subscribers, CCBI will file a post-effective amendment to its Registration
Statement, of which this Prospectus is a part, and re-solicit subscribers
through a Supplemental Prospectus to the extent required by the Commission.
Escrow Agent. The Independent Bankers' Bank of Florida, 109 East Church Street,
Orlando, Florida 32801 (the "Escrow Agent").
Transfer Agent and Registrar. Prior to the Offering, the Company served as
transfer agent for the Common Stock. The Company has engaged Registrar and
Transfer Company, Cranford, New Jersey, to handle stock transfers, stock record
keeping, and mailing of all proxy materials. See "THE OFFERING - Transfer Agent
and Registrar".
Intentions of Executive Officers and Directors. The executive officers and
directors of the Company have preliminarily indicated that collectively they
intend to purchase approximately 100,000 shares of Common Stock in the Offering.
See - "BENEFICIAL OWNERSHIP OF COMMON STOCK".
Information on the Offering. If you have questions concerning the Offering,
contact the Stock Sales Center at 1-800-895-0955, Voice Mail Box Number 275.
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SUMMARY OF FINANCIAL DATA
At December 31,
--------------------
1997 1996
---- ----
(In thousands except
per share data)
Selected Balance Sheet Data:
Total assets $ 44,422 $ 25,028
Cash and cash equivalents 12,211 8,042
Securities 2,499 2,240
Loans, net 26,420 12,116
Deposit accounts 36,938 17,885
Stockholders' equity 6,771 5,964
Selected Operating Data:
Total interest income $ 2,523 $ 740
Total interest expense 1,208 283
Net interest income 1,315 457
Non-interest income after
provision for loan losses 1,162 312
Non-interest income 273 70
Non-interest expenses 1,260 915
Earning (loss) before income taxes (benefit) 175 (533)
Income taxes (benefit) 65 (191)
Net earnings (loss) $ 110 $ (342)
Per Share Data(1):
Basic earnings (loss) per share $ .07 $ (.26)
======== ========
Diluted earnings (loss) per share .07 (.26)
-------- --------
Book value per share(2) $ 4.31 $ 4.22
======== ========
Performance Ratios:
Return on average assets (R.O.A.) .30% (2.71)%
Return on average equity (R.O.E.) 1.72% (10.35)%
Interest-rate spread during the period 4.02% 2.33 %
Non-interest expense to average assets 3.45% 7.24 %
Other Ratios and Data:
Average equity to average assets 17.47% 26.16%
Allowance for credit losses as a
percentage of total loans outstanding 1.12% 1.18%
Nonperforming loans and foreclosed
real estate as a percentage of total assets *(3) *(3)
Total number of full-service banking offices 2 1
Capital Adequacy Ratios(4):
Leverage capital ratio 10.67% 19.46%
Total risk-based capital ratio 17.67% 30.80%
Stockholders' equity to total assets 15.24% 23.83%
(1) Consolidated per share data has been presented to give retroactive
effect to the two for one stock split paid, effective December 15,
1997.
(2) The book value per share as of December 31, 1997, would have been $4.41
assuming the exercise of stock options and Warrants outstanding on that
date.
(3) The Company had no nonperforming loans or foreclosed real estate for
the periods indicated.
(4) Capital ratios are computed using the year-end regulatory capital of
Citizens Bank. See "CAPITAL RATIOS" for capital ratios relating to the
Company.
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RISK FACTORS
Before purchasing the Common Stock offered hereby, prospective
investors should consider carefully the following factors, in addition to other
information contained in this Prospectus.
Interest Rate Risk
CCBI's earnings depend, to a large extent, upon the level of Citizens
Bank's net interest income which is primarily influenced by the relationship
between its cost of funds (deposits and borrowings) and the yield on its
interest-earning assets (loans and investments). This relationship, known as the
net interest margin, is subject to fluctuation and is affected by regulatory,
economic and competitive factors which influence the level of interest rates,
the volume, rate and mix on interest-earning assets and interest-bearing
liabilities, and the level of nonperforming assets. As part of its interest rate
risk management strategy, management seeks to reduce its exposure to interest
rate changes by matching the maturity and repricing horizons of interest-earning
assets, and interest-bearing liabilities.
As of December 31, 1997, total interest-earning assets maturing or
repricing within one year were less than total interest-bearing liabilities
maturing or repricing in the same period by $8.3 million, representing a
cumulative one-year interest rate sensitivity gap as a percentage of total
interest-earning assets of negative 18.6%. As a result, the yield on the
Company's interest-earning assets should adjust to changes in market interest
rates at a slower rate than the cost of the Company's interest-bearing
liabilities. Consequently, the Company's net interest income could be adversely
affected during periods of rising interest rates. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Asset/Liability
Management".
Credit Risk
In originating loans, there is a substantial likelihood that credit
losses will occur. This risk of loss varies with, among other things, general
economic conditions, the type of loan made, the creditworthiness and debt
servicing capacity of the borrower over the term of the loan and, in the case of
a collateralized loan, the value and marketability of the collateral securing
the loan. Management maintains an allowance for loan losses based on, among
other things, historical loan loss experience, known inherent risks in the loan
portfolio, adverse situations that may affect the borrower's ability to repay,
the estimated value of any underlying collateral and an evaluation of current
economic conditions. Additional provision for loan losses may be required should
economic or other conditions change substantially in the future.
As of December 31, 1997, the Company's allowance for loan losses was
$298,000, which represented 1.12% of net loans. Approximately 27% of the loan
portfolio was comprised of permanent and construction-permanent mortgage loans
secured by residential properties and, historically, the Company has not
experienced a loss. As of December 31, 1997, there were no nonperforming loans
in the portfolio. The Company actively manages its nonperforming loans in an
effort to minimize credit losses and monitors its asset quality to maintain an
9
<PAGE>
adequate allowance for loan losses. Although management believes that its
allowance for loan losses is adequate, there can be no assurance that the
allowance will prove sufficient to cover future loan losses. Material additions
to the Company's allowance for loan losses would have a material adverse effect
on the Company's results of operations and financial condition. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Allowance for Loan Losses".
Growth by Internal Expansion and Acquisitions
The Company's strategy to expand internally by establishing new branch
offices is dependent on its ability to identify advantageous branch office
locations and generate new deposits and loans from those locations that will
create an acceptable level of net income for the Company. At the same time, the
Company's strategy to grow externally through selective acquisitions of the
financial institutions or branches of such institutions is dependent on
successfully identifying, acquiring and integrating such institutions or
branches. There can be no assurance the Company will be successful in
implementing its internal growth strategy or in identifying attractive
acquisition candidates, acquiring such candidates on favorable terms or
successfully integrating any acquired institutions or branches into the Company,
See "BUSINESS - Competition".
Competition
The banking and financial services industry is highly competitive. In
its primary service area, the Company competes with other commercial banks,
savings and loan associations, credit unions, finance companies, mutual funds,
insurance companies and brokerage and investment banking firms operating locally
and elsewhere. Many of these competitors have substantially greater resources
and lending limits than the Company and may offer certain services that the
Company does not or cannot provide. The profitability of the Company depends
upon its continued ability to successfully compete in its market areas. See
"BUSINESS - Competition".
Local Economic Conditions
The success of the Company is dependent, to a certain extent, upon the
general economic conditions in the geographic market served by the Company.
Although the Company expects that economic conditions will continue to be
favorable in Collier County, no assurance can be given that these economic
conditions will continue. Adverse changes in economic conditions in the
Company's geographic market would likely impair its ability to collect loans and
could otherwise have a material adverse effect on the results of operations and
financial condition of the Company. An example of potential unfavorable changes
in economic conditions which could affect the Company's geographic market
includes adverse weather conditions resulting from natural causes, such as a
hurricane.
Supervision and Regulation
Bank holding companies and banks operate in a highly regulated
environment and are subject to supervision and examination by several federal
10
<PAGE>
and state regulatory agencies. CCBI is subject to the Bank Holding Company Act
of 1956 ("BHCA") and to regulation and supervision by the Board of Governors of
the Federal Reserve System ("Federal Reserve"). Citizens Bank is also subject to
the regulation and supervision of the FDIC and the Florida Department of Banking
and Finance ("Florida Department"). Federal and state laws and regulations
govern matters ranging from deposit insurance premiums to the regulation of
certain debt obligations, changes in control of bank holding companies, as well
as the maintenance of adequate capital for the general business operations and
financial condition of Citizens Bank, including permissible types, amounts and
terms of loans and investments, the amount of reserves against deposits,
restrictions on dividends, establishment of branch offices, and the maximum rate
of interest that may be charged by law. The Federal Reserve also possesses cease
and desist powers over bank holding companies to prevent or remedy unsafe or
unsound practices or violations of law. These and other restrictions limit the
manner by which the Company may conduct its business and obtain financing.
Furthermore, the commercial banking business is affected not only by general
economic conditions, but also by the monetary policies of the Federal Reserve.
These monetary policies have had, and are expected to continue to have,
significant effects on the operating results of commercial banks. Changes in
monetary or legislative policies may affect the ability of Citizens Bank to
attract deposits and make loans, and changes in applicable statutes and
regulations could, under certain circumstances, adversely affect the Company.
Anti-Takeover Provisions
The Company's Amended and Restated Articles of Incorporation
("Articles") contain provisions requiring super-majority shareholder approval to
effect certain extraordinary corporate transactions which are not approved by
the Board of Directors. The effect of these provisions is to make it more
difficult to effect a merger, sale of control or similar transaction involving
the Company even though a majority of the Company's shareholders may vote in
favor of such a transaction. In addition, the Company's Articles provide for
classes of Directors, whereby one-third of the members of the Board of Directors
shall be elected each year and each Director of the Company will serve for a
term of three years. Finally, the Company's Articles provide that Florida's
Control-Share Acquisition Statute shall apply to acquisitions of control shares,
as defined therein, of the Company's Common Stock. The effect of these
provisions is to make it more difficult to effect a hostile change in control of
the Company through the acquisition of a large block of the Company's Common
Stock. See "DESCRIPTION OF COMMON STOCK".
Absence of Shareholder Preemptive Rights
No holders of the Common Stock of the Company have preemptive rights
with respect to the issuance of shares of any class of stock. The total number
of shares of all classes of capital stock which the Company has the authority to
issue is 10,000,000 shares, consisting of 2,000,000 shares of Preferred Stock,
par value $0.01 per share and 8,000,000 shares of Common Stock, par value $0.01
per share. Each share of Common Stock is entitled to one vote per share in all
matters requiring a vote of shareholders. The Board of Directors of the Company
could from time to time determine to issue additional shares of the authorized
Preferred Stock or Common Stock of the Company, in addition to the shares
offered hereby and in such event the ownership interest of the subscribers in
this Offering may be diluted.
11
<PAGE>
Voting Control
As of December 31, 1997, Richard Storm, Jr., together with his wife,
beneficially owned approximately 26.01% of the Company's Common Stock (based
upon 1,730,354 shares being issued and outstanding in the event Mr. Storm
exercised his Warrants for 158,730 shares) and will beneficially own
approximately 24.04% and 17.05% of the issued and outstanding Common Stock after
the Minimum Offering and the Maximum Offering, if they choose not purchase
shares in the Offering. Mr. Storm is not subject to the aggregate 9.9% Purchase
Limitation since his current beneficial ownership exceeds this amount. Mr. Storm
received regulatory approval to own in excess of 25.0% of the Company's Common
Stock as part of the original stock offering. Mr. Storm and his family comprise
the single largest voting block of the Common Stock and after this Offering, it
is anticipated that they will continue to have a significant influence on the
election of members of the Board of Directors and other stockholder matters. See
"BENEFICIAL OWNERSHIP OF COMMON STOCK."
Dilutive Effect of Purchase Warrants and Stock Options
In connection with the company's initial public offering, Purchase
Warrants were issued which when adjusted for the two for one stock split and
fully exercised would result in an additional 670,000 shares being issued at
$4.50 per share (each Warrant entitles the holder to purchase 1/2 share of
Common Stock). As of December 31, 1997, there were 1,285,550 Purchase Warrants
(representing 642,775 shares authorized to be issued at $4.50 per share) that
had not been exercised.
Stock options have been granted periodically to officers and employees
of the Company at exercise prices equal to fair market value at the date of
grant. As of December 31, 1997, there were stock options to purchase 155,400
shares of Common Stock outstanding (at a weighted average exercise price of
$5.05 per share). The Board of Directors has approved increasing the amount of
shares covered under the 1996 Stock Option Plan by 75,000. The increase in stock
option shares is subject to shareholder approval at the 1998 Annual Meeting of
Shareholders. The exercise of such options would not have a dilutive effect on
the Company's book value per share. See "SELECTED CONSOLIDATED FINANCIAL DATA".
Impact on Earnings Per Share
The issuance of up to 1,000,000 shares offered hereby may adversely
affect the Company's earnings per share until such time as the net proceeds of
this Offering are fully utilized to generate additional assets and deposits
through both internal and external means. See "Growth by Internal Expansion and
Acquisition" and "USE OF PROCEEDS".
Limited Trading Market
The price of the Company's Common Stock is currently quoted on the
National Quotation Bureau System Pink Sheets under the symbol "CCBI". Prior to
this Offering, there has been only limited trading activity. Although the
Company expects that an active trading market will develop, there can be no
assurance that an active trading market will develop at the completion of this
12
<PAGE>
Offering or that such a market, if developed, will continue. It is the Company's
intent to list the Common Stock on the Nasdaq - SmallCap Market in the fourth
quarter of 1998 depending on market conditions and assuming the Company meets
the Nasdaq SmallCap listing requirements. See "THE OFFERING -- Limited Trading
Market".
Shares Eligible for Future Sale
Sales of Common Stock in the public market following this Offering
could adversely affect the market price of the Common Stock. Following this
Offering, approximately 1,061,554 shares of Common Stock held by current
shareholders, as well as the 1,000,000 maximum shares offered hereby, will be
eligible for immediate sale without restriction in the public market. The
executive officers and directors of CCBI, and certain officers of Citizens Bank
own the remaining 510,070 shares of Common Stock in the aggregate. Such shares
are subject to the volume and other limitations of Rule 144 adopted under the
Securities Act. See "SHARES ELIGIBLE FOR FUTURE SALE".
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock
offered hereby will be approximately $2,150,000 at the Minimum Offering, net of
estimated Offering expenses, and $7,400,000 at the Maximum Offering, net of
estimated Offering expenses. The net proceeds to be raised in the Offering will
depend upon the number of shares of Common Stock sold in the Offering and the
actual amount of expenses incurred in the Offering, which may differ from the
estimates herein.
The Company intends to use the net proceeds to support future growth,
including the expansion of the Company's main office location, and for general
corporate purposes. Future growth is expected to occur both internally by
establishing new branch offices and externally through selective acquisitions of
other financial institutions or branch offices from such other institutions,
primarily in the Southwest Florida Market of Collier, Lee and Charlotte
Counties. The Company currently has no specific plans for, and has not entered
into any agreement or understanding concerning, any such acquisitions. Pending
the application of proceeds in the manner set forth above, the net proceeds will
initially be invested by the Company in short-term, interest-bearing securities.
13
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1997, and as adjusted to give effect to the sale of a
minimum of 300,000 shares and a maximum of 1,000,000 shares of Common Stock
offered hereby, at $7.50 per share, net estimated offering expenses.
<TABLE>
<CAPTION>
As Adjusted As Adjusted
for Minimum for Maximum
Actual Offering Offering
------ -------- --------
(In thousands)
<S> <C> <C> <C>
Deposits $ 36,938 $ 36,938 $ 36,938
Other borrowings -- -- --
----------- ----------- -----------
Total deposits and borrowed funds $ 36,938 $ 36,938 $ 36,938
=========== =========== ===========
Stockholders' Equity:
Common Stock, $0.01 par 8,000,000
shares authorized, 1,571,624 issued
and outstanding (1,871,624 shares at
the Minimum Offering and 2,571,624
shares at the Maximum Offering) $ 15 $ 19 $ 26
Additional paid-in capital 7,011 9,157 14,400
Accumulated Deficit (255) (255) (255)
----------- ----------- -----------
Total stockholders' equity $ 6,771 $ 8,921 $ 14,171
=========== =========== ===========
</TABLE>
- -----------
(1) Amount includes shares issued for one stock split.
(2) Excludes 155,400 shares of Common Stock issuable pursuant to
outstanding stock options at an average exercise price of $5.05 per
share.
DETERMINATION OF SUBSCRIPTION PRICE
The Common Stock of the Company is not publicly traded. The book value
of the Company at December 31, 1997, was $4.31 per share. The $7.50 Subscription
Price per share in the Offering was set by the Board of Directors after
considering the Company's book value, assets, and the last three trades of the
Common Stock, recent common stock offerings for financial institutions, and the
demand for the Company's Common Stock. The Subscription Price is not, however,
necessarily reflective of the value of the Common Stock in that no independent
appraisal was made to determine the value of the Common Stock.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data for
the Company for each of the two years ended December 31, 1997 and December 31,
1996. The data should be read in conjunction with the Company's consolidated
financial statements, including the related notes, included elsewhere herein.
14
<PAGE>
This data should be read in conjunction with the Financial Statements and notes
thereto included in this Prospectus and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
At December 31,
--------------------
1997 1996
---- ----
(In thousands except
per share data)
Selected Balance Sheet Data:
Total assets $ 44,422 $ 25,028
Cash and cash equivalents 12,211 8,042
Securities 2,499 2,240
Loans, net 26,420 12,116
Deposit accounts 36,938 17,885
Stockholders' equity 6,771 5,964
Selected Operating Data:
Total interest income $ 2,523 $ 740
Total interest expense 1,208 283
Net interest income 1,315 457
Net interest income after
provision for loan losses 1,162 312
Non-interest income 273 70
Non-interest expenses 1,260 915
Earnings (loss) before
income taxes (benefit) 175 (533)
Income taxes (benefit) 65 (191)
Net earnings (loss) 110 (342)
Per Share Data(1):
Basic earnings (loss) per share $ .07 $ (.26)
======== ========
Diluted earnings (loss) per share .07 (.26)
-------- --------
Book value per share(2) $ 4.31 $ 4.22
======== ========
Performance Ratios:
Return on average assets (R.O.A.) .30% (2.71)%
Return on average equity (R.O.E.) 1.72% (10.35)%
Interest-rate spread during the period 4.02% 2.33 %
Non-interest expense to average assets 3.45% 7.24 %
Other Ratios and Data:
Average equity to average assets 17.47% 26.16%
Allowance for credit losses as a
percentage of total loans outstanding 1.12% 1.18%
Nonperforming loans and foreclosed
real estate as a percentage of
total assets *(3) *(3)
Total number of full-service banking offices 2 1
Capital Adequacy Ratios(4):
Leverage capital ratio 10.67% 19.46%
Total risk-based capital ratio 17.67% 30.80%
Stockholders' equity to total assets 15.24% 23.83%
(1) Consolidated per share data has been presented to give retroactive
effect to the two for one stock split paid, effective December 15,
1997.
(2) The book value per share as of December 31, 1997, would have been $4.41
assuming the exercise of stock options and Warrants outstanding on that
date.
(3) The Company had no nonperforming loans or foreclosed real estate for
the periods indicated.
(4) Capital ratios are computed using the year-end regulatory capital of
Citizens Bank. See "CAPITAL RATIOS" for capital ratios relating to the
Company.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
CCBI was incorporated on May 24, 1995. CCBI owns 100% of the
outstanding common stock of Citizens Bank and Citizens Financial Corp., a
mortgage brokerage company which was incorporated on March 27, 1997. Citizens
Financial is currently inactive. CCBI was organized simultaneously with Citizens
Bank and its primary business is the ownership and operation of Citizens Bank
and Citizens Financial. Citizens Bank is a Florida state-chartered commercial
bank and its deposits are insured by the FDIC. Citizens Bank opened for business
on March 8, 1996, and provides community banking services to businesses and
individuals in Marco Island, Naples, and greater Collier County, Florida.
Liquidity and Capital Resources
A state-chartered commercial bank is required under Florida Law and
FDIC regulations to maintain a liquidity reserve of at least 15% of its total
transaction accounts and 8% of its total non- transaction accounts subject to
certain restrictions. The reserve may consist of cash-on-hand, demand deposits
due from correspondent banks, and other investments and short-term marketable
securities.
The Company's primary source of funds during the year ended December
31, 1997, was from net deposit inflows of $19.1 million which were used
primarily to originate loans. At December 31, 1997, the Company had outstanding
commitments to originate loans totaling $1.0 million and commitments to
borrowers for available lines of credit totaling $5.1 million. At December 31,
1997, the Bank exceeded its regulatory liquidity requirements.
Year 2000 Compliance
Management has an ongoing program designed to ensure that its
operational and financial systems will not be adversely affected by year 2000
software failures, due to processing errors arising from calculations using the
year 2000 date. Based on current estimates, the Company expects to incur between
$25,000 and $30,000 over the next three years on its program to redevelop,
replace, or repair its computer applications to make them "year 2000 compliant."
While management believes it is doing everything technologically possible to
assure year 2000 compliance, it is to some extent dependent upon vendor
cooperation. Management is requiring its computer system and software vendors to
represent that the products provided are, or will be, year 2000 compliant, and
has planned a program of testing for compliance. It is recognized that any year
2000 compliance failures could result in additional expense to the Company.
16
<PAGE>
Credit Risk
The Company's primary business is making commercial, business,
consumer, and real estate loans. That activity entails potential loan losses,
the magnitude of which depend on a variety of economic factors affecting
borrowers which are beyond the control of the Company. While underwriting
guidelines and credit review procedures have been instituted to protect the
Company from avoidable credit losses, some losses will inevitably occur. At
December 31, 1996 or 1997, the Company had no nonperforming assets, no loans
delinquent 90 days or more, and has had no charge-off experience.
The following table presents information regarding the Company's total
allowance for losses as well as the allocation of such amounts to the various
categories of loans (dollars in thousands):
At December 31,
---------------
1997 1996
------ -----
Loans Loans
to to
Total Total
Amount Loans Amount Loans
------ ----- ------ -----
Commercial real estate loans $ 94 35% $ 62 31%
Residential real estate loans 42 27 22 36
Commercial loans 117 29 55 31
Consumer loans 45 9 6 2
---- ---- ---- ----
Total allowance for loans losses $298 100% $145 100%
---- ==== ==== ====
Allowance for credit losses as a
percentage of the total loans
outstanding 1.12% 1.18%
==== ====
Loan Portfolio Composition
Commercial real estate loans and land loans comprise the largest group
of loans in the Company's portfolio amounting to $9.4 million, or 35% of the
total loan portfolio as of December 31, 1997. Commercial real estate loans
consist of $8.6 million of loans secured by other non-residential property and
$800,000 of loans secured by undeveloped land.
Residential real estate loans comprise the second largest group of
loans in the Company's loan portfolio, amounting to $7.3 million or 27% of the
total loan portfolio as of December 31, 1997, of which approximately 98% are
first mortgage loans. As of December 31, 1997, consumer loans and savings
account loans, amounted to $2.3 million or 9% of the total loan portfolio.
17
<PAGE>
The following table sets forth the composition of the Company's loan
portfolio by type at the dates indicated:
At December 31,
---------------
1997 1996
------ -----
% %
Amount of Total Amount of Total
------ -------- ------ --------
(In thousands)
Commercial real estate $ 9,423 35% $ 3,758 31%
Residential real estate 7,261 27 4,384 36
Commercial loans 7,710 29 3,815 31
Consumer loans 2,261 9 305 2
-------- -------- -------- --------
26,655 100% 12,262 100%
========= =========
Add (Subtract):
Deferred costs (fees) net 63 (1)
Allowance for credit
losses (298) (145)
-------- --------
Loan, net $ 26,420 $ 12,116
======== ========
Investments
The investment portfolio is comprised primarily of U.S. Treasury and
U.S. Government agency securities and mortgage-backed securities. According to
Financial Accounting Standards No. 115, investment portfolio is categorized as
either "held to maturity", "available for sale" or "trading". Investments held
to maturity represent those investments which the Company has the positive
intent and ability to hold to maturity. These investments are carried at
amortized cost and were comprised of U.S. Treasury and U.S. Government agency
securities at December 31, 1997. Investments available for sale represent those
investments which may be sold for various reasons including changes in interest
rates and liquidity considerations. These investments are reported at fair
market value with unrealized gains and losses being reported as a separate
component of stockholders equity, net of income taxes. Trading securities are
held primarily for resale and are recorded at their fair values. Unrealized
gains or losses on trading securities are included immediately in earnings. At
December 31, 1997, the Company had no securities categorized as available for
sale or trading.
18
<PAGE>
Investment Portfolio. The following table sets forth the carrying value
of the Company's investment portfolio:
At December 31,
1997 1996
---------- ------
(In thousands)
Securities held to maturity:
U.S. Treasury securities $ 250 $ 1,743
U.S. Government agency securities 2,249 497
-------- ---------
$ 2,499 $ 2,240
======== ========
Investment Maturities. The following table sets forth, by maturity
distribution, certain information pertaining to the securities held to maturity
portfolio as follows (dollars in thousands):
<TABLE>
<CAPTION>
After One Year
One Year or Less to Five Years Total
---------------- ------------- -----
Carrying Average Carrying Average Carrying Average
Value Yield Value Yield Value Yield
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997:
U.S. Treasury securities $ 250 6.04% $ -- --% $ 250 6.04%
U.S. Government agency
securities 749 5.80 1,500 6.00 2,249 5.93
--------- -------- --------
Total $ 999 5.81% $ 1,500 6.00% $ 2,499 5.94%
========= ========= ======== ======= ======== ========
December 31, 1996:
U.S. Treasury securities 247 6.00% 1,496 5.78% 1,743 5.80%
U.S. Government agency
securities 497 5.80 -- -- 497 5.80
--------- ----------- ---------
Total $ 744 5.88% $ 1,496 5.78% $ 2,240 5.80%
========= -------- ======== ======= ======== ========
</TABLE>
Regulatory Capital Requirements
Under FDIC regulations, Citizens Bank is required to meet certain
minimum regulatory capital requirements. This is not a valuation allowance and
has not been created by charges against earnings. It represents a restriction on
stockholders' equity.
Quantitative measures established by regulation to ensure capital
adequacy require Citizens Bank to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier I capital (as defined in the regulations)
to risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined).
19
<PAGE>
The following table sets forth Citizen Bank's regulatory capital
position.
<TABLE>
<CAPTION>
Well
Actual Minimum(1) Capitalized(2)
----------------- ---------------- -----------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total capital (to Risk-Weighted Assets) $ 4,643 17.67% $ 2,102 8.00% $ 2,627 10.00%
Tier I Capital (to Risk-Weighted Assets) 4,354 16.57 1,051 4.00 1,576 6.00
Tier I Capital (to Average Assets) 4,354 10.67 1,633 4.00 2,041 5.00
As of December 31, 1996:
Total capital (to Risk-Weighted Assets) $ 3,890 30.80% $ 1,011 8.00% $ 1,264 10.00%
Tier I Capital (to Risk-Weighted Assets) 3,747 29.65 505 4.00 758 6.00
Tier I Capital (to Average Assets) 3,747 19.46 770 4.00 963 5.00
</TABLE>
(1) The minimum for adequately capitalized purposes.
(2) To be "well capitalized" under the FDIC's Prompt Corrective Action
regulations.
Market Risk
Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises primarily from interest-rate risk
inherent in its lending and deposit taking activities. To that end, management
actively monitors and manages its interest-rate risk exposure. The measurement
of market risk associated with financial instruments is meaningful only when all
related and offsetting on- and off-balance-sheet transactions are aggregated,
and the resulting net positions are identified. Disclosures about the fair value
of financial instruments, which reflect changes in market prices and rates, can
be found in Note 7 to Consolidated Financial Statements.
The Company's primarily objective is managing interest-rate risk to
minimize the adverse impact of changes in interest rates on the Company's net
interest income and capital, while adjusting the asset-liability structure to
obtain the maximum yield-cost spread on that structure. The Company relies
primarily on its asset-liability structure to control interest-rate risk.
However, a sudden and substantial increase in interest rates may adversely
impact the Company's earnings, to the extent that the interest rate borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis. The Company does not engage in trading activities.
Asset and Liability Management
As part of its asset and liability management, the Company has
emphasized establishing and implementing internal asset-liability decision
processes, as well as communications and control procedures to aid in managing
the Company's earnings. Management believes that these processes and procedures
provide the Company with better capital planning, asset mix and volume controls,
20
<PAGE>
loan-pricing guidelines, and deposit interest-rate guidelines which should
result in tighter controls and less exposure to interest-rate risk.
The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time period.
The gap ratio is computed as rate sensitive assets/rate sensitive liabilities. A
gap ratio of 1.0% represents perfect matching. A gap is considered positive when
the amount of interest-rate sensitive assets exceeds interest-rate sensitive
liabilities. A gap is considered negative when the amount of interest-rate
sensitive liabilities exceeds interest-rate sensitive assets. During a period of
rising interest rates, a negative gap would adversely affect net interest
income, while a positive gap would result in an increase in net interest income.
During a period of falling interest rates, a negative gap would result in an
increase in net interest income, while a positive gap would adversely affect net
interest income.
In order to minimize the potential for adverse effects of material and
prolonged increases in interest rates on the results of operations, management
continues to monitor asset and liability management policies to better match the
maturities and repricing terms of its interest-earning assets and
interest-bearing liabilities. Such policies have consisted primarily of: (i)
emphasizing the origination of adjustable-rate loans; (ii) maintaining a stable
core deposit base; and (iii) maintaining a significant portion of liquid assets
(cash and short-term securities).
[Intentionally Left Blank]
21
<PAGE>
The following table sets forth certain information relating to the
Company's interest-earning asset and interest-bearing liabilities at December
31, 1997 that are estimated to mature or are scheduled to reprice within the
period shown (dollars in thousands):
<TABLE>
<CAPTION>
More More
Than More Than
Three Than Six One More
Months Months Year to Than
Three to Six to One Five Five Over Ten
Months Months Year Years Years Years Total
------ ------ ---- ----- ----- ----- -----
Mortgage and commercial loans(1):
<S> <C> <C> <C> <C> <C> <C> <C>
Variable rate $ 6,346 $ 1,069 $ 893 $ 1,904 $ 101 $ -- $ 10,313
Fixed rate 803 331 1,363 12,004 762 1,079 16,342
----------- ----------- ---------- --------- ---------- ------- --------
Total loans 7,149 1,400 2,257 13,908 863 1,079 26,655
Federal funds sold 9,057 -- -- -- -- -- 9,057
Securities(2) 500 -- 499 1,500 -- -- 2,499
----------- ------------ ---------- ---------- ------------ ------------ ---------
Total rate-sensitive assets 16,706 1,400 2,755 15,408 863 1,079 38,211
--------- --------- --------- --------- --------- -------- --------
Deposit accounts(3):
Money market deposits 1,302 -- -- -- -- -- 1,302
NOW deposits 15,462 -- -- -- -- -- 15,462
Savings deposits 839 -- -- -- -- -- 839
Certificates of deposit 3,440 2,800 5,293 4,547 102 -- 16,182
---------- ---------- ---------- --------- --------- ----------- --------
Total rate-sensitive liabilities 21,043 2,800 5,293 4,547 102 -- 33,785
---------- ---------- ---------- ---------- --------- ----------- --------
GAP repricing differences $ (4,337) $ (1,400) $ (2,538) $ 10,861 $ 761 $ 1,079 $ 4,726
========== ========= ========= ========= ========= ========= =========
Cumulative GAP $ (4,337) $ (5,737) $ (8,275) $ 2,586 $ 3,347 $ 4,426
========== ========= ========= ========== ======== =========
Cumulative GAP/total assets 9.8% 12.9% 18.6% 5.8% 7.5% 10.0%
========= ======= ======= ======== ====== =======
</TABLE>
(1) In preparing the table above, adjustable-rate loans are included in the
period in which the interest rates are next scheduled to adjust rather
than in the period in which the loans mature. Fixed-rate loans are
scheduled, including repayment, according to their maturities.
(2) Securities are scheduled through the maturity dates.
(3) Money-Market, NOW, and Savings Deposits are regarded as ready
accessible withdrawable accounts. Time deposits are scheduled through
the maturity dates.
The following table reflects the contractual principal repayments by
period of the Company's loan portfolio at December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
Residential Commercial
Years Ending Commercial Mortgage Real Estate Consumer
December 31, Loans Loans Loans Loans Total
-------------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1998 $ 2,466 $ 1,323 $ 3,013 $ 447 $ 7,249
1999 494 540 604 252 1,890
2000 1,140 1,095 1,393 221 3,849
2001-2002 1,233 482 2,207 214 4,136
2003-2004 1,481 489 1,810 255 4,035
2005 and beyond 896 3,332 396 872 5,496
---------- --------- ---------- ---------- ----------
Total $ 7,710 $ 7,261 $ 9,423 $ 2,261 $ 26,655
========= ========= ========= ========= =========
</TABLE>
22
<PAGE>
Scheduled contractual principal repayments of loans do not reflect the
actual life of such assets. The average life of loans is substantially less than
their average contractual terms due to prepayments. In addition, due-on-sale
clauses on loans generally give the Company the right to declare a conventional
loan immediately due and payable in the event, among other things, that the
borrower sells the real property subject to the mortgage and the loan is not
repaid. The average life of mortgage loans tends to increase, however, when
current mortgage loan rates are substantially higher than rates on existing
mortgage loans and, conversely, decrease when rates on existing mortgages are
substantially higher than current mortgage loan rates. Of the $19.4 million in
loans due after 1998, 71% of such loans have fixed interest rates and 29% have
adjustable interest rates.
Origination, Sale and Repayment of Loans. The Company generally
originates loans on real estate located in its primary geographical lending area
in Southwest Florida. Residential mortgage loan originations by the Company are
attributable to Depositors, other existing customers, advertising and referrals
from real estate brokers and developers. The Company's residential mortgage
loans generally are originated to ensure compliance with documentation and
underwriting standards which permit their sale to the Federal National Mortgage
Association ("Fannie Mae") and other investors in the secondary market.
The Company has, to limited extent, engaged in the sale of whole loans.
The Company utilizes the sale of fixed rates loans and ARM loans to provide
liquidity and funding sources for higher yielding loans.
The following table sets forth total loans originated, repaid and sold
during the periods indicated.
Year Ended
December 31,
----------------------------
1997 1996
------------ --------
(In thousands)
Originations:
Commercial loans $ 756 $ 3,855
Commercial real estate loans 9,426 3,797
Residential mortgage loans 13,897 4,384
Consumer loans 2,888 305
--------- --------
Total loan originated 26,967 12,341
Less:
Principal reductions 7,887 79
Loans sold 4,687 --
--------- --------
Increase in total loans $ 14,393 $ 12,262
========= ========
23
<PAGE>
Deposits and Other Sources of Funds
General. In addition to deposits, the sources of funds available for
lending and other business purposes include loan repayments, loan sales, and
securities sold under agreements to repurchase. Loan repayments are a relatively
stable source of funds, while deposit inflows and outflows are influenced
significantly by general interest rates and money market conditions. Borrowings
may be used on a short-term basis to compensate for reductions in other sources,
such as deposits at less than projected levels and are also used to fund the
origination of mortgage loans designated to be sold in the secondary markets.
Deposits. Deposits are attracted principally from the Company's primary
geographic market areas in Collier County, Florida. The Company offers a broad
selection of deposit instruments including demand deposit accounts, NOW
accounts, money market accounts, regular savings accounts, term certificate
accounts and retirement savings plans (such as IRA accounts). Certificate of
deposit rates are set to encourage longer maturities as cost and market
conditions will allow. Deposit account terms vary, with the primary differences
being the minimum balance required, the time period the funds must remain on
deposit and the interest rate.
The Company has emphasized commercial banking relationships in an
effort to increase demand deposits as a percentage of total deposits. The
Company's courier service is expected to be in operation by the end of the first
quarter of 1998. The courier service will serve the Company's business customers
in Marco Island and Naples.
Management sets the deposit interest rates weekly based on a review of
deposit flows for the previous week, a survey of rates among competitors and
other financial institutions in Florida.
[Intentionally Left Blank]
24
<PAGE>
The following table shows the distribution of, and certain other
information relating to, the Company's deposit accounts by type for the periods
indicated.
<TABLE>
<CAPTION>
December 31,
1997 1996
-------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
(Dollars in thousands)
<S> <C> <C> <C> <C>
Demand deposits $ 3,153 8.54% $ 2,366 13.23%
NOW deposits 15,462 41.86 8,311 46.47
Money-market deposits 1,302 3.52 418 2.34
Savings deposits 839 2.27 360 2.01
--------- -------- ---------- ---------
Subtotal 20,756 56.19% 11,455 64.05%
Certificate of deposits:
4.00% - 4.99% 1,101 2.98% 447 2.50%
5.00% - 5.99% 8,221 22.26 4,966 27.77
6.00% - 6.99% 6,860 18.57 1,017 5.68
--------- -------- --------- ---------
Total certificates of deposits (1) 16,182 43.81 6,430 35.95
-------- -------- --------- --------
Total deposits(2) $ 36,938 100.00% $ 17,885 100.00%
======== ======= ======== =======
</TABLE>
(1) Includes individual retirement accounts ("IRA") totaling $611,000 and
$253,000 at December 31, 1997 and 1996, all of which are in the form of
certificates of deposit.
(2) The deposit portfolio does not contain a concentration from any one
depositor or related group of Depositors.
Jumbo certificates ($100,000 and over) mature as follows (in thousands):
December 31,
---------------------
1997 1996
------ ----
Due three months or less $ 872 $ --
Due over three months to six months 411 507
Due over six months to one year 1,831 260
Due over one year 905 700
-------- --------
$ 4,019 $ 1,467
======= =======
Borrowings. At December 31, 1997, the Company had no borrowings. To
date, the Company has been able to fund its lending activities through its
deposits.
25
<PAGE>
Results of Operation
The operating results of the Company depend primarily on its net
interest income, which is the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities,
consisting primarily of deposits. Net interest income is determined by the
difference between yields earned on interest-earning assets and rates paid on
interest-bearing liabilities ("interest-rate spread") and the relative amounts
of interest-earning assets and interest-bearing liabilities. The Company's
interest-rate spread is affected by regulatory, economic, and competitive
factors that influence interest rates, loan demand, and deposit flows. In
addition, the Company's net earnings are also affected by the level of
nonperforming loans and foreclosed real estate, as well as the level of its
non-interest income, and its non-interest expenses, such as salaries and
employee benefits, occupancy and equipment costs and income taxes.
[Intentionally Left Blank]
26
<PAGE>
The following table sets forth, for the periods indicated, information
regarding: (i) the total dollar amount of interest and dividend income of the
Company from interest-earning assets and the resultant average yield; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average costs; (iii) net interest/dividend income; (iv) interest-rate
spread; and (v) net interest margin. Average balances are based on average daily
balances.
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------------------------
1996 1995
--------------------------------- ----------------------------------
Interest Interest Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 20,537 $ 1,914 9.32% $ 3,842 $ 323 8.39%
Securities 2,346 141 6.01 2,052 119 5.78
Other interest-earning assets(1) 8,516 468 5.50 5,306 298 5.62
--------- -------- -------- --------
Total interest-earning assets 31,399 2,523 8.04 11,200 740 6.61
------- --------
Non-interest earning assets 5,157 1,443
-------- --------
Total Assets $ 36,556 $ 12,643
======= =======
Interest-bearing liabilities:
Demand, money market and
NOW deposits $ 17,638 $ 517 2.93% $ 4,087 $ 148 3.62%
Savings 573 17 3.01 163 5 2.99
Certificates of deposit 11,704 664 5.67 2,296 124 5.39
Other 125 10 8.00 66 6 9.42
--------- --------- ----- ---------- ----------
Total interest-bearing
liabilities 30,040 1,208 4.02% 6,612 283 4.28%
------- --------
Non-interest bearing liabilities 128 2,724
Stockholders' equity 6,388 3,307
-------- --------
Total liabilities and
stockholders' equity $ 36,556 $ 12,643
======= =======
Net interest dividend income $ 1, 315 $ 457
======== =======
Interest-rate spread(2) 4.02% 2.33%
====== =======
Net interest margin(3) 4.20% 4.08%
====== =======
Ratio of average interest-earning
assets to average interest-bearing 1.05 1.69
======= ======
liabilities
</TABLE>
(1) Includes interest-bearing deposits and federal funds sold.
(2) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of
interest-bearing liabilities
(3) Net interest margin is net interest income divided by average
interest-earning assets.
27
<PAGE>
Rate/Volume Analysis
The following table sets forth certain information regarding changes in
interest income and interest expenses for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to: (i) changes in rate (change
in rate multiplied by prior volume); (ii) changes in volume (change in volume
multiplied by prior rate); and (iii) changes in rate-volume (change in rate
multiplied by change in volume).
<TABLE>
<CAPTION>
Year Ended December 31, 1997
vs. Year Ended December 31, 1996
Increase (Decrease) Due to
------------------------------------------
Rate/
Rate Volume Volume Total
---- ------ ------ -----
(In thousands)
<S> <C> <C> <C> <C>
Interest earning assets:
Loans $ 35 $ 1,401 $ 155 $ 1,591
Securities 5 17 -- 22
Other interest-earning assets (6) 180 (4) 170
--------- --------- --------- --------
Total 34 1,598 151 1,783
--------- -------- -------- -------
Interest-bearing liabilities:
Deposits:
Demand, money-market and NOW deposits (28) 491 (94) 369
Savings -- 12 -- 12
Certificates of deposit 7 507 26 540
Other (1) 6 (1) 4
--------- ---------- ---------- ---------
Total (22) 1,016 (69) 925
-------- -------- --------- ---------
Net change in net interest income $ 56 $ 582 $ 220 $ 858
======== ========= ======== ========
</TABLE>
Results of Operations for the Years Ended December 31, 1997 and 1996
General. Net earnings for the year ended December 31, 1997 were
$109,506 or $.07 per basic share ($.07 per diluted share) compared to a net loss
of $(342,295) or $(.26) for the year ended December 31, 1996. This improvement
in the Company's net operating results was primarily due to an increase in net
interest income partially offset by an increase in non-interest expenses.
Interest Income and Expense. Interest income increased by $1.8 million
from $740,000 for the year ended December 31, 1996 to $2.5 million for the year
ended December 31, 1997. Interest income on loans increased $1.6 million due to
an increase in the average loan portfolio balance from $3.8 million for the year
ended December 31, 1996, to $20.5 million for 1997, as well as an increase in
the weighted-average yield of 93 basis points. Interest on securities increased
$22,000 due to an increase in the average securities balance from $2.1 million
in 1996 to $2.3 million in 1997, as well as an increase in the average yield
from 5.78% in 1996, to 6.01% in 1997. Interest on other interest-earning assets
increased $170,000 primarily due to an increase from $5.3 million in average
other interest-earning assets in 1996, to $8.5 million in 1997.
Interest expense increased $925,000 in 1997 compared to 1996. Interest
expense increased due to and an increase in average deposits from $6.5 million
to $29.9 million from 1996 to 1997.
Provision for Loan Losses. The provision for loan losses was charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by Citizens Bank, industry standards, the amounts of
nonperforming loans, general economic conditions, particularly as they relate to
Company's market areas, and other factors related to the collectibility of
Company's loan portfolio. Management believes that the allowance for loan losses
of $298,000 is adequate at December 31, 1997.
Other Income. Other income increased from $70,000 in 1996 to $273,000
in 1997 primarily because of gains from the sale of loans of $68,000 in 1997,
with no corresponding amount in 1996, and increased service charges on deposit
accounts in 1997 compared to 1996.
Other Expense. Total other expense increased $345,000 for the year
ended December 31, 1997, compared to 1996, primarily due to an increase in
employee compensation and benefits of $310,000 due to additional employees. All
other operating expenses increased primarily due to the growth of the Company.
Income Taxes. The income tax provision was $66,000 (an effective rate
of 37.6%) for 1997 compared to a credit of $(191,000) (an effective rate of
[35.8%]) for 1996.
Impact of Inflation and Changing Prices
The consolidated financial statements and related data presented herein
have been prepared in accordance with Generally Accepted Accounting Principles
("GAAP"), which require the measurements of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of the assets and liabilities of the
Company are monetary in nature. As a result, interest rates have a more
significant impact on the Company's performance than the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services, since
such prices are affected by inflation to a larger extent than interest rates.
28
<PAGE>
Future Accounting Requirements
Financial Accounting Standards 130 - Reporting Comprehensive Income
establishes standards for reporting comprehensive income. The Standard defines
comprehensive income as the change in equity of an enterprise except those
resulting from stockholder transactions. All components of comprehensive income
are required to be reported in a new financial statement that is displayed with
equal prominence as existing financial statements. The Company will be required
to adopt this Standard effective January 1, 1998. As the Statement addresses
reporting and presentation issues only, there will be no impact on operating
results from the adoption of this Standard.
Financial Accounting Standards 131 - Disclosures about Segments of an
Enterprise and Related Information establishes standards for related disclosures
about products and services, geographic areas, and major customers. The Company
will be required to adopt this Standard effective January 1, 1998. As the
Standard addresses reporting and disclosure issues only, there will be no impact
on operating results from adoption of this Standard.
BUSINESS
The Company
CCBI is a one-bank holding company organized under the laws of the
State of Florida and headquartered in Marco Island, Florida. CCBI operates
primarily through its wholly-owned banking subsidiary, Citizens Bank, a
Florida-chartered commercial bank and Citizens Financial, a mortgage brokerage
company which became inactive in August 1997.
As of December 31, 1997, CCBI had total assets of $44.4 million, total
deposits of $36.9 million and total stockholders' equity of $6.8 million. CCBI
reported consolidated net earnings income of $110,000 or $.07 per basic and
diluted share for the year ended December 31, 1997.
The Bank
Citizens Bank, a Florida-chartered commercial bank, commenced its
operations on March 8, 1996. Citizens Bank has two full-service offices, its
main office in Marco Island, Florida, and its East Tamiami Trail Branch Office
in Naples, Florida. Citizens Bank's deposits are federally insured up to
applicable limits by the FDIC under the Bank Insurance Fund ("BIF").
The principal sources of funds for Citizens Bank's lending and
investing activities traditionally have been deposits, repayment of loans and
earnings from operations. Citizens Bank's primary sources of income are interest
and fees on loans, fees on transaction accounts and other activities, gains on
sales of mortgage loans in the secondary market, and interest and dividends on
mortgage-backed securities and investments. Citizens Bank's principal costs are
interest paid on deposit accounts and operating expenses.
29
<PAGE>
Citizens Bank operates a traditional community banking business through
its retail banking facilities and a friendly and professional staff that is
committed to developing long-term relationships with customers by offering
personalized, quality service. Citizens Bank offers a broad range of retail and
commercial banking services, including various types of deposit accounts and
loan products for small businesses and consumers. As part of its "community
banking" approach, Citizens Bank encourages its Officers to actively participate
in community organizations.
As of December 31, 1997, Citizens Bank had total assets of $42.4
million, total deposits of $36.9 million and total stockholders' equity of $4.4
million. Citizens Bank is the only community bank headquartered in Marco Island.
Citizens Bank is considered a "well-capitalized" financial institution under
regulations adopted by the FDIC. See "REGULATION AND SUPERVISION Prompt and
Corrective Action."
Primary Service Area
The Company is headquartered in Marco Island, Florida, which has a
population of approximately 13,000 residents in the Summer months and a seasonal
high of 30,000 residents in the Winter months. Marco Island is approximately six
miles long and four miles wide, and is located in Collier County, Florida. Marco
Island was originally developed as a retirement community, but the demographics
are changing as younger families move into the area. Tourism is the primary
industry of Marco Island, which is supported by three large resorts. There is no
heavy manufacturing on the island. Marco Island is approximately 16 miles South
of downtown Naples, and 104 miles West of Miami, Florida.
The Company's East Tamiami Trail Branch is located in the southern part
of Naples, Florida. Naples has a population of approximately 100,000 residents
and is the county seat for Collier County, which is the Company's Primary
Geographic Market. The seasonal population of Collier County, based upon
statistical information provided by the Naples Chamber of Commerce, is
approximately 200,000 residents. Collier County is the second-largest county in
Florida, with a land area of 1,994 square miles. It has more than 675 miles of
coastline and is served by the Southwest Regional Airport in Ft. Myers, the
Naples Airport, and the Marco Island Airport which serves private and chartered
flights. Collier County is one of the fastest growing areas in the State of
Florida. The primary business sectors in greater Collier County include the
service industry, retail trade industry, finance industry, insurance industry,
real estate development and sales, and the agriculture industry. Based upon the
latest statistical data, the median family income for Collier County is the
highest in the State of Florida.
The Company views its Primary Service Area and Primary Geographic
Market to be a dynamic growing market.
Competition
The Company experiences competition for attracting deposits and making
loans from other financial institutions, including larger regional bank holding
companies, commercial banks, and credit unions. Additional competition for
30
<PAGE>
deposits comes from government securities, money market funds, mutual fund and
securities brokerage firms. The primary factors in competing for deposits are
interest rates, the range of financial services offered, convenience of office
locations, and the flexibility of office hours. The primary factors in competing
for loans include interest rates, loan fees, flexible terms, and timely loan
decisions.
The Company competes for deposits by offering a variety of checking
programs geared to its potential customers. The Company responds to its
competition by developing strong ties in the local community and providing a
high quality of personal banking services to families, professionals, retirees,
and owner-operated businesses with an emphasis on flexibility and timely
responses to customer demands.
With respect to loans, since opening for business in March 1996, the
Company has placed an emphasis on originating commercial and consumer loans. The
Company has targeted small- to medium-sized businesses as its potential customer
base as management believes that large out-of-state financial institutions which
have acquired several local banks have shifted the focus of the acquired banks
away from these businesses. The Company, also originates residential loans by
offering various adjustable-rate and fixed-rate mortgage loan products.
Geographic deregulation has also had a material impact on the financial
industry. Federally-chartered savings institutions have interstate banking
authority. As for commercial banks, to date, all but three states have enacted
some form of interstate banking legislation. The most common form of interstate
banking statutes have either regional limitations or reciprocity requirements. A
growing number of states, however, now provide for unrestricted entry. Recent
legislation in Florida and on the national level have removed most of the final
barriers to interstate banking. A bank holding company is now permitted to
acquire existing banks across state lines and may consolidate its interstate
subsidiary banks into branches and merge with a bank in another state, depending
upon state laws.
Lending Activities
General. The Company's primary business is making commercial business,
real estate and consumer loans. As of December 31, 1997, the total loan
portfolio, net, totaled $26.7 million, or 60% of total assets. See "MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Loan
Portfolio Composition."
Loan Underwriting. Lending activities are subject to underwriting
standard and loan origination procedures prescribed by the Board of Directors
and management. Loan applications are obtained to determine the borrower's
ability to repay, and the more significant items on these applications are
verified through the use of credit reports, financial statements and
confirmations. The Company's lending policy for real estate loans generally
requires that collateral be appraised by an independent, outside appraiser
approved by the Board of Directors.
Loans are approved at various management levels up to and including the
Board of Directors, depending on the amount of the loan. Loan approvals are made
in accordance with a Chart of Delegated Authority approved by the Board of
31
<PAGE>
Directors. Generally, loans less than $250,000 are approve by authorized
officers or loan underwriters. Loans over $250,000 usually require approval by
the Loan Committee or Board of Directors.
General Lending Policies. The policy of the Company for real estate
loans is to have a valid mortgage lien on real estate securing a loan and to
obtain a title insurance policy which insures the validity and priority of the
lien. Borrowers must also obtain hazard insurance policies prior to closing, and
when the property is in a flood prone area, flood insurance is required. Most
real state loans also require the borrower to advance funds on a monthly basis
together with each payment of principal and interest to a mortgage escrow
account from which disbursements are made for items such as real estate taxes
and property insurance.
The Company is permitted to lend up to 100% of the appraised value of
the real property securing a mortgage loan. However, if the amount of a
conventional, residential loan (including a construction loan or a combination
construction and permanent loan) originated or refinanced exceeds 90% of the
appraised value, the bank is required by federal regulations to obtain private
mortgage insurance on that portion of the principal amount of the loan that
exceeds 80% of the appraised value of the property. The Company will originate
single-family residential mortgage loans with up to a 90% loan-to-value ratio if
the required private mortgage insurance is obtained. Loans over 95%
loan-to-value ratio are limited to special community support programs or one of
the FHA, VA, or Farmers Home Administration ("FmHA") guarantee or insurance
programs. The loan-to-value ratio on a home secured by a junior lien generally
does not exceed 85%, including the amount of the first mortgage on the
collateral. With respect to home loans granted for construction or combination
construction/permanent financing, the bank will lend up to 80% of the appraised
value of the property on an "as completed" basis. The Company generally limits
the loan-to-value ratio on multi-family residential and commercial real estate
loans to 75% of value. Consumer loan are considered to be loans to natural
persons for personal, family or household purposes, and these loans may be
unsecured, secured by personal property or secured by liens on real estate
which, when aggregated with prior liens, equals or exceeds the appraised value
of the collateral property.
The maximum amount which the Company could have loaned to one borrower
and the borrower's related entities as of December 31, 1997, was approximately
$1.1 million. See "REGULATION AND SUPERVISION - Regulation of the Bank."
The Company is permitted to originate loans secured by non-residential
or commercial real estate. As of December 31, 1997, loans secured by
non-residential or commercial real estate totaled $10.0 million.
Interest rates charged on loans are affected principally by competitive
factors, the demand for such loans and the supply of funds available for lending
purposes. These factors are, in turn, affected by general economic conditions,
monetary policies of the federal government, including the Federal Reserve
Board, legislative tax policies and government budgetary matters.
Residential Loans. The Company currently originates fixed-rate
residential mortgage loans and ARMS loans for terms of up to 30 years. As of
32
<PAGE>
December 31, 1997, $7.3 million or 27% of the Company's total loan portfolio
consisted of one-to-four family residential real state loans. As of such date,
approximately $6.8 million, or 93% of these loans were ARM loans.
The residential ARM loans currently being offered have interest rates
that are fixed for a period of one, three or five years and then after the
initial period the interest rate is adjusted annually based upon an index such
as the yield on Treasury Securities adjusted to a one-year maturity, plus a
margin. Most of the Company's ARM lending programs limit the amount of any
increase or decrease in the interest rate at each adjustment and over the life
of the loan. Typical limitations are 2% of each adjustment with a limit of 6%
over the life of the loan. The Company may offer ARM loans with different annual
and life of loan interest change limits, shorter or longer adjustment periods
and different base indices as may be appropriate to meet market demands,
portfolio needs, and the Company's interest rate risk management goals. While
the Company usually offers an initial rate on ARM loans below a fully indexed
rate, the loan is always underwritten based on the borrower's ability to pay at
the interest rate which would be in effect after adjustment of the loan. Some
ARM loans include features that allow the borrower, under special conditions, to
convert the loan to a fixed rate at the then prevailing market rates.
ARM loans reduce the risks to the Company concerning changes in
interest rates, but involve other risk because as interest rates increase, the
borrower's required payments increase thus increasing the potential for default.
Marketability of real estate is also affected by the level of interest rates.
Most of the Company's fixed rate home loans are originated for 30-year
amortization terms. Borrowers requesting a term of 15 years or less are usually
granted an interest rate slightly lower than is offered for a 30-year amortizing
loan. These loans are originated to ensure compliance with documentation and
underwriting standards which permit their sale in the secondary market to
institutional investors such as Fannie Mae. Fixed-rate home loans include a "Due
on Sale" clause which provides the bank with the contractual right to declare
the loan immediately due and payable in the event the borrower transfers
ownership of the property without the Company's consent. It is the Company's
policy to enforce "Due on Sale" provisions.
Construction Loans. The Company has and continues to offer adjustable
and fixed-rate residential construction loans to owners wishing to construct
their primary residence and to selected builders/developers to build one- to
four-family dwellings in the Company's primary geographic market and neighboring
communities. As of December 31, 1997, construction loans amounted to $2.7
million, or 10.1% of the total loan portfolio. Loans to builders/developers are
for homes that are pre-sold or are constructed on a speculative basis ("Spec
Loans"). Loans to builders for the construction of a home for which there is no
end buyer at the time of construction are considered speculative loans.
Construction loans to individuals usually are originated in connection with the
permanent loan on the property ("construction-permanent loans"). Construction
permanent loans typically provide for a construction term of six months to one
year followed by the permanent loan term of up to 30 years. Speculative builder
loans are typically for one year and provide for interest only payments during
the loan term. The financial capacity of the builder, the builder experience and
credit history of the builder, as well as, present market conditions are
reviewed when considering speculative loans. As of December 31, 1997, the
33
<PAGE>
Company had three Spec Loans for an aggregate of $528,000. All of the Spec Loans
are to the same builder and are performing in accordance with their original
terms.
Loan advances during construction are made on a percentage of
completion basis, and funds are typically disbursed in four to six draws after
an inspection is made by Company personnel and/or authorized independent
inspectors and after a written report of construction progress is received.
Construction financing is generally considered to involve a higher degree of
risk of loss than long-term financing on improved, owner-occupied real estate.
Risk of loss on a construction loan is dependent largely upon the accuracy of
the initial estimate of construction cost and of the initial estimate of the
property's value upon completion. During construction, a number of factors could
result in delays and cost overruns. If the estimate of construction costs proves
to be inaccurate, funds may be required to be advanced beyond the amount
originally committed to complete construction. If the estimate of value proves
to be high, the Company may be confronted with a project having a value which is
insufficient to assure full payment. Repayment of construction loans to builders
of single family homes usually depends upon the builder successfully negotiating
a sale for the property. Sales of homes are affected by market conditions and
the supply and demand for such products.
Consumer Loans. The Company makes various types of consumer loans,
primarily home equity loans and second mortgages. Consumer loans are originated
in order to provide a wide range of financial services to customers and to
create stronger ties to its customers and because the shorter term and normally
higher interest rates on such loans help increase the sensitivity of
interest-earning assets to changes in interest rates and maintain a profitable
spread between the Company's average loan yield and its cost of funds. The terms
of consumer loans generally range from one to five years. Underwriting standards
for consumer loans include an assessment of the applicant's repayment history on
other debts and ability to meet existing obligations and payments on the
proposed loans. Although the applicant's creditworthiness is a primary
consideration, the underwriting process also includes a comparison of the value
of the security, if any, to the proposed loan amount. Consumer loans generally
involve more credit risks than mortgage loans because of the type and nature of
the collateral or absence of collateral. Consumer lending collections are
dependent on the borrower's continuing financial stability, and are likely to be
adversely affected by job loss, divorce and illness. Furthermore, the
application of various federal and state laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans. In most cases, any repossessed collateral for a defaulted consumer
loan will not provide an adequate source of repayment of the outstanding loan
balance. Management believes that the yields earned on consumer loans are
commensurate with the credit risk associated with such loans. The Company
intends to continue to increase its investment in these types of loans. As of
December 31, 1997, consumer loans amounted to $2.3 million, or 9% of the total
loan portfolio.
Commercial Real Estate Loans. Commercial real estate loans are secured
primarily by office and retail business properties located in Florida. These
types of loans amounted to $9.4 million or 35% of the total loan portfolio as of
December 31, 1997. Commercial real estate loans may be for an amortization term
of up to 25 years, but frequently include a maturity in three to six years. The
Company generally does not offer fixed-rate commercial real estate or
multi-family loans.
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Commercial and multi-family real estate loans are originated with a
loan-to-value ratio not exceeding 75%. Loans on this type of collateral will
continue to be a part of the Company's future lending program. Commercial and
multi-family real estate loans are generally larger and involve a greater degree
of risk than residential mortgage loans. Because payments on loans secured by
commercial property depend to a large degree on results of operations and
management of the properties, repayment of such loans may be subject to a
greater extent to adverse conditions in the real estate market or the economy.
At December 31, 1997, the largest commercial real estate loan was $1.2 million
secured by commercial rental property located in Marco Island, Florida. The loan
is current. The largest multi-family real estate loan is $478,000, secured by
three, four plexes located in Naples, Florida. The loan is current.
Commercial Loans. The Company's commercial loans are business loans
that are not secured by real estate. At December 31, 1997, the largest
commercial loans was $750,000 to an individual in Immokalee, Florida, secured by
stock of a local bank. The Company has no Small Business Administration ("SBA")
loans. The Company is not a delegated SBA underwriter. The Company would
consider making SBA loans if the demand for such loans arise in its primary
geographic market area. SBA loans, which are guaranteed in part by the SBA,
typically include a higher loan balance relative to the value of the collateral,
as opposed to loans originated without a government guarantee.
Income from Lending Activities. Fees are earned in connection with loan
commitments and originations, loan modifications, late payments, changes of
property ownership and for miscellaneous services related to loans. Income from
these activities varies from period to period with the volume and type of loans
originated, sold and purchased, which in turn is dependent upon prevailing
mortgage interest rates and their effect on the demand for loans in the
Company's primary market area.
Loan fees typically are charged at the time of loan origination and may
be a flat fee or a percentage of the amount of the loan. Under current
accounting standards such fees cannot typically be recognized as income and are
deferred and taken into income over the contractual life of the loan, using a
level yield method. If a loan is prepaid or refinanced, all remaining deferred
fees with respect to such loan are taken into income at that time.
Nonperforming Loans and Real Estate Owned. When a borrower fails to
make a required payment on a loan, the Company attempts to collect the payment
by contacting the borrower. If a payment on a loan has not been received by the
end of a grace period (usually 10 days from the payment due date), notices are
sent at that time, with follow-up contacts made thereafter. In most cases,
delinquencies are cured promptly. If the delinquency exceeds 29 days and is not
cured through normal collection procedures, the Company will institute more
formal measures to remedy the default, including the commencement of foreclosure
proceedings. The Company will then attempt to negotiate with the delinquent
borrower to establish a satisfactory payment schedule.
If foreclosure is required, when completed, the property would be sold
at a public auction in which the Company may participate as a bidder. If the
Company is the successful bidder, the acquired real estate property is then
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included in the other real estate owned "OREO" account until it is sold. The
Company is permitted under federal regulations to finance sales of real estate
owned by "loans to facilitate", which may involve more favorable interest rates
and terms than generally would be granted under normal underwriting guidelines.
As of December 31, 1997, the Company had no OREO properties and had not been
required to institute foreclosure on any of its loans.
Asset Classification
The Commercial banks are required to review and when appropriate
classify their assets on a regular basis. FDIC and state banking examiners have
authority to identify problem assets and, if appropriate, require them to be
classified. There are three classifications for problem assets: substandard,
doubtful and loss. Substandard assets have one or more defined weaknesses and
are characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. An asset classified as loss is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. If an asset or portion thereof is classified as loss, the insured
institution establishes specific allowance for loan losses for the full amount
of the portion of the asset classified as loss. All or a portion of general loan
loss allowances established to cover possible losses related to assets
classified substandard or doubtful may be included in determining an
institution's regulatory capital, while specific valuation allowances for loan
losses generally do not qualify as regulatory capital. Assets that do not
warrant classification in one of the aforementioned categories, but possess
weaknesses, are classified as special mention and monitored by the Company.
At December 31, 1997, the Company had no loans classified as
Substandard, Doubtful, or Loss.
Provision for Losses on Loans
The provision for loan losses is established through a provision for
loan losses charged against income. Loans are charged against the provision when
management believes that the collectibility of the principal is unlikely. The
provision is an estimated amount that management believes will be adequate to
absorb losses inherent in the loan portfolio and commitments to extend credit,
based on evaluations of its collectibility. The evaluations take into
consideration such factors as changes in the nature and volume of the portfolio,
overall portfolio quality, specific problem loans and commitments, and current
anticipated economic conditions that may affect the borrower's ability to pay.
While management uses the best information available to recognize losses on
loans, future additions to the provision may be necessary based on changes in
economic conditions. At December 31, 1997, the Company had a total provision for
loan losses of $298,000 representing 1.12% of total loans. See "MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Credit Risk" for the table showing the Company's provision for loan losses.
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Non-Bank Subsidiary
As of December 31, 1997, the Company had one wholly-owned non-bank
subsidiary, Citizens Financial. Citizens Financial was established on March 27,
1997, to be a mortgage brokerage company in Southwest Florida. As of December
31, 1997, the Company's aggregate investment in Citizens Financial was $100,000,
or 0.2% of consolidated assets. The operations of Citizens Financial were
suspended in August 1997.
Personnel
As of December 31, 1997, the Company had 19 full-time employees and 6
part-time employees. The employees are not represented by any collective
bargaining group. The Company believes its relations with its employees to be
good.
The Company currently maintains a comprehensive employee benefit
program providing, among other benefits, hospitalization and major medical
insurance, long-term disability insurance, life insurance, and education
assistance. Such employee benefits are considered by management to be generally
competitive with employee benefits provided by other major employers in the
Company's geographic market area.
Legal Proceedings
There are no material pending legal proceedings to which CCBI or
Citizens Bank is a party or to which any of their property is subject.
Properties
The following table sets forth information with respect to the
Company's offices as of December 31, 1997.
<TABLE>
<CAPTION>
Year Facility Facility Net Book
Location Opened Status Value
-------- ------ ------ -----
<S> <C> <C> <C>
Main Office
Citizens Community Bank 1996 Owned(1) $1,701,000
650 E. Elkcam
Marco Island, Florida 34145
Branches
East Tamiami Trail Office 1997 Owned(2) $ 785,000
5101 East Tamiami Trail
Naples, Florida 34113
- -------------------------
</TABLE>
(1) The Main Office facility is owned by Citizens Bank.
(2) The East Tamiami Trail Office is a 12,000 square foot two story
building which is owned by CCBI. Citizens Bank leases 4,000 square feet
on the first floor of the building. The remaining 8,000 square feet is
being leased to non-affiliated third parties.
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REGULATION AND SUPERVISION
General
As a one-bank holding company registered under the BHC Act, CCBI is
subject to regulation and supervision by the Federal Reserve. Under the BHC Act,
CCBI's activities and those of Citizens Bank are limited to banking, managing or
controlling banks, furnishing services to or performing services for its
subsidiaries or engaging in any other activity that the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
As a Florida corporation, CCBI is also subject to Chapter 607, Florida Business
Corporation Act ("FBC Act") and the regulations promulgated thereunder by the
Florida Department of State. As a state-chartered commercial bank, Citizens Bank
is subject to extensive regulation by the Florida Department and the FDIC.
CCBI and Citizens Bank are required to file reports with the Federal
Reserve, the Florida Department and the FDIC concerning their activities and
financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with or acquisitions of other
financial institutions. Periodic examinations are performed by the Federal
Reserve, the Florida Department and the FDIC to monitor CCBI's compliance with
the various regulatory requirements. Citizens Bank's deposits are insured up to
the applicable limits by the FDIC under the Bank Insurance Fund ("BIF").
Citizens Bank is subject to regulation by the Federal Reserve and the Florida
Department with respect to reserves required to be maintained against
transaction deposit accounts and certain other matters.
Regulation of CCBI
General. The BHC Act prohibits CCBI from acquiring direct or indirect
control of more than 5% of any class of outstanding voting stock or acquiring
substantially all of the assets of any bank or merging or consolidating with
another bank holding company without prior approval of the Federal Reserve. The
BHC Act also prohibits CCBI from acquiring control of any bank operating outside
the State of Florida, unless such action is specifically authorized by the
statutes of the state where the bank to be acquired is located. Additionally,
the BHC Act prohibits CCBI from engaging in or from acquiring ownership or
control of more than 5% of the outstanding voting stock of any company engaged
in a non-banking business, unless such business is determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be properly incident thereto. The BHC Act generally does not place
territorial restrictions on the activities of such non-banking related
activities.
Transactions between the CCBI and Citizens Bank. CCBI's authority to
engage in transactions with related parties or "affiliates," or to make loans to
certain insiders, is limited by certain provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Specifically, Sections
23A and 23B of the Federal Reserve Act apply to all transactions by an
insured-state non-member bank or a holding company with any affiliate. Sections
23A and 23B generally define an "affiliate" as any company that controls or is
under common control with an institution. Subsidiaries of a financial
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institution, however, are generally exempted from the definition of "affiliate."
Section 23A limits the aggregate amount of transactions with any individual
affiliate to 10% of the capital and surplus of CCBI and also limits the
aggregate amount of transactions with all affiliates to 24.1% of CCBI's capital
and surplus. Certain transactions with affiliates, such as loans to affiliates
or guarantees, acceptances and letters of credit issued on behalf of affiliates,
are required to be collateralized by collateral in an amount and of a type
described in the statute. The purchase of low quality assets from affiliates is
generally prohibited. Section 23B provides that certain transactions with
affiliates, including loans and asset purchases, must be on terms and under
circumstances, including credit standards, that are substantially the same or at
least as favorable to the institution as those prevailing at the time for
comparable transactions with non-affiliated companies. In the absence of
comparable transactions, such transactions may only occur under terms and
circumstances, including credit standards, that in good faith would be offered
to or would apply to non-affiliated companies.
Support of Subsidiary Depository Institutions. In accordance with
Federal Reserve policy, CCBI is expected to act as a source of financial
strength and to commit resources to support Citizens Bank. This support may be
required at times when CCBI might not be inclined to provide such support. Such
support would include the infusion of additional capital into an under
capitalized bank subsidiary in situations where an additional investment in a
troubled bank might not ordinarily be made by a prudent investor. In addition,
any capital loans by a bank holding company to any of its subsidiary banks must
be subordinate in right of payment to deposits and to certain other indebtedness
of such subsidiary banks. In the event of bankruptcy, any commitment by a bank
holding company to a federal bank regulatory agency to maintain the capital of
its subsidiary bank will be assumed by the bankruptcy trustee and will be
entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA") a subsidiary bank of a
bank holding company, can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution, or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC insured depository
institution "in danger of default". "Default" is defined generally as the
appointment of a conservator or a receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
Control of a Bank Holding Company. FRB Regulation Y, adopted pursuant
to Section 225.41 of 12 U.S.C. Section 1817(j), requires persons acting directly
or indirectly or in concert with one or more persons to give the Board of
Governors of the Federal Reserve 60 days advanced written notice before
acquiring control of a bank holding company. Under the Regulation, control is
defined as the ownership or control with the power to vote 25 % or more of any
class of voting securities of the bank holding company. The Regulation also
provides for a presumption of control if a person owns, controls, or holds with
the power to vote 10 % or more (but less than 25 %) of any class of voting
securities, and if: (i) the bank holding company's securities are registered
securities under Section 12 of the Securities and Exchange Act of 1934; or (ii)
no other person owns a greater percentage of that class of voting securities.
This Offering is subject to a Purchase Limitation which precludes a person
(individually, or together with associates of, or persons acting in concert
with, such person) from purchasing shares which when aggregated with current
holdings would exceed 9.99% of the total number of shares outstanding at the
conclusion of the Offering.
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Legislation and Regulations of Citizens Bank
General. From time to time, various bills are introduced in the United
States Congress with respect to the regulation of financial institutions. Recent
banking legislation, particularly the FIRREA and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory
powers of the federal bank regulatory agencies and restructured the nation's
banking system. The following is a brief discussion of certain portions of these
laws and how they would effect CCBI or Citizens Bank.
The FDICIA revised sections of the FDIA affecting bank regulation,
deposit insurance and provisions for funding of the BIF administered by the
FDIC. The FDICIA also revised bank regulatory structures embodied in several
other federal banking statutes, strengthened the bank regulators' authority to
intervene in cases of deterioration of a bank's capital level, placed limits on
real estate lending and imposes detailed audit requirements.
Prompt and Corrective Action. The FDICIA required the federal banking
regulatory agencies to set certain capital and other criteria which would define
the category under which a particular financial institution would be classified.
The FDICIA imposes progressively more restrictive constraints on operations,
management, and capital distributions depending on the category in which an
institution is classified. Pursuant to the FDICIA, undercapitalized institutions
must submit recapitalization plans to their respective federal banking
regulatory agencies, and a company controlling a failing institution must
guarantee such institution's compliance with its plan in order for the plan to
be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories. For
example, a bank is deemed to be "well- capitalized" if it has a total risk-based
capital ratio (total capital to risk-weighted assets) of 10% or greater, a Tier
1 risk-based capital ratio (Tier 1 capital to risk-weighted assets) of 6% or
greater, and a Tier 1 leverage capital ratio (Tier 1 capital to adjusted total
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A bank is deemed to be "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, and (generally) a Tier 1 leverage capital ratio
of 4% or greater, and the bank does not meet the definition of a
"well-capitalized" institution. A bank is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%. In addition, the
FDIC is authorized effectively to downgrade a bank to a lower capital category
than the bank's capital ratios would otherwise indicate, based upon safety and
soundness considerations (such as when the bank has received a less than
satisfactory examination rating for any of the CAMELS rating categories other
than capital: i.e. Asset Quality, Management, Earnings or Liquidity). As a bank
drops to lower capital levels, the extent of action to be taken by the
appropriate regulator increases, restricting the types of transactions in which
the bank may engage. The regulatory capital standards are designed to bolster
and protect the deposit insurance fund. Citizens Bank is considered to be "well
capitalized" based upon its current capital.
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Insurance on Deposit Accounts. In response to the requirements of the
FDICIA, the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The FDIC
assigns a financial institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period. These categories consist of well
capitalized, adequately capitalized or undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the financial institution's primary regulator, in Citizens Bank's
case the Florida Department, and information which the FDIC determines to be
relevant to the institution's financial condition and the risk posed to the
deposit insurance funds. A financial institution's assessment rate depends on
the capital category and supervisory category to which it is assigned. There are
nine assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied. BIF
assessment rates range from 0 basis points on deposits for a financial
institution in the highest category (i.e.. well-capitalized and financially
sound with only a few minor weaknesses) to 31 basis points on deposits for an
institution in the lowest category (i.e., undercapitalized and posing a
substantial probability of loss to the BIF, unless effective corrective action
is taken). Citizens Bank has not been assessed a deposit insurance premium since
it began its operations in May, 1996.
Standards for Safety and Soundness. The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and their
holding companies standards relating to internal controls, information systems
and audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate. In
addition, the federal banking regulatory agencies are required to prescribe by
regulation standards specifying: (i) maximum classified assets to capital
ratios; (ii) minimum earnings sufficient to absorb losses without impairing
capital; (iii) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of depository institutions or the depository
institution holding companies; and (iv) such other standards relating to asset
quality, earnings and valuation as the agency deems appropriate. Finally, each
federal banking agency is required to prescribe standards for employment
contracts and other compensation arrangements of executive officers, employees,
directors and principal shareholders of insured depository institutions that
would prohibit compensation and benefits and other arrangements that are
excessive or that could lead to a material financial loss for the institution.
If an insured depository institution or its holding company fails to meet any of
its standards described above, it will be required to submit to the appropriate
federal banking agency a plan specifying the steps that will be taken to cure
the deficiency. If an institution fails to submit an acceptable plan or fails to
implement the plan, the appropriate federal banking agency will require the
institution or holding company, to correct the deficiency and until corrected,
may impose restrictions on the institution or the holding company including any
of the restrictions applicable under the prompt corrective action provisions of
the FDICIA.
Loans to One Borrower. Florida law allows a state bank such as Citizens
Bank to extend credit to any one borrower in an amount up to 25% of its capital
accounts, which are defined as unimpaired capital, surplus and undivided
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profits, provided that the unsecured portion may not exceed 15% of the capital
accounts of the bank. The law permits exemptions for loans collateralized by
accounts maintained with Citizens Bank and for loans guaranteed by the Small
Business Administration, the Federal Housing Administration and the Veterans
Administration.
Payment of Dividends. While not the only source of income, a major
source of income to CCBI in the future will be dividends from Citizens Bank.
Since commencing operations in May, 1996, CCBI has not received any dividends
from Citizens Bank. A Florida chartered commercial bank may not pay cash
dividends that would cause the bank's capital to fall below the minimum amount
required by federal or Florida law. Otherwise, a commercial bank may pay a
dividend out of the total of current net profits plus retained net profits of
the preceding two years to the extent it deems expedient, except as described
below. Twenty percent of the net profits in the preceding two year period may
not be paid in dividends, but must be retained to increase capital surplus until
such surplus equals the amount of common and preferred stock issued and
outstanding. In addition, no bank may pay a dividend at any time that net income
in the current year when combined with retained net income from the preceding
two years produces a loss. The ability of Citizens Bank to pay dividends to CCBI
depends in part on the FDIC capital requirements in effect at such time and the
ability of Citizens Bank to comply with such requirements.
Brokered Deposits. In accordance with the FDICIA, the FDIC has
implemented restrictions on the acceptance of brokered deposits. In general, an
"undercapitalized" institution may not accept, renew or roll over any brokered
deposits. "Adequately capitalized" institutions may request a waiver from the
FDIC to do so, while "well-capitalized" institutions may accept, renew or roll
over such deposits without restriction. The rule requires registration of
deposit brokers and imposes certain record keeping requirements. Institutions
that are not "well-capitalized" (even if meeting minimum capital requirements)
are subject to limits on rates of interest they may pay on brokered and other
deposits. Citizens Bank does not have any brokered deposits.
Deposit Insurance Funds Act of 1996. On September 30, 1996, Congress
passed and the President signed in to law the Deposit Insurance Funds Act of
1996 ("DIFA"). Among other things, the DIFA, and rules promulgated thereunder by
the FDIC, provide for banks and thrifts to share the annual interest expense for
the Finance Corp. Bonds which were issued in the late 1980s to help pay the
costs of the savings and loan industry restructuring. The approximate annual
interest expense is $780 million of which BIF insured banks are expected to pay
approximately $322 million or 41%, while SAIF insured thrifts will pay
approximately $458 million or 59% of the interest expense. It is estimated that
the annual assessment for BIF insured institutions will be approximately 1.2
cents per $100 of deposits, while SAIF insured institutions will pay 6.5 cents
per $100 of deposits. These payments are to begin in 1997 and run through 1999.
Beginning in the year 2000 and continuing through the year 2017, banks and
thrifts will each pay 2.43 cents per $100 of deposits. These assessments will be
in addition to any regular deposit insurance assessments imposed by the FDIC
under FDICIA. See REGULATION AND SUPERVISION - Insurance on Deposit Accounts.
Interstate Banking. Under the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, existing restrictions on interstate
acquisitions of banks by bank holding companies were repealed on September 29,
1995, such that CCBI and any other bank holding company would be able to acquire
any Florida-based bank, subject to certain deposit percentage and other
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restrictions. The legislation also provides that, unless an individual state
elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to be subject to applicable state
branching laws. Florida has adopted legislation which will permit interstate
acquisitions and interstate branching effective June 1, 1997. Florida law
prohibits de novo branching by out of state banks.
State Assessment. State-chartered commercial banks are required by the
Florida Department regulation to pay assessments to the Florida Department to
fund the operations of the Florida Department. The general assessment, to be
paid semiannually, is computed upon a bank's total assets, including
consolidated subsidiaries, as reported in the bank's latest quarterly call
report. Citizens Bank's assessment for 1997 was $8,435.
The Federal Reserve System
The Federal Reserve regulations require banks to maintain
non-interest-earning reserves against their transaction accounts (primarily NOW
and regular checking accounts). The Federal Reserve regulations generally
require that reserves of 3% must be maintained against aggregate transaction
accounts of $49.3 million or less (subject to adjustment by the Federal Reserve)
plus 10% (subject to adjustment by the Federal Reserve between 8% and 14%)
against that portion of total transaction accounts in excess of $49.3 million.
The first $4.4 million of otherwise reservable balances (subject to adjustments
by the Federal Reserve) are exempted from the reserve requirements. The balances
maintained to meet the reserve requirements imposed by the Federal Reserve may
be used to satisfy liquidity requirements. Because required reserves must be
maintained in the form of either vault cash, a non-interest-bearing account at a
Federal Reserve Bank or a pass-through account as defined by the Federal
Reserve, interest-earning assets of Citizens Bank are reduced.
Federal Securities Laws
CCBI, in connection with this Offering, filed with the Commission a
registration statement under the Securities Act for the registration of CCBI's
Common Stock. The registration under the Securities Act of shares of the Common
Stock issued in this Offering does not cover the resale of such shares. Shares
of the Common Stock purchased by persons who are not affiliates of CCBI may be
resold without further registration. Shares purchased by an affiliate of CCBI
will be subject to the resale restrictions of Rule 144 under the Securities Act.
If CCBI meets the current public information requirements of Rule 144 under the
Securities Act, each affiliate of CCBI who complies with the other conditions of
Rule 144 (including the holding period and those that require the affiliate's
sale to be aggregated with those of certain other persons) may be able to sell
in the public market, without registration, a number of shares not to exceed, in
any three-month period, the greater of (i) 1% of the outstanding shares of CCBI,
or (ii) the average weekly volume of trading in such shares during the preceding
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four calendar weeks. Provision may be made in the future by CCBI to permit
affiliates to have their shares registered for sale under the Securities Act
under certain circumstances.
The scope of regulation, supervision and permissible activities of CCBI
is subject to change by future federal and state legislation.
MANAGEMENT
Directors and Executive Officers
The Board of Directors of CCBI and Citizens Bank currently consist of
13 directors and 6 executive officers, respectively. The Boards of Directors of
CCBI are currently divided into three classes, with the members of each class
serving three-year terms.
The following sets forth information regarding the directors and
executive officers of CCBI and Citizens Bank.
Diane M. Beyer, age 58, is a Director and Assistant Secretary of CCBI,
and is a member of its Audit Committee. She also serves as a Director of
Citizens Bank and as Chairman of the Board's Compensation and Personnel and CRA
Committees and member of the Executive Committee. Mrs. Beyer has extensive
business experience in the areas of administration and human resource, and is a
member of the National Association of Women in Construction and was Chairman of
its Public Relations/Marketing Committee for 1990-91. She has been a resident of
Naples, Florida, and a Human Resources Consultant since 1993, and serves on a
policy-making role in several non-profit organizations.
Joel M. Cox, Sr., age 59, has 37 years of experience in banking and
insurance. Mr. Cox is a Director of CCBI, serves as Chairman of the Executive
Committee, and is a member of the Audit Committee. Mr. Cox is Chairman of the
Board of Citizens Bank and serves as an ad hoc member of all Board committees of
Citizens Bank. Mr. Cox has been Vice President and Director of Cox Insurance
Agency, Inc., on Marco Island, Florida, since 1985. He currently serves as
Membership Chairman of the Kiwanis Club of Marco Island and serves on the Marco
Island Fair Water Committee.
Thomas B. Garrison, age 50, has over 30 years of experience in the
design and development of major software projects. Mr. Garrison is a Director of
CCBI and serves as Chairman of the Audit Committee. He is also a Director of
Citizens Bank and serves as Chairman of the EDP Committee, Vice Chairman of the
Audit Committee, and is a member of the CRA Committee. Mr. Garrison is employed
by the Barron-Collier Companies, where he has served as the Management
Information Systems Director, Chief Information Officer, and currently as the
Network Technology Manager. Mr. Garrison has been a Collier County resident,
residing in Naples, Florida, since 1988, and has been an active member of
several Collier County civic organizations, including Toastmaster, Naples
Investment Club, Small CAP Investment Club, Naples Computer Club, and the Latin
American Business Association.
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Jamie Greusel, age 36, is Assistant Secretary to, and a member of, the
Board of Directors of Citizens Bank. Mrs. Greusel serves as a member of the
Audit Committee and the Loan Committee. She is a member of the Florida Bar,
licensed in all State Courts; member of the New Jersey Bar, licensed in all
State Courts and the United State District Court for the District of New Jersey;
member of the Real Property, Probate and Trust Section of the Florida Bar;
member of the Collier County Bar Association; Associate Member of Marco Island
Area Association of Realtors; Associate Member of the Community Association
Managers of Marco Island; Member, Attorney's Title Insurance Fund; and Vice
President, Home and School Association, St. Elizabeth Seton School.
James S. Hagedorn, age 55, serves as Vice Chairman of CCBI, Chairman of
the Loan Committee and is a member of the Executive and Strategic Planning
Committees. Mr. Hagedorn also serves as Vice Chairman of the Board of Directors
of Citizens Bank, Chairman of the Loan Committee and is a member of the
Executive, Audit, Asset/Liability, Building and Facilities, and Compensation and
Personnel Committees. Mr. Hagedorn has been President and Director of Waterside
Development Corp. since 1995. He served as Chairman, President, and CEO of The
Merchant Bank of Florida, Brandon, Florida, and as President of The Merchant
Bancorporation of Florida from 1986 through 1994.
Dennis J. Lynch, age 55, is a member of the Board of Directors of CCBI
and serves as Vice Chairman of the Audit and Loan Committees. He is also a
member of the Board of Directors of Citizens Bank, where he serves as Chairman
of the Asset/Liability Committee and the Building and Facility Committee, and as
Vice Chairman of the Compensation and Personnel and Loan Committees. Mr. Lynch
has been involved in the real estate sales and development business since moving
to Naples in 1971. He has been the owner and President of Dennis J. Lynch and
Associates, a real estate sales agency established in 1979. Since 1979, his firm
has developed and been involved in the management of over 500,000 square feet of
commercial real estate space in Collier County. Currently, the firm is a
co-developer of a 52,000 sq. ft. commercial building in Naples, Florida.
Robert A. Marks, age 66, is a member of the Board of Directors of CCBI
and serves as a member of the Audit, Compensation and Personnel, CRA, and
Welcoming Package Committees, and is an alternate member of the Loan Committee.
Mr. Marks also serves as Chairman of Citizens Bank's Advisory Board. Mr. Marks
retired with over 30 years of service with Metropolitan Life as Regional Manager
heading up metropolitan's their operations in Tennessee and Kentucky. Mr. Marks'
involvement in the Marco Island Community includes serving as a past President
of Marco Island Men's Club, current board member of Sunrise Rotary Club of Marco
Island and the Gulfview Club of Marco Island.
Stephen A. McLaughlin, age 51, is a founding director of CCBI and of
Citizens Bank. He has served on the Boards of both companies since 1996. Mr.
McLaughlin is Vice President, Secretary and Treasurer of CCBI, serves as Vice
Chairman of the Executive Committee, and is a member of the Audit, Loan and
Strategic Planning Committees. He also serves as Vice President, and Secretary
of Citizens Bank. He is Vice Chairman of the Asset/Liability Committee and is a
member of the Executive, Building and Facilities, EDP, and Loan Committees.
Prior to 1996, Mr. McLaughlin's business involved the operations of several
Maine-based real estate consulting and timber companies, including Stillwater
Land & Lumber Limited.
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Michael A. Micallef, Jr., age 48, is the President and CEO of CCBI,
Citizens Bank. He is also a member of the Board of Directors of Citizens Bank
and is a member of the Loan Committee. In addition, Mr. Micallef serves as the
Bank's Secrecy, Bribery, Security and Investment Officer. Mr. Micallef has 29
years of experience in the banking industry and has spent the past 19 years
working for banks in South Florida. Prior to joining Citizens Bank, Mr. Micallef
was President and CEO of BankBoynton in Boynton Beach, Florida from February,
1993 to May, 1997.
Louis Smith, age 74, is a member of the Board of Directors of CCBI. Mr.
Smith was a self-employed Pharmacist for 34 years, currently owns and operates
Pat's Hallmark in the Shops of Marco on Marco Island, is the Officer in Charge
of a U.S. Post Office, and was formerly a bank director for the 1st Wisconsin
Bank of Wisconsin (now First-Star).
Richard Storm, Jr., age 56, is a founding director, Chairman, CEO and
President of CCBI, and serves on the Executive and Loan Committees of the Board.
He is also a member of the Board of Directors of Citizens Bank, where he serves
as Chairman of the Executive and Audit Committees, and is a member of the
Compensation and Personnel, EDP, Loan and Welcoming Package Committees. Mr.
Storm is currently an at-large director for Group VI for Community Bankers of
Florida. Mr. Storm has an extensive background in real estate management,
marketing, finance and development. From 1987 to 1994, Mr. Storm served as a
director of Citizens National Bank and Citizens National Corporation, both of
Naples, Florida. From 1992 to 1994, Mr. Storm served as Corporate Secretary for
Citizens National Corporation. Following the Citizens National merger with
AmSouth Bank of Florida in 1994, Mr. Storm served as a City Director of AmSouth
Bank until April 1995. As a director of Citizens National Bank, Mr. Storm served
as an active member of a number of board committees. Mr. Storm is the President
of Storm & Company, Inc., a Florida corporation specializing in consulting,
venture capital and marketing. He is also the managing General Partner for
Cumberland Associates, a shopping center owner/operator with principal offices
in Windham, Maine. He is a member of the Loyal Order of Moose in Marco Island,
the Everglades Sporting Clays Club of Naples and has been a member of the Masons
Ark Lodge 39, A.F. & A.M., in Georgetown, Connecticut since 1968. Mr. Storm is a
member of the Marco Island Shrine Club and the Marco Island Power Squadron, Inc,
and is an honorary member of the Florida Sheriffs Association/Florida Sheriffs
Youth Ranches.
Jack G. Wolf, age 51, is Assistant Treasurer and a member of the Board
of Directors of CCBI where he serves as the Chairman of the Strategic Planning
Committee. He is also a member of the Audit Committee, and is an alternate
member of the Loan Committee. Mr. Wolf is a practicing dentist in Naples,
Florida and is on the Board of Directors of the Florida Sports Shooting
Association, and a member of the Governor's Council on Sports and Fitness. Mr.
Wolf is also involved in health care delivery and the development and marketing
of dental practices.
Bruce Fedor, age 62, is Vice President and General Counsel of CCBI. He
is also a Vice President and the Compliance Officer for Citizens Bank. Prior to
joining Citizens Community Bank, Mr. Fedor was formerly associated with a Naples
law firm specializing in banking and commercial loan matters and from 1990 to
1994 served as General Counsel of BancFlorida, Inc. He is a member of the
Florida and Collier County Bars.
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Sharon Ginn, age 44, became a Vice President/Cashier of Citizens Bank
in October, 1997. From February, 1992 to October 1997, Mrs. Ginn was formerly
with First National Bank and Trust Co. of the Treasure Coast in Stuart, Florida
where she was an Assistant Vice President and Accounting Manager. Mrs. Ginn has
more than 18 years of managerial and technical experience in financial
institutions.
David Klein, age 42, became the Executive Vice President and Loan
Officer of Citizens Bank in April, 1997. Mr. Klein also serves as Citizens
Bank's CRA Officer. Mr. Klein has almost 20 years of banking experience in all
areas of residential and commercial lending, the most recent of which was as
Vice President/Loan Officer of Bank of Bowie in Prince George's County, Maryland
from January, 1993 to April, 1997. Prior to his position at the Bank of Bowie,
he was Vice President/Business Banking at the First American Bank of Maryland
and Branch Officer and Market Manager at the Maryland National Bank. Mr. Klein
is an active member of the Marco Island Sunrise Rotary Club.
EXECUTIVE COMPENSATION
Executive Compensation
During the years ended December 31, 1997, and 1996, no executive
officer received total compensation (i.e., salaries and bonuses) which, when
aggregated, exceeded $100,000 per year.
Stock Option Plan for Outside Directors. On February 24, 1998, the
Board of Directors of CCBI approved an Outside Directors' Stock Plan
("Directors' Plan"). The Directors' Plan provides that a maximum of 150,000
shares of common stock (the "Stock Options") will be made available to outside
directors of CCBI and Citizens Bank. Under the Directors' Plan, outside
directors of CCBI will each be granted a Stock Option for 10,000 shares of
common stock and the outside directors of Citizens Bank will each be granted a
Stock Option for 5,000 shares of common stock. The Stock Options granted to the
respective Boards of Directors are not cumulative. The Stock Options will not be
granted until the Directors' Plan is approved by a majority vote of CCBI's
shareholders at the upcoming Annual Meeting of Shareholders.
The Directors' Stock Option are for a term of ten years from the date
of grant, February 24, 1998. The Directors' Stock Options will be issued at an
exercise price determined at the time of issuance to be the "fair market value"
of the underlying common stock on the date the Stock Option was granted. The
Stock Options held by an outside director are canceled immediately if such
director is removed for "cause," as defined in the Directors' Plan.
Incentive Stock Options
CCBI has an Incentive Stock Option Plan ("Incentive Plan") for officers
and employees of CCBI and Citizens Bank, reserving 200,000 shares of Common
Stock ("Incentive Options") for future issuance. The Incentive Plan was approved
by CCBI's shareholders at the 1996 Annual Meeting of Shareholders. The exercise
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price of the 36,000 shares granted in 1996 was at $9.00 per share (adjusted to
$4.50 per share as a result of the two for one stock split in December 15,
1997). In 1997, 129,000 Incentive Options were granted at between at $9.00 and
$12.00 per share (with an adjusted price of $4.50 and $6.00 per share to reflect
the December 15, 1997, two for one stock split). At December 31, 1997, Incentive
Options for 155,400 shares remained outstanding, with 36,600 unallocated shares
available for grant. The Incentive Options have 10-year terms from the date of
the grant and vest at a rate of 20% per year.
The following table sets forth information concerning the Incentive
Options that have been granted (as adjusted to reflect the December 15, 1997,
two for one stock split) to the executive officers of CCBI and Citizens Bank.
Shares Price
Name Granted Date of Grant Per Share(1)
- ---- ------- ------------- ------------
David Klein 15,000 April 11, 1997 4.75
3,000 August 19, 1997 5.50
3,000 October 21, 1997 6.00
Bruce Fedor 10,000 November 10, 1997 6.00
Sharon Ginn 10, 00 October 20, 1997 5.63
Stephen A. McLaughlin 10,000 October 8, 1996 4.50
10,000 May 21, 1997 5.00
Michael A. Micallef, Jr. 30,000 June 4, 1997 5.00
Director Compensation
CCBI does not presently compensate directors for Board or Committee
meetings. Effective November 1, 1997, Citizens Bank began paying directors' fees
to its outside directors. Directors receive $100 for each Board meeting attended
and $25 for each Committee meeting attended.
Employment Contracts
CCBI does not have an employment agreement with any of its officers.
Citizens Bank has an employment agreement ("Agreement") with its President and
Chief Executive Officer, Michael A. Micallef, Jr. The Agreement, which became
effective June 2, 1997, is for a one-year term and is automatically renewed for
a successive six month term(s), unless either party notifies the other of their
desire to terminate the Agreement at the expiration of the term. Such notice
must be given at least 30 days prior to the expiration of the current term.
The Agreement provides Mr. Micallef with a $79,000 base salary, plus
reimbursement of reasonable business expenses. In addition, Mr. Micallef may be
granted an annual performance bonus, which is solely at the discretion of the
Board of Directors. Under the Agreement, Mr. Micallef was granted Incentive
Options for 15,000 shares of Common Stock at a grant price of $10.00 per share
(adjusted to 30,000 shares at $5.00 per share as a result of the December 15,
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1997, two for one stock split) which vest 20% per year and expire 10 years from
the date of grant, along with an automobile allowance and three-months
disability coverage.
Mr. Micallef may participate in all employee benefits, stock option
plans, pension plans, insurance plans and other fringe benefits that
commensurate with his position. The Agreement provides for termination by
Citizens Bank for "good cause". In the event Citizens Bank chooses to terminate
Mr. Micallef's employment for reasons other than for good cause, he (or in the
event of death, his beneficiaries) would be entitled to a severance payment
equal to the total annual compensation for the remainder of the term of the
Agreement, or six month pay, whichever is greater. In the event of a change of
control of the Company, Mr. Micallef will be entitled to a one- year's annual
compensation.
In the event Mr. Micallef voluntarily terminates his employment other
than for the reasons mentioned herein, all rights and benefits under the
Agreements shall immediately terminate upon the effective date of termination.
CERTAIN TRANSACTIONS
Indebtedness of Management
The policy of the Company is generally not to make loans to directors
and officers, but permits loans to employees. Any plans that are made, however,
will require approval of a majority of the disinterested directors of the
Company making the loan. Citizens Bank is also subject to the provisions of
Section 22(h) of the Federal Reserve Act. Any credit extended by Citizens Bank
to directors, executive officers and, to the extent otherwise permitted,
principal shareholders, or any affiliates thereof must be: (i) on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions by Citizens Bank with non-affiliated
parties; and (ii) not involve more than the normal risk of repayment or present
other unfavorable features.
As of December 31, 1997, Citizens Bank had no loans outstanding to
directors or executive officers, or their affiliates as that terms is defined by
Commission regulations.
[Intentionally Left Blank]
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table indicates certain information regarding the current
beneficial ownership of Common Stock by each of the Company's directors and
executive officers, and all of the directors and executive officers as a group.
It is anticipated that 100,000 shares of the Offering will be purchased by the
Company's executive officers and directors, but there has been no formal
commitment to purchase shares as of the date of this Prospectus.
<TABLE>
<CAPTION>
% of % of
Amount Ownership Ownership
Owned at Based on the Based on the
December 31, % of Total Total
Name 1997 Ownership(1) Minimum Maximum
- ---------------------- ------ ------------ ------- -------
<S> <C> <C> <C> <C>
Diane M. Beyer 10,000(2) (3) % (3)% (3)%
Joel M. Cox, Sr 58,730(4) 3.69 3.14 2.28
Thomas B. Garrison 23,500(5) 1.49 1.25 (3)
James S. Hagedorn 20,000(6) 1.27 1.07 (3)
Dennis J. Lynch 58,500(7) 3.68 3.13 2.27
Stephen A. McLaughlin 62,000(8) 3.90 3.31 2.41
Louis Smith 400 (3) (3) (3)
Richard Storm, Jr 450,080(9) 26.01 24.04 17.50
Jack G. Wolf 39,000(10) 2.46 2.08 1.52
------- ----- ----- -----
All Directors and Executive Officers
as a Group (11 persons) 722,210 43.17% 38.59% 28.08 %
======= ===== ===== =====
</TABLE>
(1) Percentage based on current beneficial ownership assuming shares that
under Warrant have been exercised.
(2) Shares held jointly with Mrs. Beyer's husband, Robert F. Beyer, and
1,600 unexercised shares subject to Warrants.
(3) Amount is less than 1%.
(4) Amount includes 18,310 unexercised shares subject to Warrants; 20,000
shares held by Joel M. Cox as Trustee for the Joel M. Cox Revocable
Trust; 11,000 shares held by Cede & Co. f/b/o Joel M. Cox; 6,200 shares
held by the Cox's Insurance Agency, Inc. (Joel M. Cox, Vice President);
and 1,000 shares held by Joan C. Cox, Mauale M. Greene and William
Greene, which Mr. Cox disclaims any beneficial interest in.
(5) Amount includes 19,000 shares held individually and 4,500 unexercised
shares subject to Warrants.
(6) Amount includes 19,000 shares held by Robert W. Baird & Co. f/b/o James
Hagedorn IRA, and 1,000 shares held by Robert W. Baird f/b/o Pat
Hagedorn IRA.
(7) Amount includes 29,000 shares held by Cede & Co. f/b/o Dennis Lynch
IRA; 10,000 shares held by Cede & Co. f/b/o Bonnie Lynch; and 19,800
unexercised shares subject to Warrants.
(8) Amount includes 15,000 shares held individually; 8,000 shares held by
Stephen A. McLaughlin as Trustee for SLLL Employee Pension; 20,000
unexercised shares subject to Warrants; and 2,000 vested, but exercised
shares under the Incentive Option.
(9) Amount includes shares held jointly with his wife, Kathleen D. Storm;
158,730 unexercised shares subject to Warrants; 25,500 shares held in
the Richard Storm, Jr. Profit Sharing Plan (Richard Storm, Trustee);
5,000 shares held in Kathleen D. Storm Profit Sharing Plan (Kathleen D.
Storm, Trustee); and 1,000 shares held by Storm and Company, Inc.
(Richard Storm, President).
(10) Amount includes 26,000 shares held individually and 13,000 unexercised
shares subject to Warrants.
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Principal Holders of Voting Securities. The following table sets forth
information as of December 31, 1997, with respect to the ownership of shares of
Common Stock by beneficial owners of more than 5% of the Common Stock of CCBI.
% of Common Stock
Name and Address Amount Owned Issued and Outstanding(3)
---------------- ------------ -------------------------
Richard Storm, Jr. 450,080(1) 26.01%
264 Rock Hill Court
Marco Island, Florida 34145
Paul Janssens-Lens 151,590 9.65%
992 Winterberry
Marco Island, Florida 34145
(1) Amount includes shares held jointly with his wife, Kathleen D. Storm;
158,730 unexercised shares subject to Warrants; 25,500 shares held in
the Richard Storm, Jr. Profit Sharing Plan (Richard Storm, Trustee);
5,000 shares held in Kathleen D. Storm Profit Sharing Plan (Kathleen D.
Storm, Trustee); and 1,000 shares held by Storm and Company, Inc.
(Richard Storm, President).
(2) Amount includes ____ shares held individually and ____ unexercised
shares subject to Warrants.
DESCRIPTION OF CAPITAL STOCK
CCBI has authorized 10,000,000 shares of authorized capital stock,
consisting of 8,000,000 shares of Common Stock, par value $0.01 per share, and
2,000,000 shares of Preferred Stock, par value of $0.01 per share. As of
December 31, 1997, 1,571,624 shares of Common Stock were issued and outstanding
and 646,375 shares were subject to Warrants. No shares of Preferred Stock were
issued.
Common Stock
Each share of CCBI Common Stock has the same relative rights and is
identical in all respects with every other share of Common Stock. The holders of
Common Stock are entitled to elect the members of the Board of Directors of the
Company and such holders are entitled to vote as a class on all matters required
or permitted to be submitted to the shareholders of the Company. No holder of
any class of stock of the Company has preemptive rights with respect to the
issuance of shares of that or any other class of stock and the Common Stock is
not entitled to cumulative voting rights with respect to the election of
directors.
The holders of Common Stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefore. Upon the liquidation, dissolution or winding up of
the Company, the holder of each share of Common Stock is entitled to share
equally in the distribution of the Company's assets. The holders of Common Stock
are not entitled to the benefit of any sinking fund provision. The shares of
Common Stock are not subject to any redemption provisions, nor are they
convertible into any other security or property of the Company. All shares of
Common Stock outstanding are, fully paid and non-assessable. CCBI requires the
payment of a $10.00 transfer fee with regard to all requests for cancellation
and re-issue of shares after the initial issue of share certificates.
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Preferred Stock
CCBI is authorized to issue 2,000,000 shares of Preferred Stock. The
Board of Directors may issue the Preferred Stock in series and to fix the
particular designation of and the rights, preferences, privileges and
restrictions granted to and imposed upon each series, all without approval of
the shareholders. CCBI has no plans at this time to issue any of the Preferred
Stock authorized.
SUMMARY OF ARTICLES OF INCORPORATION OF CCBI
The following is a summary of the material provisions of the October
10, 1995 Amended and Restated Articles of Incorporation of CCBI (the "Articles
of Incorporation"). The full text of the Articles of Incorporation are
incorporated by reference as an Exhibit to the Registration Statement to which
this Prospectus is a part. See "AVAILABLE INFORMATION".
The power to issue additional shares of common stock rest with the
Board of Directors of CCBI, which may help delay or deter a change in control by
increasing the number of shares needed to gain control. The following provisions
of the CCBI's Articles of Incorporation may also have the effect of preventing,
discouraging or delaying any change in control of CCBI.
Requirements for Super Majority Approval of Transactions
The Articles of Incorporation of CCBI ("Articles of Incorporation")
contain provisions requiring super majority stockholder approval to effect
certain extraordinary corporate transactions which are not approved by the Board
of Directors. The Articles of Incorporate require the affirmative vote or
consent of the holders of at least two-thirds (662/3%) of the shares of each
class of Common Stock entitled to vote in elections of directors to approve any
merger, consolidation, disposition of all or a substantial part of the assets of
CCBI or a subsidiary of CCBI, exchange of securities requiring stockholder
approval or liquidation of the Company ("Affiliated Transaction"), if any person
who together with his affiliates and associates owns beneficially 5% or more of
any voting stock of CCBI ("Interested Shareholder") is a party to the
transaction; provided that a majority of the Disinterested Directors of the
Company has not approved the transaction. In addition, the Articles of
Incorporation require the separate approval by the holders of a majority of the
shares of each class of stock of entitled to vote in elections of directors
which are not beneficially owned, directly or indirectly, by an Interested
Shareholder, of any merger, consolidation, disposition of all or a substantial
part of the assets of CCBI or a subsidiary of CCBI, or exchange of securities
requiring stockholder approval ("Business Combination"), if an Interested
Shareholder is a party to such transaction; provided, that such approval is not
required if: (i) the consideration to be received by the holders of the stock of
the Company meets certain minimal levels determined by a formula under the CCBI
Articles (generally the highest price paid by the Interested Shareholder for any
shares acquired); (ii) there has been no reduction in the average dividend rate
from that which was obtained prior to the time the Interested Shareholder became
such; and (iii) the consideration to be received by the shareholders who are not
Interested Shareholders shall be paid in cash or in the same form as the
Interested Shareholder previously paid for shares of such class of stock. This
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Article, as well as the Article establishing a classified Board of Directors,
may be amended, altered, or repealed only by the affirmative vote or consent of
the holders of at least 662/3% of the shares of each class of stock entitled to
vote in elections of directors.
Acquisition Offers
The Board of Directors, when evaluating any offer of another Person (as
defined in the Articles of Incorporation) to: (i) make a tender or exchange
offer for any equity security of CCBI; (ii) merge or consolidate the Company
with another corporation or entity; or (iii) purchase or otherwise acquire all
or substantially all of the properties and assets of the Company, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Company and its shareholders, give due consideration to all
relevant factors, including, without limitation: (i) the social and economic
effect of acceptance of such offer on the Company's present and future customers
and employees and those of its Subsidiaries (as defined in the Articles of
Incorporation); (ii) on the communities in which the Company and its
Subsidiaries operate or are located; (iii) on the ability of the Company to
fulfill its corporate objectives as a financial institution holding company; and
(iv) on the ability of its subsidiary financial institutions to fulfill the
objectives of such institutions under applicable statutes and regulations.
Control Share Acquisitions
The Articles of Incorporation provide that any person who acquires 20 %
or more of the Company's shares must comply with the Florida Statutes governing
control-share acquisitions. Generally a person intending to acquire such shares
must give the Company notice of such intent and request a meeting of the
shareholders at which shareholder's will be given an opportunity to vote on
whether such shares will be accorded full voting rights. Refusal by the
shareholders to accord full voting rights would result in the proposed acquiror
obtaining shares which could not be voted on any matters to come before the
shareholders. Certain acquisitions are exempt from the effects of the Article,
such as mergers or business combinations which have been approved by the Board
of Directors, as well as acquisitions of shares issued by CCBI in its original
offering or in subsequent offerings approved by the Board.
The effect of all of the above provisions is to make it more difficult
for a person, entity or group to effect a change in control of the Company
through the acquisition of a large block of CCBI's voting stock.
Indemnification
The FBC Act authorizes Florida corporations to indemnify any person who
was or is a party to any proceeding (other than an action by, or in the right
of, the corporation) by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation or other entity, against liability incurred in connection with such
proceeding, including any appeal thereof, if he or she acted in good faith and
in a manner he or she reasonably believed to be in, or not opposed to, the best
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interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or on behalf of a corporation, indemnification may
not be made if the person seeking indemnification is adjudged liable, unless the
court in which such action was brought determines such person is fairly and
reasonably entitled to indemnification. The indemnification provisions of the
FBC Act require indemnification if a director or officer has been successful on
the merits or otherwise in defense of any action, suit or proceeding to which he
or she was a party by reason of the fact that he or she is or was a director or
officer of the corporation. The indemnification authorized under Florida law is
not exclusive and is in addition to any other rights granted to officers and
directors under the articles of incorporation or bylaws of the corporation or
any agreement between officers and directors and the corporation. A corporation
may purchase and maintain insurance or furnish similar protection on behalf of
any officer or director against any liability asserted against the director or
officer and incurred by the director or officer in such capacity, or arising out
of the status, as an officer or director, whether or not the corporation would
have the power to indemnify him or her against such liability under the FBC Act.
CCBI's Articles of Incorporation provide for the indemnification of
directors and executive officers to the maximum extent permitted by Florida law
as authorized by the Board of Directors and for the advancement of expenses
incurred in connection with the defense of any action, suit or proceeding that
the director or executive officer was a party to by reason of the fact that he
or she is or was a director of CCBI upon the receipt of an undertaking to repay
such amount, unless it is ultimately determined that such director is not
entitled to indemnification.
THE OFFERING
Initial Offering
During the first 75 days following the date of the Prospectus (defined
herein as the "Initial Offering Period") CCBI is offering up to 1,000,000 shares
of its Common Stock (the "Maximum Offering") on a priority basis to Depositors,
shareholders and their Related Parties as of the Record Date, pursuant to
non-transferable Subscription Rights. The Subscription Right entitles each
Director and shareholder and their Related Party to purchase up to a maximum
5,000 shares of Common Stock in the Initial Offering. Depositors, shareholders,
and their Related Parties will be permitted to purchase their respective limits
provided the aggregate number of shares owned at the conclusion of the Offering
does not result in the individual or Related Party's beneficial ownership
exceeding 9.9%. See "Purchase Limitation" and "RISK FACTORS - Voting Control".
The Community Offering
Immediately following the Initial Offering, CCBI is offering shares of
its Common Stock in a Community Offering to members of the general public to
whom a copy of the Prospectus is delivered. Persons of the general public may
subscribe to purchase, individually or with their Related Party, a minimum of
100 shares and maximum of 15,000 shares of Common Stock at the Subscription
Price of $7.50 per share. Individuals who purchase shares in the Initial
Offering will be permitted to subscribe for shares in the Community Offering up
54
<PAGE>
to a maximum of 15,000 shares in the aggregate. Shares purchased by Depositors
and shareholders in the Community Offering will not be on a priority basis.
There can be no assurance that any shares of Common Stock will be available to
persons desiring to subscribe for Common Stock in the Community Offering, or
that the individual will receive the entire amount of shares he or she
subscribes for in the Community Offering. See "- Purchase Limitation". To
properly subscribe for shares of Common Stock in the Offering, the appropriate
sections of the Order Form must be completed, and payment in full must accompany
the Order Form. See "Purchase Limitation".
Officers and Directors Purchase Exception
Each officer and director of the Company and their Related Party, as of
the Record Date, will be permitted to purchase up to 50,000 shares during the
Initial Offering, or in the Community Offering. Purchases made in the Community
Offering will not be on a priority basis.
Expiration Dates of the Offering
The Initial Offering will expire at 5:00 p.m., Local Time, on
___________, 1998. At the expiration of the Initial Offering, unexercised
Subscription Rights will be null and void and the Company will not be obligated
to honor any Order Form received by the Escrow Agent after the Initial Offering
Period, regardless of when the documents were sent.
The period for the Minimum Offering will expire at 5:00 p.m., Local
Time, on ______________, 1998. The Community Offering will expire at 5:00 p.m.,
Local Time, on ______________, 1999, unless the Community Offering is terminated
beforehand at the sole discretion of the Board of Directors.
Conditions to Consummation of the Offering
The Offering will not be consummated and all funds received by the
Company's Escrow Agent will be promptly returned with interest if the Minimum
Offering (300,000 shares of Common stock) is not sold by 5:00 p.m., Local Time,
on ____________, 1998.
Procedures for Subscribing for Common Stock
Depositors, shareholders, officers and directors who desire to exercise
their Subscription Rights, as well as persons who desire to participate in the
Community Offering must deliver to the Escrow Agent, on or prior to the Initial
Offering Period or the Offering Expiration Date, whichever the case may be, a
properly completed and executed Order Form with any required signatures
guaranteed, together with payment in full of the aggregate Subscription Price
for the shares of Common Stock subscribed for in the Offering. Such payment in
full must be: (i) check or bank draft drawn upon a domestic bank or postal,
telegraphic or express money order payable to the Independent Bankers' Bank of
Florida, 109 East Church Street, Orlando, Florida 32801 as Escrow Agent for
CCBI; or (ii) wire transfer of funds to the account maintained by the Escrow
Agent for such purpose. The aggregate Subscription Price will be deemed to have
been received by the Escrow Agent only upon: (i) clearance of any non-certified
55
<PAGE>
check, (ii) receipt by the Escrow Agent of any certified check or bank draft
drawn upon a domestic bank or of any postal, telegraphic or express money order,
or (iii) receipt of good funds in the Escrow Agent's account designated above.
If paying by a non-certified personal check, please note that the funds paid
thereby may take at least five business days to clear. Accordingly, persons who
wish to pay the aggregate Subscription Price by means of a non-certified
personal check are urged to make payment sufficiently in advance to the Initial
Offering Period to ensure that such payment is received and clears by such date
and are urged to consider payment by means of certified or cashier's check,
money order or wire transfer of funds. All funds received by Citizens Bank shall
be forwarded to the Escrow Agent. The Minimum Offering shares must be sold in
order to break escrow. If the Minimum Offering is not sold, the funds held in
the Escrow Account will be returned with interest. If the Minimum Offering
shares is sold and the Offering is closed, earnings on such funds (which are not
expected to be material) will be retained by CCBI. The Escrow Agent will invest
collected Subscription Funds, in short-term direct obligations of the United
States government (either directly or under repurchase agreement), in FDIC
insured money market deposit accounts (not to exceed $100,000), and/or in
short-term FDIC insured certificates of deposit (not to exceed $100,000), but in
any case with maturities of 90 days or less.
The address to which the Order Form and payment of the Subscription
Price should be delivered is:
Independent Bankers' Bank of Florida
Attention: James H. McKillop, III,
Senior Vice President
109 East Church Street
Orlando, Florida 32801
Payment may be made by wire transfer as described above. Persons who
make payments by such method must be sure to deliver to the Escrow Agent, prior
to the Expiration Date, a properly executed and completed Order Form. Order
Forms may be delivered to the Escrow Agent as described above or by telecopy, if
subscription funds are being sent via wire transfer. The Escrow Agent's
telephone number is (407) 423-2002 and the telecopy number is (407) 481-8637.
If the aggregate Subscription Price paid by a subscriber is
insufficient to purchase the number of shares of Common Stock that the
subscriber indicates are being subscribed for, or if a subscriber does not
specify the number of shares of Common Stock to be purchased, or if the
aggregate Subscription Price paid by a subscriber exceeds the amount necessary
to purchase the number of shares of Common Stock for which the subscriber has
indicated an intention to subscribe, then the subscriber will be deemed to have
exercised first, the Subscription Right and second, to have purchased shares of
Common Stock in the Community Offering to the full extent of the payment
tendered (subject only to reduction to the extent necessary to comply with any
regulatory limitation or conditions imposed by CCBI in connection with the
Offering). See "- Purchase Limitation."
If the aggregate Subscription Price paid by a person purchasing shares
in the Community Offering is insufficient to purchase the number of shares of
Common Stock that the person indicates are being subscribed for, or if such
56
<PAGE>
Community Offering participant does not specify the number of share of Common
Stock subscribed for, or if the aggregate Subscription Price paid by a Community
Offering participant exceeds the amount necessary to purchase the number of
shares of Common Stock for which the Community Offering participant has
subscribed, then the Community Offering participant will be deemed to have
subscribed for the number of shares of Common Stock which may be purchased by
the full extent of the payment tendered (subject only to reduction to comply
with regulatory limitations or conditions of the Offering). See "- Purchaser
Limitation."
Holders who hold shares of Common Stock for the account of others, such
as brokers, trustees or depositories for securities, should notify the
respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
Subscription Rights. If such a beneficial owner so instructs, the record holder
of such Subscription Right should submit payment to the Escrow Agent with the
proper documentation. In addition, beneficial owners of Common Stock held
through such a nominee holder should contact the holder and request the holder
to effect transactions in accordance with the beneficial owner's instructions.
The instructions accompanying the Order Form should be read carefully
and followed in detail. Order Forms should be sent with payment to the Escrow
Agent.
The method of delivery of Order Forms and payment of the aggregate
Subscription Price to the Escrow Agent will be at the election and risk of the
participants in the Offering, but if sent by mail, it is recommended that such
Order Form and payments be sent by registered mail, properly insured, with
return receipt requested and that a sufficient number of days be allowed to
ensure delivery to the Escrow Agent and clearance of payment prior to the
expiration Initial Offering Period in the case of Depositors and shareholders or
the Offering Expiration Date in the case of the Community Offering participants,
whichever the case may be. Because uncertified personal checks may take five
business days to clear, you are strongly urged to pay, or arrange for payment,
by means of certified or cashier's check, money order or wire transfer of funds.
All questions concerning the timeliness, validity, form and eligibility
of Order Forms received or any exercise of Subscription Rights will be
determined by CCBI, whose determinations will be final and binding. CCBI in its
sole discretion may waive any defect or irregularity, or permit a defect or
irregularity to be corrected within such time as it may determine, or reject the
purported subscriptions for shares of Common Stock. Order Forms will not be
deemed to have been received or accepted until all irregularities have been
waived or cured within such time as CCBI determine in its sole discretion.
Neither CCBI nor the Escrow Agent will be under any duty to give notification of
any defect or irregularity in connection with the submission of Order Forms or
incur any liability for failure to give such notification.
Subscriptions for the Common Stock which are received by the Escrow
Agent from Depositors, shareholders, officers or directors exercising
Subscription Rights or from person in the Community Offering may not be revoked.
The securities being offered in the Offering will be sold on a
best-efforts basis by certain directors and executive officers of the Company
57
<PAGE>
and no commission will be paid on such sales. The directors and executive
officers are not registered as securities brokers or dealers under the federal
or applicable state securities laws, nor are these individuals affiliated with
any broker or dealer.
Purchase Limitation
CCBI will not be required to issue shares of Common Stock pursuant to
the Offering to any person who, in the opinion of CCBI, would be required to
obtain prior clearance or approval from any federal regulatory authority to own
or control such shares. The minimum number of shares of Common Stock any person
may purchase in the Initial Offering or the Community Offering is 100 shares. No
fractional shares will be issued in the Offering. The maximum a Depositor or
shareholder or their Related Party may purchase in the Initial Offering is 5,000
shares. An officer and director and their Related Party will be permitted to
purchase a maximum of 50,000 shares in either the Initial Offering or the
Community Offering. If shares are available in the Community Offering, each
Depositor, shareholder and their Related Party (without preference) can
subscribe for a total of 15,000 shares in the Offering. Shares not subscribed
for in the Initial Offering will be offered to the general public in the
Community Offering. Participants in the Community Offering may purchase
individually or with their Related Party a maximum of 15,000 shares of Common
Stock. Except for Richard Storm, who already owns in excess of 9.9% of the
Company's Common Stock, no person shall be allowed to purchase, individually or
together with their Related Party, shares of Common Stock in the Initial
Offering or the Community Offering, which when aggregated would exceed 9.99% of
the total number of shares outstanding at the conclusion of the Offering.
Under FDIC regulations a rebuttable presumption of concerted action
will occur, but is not limited to these situations: (1) a person will be
presumed to be acting in concert with the members of the person's immediate
family (which includes a person's spouse, father, mother, children, brothers,
sisters and grandchildren; the father, mother, brother and sisters of the
person's spouse; and the spouse of the person's child, brother or sister); (2)
persons will be presumed to be acting in concert with each other where: (i) both
own stock in a bank and both are also management officials, controlling
shareholders, partners, or trustees of another company; or (ii) one person
provides credit to another or is instrumental in obtaining financing for another
person to purchase stock of the bank; and (3) a person will be presumed to be
acting in concert with any trust for which such person or company serves as a
trustee.
Blue Sky Consideration
The securities in this Offering will be registered in the following
states: Colorado, Florida, Maine, Iowa, Illinois, Indiana, Kentucky, Maryland,
Michigan, North Carolina, Nevada, New York, Ohio, Pennsylvania, Wisconsin and
West Virginia. The Company, however, reserves the right to increase the maximum
number of shares to be offered in any state, to the extent that such increase in
the Offering is permitted by the securities laws and regulations of any such
states.
The securities in this Offering will not be registered in the following
states: Connecticut, Georgia, Massachusetts, Missouri, New Hampshire, New
Jersey, South Carolina, Tennessee, Texas, Virginia and Washington. In these
58
<PAGE>
states, the Offering will be limited solely to existing shareholder of the
Company pursuant to available exemptions from registration provided under the
Blue Sky Laws of those states.
Issuance of Common Stock
Provided that all conditions necessary to consummate the Offering are
satisfied, including the sale of a minimum of 300,000 shares of Common Stock in
the Minimum Offering, certificates representing shares of Common Stock purchased
pursuant to the Offering will be delivered to purchasers as soon as practical
after the Expiration Date of the Minimum Offering and after all prorations and
adjustments contemplated by the Initial Offering and Community Offering have
been effected. No fractional shares will be issued in the Offering.
Subscription Price
The Subscription Price is $7.50 in cash, per share, of the Common Stock
subscribed for in the Offering. See"DETERMINATION OF SUBSCRIPTION PRICE."
Foreign and Certain Other Shareholders
Order Forms will not be mailed to shareholders whose addresses are
outside the United States or who have an APO or FPO address, but will be held by
the Escrow Agent for their account. To exercise their Subscription Rights, such
Shareholder must notify the Escrow Agent prior to the expiration of Initial
Offering Period.
Certain Federal Income Tax Considerations
For federal income tax purposes, receipt of the Subscription Rights
should be treated as a non-taxable distribution with respect to the Common
Stock. A shareholder will have a zero basis in the Subscription Rights, unless:
(i) either the shareholder elects under Section 307 Code to allocate a portion
of his or her basis in his or her existing Common Stock to the Subscription
Rights (based on their relative fair market value) or the fair market value of
the Subscription Rights at the time of distribution equals or exceeds 15% of the
fair market value of the Common Stock at that time, in which case the allocation
of basis (based upon relative fair market values) is required; and (ii) the
shareholder exercises such Subscription Rights.
Upon exercise of Subscription Rights, shareholder will not recognize
gain or loss. The basis of each share of Common Stock acquired upon exercise of
a Subscription Right will equal the sum of the Subscription Price and the basis,
if any, in the Subscription Right exercised. The holding period for such Common
Stock will begin on the date the Subscription Rights are exercised. No loss will
be recognized by a shareholder who receives Subscription Rights and allows those
Subscription Rights to lapse.
Because of the individual nature of tax consequences, shareholders are
advised to consult their tax advisors with respect to these and other federal,
state and local tax consequences of the distribution and exercise of
Subscription Rights.
59
<PAGE>
Intention of Directors and Executive Officers
The directors and executive officers of the Company as a group (16
persons) have indicated to the Company that they intend to subscribe for , in
the aggregate, 100,000 shares of Common Stock, either through exercise of
Subscription Rights or in the Community Offering. These intentions are not
commitments and could change based upon individual circumstances. Assuming the
full exercise indicated by the directors and executive officers of the Company,
such persons would be deemed to beneficially own 43.82% and 31.97% of the Common
Stock assumed to be outstanding on a pro forma basis following the Minimum
Offering and the Maximum Offering, respectively.
Right to Amend or Terminate the Offering
CCBI expressly reserves the right to amend the terms and conditions of
the Offering whether the terms and conditions are more or less favorable to the
Initial Offering and Community Offering participants. In the event of a material
change to the terms of the Offering, the Company will file a post-effective
amendment to its Registration Statement, of which this Prospectus is a part, and
resolicit subscribers to the extent required by the Commission. CCBI expressly
reserves the right, at any time prior to delivery of shares of Common Stock
offered hereby, to terminate the Offering if the Offering is prohibited by law
or regulation or the Board of Directors concludes, in its judgment, that it is
not in the best interests of CCBI to complete the Offering under the
circumstances. The Offering would be terminated by CCBI by giving oral or
written notice thereof to the Escrow Agent and making a public announcement
thereof. If the Offering is so terminated, all funds received from the Initial
Offering or Community Offering participants will be promptly refunded, with
interest.
Transfer Agent and Registrar
Prior to the Offering, the Company served as transfer agent for the
Common Stock. The Company has engaged Registrar and Transfer Company, Cranford,
New Jersey, to handle stock transfers, stock record keeping, and mailing of all
proxy materials.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, CCBI will have 1,871,624 shares of
Common Stock outstanding assuming the sale of the Minimum Offering and
2,571,624, assuming the sale of the Maximum Offering. These shares will be
freely tradeable without restriction or further registration under the Exchange
Act, except for shares held or purchased by "affiliates" of the Company, defined
in Rule 144 promulgated under the Exchange Act to mean a person who directly or
indirectly through the use of one or more intermediaries controls, is controlled
by, or is under common control with the Company.
CCBI and its executive officers and directors, and certain officers of
Citizens Bank holding, in the aggregate, 822,210 shares of Common Stock
60
<PAGE>
(assuming full exercise of their Warrants and intended purchases in this
Offering) will be eligible for sale in the public market, subject to the volume
and other limitations on sale imposed by Rule 144, or unless otherwise
registered under the Exchange Act.
In general, under Rule 144, a person (or person whose shares are
aggregated) who has beneficially owned shares for at least one year, including
"affiliates" of the Company, would be entitled to sell within any three month
period that number of shares that does not exceed the greater of (i): 1% of the
number of shares of Common Stock then outstanding (18,716 shares based on the
Minimum Offering and 25,716 shares based on the Maximum Offering); or (ii) the
average weekly trading volume of the Common Stock during the four calendar weeks
preceding such sale. Sales pursuant to Rule 144 are subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of the Company at any time during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, would be entitled to sell such shares under
Rule 144(k) without regard to the requirements described above.
LEGAL MATTERS
Certain legal matters, including, among other things, the validity of
the shares of Common Stock offered hereby and the tax aspects of the
Subscription Rights for existing shareholders have been passed upon by Igler &
Dougherty, P.A., Tallahassee, Florida, counsel to the Company.
EXPERTS
The consolidated financial statements of the Company set forth herein
as of December 31, 1997 and 1996, and for each of the years in the two-year
period ended December 31, 1997, have been included herein and in the
Registration Statement in reliance upon the report of Hacker, Johnson, Cohen &
Grieb appearing elsewhere herein, and upon the authority of said firm as experts
in accounting and auditing.
AVAILABLE INFORMATION
CCBI is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 and at the following regional offices of the
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such
material also can be obtained from the Commission's Public Reference Section at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates and from the Commission's Web Site at http://www.sec.gov.
61
<PAGE>
This Prospectus constitutes part of a Registration Statement on Form
SB-2 (File No. ________) filed by CCBI with the Commission under the Exchange
Act. This Prospectus omits certain of the information contained in the
Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to CCBI and the Common Stock.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, where a copy of such document has
been filed as an exhibit to the Registration Statement or otherwise has been
filed with the Commission, reference is made to the copy so filed.
62
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements Page
- ---------------------------- ----
Independent Auditors' Report......................................... F-2
Consolidated Balance Sheets, December 31, 1997 and 1996.............. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1997 and 1996.................................. F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997 and 1996....................... F-5
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997 and 1996............................. F-6
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1997 and 1996.............................F-7 - F-18
All schedules are omitted because of the absence of the conditions under which
they are required or because the required information is included in the
financial statements and related notes.
63
<PAGE>
Independent Auditors' Report
Board of Directors
Citizens Community Bancorp, Inc.
Marco Island, Florida:
We have audited the accompanying consolidated balance sheets of Citizens
Community Bancorp, Inc. and Subsidiaries (the "Company") at December 31, 1997
and 1996, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/HACKER, JOHNSON, COHEN & GRIEB PA
- ------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
February 6, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
At December 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Assets
Cash and due from banks.............................................................. $ 3,153,577 1,353,777
Federal funds sold................................................................... 9,057,000 6,688,000
---------- ----------
Cash and cash equivalents.............................................. 12,210,577 8,041,777
Securities held to maturity.......................................................... 2,498,614 2,240,290
Loans, net of allowance for loan losses of $298,000 and $145,000..................... 26,420,149 12,115,911
Premises and equipment, net.......................................................... 2,845,997 2,293,140
Accrued interest receivable and other assets......................................... 308,152 132,406
Deferred income taxes................................................................ 138,043 204,000
------------ -----------
Total assets........................................................... $ 44,421,532 25,027,524
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits.................................................................. 3,153,135 2,366,487
Savings and NOW deposits......................................................... 16,300,813 8,670,357
Money-market deposits............................................................ 1,302,296 417,775
Time deposits.................................................................... 16,182,123 6,430,485
---------- ----------
Total deposits......................................................... 36,938,367 17,885,104
Official checks.................................................................. 473,521 579,703
Mortgage payable................................................................. - 525,000
Accrued interest payable and other liabilities................................... 238,886 73,534
------------ -----------
Total liabilities...................................................... 37,650,774 19,063,341
---------- ----------
Commitments (Note 7)
Stockholders' Equity:
Preferred stock, $.01 value, 2,000,000 shares authorized,
none issued or outstanding.................................................. - -
Common stock, $.01 par value 8,000,000 shares authorized
and 1,571,624 and 707,610 shares issued and outstanding..................... 15,716 7,076
Additional paid-in capital....................................................... 7,010,515 6,322,086
Accumulated deficit.............................................................. (255,473) (364,979)
----------- -----------
Total stockholders' equity............................................. 6,770,758 5,964,183
---------- ----------
Total liabilities and stockholders' equity............................. $ 44,421,532 25,027,524
========== ==========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Year Ended December 31,
-----------------------
1997 1996
---- ----
Interest income:
<S> <C> <C>
Loans ........................................................................ $ 1,913,828 322,538
Securities..................................................................... 140,545 118,531
Federal funds sold............................................................. 468,404 254,864
Deposits in banks.............................................................. - 43,863
-------------- -------
Total interest income................................................... 2,522,777 739,796
--------- -------
Interest expense:
Deposits....................................................................... 1,197,823 276,691
Other ........................................................................ 9,573 6,182
----------- --------
Total interest expense.................................................. 1,207,396 282,873
--------- -------
Net interest income................................................................ 1,315,381 456,923
Provision for loan losses.......................................................... 153,000 145,000
---------- -------
Net interest income after provision for loan losses..................... 1,162,381 311,923
--------- -------
Noninterest income:
Gain on sale of loans.......................................................... 68,476 -
Other service charges and fees................................................. 176,974 57,412
Other ........................................................................ 27,652 12,297
---------- --------
Total noninterest income................................................ 273,102 69,709
--------- --------
Noninterest expense:
Compensation and benefits..................................................... 641,693 332,124
Occupancy and equipment........................................................ 167,755 153,548
Advertising.................................................................... 31,917 20,491
Organizational expenses........................................................ - 100,079
Professional fees.............................................................. 18,108 35,257
Office supplies................................................................ 30,120 68,982
Data processing................................................................ 62,195 33,765
Other ........................................................................ 308,232 170,681
---------- -------
Total noninterest expense............................................... 1,260,020 914,927
--------- -------
Earnings (loss) before income taxes (benefit)...................................... 175,463 (533,295)
Income taxes (benefit).................................................. 65,957 (191,000)
---------- -------
Net earnings (loss)................................................................ $ 109,506 (342,295)
========= =======
Earnings (loss) per share:
Basic...................................................................$ .07 (.26)
=========== ==========
Diluted.................................................................$ .07 (.26)
=========== ==========
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Common Stock
Number Additional Total
Preferred of Paid-In Accumulated Stockholders'
Stock Shares Amount Capital Deficit Equity
----- ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995........... $ 21,000 - - - (22,684) (1,684)
Redemption of 210 shares of
preferred stock................... (21,000) - - - - (21,000)
Issuance of 707,610 shares of
common stock...................... - 7,076 - 6,322,086 - 6,329,162
Net loss ............................ - - - - (342,295) (342,295)
----------- ---------- -------- ------------- ------- ---------
Balance at December 31, 1996........... - 707,610 7,076 6,322,086 (364,979) 5,964,183
Issuance shares of common
stock at $9.00.................... - 77,452 774 689,545 - 690,319
Two-for-one stock split on
December 15, 1997................. - 785,062 7,851 (7,851) - -
Issuance of shares at $4.50............ - 1,500 15 6,735 - 6,750
Net earnings........................... - - - - 109,506 109,506
----------- --------- -------- -------------- ------- ----------
Balance at December 31, 1997...........$ - 1,571,624 15,716 7,010,515 (255,473) 6,770,758
========== ========= ====== ========= ======= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended December 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................................................ $ 109,506 (342,295)
Adjustments to reconcile net earnings (loss) to net cash used in
operating activities:
Depreciation.............................................................. 82,818 73,610
Provision for loan losses................................................. 153,000 145,000
Provision (credit) for deferred income taxes.............................. 65,957 (191,000)
Amortization of loan fees, premiums and discounts......................... (148,005) (19,340)
(Increase) decrease in accrued interest receivable and other assets....... (175,746) 14,592
Loans originated for sale................................................. (4,687,283) -
Sale of loans originated for sale......................................... 4,755,759 -
Gain on sale of loans..................................................... (68,476) -
Increase in accrued interest payable and other liabilities................ 165,352 24,503
----------- ------------
Net cash provided by (used in) operating activities.............. 252,882 (294,930)
----------- -----------
Cash flows from investing activities:
Purchase of securities held to maturity........................................ (1,750,000) (5,220,309)
Maturities of securities held to maturity...................................... 1,500,000 3,000,000
Net increase in loans.......................................................... (14,317,557) (12,261,552)
Purchase of premises and equipment............................................. (635,675) (1,163,961)
----------- ----------
Net cash used in investing activities............................ (15,203,232) (15,645,822)
---------- ----------
Cash flows from financing activities:
Net increase in demand, savings, NOW and money-market deposits................. 9,301,625 11,454,619
Net increase in time deposits.................................................. 9,751,638 6,430,485
Net (decrease) increase in official checks..................................... (106,182) 579,703
Repayment of advances from organizers.......................................... - (239,000)
Redemption of preferred stock.................................................. - (21,000)
Sale of common stock........................................................... 697,069 6,329,162
Payment of mortgage payable.................................................... (525,000) (593,806)
----------- -----------
Net cash provided by financing activities........................ 19,119,150 23,940,163
---------- ----------
Net increase in cash and cash equivalents.......................................... 4,168,800 7,999,411
Cash and cash equivalents at beginning of year..................................... 8,041,777 42,366
---------- -----------
Cash and cash equivalents at end of year........................................... $ 12,210,577 8,041,777
========== ==========
Supplemental disclosure of cash flow information: Cash paid during the year for:
Interest ................................................................. $ 1,093,507 233,273
========== ==========
Income taxes..............................................................$ - -
============== ==========
Noncash transactions-
Issuance of mortgage payable for acquisition of property..................$ - 525,000
============== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1997 and 1996
(1) Summary of Significant Accounting Policies
Organization. Citizens Community Bancorp, Inc. (the "Holding Company") was
incorporated on May 24, 1995. The Holding Company owns 100% of the
outstanding common stock of Citizens Community Bank of Florida (the
"Bank") and 100% of Citizens Financial Corp. ("Citizens Financial")
(collectively the "Company"). The Holding Company was organized
simultaneously with the Bank and its primary business is the ownership
and operation of the Bank and Citizens Financial. The Bank is a Florida
state-chartered commercial bank and is insured by the Federal Deposit
Insurance Corporation. The Bank opened for business on March 8, 1996
and provides community banking services to businesses and individuals
in Collier County, Florida. Citizens Financial was formed and commenced
business as a mortgage broker in 1997.
Basis of Presentation. The accompanying consolidated financial statements of
the Company include the accounts of the Holding Company, the Bank and
Citizens Financial. All significant intercompany accounts and
transactions have been eliminated in consolidation. The accounting and
reporting practices of the Company conform to generally accepted
accounting principles and to general practices within the banking
industry.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Securities Held to Maturity. United States government treasury and agency
securities for which the Company has the positive intent and ability to
hold to maturity are reported at cost, adjusted for amortization of
premiums and accretion of discounts which are recognized in interest
income using the interest method over the period to maturity.
LoansHeld for Sale. Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of cost or estimated market
value in the aggregate. At December 31, 1997 and 1996 there were no
loans held for sale.
Loans Receivable. Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off
are reported at their outstanding principal adjusted for any
charge-offs, the allowance for loan losses, and any deferred fees or
costs on originated loans and unamortized premiums or discounts on
purchased loans.
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield of the related
loan.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Company's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, and current economic
conditions.
(continued)
F-7
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Summary of Significant Accounting Policies, Continued
Premises and Equipment. Premises and equipment are stated at cost less
accumulated depreciation. Depreciation expense is computed on the
straight-line basis over the estimated useful life of each type of
asset.
Stock-Based Compensation. Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("Statement 123")
establishes a "fair value" based method of accounting for stock-based
compensation plans and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However,
it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees" (Opinion 25). The Company has elected to follow Opinion 25
and related interpretations in accounting for its employee stock
options. Statement 123 requires the disclosure of proforma net earnings
and earnings per share determined as if the Company accounted for its
employee stock options under the fair value method of that Statement.
Income Taxes. Deferred tax assets and liabilities are reflected at currently
enacted income tax rates applicable to the period in which the deferred
tax assets or liabilities are expected to be realized or settled. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
Off-Balance-Sheet Instruments. In the ordinary course of business the
Company has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit. Such financial instruments
are recorded in the financial statements when they are funded.
Advertising. The Company expenses all media advertising as incurred.
Fair Values of Financial Instruments. The following methods and assumptions
were used by the Company in estimating fair values of financial
instruments disclosed herein:
Cash and Cash Equivalents. The carrying amounts of cash and cash
equivalents approximate their fair value.
Securities Held to Maturity. Fair values for securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Loans. For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying
values. Fair values for certain fixed-rate mortgage (e.g. one-to-four
family residential), commercial real estate and commercial loans are
estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of
similar credit quality.
Deposit Liabilities. The fair values disclosed for demand, NOW,
money-market and savings deposits are, by definition, equal to the
amount payable on demand at the reporting date (that is, their carrying
amounts). Fair values for fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation that applies
interest rates currently being offered on certificates to a schedule of
aggregated expected monthly maturities on time deposits.
Accrued Interest. The carrying amounts of accrued interest approximate
their fair values.
Off-Balance-Sheet Instruments. Fair values for off-balance-sheet
lending commitments are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.
(continued)
F-8
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1) Summary of Significant Accounting Policies, Continued
Earnings (Loss) Per Share. Earnings (loss) per share ("EPS") of common stock
has been computed on the basis of the weighted-average number of shares
of common stock outstanding. For purposes of calculating diluted EPS
because there is no active trading market for the Company's common
stock, the average book value per share was used. For 1997 and 1996,
outstanding warrants and stock options were not dilutive. The weighted
average number of shares outstanding in 1997 and 1996 were 1,558,457
and 1,331,624, respectively.
Future Accounting Requirements. Financial Accounting Standards 130 -
Reporting Comprehensive Income establishes standards for reporting
comprehensive income. The Standard defines comprehensive income as the
change in equity of an enterprise except those resulting from
stockholder transactions. All components of comprehensive income are
required to be reported in a new financial statement that is displayed
with equal prominence as existing financial statements. The Company
will be required to adopt this Standard effective January 1, 1998. As
the Statement addresses reporting and presentation issues only, there
will be no impact on operating results from the adoption of this
Standard.
Financial Accounting Standards 131 - Disclosures about Segments of an
Enterprise and Related Information establishes standards for related
disclosures about products and services, geographic areas, and major
customers. The Company will be required to adopt this Standard
effective January 1, 1998. As the Standard addresses reporting and
disclosure issues only, there will be no impact on operating results
from adoption of this Standard.
(2) Securities Held to Maturity
Securities have been classified as held to maturity, in accordance with
management's intent. The carrying amount of securities and their
approximate fair values are as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
December 31, 1997:
U.S. Treasuries................... $ 249,786 56 - 249,842
U.S. Government agencies.......... 2,248,828 - (1,410) 2,247,418
--------- ---------- ----- ---------
$ 2,498,614 56 (1,410) 2,497,260
========= ======== ===== =========
December 31, 1996:
U.S. Treasuries................... 1,743,345 10,069 (2,251) 1,751,163
U.S. Government agencies.......... 496,945 - (5,079) 491,866
--------- -------- ----- ---------
$ 2,240,290 10,069 (7,330) 2,243,029
========= ====== ===== =========
</TABLE>
There were no sales of securities in 1997 or 1996.
The scheduled maturities of securities at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
---- -----
<S> <C> <C>
Due in one or less.......................................................... $ 998,614 998,200
Due after one through five years............................................. 1,500,000 1,499,060
--------- ---------
$ 2,498,614 2,497,260
========= =========
(continued)
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3) Loans
The components of loans are as follows:
At December 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Commercial real estate.................................................... $ 9,422,955 3,757,335
Residential real estate................................................... 7,260,686 4,384,301
Commercial................................................................ 7,710,001 3,814,584
Consumer.................................................................. 2,261,622 305,332
---------- ----------
26,655,264 12,261,552
Add (Subtract):
Deferred costs (fees), net.............................................. 62,885 (641)
Allowance for loan losses............................................... (298,000) (145,000)
----------- -----------
Loans, net................................................................ $ 26,420,149 12,115,911
========== ==========
An analysis of the change in the allowance for loan losses follows:
Year Ended December 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
Beginning balance......................................................... $ 145,000 -
Provision for loan losses................................................. 153,000 145,000
------- -------
$ 298,000 145,000
======= =======
</TABLE>
The Company had no impaired loans in 1997 or 1996.
(continued)
F-10
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4) Premises and Equipment
A summary of premises and equipment follows:
At December 31,
1997 1996
---- ----
<S> <C> <C>
Land.................................................................. $ 931,056 931,056
Bank premises......................................................... 1,581,383 536,576
Construction in progress.............................................. - 696,276
Furniture, fixtures and equipment..................................... 442,775 163,566
--------- ---------
Total, at cost.................................................... 2,955,214 2,327,474
Less accumulated depreciation..................................... 109,217 34,334
---------- ---------
Premises and equipment, net....................................... $ 2,845,997 2,293,140
========= =========
</TABLE>
(5) Deposits
The aggregate amount of certificates of deposit with a minimum denomination
of $100,000, was approximately $4,019,000 and $1,467,000 at December
31, 1997 and 1996, respectively.
A schedule of maturities of certificates of deposit follows:
Year Ending
December 31, Amount
------------ ------
1998............................. $ 11,532,779
1999............................. 4,261,691
2000............................. 285,653
2001............................. -
2002 and thereafter.............. 102,000
-----------
$ 16,182,123
(6) Mortgage Payable
At December 31, 1996, the Company had an 8% note payable collateralized by
a mortgage on a future branch site. The note was payable based on a 20
year amortization with a balloon payment due 2001. This note was repaid
during 1997.
(continued)
F-11
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7) Financial Instruments
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments are commitments to extend credit
and may involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amount recognized in the balance
sheet. The contract amounts of these instruments reflect the extent of
involvement the Company has in these financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend
credit is represented by the contractual amount of those instruments.
The Company uses the same credit policies in making commitments as it
does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since some of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The
Company evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained if deemed necessary by the
Company upon extension of credit is based on management's credit
evaluation of the counterparty.
The estimated fair values of the Company's financial instruments were as
follows (in thousands):
<TABLE>
<CAPTION>
At December 31, 1997 At December 31, 1996
---------------------- --------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Financial assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents..................... $ 12,211 12,211 8,042 8,042
Securities held to maturity................... 2,499 2,497 2,241 2,243
Loans receivable.............................. 26,420 26,681 12,116 12,116
Accrued interest receivable................... 220 220 101 101
Financial liabilities:
Deposit liabilities........................... 36,938 37,053 17,885 17,921
</TABLE>
A summary of the notional amounts of the Company's financial instruments,
which approximates market value with off balance sheet risk at December
31, 1997 follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Unfunded loan commitments at variable rates............................. $ 997
======
Available lines of credit............................................... $ 5,110
=====
</TABLE>
(continued)
F-12
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8) Credit Risk
The Company grants the majority of its loans to borrowers throughout
Collier County, Florida. Although the Company has a diversified loan
portfolio, a significant portion of its borrowers' ability to honor
their contracts is dependent upon the economy in Collier County,
Florida.
(9) Income Taxes
The income tax provision (benefit) consisted of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996
---- ----
Deferred:
<S> <C> <C>
Federal................................................................... $ 56,317 (163,000)
State..................................................................... 9,640 (28,000)
------ -------
Total deferred provision (credit)...................................... $ 65,957 (191,000)
====== =======
</TABLE>
The reasons for the differences between the statutory federal income tax
rate and the effective tax rate are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
% of % of
Pretax Pretax
Amount Earnings Amount Loss
------ -------- ------ ----
Income tax benefit at statutory Federal
<S> <C> <C> <C> <C>
income tax rate...................................... $ 59,657 34.0% $(181,320) (34.0)%
Increase (decreases) resulting from
State taxes, net of federal tax benefit.............. 6,362 3.6 (18,480) (3.4)
Other................................................ (62) - 8,800 1.6
-------- ------- ------- ----
$ 65,957 37.6% $(191,000) (35.8)%
====== ==== ======= ====
</TABLE>
(continued)
F-13
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) Income Taxes, Continued
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below.
<TABLE>
<CAPTION>
At December 31,
---------------
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses........................................... $ - 45,000
Contributions....................................................... 1,451 1,000
Net operating loss carryforward..................................... 154,500 158,000
Organization and start-up costs..................................... 33,753 -
------- -------
Total deferred tax asset.......................................... 189,704 204,000
------- -------
Deferred tax liabilities:
Depreciation........................................................ 25,522 -
Accrual to cash adjustment.......................................... 24,154 -
Allowance for loan losses........................................... 1,985 -
------- ------
Total deferred tax liabilities.................................... 51,661 -
------- ------
Net deferred income taxes......................................... $ 138,043 204,000
======= =======
</TABLE>
At December 31, 1997, the Company had a net operating loss carry forward
for federal and state income tax purposes of approximately $411,000 to
offset future taxable income, which expires in the year 2011.
(10) Stock Options
The Company established an Incentive Stock Option plan for officers and
employees and reserved 200,000 shares of common stock for the plan. At
December 31, 1997, 36,600 shares remain available for grant. The
options vest at the rate of 20% per year beginning one year after
grant.
<TABLE>
<CAPTION>
Range
of Per Weighted-
Number Share Average Aggregate
of Option Per Share Option
Shares Price Price Price
------ ----- ----- -----
<S> <C> <C> <C> <C>
Outstanding at December 31, 1995.................... - $ - - -
Options granted..................................... 51,000 4.50 4.50 229,500
------ -------
Outstanding at December 31, 1996.................... 51,000 4.50 4.50 229,500
Options granted..................................... 125,000 4.50-6.00 5.18 648,090
Options terminated.................................. (12,600) 4.50 4.50 (56,700)
Options exercised................................... (8,000) 4.50 4.50 (36,000)
------- -------
Outstanding at December 31, 1997.................... 155,400 $ 4.50-6.00 5.05 784,890
======= ========= ==== =======
</TABLE>
The weighted-average remaining contractual of the outstanding stock options
at December 31, 1997 and 1996 was 114 months and 76.8 months,
respectively.
(continued)
F-14
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10) Stock Options, Continued
These options are exercisable as follows:
Year Ending
1998......................................... 43,800
1999......................................... 28,600
2000......................................... 28,600
2001......................................... 25,800
2002......................................... 28,600
-------
155,400
In order to calculate the fair value of the options, it was assumed that the
risk-free interest rate was 6.0%, there would be no dividends paid by the
Company over the exercise period, the expected life of the options would
be the entire exercise period and stock volatility would be zero due to
the lack of an active market for the stock. The following information
pertains to the fair value of the options granted to purchase common
stock:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Weighted-average grant-date fair value of options
issued during the year......................................... $ 168,041 59,505
======= ======
For purposes of pro forma disclosures, the estimates fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma net earnings and earnings per share were as follows:
1997 1996
---- ----
<S> <C> <C>
Net earnings (loss) - as reported ................................... $ 109,506 (342,295)
Net earnings (loss) - pro forma...................................... 97,605 (342,295)
Basic earnings (loss) per share - as reported........................ .07 (.26)
Basic earnings (loss) per share - pro forma.......................... .06 (.26)
</TABLE>
(11) Stockholders' Equity
TheBoard of Directors voted to split the common shares on a two-for-one
basis effective December 15, 1997. All share amounts reflect this split.
TheBank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At December 31, 1997,
the Bank had no amounts available for dividends.
As of December 31, 1996, the Company has sold 1,415,220 shares of common
stock for an aggregate of $6,368,490. The Company incurred $39,328 in
offering expenses relating to their public offering of the Company's
common stock and warrants. Offering expenses were deducted from the
proceeds received from the sale of common stock and warrants.
During the initial offering period shares were offered in units with a unit
consisting of one share of common stock and one warrant. Each warrant
entitles the holder thereof to purchase 1/2 of one share of additional
common stock for $4.50 per share during the 24 month period ending June
16, 1998. There were 1,340,000 warrants issued and as of December 31,
1997 there were 1,285,550 warrants outstanding entitling the holders to
purchase 642,775 shares of the Company's stock.
(continued)
F-15
<PAGE>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(11) Stockholders' Equity, Continued
TheCompany is offering common stock to depositors of the Bank. Each
depositor who opens a deposit account with a balance of $1,000 or more
may purchase up to 500 shares of common stock at $9.00 per share. This
offer expires March 8, 1997.
(12) Regulatory Matters
TheHolding Company and the Bank are subject to various regulatory capital
requirements administered by various regulatory banking agencies. Failure
to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Company's
financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgements by
the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations)
to risk- weighted assets (as defined), and of Tier I capital (as defined)
to average assets (as defined). Management believes, as of December 31,
1997, that the Company meets all capital adequacy requirements to which
it is subject.
As of December 31, 1997, the most recent notification from the regulatory
authorities categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There
are no conditions or events since that notification that management
believes have changed the Bank's category. The Bank's actual capital
amounts and ratios are also presented in the table (dollars in
thousands).
<TABLE>
<CAPTION>
For Well
For Capital Capitalized
Actual Adequacy Purposes: Purposes:
---------------------- ----------------------- ------------------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total capital (to Risk
Weighted Assets).......... $ 4,643 17.67% $ 2,102 8.00% $ 2,627 10.0%
Tier I Capital (to Risk
Weighted Assets).......... 4,354 16.57 1,051 4.00 1,576 6.0
Tier I Capital
(to Average Assets)....... 4,354 10.67 1,633 4.00 2,041 5.0
As of December 31, 1996:
Total capital (to Risk
Weighted Assets).......... 3,890 30.80 1,011 8.00 1,264 10.0
Tier I Capital (to Risk
Weighted Assets).......... 3,747 29.65 505 4.00 758 6.0
Tier I Capital
(to Average Assets)....... 3,747 19.46 770 4.00 963 5.0
</TABLE>
(continued)
F-16
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13) Parent Company Only Financial Information
The Holding Company's financial information is as follows:
Condensed Balance Sheets
(In thousands)
At December 31,
---------------
1997 1996
---- ----
Assets
<S> <C> <C>
Cash............................................................................. $ 271 1,313
Loans receivable................................................................. 1,261 661
Investment in subsidiary......................................................... 4,458 3,747
Premises and equipment, net...................................................... 785 754
Other assets..................................................................... - 23
-------- -----
Total assets................................................................. $ 6,775 6,498
===== =====
Liabilities and Stockholders' Equity
Mortgage payable................................................................. - 525
Liabilities...................................................................... 4 9
Stockholders' equity............................................................. 6,771 5,964
----- -----
Total liabilities and stockholders' equity................................... $ 6,775 6,498
===== =====
Condensed Statements of Operations
(In thousands)
Year Ended
December 31,
------------
1997 1996
---- ----
<S> <C> <C>
Revenues......................................................................... $ 162 69
Expenses......................................................................... (146) (78)
--- ---
Income (loss) before income (loss) of subsidiary............................. 16 (9)
Income (loss) of subsidiary.................................................. 94 (333)
----- ---
Net income (loss)............................................................ $ 110 (342)
=== ===
</TABLE>
(continued)
F-17
<PAGE>
<TABLE>
<CAPTION>
CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13) Parent Company Only Financial Information, Continued
Condensed Statements of Cash Flows
(In thousands)
Year Ended
December 31,
------------
1997 1996
<S> <C> <C>
---- ----
Cash flows from operating activities:
Net earnings (loss)............................................................. $ 110 (342)
Adjustments to reconcile net earnings (loss) to net cash provided
by operating activities:
Equity in undistributed (earnings) loss of subsidiaries..................... (94) 333
Net decrease in other assets................................................ 23 137
Decrease in other liabilities............................................... (5) (40)
Depreciation................................................................ 17 3
------ -----
Net cash provided by operating activities................................... 51 91
------ -----
Cash flows from investing activities:
Purchase of property and equipment, net of transfer to subsidiary............... (48) 446
Net increase in loans receivable................................................ (600) (661)
------ -----
Net cash used in investing activities....................................... (648) (215)
------ -----
Cash flows from financing activities:
Repayment of mortgage note payable.............................................. (525) (594)
Net proceeds from issuance of common stock...................................... 697 6,329
Retire preferred stock.......................................................... - (21)
Repayment of advances from organizers........................................... - (239)
Investment in subsidiary........................................................ (617) (4,080)
------ -----
Net cash provided by financing activities................................... (445) 1,395
------- -----
Net (decrease) increase in cash...................................................... (1,042) 1,271
Cash at beginning of the year........................................................ 1,313 42
----- ------
Cash at end of year.................................................................. $ 271 1,313
===== =====
</TABLE>
F-18
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the Offer made by this Prospectus, and if given or
made, such information or Representations must be relied upon as having been
authorized by Citizens Community Bancorp, Inc. or any sales agent or
broker-dealer. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
sell or a sonication of an offer to buy any securities offered hereby anyone in
any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer or sonication.
TABLE OF CONTENTS:
Prospectus Summary...............................
Selected Consolidated Financial Data.............
Risk Factors.....................................
Use of Proceeds..................................
Capitalization...................................
Determination of Subscription Price..............
Market for Common Stock and Dividends............
Management's Discussion and Analysis of
Financial Condition and.....................
Results of Operations.......................
Business.........................................
Regulation and Supervision.......................
Management.......................................
Executive Compensation...........................
Certain Transactions.............................
Beneficial Ownership of Common Stock.............
Description of Capital Stock.....................
Summary of the
Articles of Incorporation of CCBI...........
The Offering.....................................
Shares Eligible for Future Sale..................
Legal Matters....................................
Experts..........................................
Available Information............................
Index to Consolidated Financial Statements ......
1,000,000 Shares
Common Stock
PROSPECTUS
March ___, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14: Other Expenses of Issuance and Distribution
The expenses in connection with the sale of the Common Stock, other
than the sales agents commission are estimated as follows:
Securities and Exchange Commission Registration Fee...$ 2,273
Printing and Engraving................................ 17,000
Legal Fees and Expenses............................... 50,000
Accounting Fees and Expenses.......................... 15,000
Blue Sky Qualifications............................... 15,000
Miscellaneous......................................... 727
----------
Total ......................................$100,000
Item 15: Indemnification of Directors and Officers
The Florida Business Corporation Act (Chapter 607, Florida Statutes)
("FBC Act") authorizes Florida corporations to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation) by reason of the fact that he or she is or was a director, officer,
employee, or agent of another corporation or other entity, against liability
incurred in connection with such proceeding, including any appearance thereof,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the best interest of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. In the case of any action by or on behalf of a
corporation, indemnification may not be made if the person seeking
indemnification is adjudged liable, unless the court in which such action was
brought determines such person is fairly and reasonably entitled to
indemnification. The indemnification provisions of the FBC Act require
indemnification if a director or officer has been successful on the merits or
otherwise in defense of any action, suit or proceeding to which he or she was
party by reason of the fact that he or she is or was a director or officer of
the corporation. The indemnification authorized under Florida law is not
exclusive and is in addition to any other rights granted to officers and
directors under the Articles of Incorporation or Bylaws of the corporation or
any agreement between officers and directors under the Articles of Incorporation
or Bylaws of the corporation or any agreement between offices and director and
the corporation. A corporation may purchase and maintain insurance or furnish
similar protection on behalf of any officer or director against any liability
asserted against the director or officer and incurred by the director or officer
in such capacity, or arising out of the status, as an officer or director,
whether or not the corporation would have the power to indemnify him or her
against such liability under the FBC Act.
The Articles of Incorporation of Citizens Community Bancorp, Inc.
("CCBI") provide for the indemnification of directors and executive officers to
the maximum extent permitted by Florida law as authorized by the Board of
<PAGE>
Directors, and for the advancement of expenses incurred in connection with the
defense of any action, suit or proceeding that the director or executive officer
was a party to be reason of the fact that he or she is or was a director of CCBI
upon the receipt of an undertaking to repay such amount, unless it is ultimately
determined that such director is not entitled to indemnification.
Item 16: Exhibits
(a) Listing of Exhibits
Exhibit
3.1 1995 Amended and Restated Articles of Incorporation of CCBI
3.2 Bylaws of CCBI
4.0 Specimen Common Stock certificate
5.0 Opinion of Igler & Dougherty, P.A.
regarding legality of shares of CCBI
8.0 Opinion of Igler & Dougherty, P.A. regarding tax matters
10.1 Incentive Stock Option Plan for Key Officers and Employees
10.2 1998 Directors' Stock Option Plan
10.3 Employment Agreement between
Citizens Community Bank of Florida and
Michael A. Micallef, Jr.
10.4 Escrow Agreement with the Independent Bankers' Bank of Florida
12.0 Statement Regarding Computation of Ratios
23.1 Consent of Igler & Dougherty, P.A.
23.2 Consent of Hacker, Johnson, Cohen & Grieb
24.0 Power of Attorney
99.1 Letter to Depositors regarding Subscription Right
99.2 Letter to Shareholders regarding Subscription Right
99.3 Acceptance Form
99.4 Subscription Order Form
Item 17: Undertakings
(a) The undersigned Registrant hereby undertakes that:
(1) for purposes of determining any liability under the
Securities Act of 1933 ("Exchange Act"), the
information omitted from the form of Prospectus filed
as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) for the purpose of determining any liability under
the Securities Act, each post-effective amendment
that contains a form of prospectus shall be deemed to
be a new Registration Statement relating to the
securities offered therein,
<PAGE>
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities
arising under the Securities Act may be
permitted to directors, officers, and
controlling persons of 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 Securities 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 policy as
expressed in the Securities Act and will be
governed by the final adjudication of such
issue.
(c) The undersigned Registrant hereby undertakes
to supplement the Prospectus, after the
expiration of the subscription period, to
set forth the results of the subscription
offer, the transactions by the underwriters
during the subscription period, the amount
of unsubscribed securities to be purchased
by the underwriters, and the terms of any
subsequent reoffering thereof. If any public
offering by the underwriters is to be made
on terms differing from those set forth on
the cover page of the Prospectus, a
post-effective amendment will be filed to
set forth the terms of such offering.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Marco
Island, State of Florida, on March 10, 1998
CITIZENS COMMUNITY BANCORP, INC.
By: /s/Richard Storm, Jr.
---------------------------------
Richard Storm, Jr.
President (Principal Executive
Officer) of the Company:
Citizens Community Bancorp, Inc.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Richard Storm, Jr. Chairman of the Board, Chief March 10, 1998
- --------------------------- Executive-Officer and President
Richard Storm, Jr.
/s/Stephen A. McLaughlin Director, Vice President and March 10, 1998
- --------------------------- Chief-Financial-Officer
Stephen A. McLaughlin (Principal Financial Officer)
/s/Diane M. Beyer Director March 10, 1998
- ---------------------------
Diane M. Beyer
/s/Joel M. Cox, Sr. Director March 10, 1998
- ---------------------------
Joel M. Cox, Sr.
/s/Thomas B. Garrison Director March 10, 1998
- ---------------------------
Thomas B. Garrison
/s/James S. Hagedorn Director March 10, 1998
- ---------------------------
James S. Hagedorn
/s/Dennis J. Lynch Director March 10, 1998
- ---------------------------
Dennis J. Lynch
/s/Louis Smith Director March 10, 1998
- ---------------------------
Louis Smith
/s/Jack G. Wolf Director March 10, 1998
- ---------------------------
Jack G. Wolf
</TABLE>
<PAGE>
REGISTRATION STATEMENT FORM SB-2
Subsequently
Exhibit Numbered Page
- ------- -------------
3.1 1995 Amended and Restated Articles
of Incorporation of CCBI..................................
3.2 Bylaws of CCBI.............................................
4.0 Specimen Common Stock certificate..........................
5.0 Opinion of Igler & Dougherty, P.A.
regarding legality of shares of CCBI......................
8.0 Opinion of Igler & Dougherty, P.A. regarding tax matters...
10.1 Incentive Stock Option Plan for
Key Officers and Employees................................
10.2 1998 Directors' Stock Option Plan..........................
10.3 Employment Agreement between
Citizens Community Bank of Florida
and Michael A. Micallef, Jr...............................
10.4 Escrow Agreement with the
Independent Bankers' Bank of Florida......................
12.0 Statement Regarding Computation of Ratios..................
23.1 Consent of Igler & Dougherty, P.A..........................
23.2 Consent of Hacker, Johnson, Cohen & Grieb..................
24.0 Power of Attorney..........................................
99.1 Letter to Depositors regarding Subscription Right..........
99.2 Letter to Shareholders regarding Subscription Right........
99.3 Acceptance Form............................................
99.4 Subscription Order Form....................................
EXHIBIT 3.1
1995 AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF CCBI
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CITIZENS COMMUNITY BANCORP, INC.
The undersigned incorporators, for the purpose of forming a corporation
under the Florida Business Corporation Act, hereby adopt the following Articles
of Incorporation.
ARTICLE I - NAME
The name of the Corporation is Citizens Community Bancorp, Inc.
("Corporation"). The principal place of business of the Corporation shall be 606
Bald Eagle Drive, Suite 301, Marco Island, Florida 33937 or at such other place
within the State of Florida as the Board of Directors may designate. The names
of the registered agent is Igler & Dougherty, P.A., 1501 Park Avenue East,
Tallahassee, Florida 32301, which address is also the address of the Registered
Office of the Corporation.
ARTICLE II - NATURE OF BUSINESS
The Corporation may engage in or transact any or all lawful activities
or business permitted under the laws of the United States and the State of
Florida, or any other state, county, territory or nation.
ARTICLE III - CAPITAL STOCK
Section 1 - Classes of Stock: The total number of shares of all classes
of capital stock which the Corporation shall have authority to issue is
10,000,000, consisting of:
A. 2,000,000 shares of preferred stock, par value one cent
($0.01) per share ("Preferred Stock"); and
B. 8,000,000 shares of common stock, par value one cent
($0.01) per share ("Common Stock"). Each holder of shares of Common
Stock shall be entitled to one vote per share.
Section 2 - Preferred Stock: The Board of Directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of the
1
<PAGE>
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Florida (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
ARTICLE IV - TERM OF EXISTENCE
This Corporation is to exist perpetually.
ARTICLE V - OFFICERS AND DIRECTORS
The names and street addresses of the initial officers and directors
who shall hold office the first year of the Corporation's existence or until
their successors are elected are:
<TABLE>
<CAPTION>
<S> <C>
Name Address Title
- ---- ------- -----
Diane Beyer 511 Gordonia Road Director
Naples, Florida 33942
Joel M. Cox, Sr. 606 Bald Eagle Drive Chairman of
Marco Island, FL 33937 The Board
Thomas Garrison 1120 Silver Sands Avenue Director
Naples, FL 33942
Paul Janssens-Lens 992 Winterberry Director
Marco Island, FL 33937
Dennis Lynch 540 Brentwood Point Director
Naples, FL 33963
Heidi Mayerhofer 1276 Treasure Court Director
Marco Island, FL 33937
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Address Title
- ---- ------- -----
<S> <C>
Steve McLaughlin 6624D Tannin Court Director
Naples, FL 33942
Richard Storm, Jr. 264 Rock Hill Court Director
Marco Island, FL 33937
</TABLE>
ARTICLE VI - INCORPORATORS
The name and street address of the incorporator to these Articles of
Incorporation is Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee,
Florida 32301.
ARTICLE VII - MANAGEMENT OF THE BUSINESS OF THE COMPANY
Section 1 - Authority of the Board. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2 - Action by Shareholders. Any action required or permitted to
be taken by the shareholders of the Corporation must be effected at a duly
called Annual or Special Meeting of Shareholders of the Corporation and may not
be effected by any consent in writing by such shareholders.
Section 3 - Special Meetings of Shareholders. Special Meetings of
shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or the President of the Corporation, or by
shareholders holding at least 20% of the outstanding shares of the Corporation.
3
<PAGE>
ARTICLE VIII - NUMBER OF DIRECTORS
Section 1 - Number of Directors: The Board of Directors of the
Corporation shall be comprised of not less than three (3) nor more than fifteen
(15) directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the Corporation. However, this paragraph
shall not be construed to limit the authority of the shareholders of the
Corporation to increase the number of directors in accordance with the Bylaws of
the Corporation.
Section 2 - Election and Term: Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The term of the initial directors of the
Corporation expires at the first shareholders' meeting at which directors are
elected.
Section 3 - Classes: The directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the 1996 Annual Meeting of Shareholders, the
term of office of the second class (Class II) to expire at the 1997 Annual
Meeting of Shareholders and the term of office of the third class (Class III) to
expire at the 1998 Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Shareholders
after their election.
Section 4 - Vacancies: Subject to the rights of the holders of any
series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum. Directors so chosen shall hold office for a term expiring at the next
4
<PAGE>
Annual Meeting of Shareholders. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director. Section 5 - Notice: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation. Section 6 - Removal by Shareholders:
Subject to the rights of the holders of any series of Preferred Stock then
outstanding, any director, or the entire Board of Directors, may be removed from
office at any time by the affirmative vote of the holders of at least 60% of the
voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
ARTICLE IX - SPECIAL VOTING PROVISIONS FOR AFFILIATED
TRANSACTIONS AND BUSINESS COMBINATIONS
Section 1 - Definitions: The terms defined below shall apply for
purposes of this Article IX:
A. "Affiliated Transaction," when used in reference to the
Corporation and any Interested Shareholder (as hereinafter defined),
means any of the following situations:
l. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (I) any
Interested Shareholder or (ii) any other corporation (whether
or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate of an
Interested Shareholder.
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) of assets of the Corporation or any
Subsidiary of the Corporation to or with any Interested
Shareholder, or any Affiliate or Associate of any Interested
Shareholder:
a. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all assets, determined on a consolidated
basis, of the Corporation; or
5
<PAGE>
b. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all outstanding shares of the Corporation;
or
c. Representing 5% or more of the earning
power or net income determined on a consolidated
basis, of the Corporation.
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any shares of the Corporation or any Subsidiary to any
Interested Shareholder or any Affiliate of any Interested
Shareholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market
Value (as hereinafter defined) equaling or exceeding 5% or
more of all the outstanding shares of the Corporation and its
Subsidiaries, except pursuant to the exercise of warrants or
rights to purchase stock offered, or a dividend or
distribution paid or made, pro rata to all shareholders of the
Corporation.
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Shareholder or any Affiliate of any
Interested Shareholder.
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not with
or into or otherwise involving an Interested Shareholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate of any Interested
Shareholder.
6. any receipt by the Interested Shareholder or any
Affiliate or Associate of the Interested Shareholder of the
benefit, directly or indirectly (except proportionately as a
shareholder of the Corporation), of any loans, advances,
6
<PAGE>
guaranties, pledges, or other financial assistance or any tax
credits or other tax advantages provided by or through the
Corporation.
B. "Interested Shareholder" means any Person who is the
Beneficial Owner, directly or indirectly, of more than 10% of the
outstanding voting shares of the corporation. However, the term
"Interested Shareholder" shall not include the Corporation or any
Subsidiary; any savings, employee stock ownership, or other employee
benefit plan of the Corporation or any Subsidiary; or any fiduciary of
any such plan when acting in such capacity. For the purpose of
determining whether a person is an Interested Shareholder pursuant to
this Section, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through application of
Article III, Section 3, but shall not include any other shares of
Voting Stock that may be issuable pursuant to any contract, arrangement
or understanding, upon exercise of conversion rights, warrants,
options, or otherwise.
C. "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in Paragraph B of this Section 1,
the term "Subsidiary" shall mean only a corporation of which a majority
of each class of equity security is owned, directly or indirectly, by
the Corporation.
D. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a
member of the Board of Directors prior to the time that the Interested
Shareholder became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the Board of Directors.
E. "Fair Market Value" means: (I) the Fair Market Value of a
share on the date in question shall be determined by a majority of
Disinterested Directors, appropriately adjusted for any dividend or
distribution in shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller
number of shares of such stock; and (ii) in the case of property other
7
<PAGE>
than cash or shares, the Fair Market Value of such property on the date
in question as determined by a majority of the Disinterested Directors.
F. Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate adjustment
for any dividend or distribution in shares of such stock or any stock
split or reclassification of outstanding share of such stock into a
greater number of shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller
number of shares of such stock.
G. "Affiliate" shall have the meaning set forth in Section
607.0901, Florida Statutes.
H. "Person" shall mean any individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture,
an investors' pool, a joint stock company, a trust, an unincorporated
organization or similar company, a syndicate or any other group formed
for the purpose of acquiring, holding or disposing of the equity
securities of the Corporation.
I. "Beneficial Ownership" is defined herein to mean a Person
who, directly or indirectly, has the:
1. voting power, which includes the power to vote or
to direct the voting of the "Voting Stock" as that term is
defined herein;
2. investment power, which includes the power to
dispose of or to direct the disposition of the Voting Stock;
or
3. the right to acquire the voting power or
investment power, whether such right is exercisable
immediately or only after the passage of time, pursuant to any
agreement, arrangement or understanding or upon the exercise
of conversion rights, warrants or options, or otherwise. J.
"Acting in Concert" means (i) knowing participation in a joint
activity or conscious parallel action towards a common goal
whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangements, whether written or otherwise.
8
<PAGE>
K. "Voting Stock" means the outstanding shares of all classes
or series of the Corporation entitled to vote generally in the election
of directors.
Section 2 - Affiliated Transactions: In addition to any affirmative
vote required by law or these Articles of Incorporation, and except as otherwise
expressly provided in this Section, any Affiliated Transaction shall be approved
by the affirmative vote of the holders of two-thirds of the Voting Stock, voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law or in any agreement with any national
securities exchange or otherwise.
Section 3 - Exceptions: The voting provisions of Section 2 of this
Article IX shall not be applicable to a particular Affiliated Transaction if all
of the conditions specified in either of the following Paragraphs A and B are
met: A. The Affiliated Transaction has been approved by a majority of the
Disinterested Directors; or
B. In the Affiliated Transaction, consideration shall be paid
to the holders of each class of voting shares and all of the following
conditions shall be met:
1. The aggregate amount of the cash and the Fair
Market Value, as of the valuation date of consideration, other
than cash to be received per share by the holders of Common
Stock in such Affiliated Transaction are at least equal to the
higher of the following:
a. if applicable, the Highest Per Share
Price (as previously defined herein), including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for
any shares of Common Stock acquired by it (I) within
the two-year period immediately prior to the first
public announcement date of the Affiliated
Transaction ("Announcement Date"), or (ii) in the
transaction in which it became an Interested
Shareholder, whichever is higher;
b. the Fair Market Value per share of Common
Stock on the Announcement Date or on the date on
9
<PAGE>
which the Interested Shareholder became an Interested
Shareholder (such latter date is referred to in this
Article IX as the "Determination Date"), whichever is
higher;
c. if applicable, the price per share equal
to the Fair Market Value per share of such class or
series determined pursuant to sub-paragraph (b) of
this Section 3, multiplied by the ratio of the
Highest Per Share Price, including any brokerage
commissions, transfer taxes and soliciting dealers'
fees, paid by the Interested Shareholder for any
shares of Voting Stock acquired by it within the
two-year period immediately prior the Announcement
Date (the numerator), to the Fair Market Value per
share of such class or series on the first day in
such two-year period on which the Interested
Shareholder acquired the Voting Stock (the
denominator); or
d. if applicable, the highest preferential
amount per share to which the holders of shares of
such Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.
2. The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common
Stock) shall be in cash or in the same form as the Interested
Shareholder has previously paid for shares of such Voting
Stock. If the Interested Shareholder has paid for shares of
any class of Voting Stock with varying forms of consideration,
the form of consideration for such class of Voting Stock shall
be either cash or the form used to acquire the largest number
of shares of such class of Voting Stock previously acquired by
it. The consideration to be received pursuant to this
provision shall be subject to appropriate adjustment in the
event of any stock dividend, stock split, combination of
shares or similar event.
10
<PAGE>
3. During such portion of the three-year period
preceding the announcement date that such Interested
Shareholder has become an Interested Shareholder and except as
approved by a majority of the Disinterested Directors:
a. there shall have been no failure to
declare and pay at the regular date any full
quarterly dividends (whether or not cumulative) on
any outstanding stock having preference over the
Common Stock as to dividends or liquidation;
b. there shall have been (I) no reduction in
the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of
the Common Stock), and (ii) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock, and
(iii) no such Interested Shareholder who has become
the Beneficial Owner of any additional shares of
Voting Stock except as part of the transaction which
results in such Interested Shareholder becoming an
Interested Shareholder.
4. Unless approved by a majority of the Disinterested
Directors, no Interested Shareholder shall have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Affiliated
Transaction or otherwise, during the three-year period
preceding the date the Interested Shareholder became an
Interested Shareholder.
5. A proxy or information statement describing the
proposed Affiliated Transaction and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
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shareholders of the Corporation at least 30 days prior to the
consummation of such business combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
Section 4 - Board Discretion: A majority of the Disinterested Directors
of the Corporation shall have the power and duty to determine for the purposes
of this Article IX, on the basis of information known to them after reasonable
inquiry, (I) whether a person is an Interested Shareholder; (ii) the number of
shares of Voting Stock beneficially owned by any person; (iii) whether a person
is an Affiliate or Associate of another; and (iv) whether the assets which are
the subject of any Affiliated Transaction have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Affiliated Transaction has, an aggregate Fair Market Value
equal to or greater than 25% of the combined assets of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article IX.
Section 5 - Interested Shareholder's Duty: Nothing contained in this
Article IX shall be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
Section 6 - Amendment: Notwithstanding any other provisions of these
Articles of Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, these
Articles of Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least 66% of the voting power of all of the
then-outstanding shares of the Voting Stock (after giving effect to the
provisions of Article III of these Articles of Incorporation), voting together
as a single class, shall be required to alter, amend or repeal this Article IX.
ARTICLE X - CONTROL SHARE ACQUISITIONS
It is the intent of the Organizers of the Corporation that the
provisions of the "Florida Control-Share Acquisitions" statute, Section 607.0902
Florida Statutes (1994 Supp.) shall apply to acquisitions of the Corporation's
shares by a person acting alone or as part of a group which would result in an
Acquiring Person, as defined herein, owning Control Shares of the Company,
except for those acquisitions defined in Section 1(f)(2) and (3) of this
Article.
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SECTION 1 - Definitions: The following terms when used in this section
shall mean: (a) "Acquiring Person" means a person who makes or proposes
to make, or persons acting as a "group" as defined in sec. 13(d)(3) of
the Securities Exchange Act of 1934 who make or propose to make, a
Control-Share Acquisition; but "Acquiring Person" does not include the
Corporation.
(b) "Acquiring Person Statement" means the statement provided for in
Section 607.0902(6), Florida Statutes (1994 Supp.) which shall set forth all of
the following:
(1) The identity of the Acquiring Person and each other member of
any group of which the Acquiring Person is a part for purposes of determining
Control Shares.
(2) A statement that the Acquiring Person Statement is given
pursuant to Section 607.0902(6), Florida Statutes (1994 Supp.).
(3) The number of shares of the Corporation owned, directly or
indirectly following the acquisition, by the Acquiring Person and each other
member of the group.
(4) The range of voting power under which the Control-Share
Acquisition falls or would, if consummated, fall.
(5) If the Control-Share Acquisition has not taken place:
(I) A description in reasonable detail of the terms of the
proposed Control- Share Acquisition; and
(ii) Representations of the Acquiring Person, together with a
statement, in reasonable detail of the facts upon which they are based,
that the proposed Control-Share Acquisition, if consummated, will not
be contrary to law and that the Acquiring Person, has the financial
capacity to make the proposed Control-Share Acquisition, including the
acquisition of dissenter's shares, if any.
(C) "Affiliate" means a person who directly or indirectly controls the
Corporation. "Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the Corporation,
whether through the ownership of voting securities, by contract, or otherwise. A
person's beneficial ownership of ten percent or more of the voting power of a
Corporation's outstanding shares entitled to vote in the election of directors
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(except a person holding voting power in good faith as an agent, bank, broker,
nominee, custodian or trustee for one or more beneficial owners who do not
individually or as a group control the Corporation) creates a presumption that
the person controls the Corporation.
(d) "All voting power" means the aggregate voting power that the
shareholders of the Corporation would have in the election of directors, except
for this Article.
(e) "Control Shares" means issued and outstanding shares of the
Corporation that, except for this section, would have voting power when added to
all other shares of the Corporation owned of record or beneficially by an
Acquiring Person or in respect to which that Acquiring Person may exercise or
direct the exercise of voting power, that would entitle the Acquiring Person,
immediately after acquisition of the shares (directly or indirectly), to
exercise or direct the exercise of the voting power of the Corporation in the
election of directors within any of the following ranges of voting power:
(1) One-fifth (1/5) or more but less than one-third (1/3) of all voting
power; (2) One-third (1/3) or more but less than a majority of all voting power;
or (3) A majority or more of all voting power. (f)(1) "Control-Share
Acquisition" means acquisition by any person of ownership of, orthe power to
direct the exercise of voting power with respect to, Control Shares.
(2) A person who acquires shares in the ordinary course of business for
the benefit of others in good faith and not for the purpose of circumventing
this section has not made a Control- Shares Acquisition of shares in respect of
which that person is not able to exercise or direct the exercise of votes
without further instruction from others.
(3) The acquisition of any Control Shares does not constitute a
Control-Share Acquisition if the acquisition is made in good faith and not for
the purpose of circumventing this section in any of the following circumstances:
A. Shares acquired in any distribution conducted by the Corporation
through any public or private offering or acquired pursuant to any warrant
certificate, stock option plan or other employee benefit plan.
B. Pursuant to the laws of descent and distribution.
C. By a donee under an inter vivos gift.
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D. Pursuant to a transfer between or among immediate family members, or
between or among persons under direct common control. An "immediate family
member" is any relative or spouse of a person, or any relative of such spouse,
who has the same home as such person.
E. Pursuant to the satisfaction of a pledge or other security interest.
F. Pursuant to a merger or plan of consolidation or share exchange
effected in compliance with Florida Statute, if the Corporation is a party to
the agreement of merger or plan of consolidation or share exchange.
G. From any person whose previous acquisition of Control Shares would
have constituted a Control-Shares Acquisition but for this Section 1(e)(3)
(other than this subsection 1(e)(3)(G), provided the acquisition does not result
in the Acquiring Person holding voting power within a higher range of voting
power than that of the person from whom the Control Shares were acquired.
H. Acquisition by a person of additional shares within the range of
voting power for which such person has received approval pursuant to the Control
Share Statute or within the range of voting power resulting from shares acquired
in a transaction described in this Section 1(e)(3).
I. An increase in voting power resulting from any action taken by the
Corporation, provided the person whose voting power is thereby affected is not
an Affiliate of the Corporation.
J. Pursuant to the solicitation of proxies subject to Regulation 14A
under the Securities Exchange Act of 1934 or Chapter 607 of the Florida
Statutes.
(g) "Interested Shares" means the shares of the Corporation in respect
of which any of the following persons may exercise or direct the exercise, as of
the applicable record date, of the voting power of the Corporation in the
election of directors, other than solely by the authority of a revocable proxy:
(1) The Acquiring Person.
(2) Any officer of the Corporation.
(3) Any employee of the Corporation who is also a director of the
Corporation.
(h) "Person" means any individual, Corporation, partnership,
unincorporated association or other entity.
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SECTION 2 - Voting Rights: Control Shares of the Corporation acquired
in a Control- Share Acquisition shall have only such voting rights as are
granted by resolution approved by the holders of other than Interested Shares of
the Corporation, as provided for in Section 607.0902(a), Florida Statutes (1994
Supp).
SECTION 3. - Redemption of Control Shares by the Company: Control
Shares acquired in a Control-Share Acquisition with respect to which no
Acquiring Person Statement has been filed with the Corporation are subject to
redemption by the Corporation at any time during the period ending 60 days after
the last acquisition of Control Shares by such Acquiring Person or persons. Such
shares are also subject to redemption by the Corporation in the event the
Control Shares are not accorded full voting rights by the shareholders as
provided for in Section 607.0902 (10)(b) and Section 607.0902(9) of the Florida
Statutes (1994 Supp.). Such shares shall be subject to redemption at the fair
value thereof. Fair value shall be the higher of, the average price paid for all
shares of the Corporation, exclusive of the Control Shares, for the 90 days
prior to the date of redemption by the Corporation or book value of the
Corporation's shares on the last day of the month preceding the date of
redemption by the Corporation, as calculated by Generally Accepted Accounting
Procedures ("GAAP").
SECTION 4 - Rights of Dissenting Shareholders: If the Control-Share
Acquisition is approved by the required vote at the meeting of shareholders at
which it was voted upon, then any shareholder who did not vote in favor of the
Control-Share Acquisition shall have the right to file with the Corporation a
written demand for payment for his/her shares within ten (10) days after the
date of the shareholder meeting. A shareholder may demand payment for less than
all of the shares registered in his/her name. The Corporation shall deliver all
such demands for payment to the Acquiring Person immediately following the
expiration of the ten (10) day period. The Acquiring Person shall then be
obligated to purchase all shares subject to the demand for payment for the
highest amount he has proposed to pay per share in the Control-Share
Acquisition. Payment to shareholders making demand must be made on the day upon
which the Control-Share Acquisition is consummated or upon surrender of the
certificate or certificates representing shares for which demand has been made
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to the Acquiring Person, whichever is later. Any shareholder failing to make
demand within the applicable ten (10) day period shall remain a shareholder of
the Corporation.
SECTION 5 - Alteration or Repeal of this Section: This Section shall
not be altered, amended, or repealed, except by an affirmative vote of at least
662/3 percent of the total number of shares of the Corporation entitled to vote
on such matter.
ARTICLE XI - ACQUISITION OFFERS
The Board of Directors of the Corporation, when evaluating any offer of
another Person to (I) make a tender or exchange offer for any equity security of
the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries (as defined in Article IX); on the
communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objectives
as a financial institution holding company and on the ability of its subsidiary
financial institutions to fulfill the objectives of such institutions under
applicable statutes and regulations.
ARTICLE XII - INDEMNIFICATION
Section 1 - General: The Corporation shall indemnify any officer,
director, employee or agent of the Corporation to the fullest extent authorized
by Section 607.0850 of the Florida Business Corporation Act as it now exists or
may hereafter be amended (the "FBCA") but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment. This includes, but is not limited to, any
person who was or is made a party or is threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or she, or a person
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of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such Proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
reasonably incurred or suffered by such person in connection therewith. Such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnity in connection with an action, suit
or Proceeding (or part thereof) initiated by such person only if such action,
suit or Proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. Such right shall be a contract right and shall include the
right to be paid by the Corporation for all expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however, that,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this Article or
otherwise.
Section 2 - Failure to Pay Claim: If a claim under Section 1 of this
Article is not paid in full by the Corporation within 90 days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the FBCA for the Corporation to indemnify the claimant for the amount claimed,
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but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the FBCA, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its shareholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that claimant has not met the applicable
standard of conduct. Section 3 - Other Rights: The rights conferred on any
individual by Sections 1 and 2 of this Article shall not be exclusive of any
other right which such individual may have or hereafter acquire under any
statute, provision of these Articles of Incorporation, Bylaws of the
Corporation, agreement, vote of shareholders or Disinterested Directors or
otherwise. Section 4 - Insurance: The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the FBCA. Section 5 - Personal Liability: A director of
the Corporation shall not be personally liable to the Corporation or its
shareholders for monetary damages for any statement, vote, decision or failure
to act regarding corporate management or policy except as provided in the FBCA.
If the FBCA is amended after adoption of these Articles of Incorporation and
such amendment further eliminates or limits the personal liability of directors,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the FBCA, as so amended. Any repeal
or modification of the foregoing paragraph by the shareholders or the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification.
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ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by the
laws of the State of Florida, and all rights conferred upon shareholders are
granted subject to this reservation; provided, however, that, notwithstanding
any other provision of these Articles of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 66% of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors (after giving effect to the provisions of Article III),
voting together as a single class, shall be required to amend or repeal this
Article XII, Section 3 of Article VII, Article VIII, Article IX or Article XI.
In witness of the foregoing, the undersigned has executed these Amended
Articles of Incorporation on behalf of the Board of Directors this 10th day of
October, 1995.
/s/ Herbert D. Haughton
Herbert D. Haughton
General Counsel
STATE OF FLORIDA )
COUNTY OF LEON )
BEFORE ME, the undersigned Notary Public, in and for the State of
Florida at large, personally appeared Herbert D. Haughton, known personally to
me to be the individual described in and who executed the foregoing Amended
Articles of Incorporation of Citizens Community Bancorp, Inc. and after being
duly sworn, acknowledged that he executed the same for the uses and purposes
therein expressed.
(Seal) /s/ Sharon M. Rivera
Notary Public
/s/ Sharon M. Rivera
Name Typed or Printed
My commission expires: May 25, 1997
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EXHIBIT 3.2
BYLAWS OF CCBI
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BYLAWS
of
CITIZENS COMMUNITY BANCORP, INC.
Article I. Meeting of Shareholders
Section 1. Annual Meeting. Unless otherwise determined by the Board of
Directors, the annual meeting of the shareholders for the election of Directors,
and for the transaction of such other business as may properly come before the
meeting, shall be held at the principal office of the Citizens Community
Bancorp, Inc. ("Corporation"), at 2:00 p.m., on the 3rd Tuesday of April
following the close of each fiscal year, if such day is not a legal holiday. If
such day is a legal holiday, the annual meeting will be held on the first
following day that is not a legal holiday or on such date and at such time
chosen by the Board of Directors. Failure to hold the annual meeting at the
designated time shall not work any forfeiture or a dissolution of the
corporation.
Section 2. Special Meetings. Special meetings of the shareholders of
the Corporation may be called by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether or
not there exist any vacancies in previously authorized directorships at the time
any such resolution is presented to the Board for adoption), the Chairman of the
Board or the President of the Corporation, or by shareholders holding twenty
(20%) percent of the outstanding shares of the Corporation.
Section 3. Place Of Meeting. Unless otherwise directed by the Board of
Directors, meetings of the shareholders shall be held at the principal offices
of the Corporation in the State of Florida.
Section 4. Notice Of Meeting. Written notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered to each shareholder
of record entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the meeting, either personally or by mail, by or at the
direction of the Chairman of the Board, the President and Chief Executive
Officer, the Secretary, or the officer or persons calling the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the Corporation, with postage thereon prepaid.
Section 5. Waiver of Notice of Meeting of Shareholders. Any notice
required to be given to any shareholder of the Corporation by law or under the
provisions of the Articles of Incorporation of the Corporation or these Bylaws
may be waived by a waiver in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends the meeting for the express purpose of objectives, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or conveyed.
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Section 6. Notice of Adjourned Meetings. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and any business may
be transacted at the adjourned meeting that might have been transacted on the
original date of the meeting. If, however, after the adjournment, the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in Section 4 of these Bylaws to
each shareholder of record on the new record date entitled to vote at such
meeting.
Section 7. Closing Of Transfer Books and Fixing Record Date. For the
purpose of determining shareholders entitled to notice or to vote at any meeting
of shareholders or any adjournment thereof, or entitled to receive payment or
any dividend, or in order to make a determination of shareholders for any other
purpose, the Board of Directors may provide that the stock transfer books shall
be closed for a stated period but not to exceed, in any case, sixty (60) days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice or to vote at a meeting of shareholders, such
books shall be closed for at least ten (10) days immediately preceding such
meeting.
In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty (60) days and, in
case of a meeting of shareholders, not less than ten (10) days prior to the date
on which the particular action, requiring such determination of shareholders is
to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board of Directors fixes a new
record date for the adjourned meeting.
Section 8. Voting Record. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten (10)
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, with their address
and the number, class and series of shares, if any, held by each. Such list
shall be kept on file at the registered office of the Corporation, at the
principal place of business of the Corporation or at the office of the transfer
agent or registrar of the Corporation for a period of ten (10) days prior to
such meeting and shall be subject to inspection by any shareholder at any time
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during normal business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder at any time during the meeting.
If the requirements of this Section have not been substantially
complied with, the meeting shall be adjourned on the demand of any stockholder
in person or by proxy until the requirements are complied with. If no such
demand is made, failure to comply with the requirements of this Section shall
not affect the validity of any action taken at such meeting.
Section 9. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. When a specified item of business is required to
be voted on by a class or series of stock, a majority of the shares of such
class or series shall constitute a quorum for the transaction of such item of
business by that class or series.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required.
After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
Section 10. Voting Of Shares. The holders of common stock shall possess
and exercise exclusive voting rights. Each outstanding share of common stock
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
Treasury shares, shares of this Corporation's own stock owned by
another corporation, the majority of the voting stock of which is owned or
controlled by this Corporation, and shares of this Corporation's own stock held
by it in a fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of outstanding
shares at any given time.
A shareholder may vote either in person or by proxy executed in writing
by the shareholder or his duly authorized attorney-in-fact.
At the election for directors, every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected at
that time and for whose election he has a right to vote.
Shares entitled to vote standing in the name of another corporations,
domestic or foreign, may be voted by the officer, agent, or proxy designated by
the Bylaws of the corporate shareholder. In the absence of any such designation,
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or in case of conflicting designation by the corporate shareholders, the
Chairman of the Board, President, any Vice President, Secretary and Treasurer of
the corporate shareholder shall be presumed to possess, in that order, authority
to vote such shares.
Shares entitled to vote held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares entitled to vote standing in the
name of a trustee may be voted by him, either in person or by proxy, but a
trustee shall not be entitled to vote shares held by him without a transfer of
such shares into his name.
Shares entitled to vote standing in the name of a receiver may be voted
by such receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his name, if authority
to do so is contained in an appropriate order of the court by which such
receiver was appointed.
A shareholder otherwise entitled to vote whose shares are pledged shall
be entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter, the pledgee or his nominee shall be
entitled to vote the shares so transferred.
Shares shall not be entitled to vote on any matter and shall not be
deemed to be outstanding shares if on or after the date on which written notice
or redemption of redeemable shares has been mailed to the holders thereof and a
sum sufficient to redeem such shares has been deposited with a bank or trust
company with irrevocable instruction and authority to pay the redemption price
to the holders thereof upon surrender of certificates.
Section 11. Proxies. Every shareholder entitled to vote at a meeting of
shareholders or the express consent or dissent without a meeting or his duly
authorized attorney-in-fact may authorize another person or persons to act for
him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact.
No proxy shall be valid after the expiration of six (6) months from the date
thereof, unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided by
law.
The authority of the holder of a proxy to act shall not be revoked by
the incompetence or death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
If a proxy for the same shares confers authority upon two or more
persons and does not otherwise require a majority of them to be present at the
meeting, or if only one is present then that one may exercise all the powers
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conferred by the proxy; but if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
Any proxy holder may appoint in writing a substitute to act in his
place, if expressly provided for in the proxy.
Section 12. Voting Trusts. Any number of shareholders of this
Corporation may create a voting trust for the purpose of conferring upon a
trustee or trustees the right to vote or otherwise represent their shares, as
provided by law, for a period not to exceed five (5) years. Where the
counterpart of a voting trust agreement and the copy of the record of the
holders of voting trust certificates have been deposited with the Corporation,
the Corporation is to treat the shareholders of record as entitled to vote the
shares standing in their names.
A transferee of shares of this Corporation shall be bound by any such
shareholder's agreement if he takes the shares subject to such agreement with
notice thereof.
Section 13. Shareholders' Agreements. Two or more shareholders of this
Corporation may enter into an agreement if in writing and signed by the parties
thereof, providing for the exercise of voting rights in the manner provided in
the Agreement, or as they may agree, or as determined in accordance with
procedures agreed upon by them. Nothing therein shall impair the right of the
Corporation to treat the shareholders of record as entitled to vote the shares
standing in their names.
A transferee of shares of this Corporation shall be bound by any such
shareholder's Agreement if he takes the shares subject to such Agreement with
notice thereof.
Section 14. Shareholder Proposals and New Business. To be considered
for inclusion in the proxy statement and proxy relating to the annual meeting of
shareholders, a shareholder proposal must be received by the Corporate Secretary
of the Corporation by no later than one hundred twenty (120) calendar days in
advance of the date of the Corporation's proxy statement released to
shareholders in connection with the previous year's annual meeting, except if no
annual meeting was held in the previous year, such proposal must be received by
the Corporation at a reasonable time before a solicitation for the upcoming
annual meeting of shareholders is made.
A shareholder may place on the agenda certain new business to be
considered at an annual meeting, including the nominations for directors,
provided the shareholder has given proper written notice to the Corporate
Secretary of not less than ten business days before the time originally fixed
for such meeting.
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Article II. Directors.
Section 1. Function. All corporate powers shall be exercised by or
under the authority of the Board of Directors, and the business and affairs of
this Corporation shall be managed under the direction of the Board of Directors.
Section 2. Qualification. The directors are required to be shareholders
of this Corporation.
Section 3. Compensation. The Board of Directors shall have authority to
fix the compensation of directors.
Section 4. Duties Of Directors. A director shall perform his duties as
a director, including his duties as a member of any committee of the Board upon
which he may serve, in good faith, in a manner he reasonable believes to be in
the best interests of the corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
(a). One or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in
the matters presented; or
(b). Counsel, public accountants or other persons as to matters
which the director reasonably believes to be within such
persons' professional or expert competence; or
(c). A committee or the Board upon which he does not serve, duly
designated in accordance with a provision of the Articles of
Incorporation or these Bylaws, as to matters within its
designated authority, which committee the director reasonably
believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
Corporation.
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Section 5. Presumption Of Assent. A director of the Corporation, who is
present at a meeting of its Board of Directors at which action on any corporate
matter is taken, shall be presumed to have assented to the action taken unless
he votes against such action or abstains from voting in respect thereto because
of an asserted conflict of interest.
Section 6. Number. The business and affairs of the Corporation shall be
managed under the direction of the Board numbering not less than three (3)
members nor more than fifteen (15) members. The number of directors may be
increased or decreased form time to time by action of the Board of Directors,
but no decrease shall have the effect of shortening the terms of any incumbent
director. If the number of directors is changed, any increase or decrease in
directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible.
Section 7. Election and Term. Directors shall be elected by a plurality
of the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present. The term of the initial directors of the Corporation
expires at the first shareholders' meeting at which directors are elected. The
terms of subsequent directors shall expire in accordance with the expiration of
their Class.
Section 8. Director Committees.
(a) The board of Directors may create one or more committees
and appoint members of the board of directors to serve on them. Each committee
must have three or more members, who shall serve at the pleasure of the board of
directors.
(b) The creation of a committee and appointment of members to
it must be approved by a majority of all the directors in office when the action
is taken.
(c) Each committee shall exercise those aspects of the
authority of the board of directors which the board of directors confers upon
such committee in the resolution creating the committee. Provided, however, no
committee may:
(i) authorize distributions including dividends;
(ii) approve or propose to shareholders any
action that the Florida Business Corporation
Act requires to be approved by shareholders;
(iii) fill vacancies on the board of directors or
on any of its committees;
(iv) adopt, amend, or repeal bylaws;
(v) approve a plan of merger not requiring
shareholder approval;
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(vi) authorize or approve any reacquisition of
shares; or
(vii) authorize or approve the issuance or sale or
contract for sale of shares or determine the
designation and relative rights,
preferences, and limitations of a class or
series of shares.
Section 9. Executive Committee. The board of directors by resolution
adopted by a majority of the full board, may designate five or more of its
members to constitute an executive committee and designate one of whom shall be
chairman. The designation of such committee and the delegation thereto of
authority shall not operate to relieve the board of directors, or any member
thereof, of any responsibility imposed by law.
(a) The executive committee shall have and may exercise all of
the authority of the board of directors except to the extent, if any, that such
authority shall be limited by these bylaws.
(b) Each member of the executive committee shall hold office
until the next regular annual meeting of the board of directors following his
designation or until his successor is designated, elected and qualified.
(c) Regular meetings of the executive committee may be held
without notice at such times and places as the executive committee may fix from
time to time by resolution. Special meetings of the executive committee may be
called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting. Any member of the executive committee may
waive notice of any meeting and no notice of any meeting need be given to any
member who attends in person. The notice of a meeting of the executive committee
need not state the business proposed to be transacted at the meeting.
(d) Four members of the executive committee shall constitute a
quorum for the transaction of business at any meeting thereof, and action of the
executive committee must be authorized by the affirmative vote of a majority of
the members present at a meeting at which a quorum is present.
(e) Any action required or permitted to be taken by the
executive committee at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
members of the executive committee.
(f) Telephonic Meetings
(g) Any member of the executive committee may be removed at any
time with or without cause by resolution adopted by a majority of the full board
of directors. Any member of the executive committee may resign from the
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executive committee at any time by giving written notice to the president or
secretary of the corporation, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(h) The executive committee may fix its own rules of procedure
which shall not be inconsistent with these Bylaws. It shall keep regular minutes
of its proceedings and report the same to the board of directors for its
information at the director's meeting held next after the proceedings have been
taken.
Section 10. Alternate Committees Members. The Board of Directors, by
resolution adopted in accordance with this section, may designate one or more
directors as alternate members of any committee, who may act in the place and
instead of any absent member or members at any meeting of such committee.
Section 11. Vacancies. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders.
Section 12. Removal Of Directors. Directors may be removed for:
(a). Any reason at a meeting of stockholders, noticed and called
expressly for that purpose, by a vote of the holders of not
less than 60% of the shares then entitled to vote at an
election of directors; or
(b). "Cause", by a vote of not less than 60% of the Disinterested
Directors entitled to vote, at a meeting noticed and called
expressly for that purpose. The term "cause" is defined to mean
a director's participation or other involvement in activities
which, in the opinion of the Board of Directors, would pose a
threat to the interests of the Association's depositors or may
threaten to impair the public's confidence in the Association.
A "Disinterested Director" is defined to be a director who is
not the subject of the removal action.
Section 13. Director Quorum and Voting. A majority of the number of
directors, fixed by these Bylaws, shall constitute a quorum for the transaction
of business. The act of the majority of the directors present at a meeting, at
which a quorum is present, shall be the act of the Board of Directors.
Section 14. Director Conflicts Of Interest. No contract or other
transaction between this Corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting or the Board of Directors of a
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committee thereof which authorized, approves or ratifiers such contract or
transaction or because his or their votes are counted for such purpose, if:
(a). The fact of such relationship or interest is disclosed or known
to the Board of Directors or committee which authorizes,
approves or ratifies the contract or transaction by a vote or
consent; or
(b). The fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote and they authorize,
approve or ratify such contract or transaction by vote or
written consent; or
(c). The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board, a
committee, or the shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Section 14. Time, Notice, and Call of Directors' Meetings. Regular
meetings of the Board of Directors, if held, shall be held without notice at
such stated time as the Chairman of the Board, the President and Chief Executive
Officer of the Corporation, or any two directors shall direct.
Special meetings of the Board of Directors may be called at any time by
the Chairman of the Board, by the President and Chief Executive Officer of the
Corporation, or by any two directors. Written notice of the time and place of
special meetings of the Board of Directors shall be given to each director
either by personal delivery or by mail, telegram or cablegram at least two days
before the meeting.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 15. Waiver Of Notice. Notice of a meeting of the Board of
Directors need not be given to any director who signs a waiver of notice either
before or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting, any objection to the transaction of business because
the meeting is not lawfully called or convened.
Section 16. Adjournments. A majority of the directors present, whether
or not a quorum exists, may adjourn any meeting of the Board of Directors to
another time and place. Notice of any such adjourned meeting shall be given to
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the directors who were not present at the time of the adjournment and, unless
the time and place of the adjoined meeting are announced at the time of the
adjournment, to the other directors.
Section 17. Participation by Conference Telephone. Members of the Board
of Directors of any committee thereof may participate in a meeting of such Board
or Committee by way of a conference telephone or similar communicating
equipment, provided all the participants at the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at such meeting.
Section 18. Action Without a Meeting. Any action required by law to be
taken at a meeting of the directors of the Corporation, or any action which may
be taken at a meeting of the directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so to be
take, signed by all of the directors, or all of the members of the committee, as
the case may be, is filed in the minutes of the proceedings of the Board or the
committee. Such consent shall have the same effect as a unanimous vote.
Article III. Officers
Section 1. Officers, Election and Terms Of Office. The Principal
officers of this Corporation shall consist of a President and Chief Executive
Officer, one or more Vice Presidents, a Secretary, a Treasurer, and (at the
discretion of the Board of Directors) a Chairman of the Board, each of whom
shall be elected by the Board of Directors at the first meeting of directors
immediately following the annual meeting of shareholders of this Corporation;
and shall hold their respective offices from the date of the meeting at which
elected until the time of the next succeeding meeting of the Board following the
annual meeting of the shareholders. The Board of Directors shall have the power
to elect or appoint, for such term as it may see fit, such other officers and
assistant officers and agents as it my deem necessary, and to prescribe such
duties for them to perform as it may deem advisable. Any two or more offices may
be held by the same person. Failure to elect a Chairman of the Board, President,
Vice President, Secretary or Treasurer shall not affect the existence of the
Corporation.
Section 2. Removal Of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board whenever, in its
judgment, the best interests of the Corporation will be served thereby.
Any officer or agent elected by the shareholders may be removed only by
vote of the shareholders, unless the shareholders shall have authorized the
directors to remove such officer or agent.
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of an
officer or agent shall not of itself create contract rights.
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Section 3. Vacancies. Any vacancy, however occurring, in any office may
be filled by the Board of Directors.
Section 4. Chairman Of the Board. At its discretion, the Board of
Directors may elect one of its members to serve as Chairman of the Board. The
Chairman of the Board shall coordinate and supervise the activities of all other
officers of the Corporation. The Chairman of the Board shall from time to time
call special meetings of the Board of Directors whenever he deems it necessary
to do so or whenever the requisite number of the members of the Board of
Directors shall request him in writing to do so. He or she shall preside at all
meetings of the shareholders and the Board of Directors and shall generally
perform such other duties as are delegated to him by the Board of Directors.
Section 5. President and Chief Executive Officer. Except as otherwise
provided in these Bylaws, the President and Chief Executive Officer, subject to
the directions of and limitations imposed by the Board of Directors, shall
perform all the duties and have all the power usually pertaining and attributed
by law or otherwise to the office of the President and Chief Executive Officer
of the Corporation. He or she shall, in the absence of the Chairman of the
Board, preside at all meetings of the shareholders and the Board of Directors.
The President and Chief Executive Officer, unless some other person is thereunto
expressly authorized by resolution of the Board of Directors, shall sign all
certificates of stock, execute all contracts, deeds, notes, mortgages, bonds and
other instruments and papers in the name of the Corporation and on its behalf,
subject to the control of the Board of Directors. He or she shall, at each
annual meeting, present a report of the business and affairs of the Corporation,
and shall from time to time, whenever requested, report to the Board all matters
within his knowledge, which the interest of the Corporation may require to be
brought to the notice of the directors.
The President and Chief Executive Officer, after consultation with the
Board of Directors, shall have the power to employ and terminate the employment
of all such subordinate officers, agents, clerks and other employees not herein
provided to be selected by the Board, as he may find necessary to transact the
business of the Corporation, and shall have the right, after consultation with
the Board to fix the compensation thereof.
Section 6. Vice President. The Corporation may have one or more Vice
Presidents. Each Vice President shall have the powers and perform such duties as
may be delegated to him or her by the Board of Directors, or in the absence or
such action by the Board, then by the Chairman of the Board or by the President
and Chief Executive Officer. In case of the death, absence, or inability of the
President and Chief Executive Officer to act, except as may be expressly limited
by action of the Board of Directors, the Board of Directors shall designate a
Vice President and Chief Executive Officer following such death of the President
and Chief Executive Officer or during the absence or inability of the President
and Chief Executive Officer to act; and, in such case, concurrently with the
President and Chief Executive Officer, shall at all times have the power to sign
all certificates of stock, execute all contracts, deeds, notes, mortgages, bonds
and other instruments and documents in the name of the Corporation in its behalf
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which the President and Chief Executive Officer is authorized to do, but subject
to the control and authority at all times of the Board of Directors.
Section 7. Secretary. The Secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in a book or books to be
kept for such purposes, and also, when so requested, the minutes of all meetings
of committees in a book or books to be kept for such purposes. He or she shall
attend to the giving and serving of all notices, and he shall have charge of all
books and papers of the Corporation, except those hereinafter directed to be in
the charge of the Treasurer, or except as otherwise expressly directed by the
Board of Directors. He or she shall keep the stock certificate book or books.
The Secretary shall be the custodian of the seal of the Corporation. The
Treasurer shall sign with the President and Chief Executive Officer all
certificates of stock as the Treasurer of this Corporation and the Secretary
shall affix or cause to be affixed thereto the seal of the Corporation. The
Secretary may sign as Secretary of the Corporation, with the President and Chief
Executive Officer in the name of the Corporation and on its behalf, all
contracts, deeds, mortgages, bonds, notes and other papers, instruments and
documents, except as otherwise expressly provided by the Board of Directors, and
as such Secretary he shall affix the seal of the Corporation thereto. Under the
direction of the Chief Executive Officer, the Secretary shall perform all the
duties usually pertaining to the office of Secretary; and he shall perform such
other duties as may be prescribed by the Board of Directors or the President and
Chief Executive Officer.
Section 8. Treasurer. The Treasurer shall have the custody of all the
funds and securities of the Corporation except as may be otherwise provided by
the Board of Directors, and he shall make such disposition of the funds and
other assets of the Corporation as may be directed by the Board of Directors. He
or she shall keep or cause to be kept a record of all money received and paid
out, and all vouchers and receipt given therefor, and all other financial
transactions of the Corporation. The Treasurer shall have general charge of all
financial books vouchers and papers belonging to the Corporation or pertaining
to its business. He or she shall render an account of the Corporation's funds at
the first meeting of the Board of Directors immediately following the annual
meeting of shareholders of this Corporation and at such other meetings as he or
she may be requested, and he or she shall make an annual statement of the
finances of the Corporation. If at any time there is a person designated as
Comptroller of the Corporation, the Treasurer may delegate to such Comptroller
such duties and powers as to the Treasurer may seem proper. The Treasurer shall
perform such other duties as are usually incident by law or otherwise to the
office of the Treasurer, and as he or she may be directed or required by the
Board of Directors, the Chairman of the Board or the President.
Article IV. Dividends
The Board of Directors of this Corporation may, from time to time,
declare and the Corporation may pay dividends on its shares in cash, property or
its own shares, except when the Corporation is insolvent or when the declaration
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or payment thereof would be contrary to any restrictions contained in the
Articles of Incorporation or contrary to any provision in the Florida Statutes,
subject to the following provisions:
(a). Dividends in cash or property may be declared and paid, except
as otherwise provided in this section, only out of the
unreserved and unrestricted earned surplus of the Corporation
or out of capital surplus, howsoever arising but each dividend
paid out of capital surplus shall be identified as a
distribution of capital surplus, and the amount per share paid
from such surplus shall be disclosed to the shareholders
receiving the same concurrently with the distribution.
(b). Dividends may be declared and paid in the Corporation's own
treasury shares.
(c). Dividends may be declared and paid in the Corporation's own
authorized but unissued shares out of any unreserved and
unrestricted surplus of the Corporation upon the following
conditions:
(1) If a dividend is payable in shares having a par value, such
shares shall be issued at not less than the par value thereof
and there shall be transferred to stated capital at the time
such dividend is paid an amount of surplus at least equal to
the aggregate par value of the shares to be issued as a
dividend.
(2) If a dividend is payable in shares without par value, such
shares shall be issued at such stated value as shall be fixed
by the Board of Directors by resolution adopted at the time
such dividend is declared, and there shall be transferred to
stated capital at the time such dividend is paid an amount of
surplus at least equal to the aggregate stated value so fixed
in respect of such shares; and the amount per share so
transferred to stated capital shall be disclosed to the
shareholders receiving such dividend concurrently with the
payment thereof.
(d). No dividend payable in shares of any class shall be paid to the
holders of shares of any other class unless the Articles of
Incorporation so provide or such payment is authorized by the
affirmative vote or the written consent of the holders of at
least a majority of the outstanding shares of the class in
which the payment is to be made.
(e). A split or division of the issued shares of any class into a
greater number of shares of the same class without increasing
the stated capital of the Corporation shall not be construed
to be a share dividend within the meaning of this section.
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Article V. Stock Certificates
Section 1. Issuance. Every holder of shares in this Corporation shall
be entitled to have a certificate, representing all shares to which he is
entitled. No certificate shall be issued for any share until such share is fully
paid.
Section 2. Form. Certificates representing shares in this Corporation
shall be signed by the President and Chief Executive Officer and the Treasurer
and may be sealed with the seal of this Corporation or a facsimile thereof. The
signatures of the President and Chief Executive Officer and the Treasurer may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar, other than the Corporation itself or an employee of the
Corporation. In case any officer, who signed or whose facsimile signature has
been placed upon such certificate, is removed from or leaves office, the
certificate may be issued by the Corporation with the same effect as if he were
such officer at the date of its issuance.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize the
restrictions upon the certificate, or shall state that the Corporation will
furnish to any shareholder upon request and without charge a full statement of
such restrictions.
Each certificate representing shares shall state upon the face thereof:
the name of the Corporation; that the Corporation is organized under the laws of
the State of Florida; the name of the person or persons to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents.
Section 3. Transfer Of Stock. Transfers of stock shall be made only on
the books of the Corporation upon surrender of the original certificate of stock
(as between the holder and the Corporation) by the holder, in person, or by an
attorney-in-fact under a power of attorney duly executed by the shareholder and
filed with the Secretary with written direction for the transfer, and the
payment of a $10.00 transfer fee and shall not be regarded as evidence of
ownership of the same in any person other than the registered owner until the
transfer thereof is duly made on the books of the Corporation. No transfer of
stock shall be valid against the Corporation until it has been effected and
registered upon the Corporation's books in the manner herein provided.
On the transfer of any shares, each certificate shall be receipted for
and such receipt shall be attached to the margin or stub of such certificate in
the certificate book. When such certificate is delivered by the Corporation by
registered or certified mail, such delivery shall be sufficient as the receipt
herein provided for. All certificates exchanged or surrendered to the
Corporation shall be cancelled by the Secretary and affixed in their original
places in the certificate book, and no new certificates shall be issued until
the certificate for which it is exchanged has been cancelled and returned to its
original place in said book, except as provided in Section 4 of this article
pertaining to lost or destroyed certificates.
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If any holder of any stock of the Corporation has entered into an
agreement with any other holder of any stock of the Corporation or with the
Corporation, or both, relating to a sale or sales or transfer of any shares of
stock of the Corporation, or wherein or whereby any restriction or condition is
imposed or placed upon or in connection with the sale or transfer of any share
of stock of the Corporation, and if a duly executed or certified copy thereof
shall have been filed with the Secretary of the Corporation, none of the shares
of stock covered by such agreement or to which it relates, of any such
contracting shareholder, shall be transferred upon the books of the Corporation
until there has been filed with the Secretary of the Corporation evidence
satisfactory to the Secretary of the Corporation of compliance with such
agreement, and any evidence of any kind or quality of compliance with the terms
of such agreement which the Secretary deems satisfactory or sufficient shall be
conclusive upon all parties interested; provided, however, that neither the
Corporation nor any director, officer, employee or transfer agent thereof shall
be liable for transferring or effecting or permitting the transfer of any such
shares of stock contrary to or inconsistent with the terms of any such
agreement, in the absence of proof of willful disregard thereof or fraud, bad
faith or gross negligence on the part of the party to be charged; provided,
further, that the certificate of the Secretary, under the seal of the
Corporation, bearing the date of its issuance by the Secretary, certifying that
such an agreement is or is not on file with the Secretary, shall be conclusive
as to such fact so certified for a period of five (5) days from the date of such
certificate, with respect to the rights of any innocent purchaser or transferee
for value of any such shares without actual notice of the existence of any
restrictive agreement.
Section 4. Lost Certificates. Any shareholder claiming a certificate of
stock to be lost or destroyed shall make an affidavit or affirmation to that
fact and affirm that he or she is the owner and holder thereof, give notice of
the loss or destruction of same in such manner as the Board of Directors may
require, and shall give the Corporation a bond of indemnity in form, and with
one or more sureties satisfactory to the Board of Directors, which shall be at
least equal to the book value of all the shares of stock represented by such
certificate, payable as may be required by the Board of Directors to protect the
Corporation and any person injured by the issuance of the new certificate from
any liability or expense which it or they may be put to or incur by reason of
the original certificate remaining outstanding; whereupon the President and the
Treasurer may cause to be issued a new certificate in the same tenor as the one
alleged to be lost or destroyed, but always subject to approval of the Board of
Directors.
Article VI. Books and Records
Section 1. Books and Records. This Corporation shall keep correct and
complete books and records of accounts and shall keep minutes of the proceedings
of its shareholders, Board of Directors and committees.
This Corporation shall keep at its registered office or principal place
of business, or at the office of its transfer agent or registrar, a record of
its shareholders, giving the names and addresses of all shareholders, and the
number, class and series, if any, of the shares held by each.
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Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights. A shareholder of the
Corporation is entitled to inspect and extract during regular business hours, at
the Corporation's principal office, any of the corporate records described in
Section 607.160, Florida Statutes, if the shareholder gives written notice of
his or her demand at least five (5) business days before the date of inspection.
The written demand must state the purpose of the request. The Corporation may
impose a reasonable charge to cover the costs of labor and material for copies
of any documents provided to the shareholder. The charge may not exceed the
estimated cost of production or reproduction of the records.
Section 3. Financial Information. No later than four (4) months after
the close of each fiscal year, this Corporation shall prepare a balance sheet
showing in reasonable detail the financial condition of the Corporation as of
the close of its fiscal year, and a profit and loss statement showing the
results of its operations during its fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in the
registered office of the Corporation in this state shall be kept for at least
five (5) years, and shall be subject to inspection during business hours by any
shareholder or holder of voting trust certificates, in person or by agent.
Article VII. Seal
The seal of this Corporation shall be circular and shall have inscribed
thereon the name of the Corporation and such other words and figures and in such
design as may be prescribed by the Board of Directors, and may be facsimile,
engraved, printed or an impression or other type seal.
Article VIII. Amendment of Bylaws
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted, by the Board of Directors.
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CERTIFICATE OF ADOPTION
I hereby certify that the foregoing Bylaws were duly adopted pursuant
to action taken by the Board of Directors dated the 30th day of May, 1995.
/s/ Stephen A. McLaughlin
Stephen A. McLaughlin
Corporate Secretary
Article II Directors - amended May 20, 1996
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EXHIBIT 5.0
OPINION OF IGLER & DOUGHERTY, P.A.
REGARDING LEGALITY OF SHARES OF CCBI
2
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IGLER & DOUGHERTY, P.A.
Attorneys at Law
1501 PARK AVENUE EAST
TALLAHASSEE, FLORIDA 32301
<TABLE>
<CAPTION>
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<S> <C> <C>
Winter Park Office Tampa Office
- ------------------ ------------
Federal Trust Bank Building (850) 878-2411 TELEPHONE Park Tower - Suite 2625
1211 Orange Avenue (850) 878-1230 FACSIMILE 400 North Tampa Street
Winter Park, Florida 32789 Tampa, Florida 33602
(407) 647-0822 - Telephone REPLY TO: TALLAHASSEE OFFICE (813) 307-0510 - Telephone
(407) 647-8089 - Facsimile (813) 307-0415 - Facsimile
</TABLE>
March 9, 1998
Board of Directors
Citizens Community Bancorp, Inc.
650 East Elkcam Circle
Marco Island, Florida 34145
Gentlemen:
As corporate counsel for Citizens Community Bancorp, Inc. (ACompany@)
we have been requested to provide our opinion concerning certain matters of
Florida law relating to the issuance and registration of shares of common stock
by the Company in connection with the Company's filing of a Form SB-2
Registration Statement with the Securities and Exchange Commission.
In connection with our opinion, we have reviewed the Company's 1995
Amended and Restate Articles of Incorporation filed with the Florida Secretary
of State ("Articles of Incorporation"), its Bylaws, the Registration Statement
to be filed on Form SB-2 with the Securities and Exchange Commission in
connection with the registration of shares of Company common stock, and the
stock certificates of the Company. In our examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity with the originals of all documents supplied to us
as copies and the accuracy and completeness of all corporate records. We have
relied upon, as to the factual matters, written statements and other documents
from officers of the Company, public officials and government agencies and
departments, and we have assumed the accuracy and authenticity of such
certificate and documents.
Based upon and subject to the foregoing, and limited in all respects to
matters of Florida law, it is our opinion that:
1. The Company has been duly organized and is validly existing in
good standing as a corporation under the laws of Florida, with
corporate power and authority to own its property and conduct
business as described in the Form SB-2 Registration Statement;
and
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Board of Directors
March 9, 1998
Page 3
2. The shares of the Company common stock to be issued in
connection with the form SB-2 Registration Statement, have
been duly authorized and will constitute validly issued, fully
paid and non-assessable shares, with no personal liability for
the payment of the Company debts arising by virtue of the
ownership thereof.
We assume no obligation to advise you of any events that occur
subsequent to the date of the opinion. We understand that you may wish to
include this Opinion as an exhibit to the Form SB-2 Registration Statement, and
we consent to such inclusion. Furthermore, we consent to the references to this
firm's name in the Company's Prospectus and any and all amendments thereto.
Sincerely,
IGLER & DOUGHERTY, P.A.
/s/ Igler & Dougherty, P.A.
EXHIBIT 8.0
OPINION OF IGLER & DOUGHERTY, P.A.
REGARDING TAX MATTERS
3
<PAGE>
IGLER & DOUGHERTY, P.A.
Attorneys at Law
1501 PARK AVENUE EAST
TALLAHASSEE, FLORIDA 32301
--------
<TABLE>
<CAPTION>
<S> <C> <C>
Winter Park Office Tampa Office
- ------------------ ------------
Federal Trust Bank Building (850) 878-2411 TELEPHONE Park Tower - Suite 2625
1211 Orange Avenue (850) 878-1230 FACSIMILE 400 North Tampa Street
Winter Park, Florida 32789 Tampa, Florida 33602
(407) 647-0822 - Telephone REPLY TO: TALLAHASSEE OFFICE (813) 307-0510 - Telephone
(407) 647-8089 - Facsimile (813) 307-0415 - Facsimile
</TABLE>
March 9, 1998
Board of Directors
Citizens Community Bancorp, Inc.
650 East Elkcam Circle
Marco Island, Florida 34145
Re: Citizens Community Bancorp, Inc., Winter Park, Florida
"Subscription Rights of Shareholders"
Gentlemen:
You have requested our opinion with respect to the tax implications
relating to the "Subscription Rights" shareholders of Citizens Community
Bancorp, Inc. ("CCBI") will receive in the stock offering, which is the subject
of a Registration Statement on Form SB-2 that is to be filed with the Securities
and Exchange Commission (the "Registration Statement"). This opinion is issued
in connection with that Registration Statement and the purposes set forth below.
It is our opinion that the discussions and the legal conclusions set
forth in the "Certain Federal Income Tax Considerations" of the Registration
Statement are accurate and complete in all material respects and constitute our
opinion as material federal income tax consequences to shareholders of CCBI.
It is also our opinion that upon the exercise of the Subscription Right
(as that term is defined in the Registration Statement), the shareholder will
not recognize any gain or loss and that the basis of each common share acquired
will equal the sum of the Subscription Price (as that term is defined in the
Registration Statement) and the basis, if any, in the Subscription Right
exercised. Further, it is our opinion that a current shareholder of the company
will have a zero basis in the subscription, unless the shareholder elects under
Section 307 of the Internal Revenue Code of 1986, as amended, to allocate any
portion of their Subscription Right to their existing common stock.
The election, if any, under Section 307 is to be made in the timely
filed return for the year in which the rights were received. Once made the
<PAGE>
Board of Directors
March 9, 1998
Page 2
election is irrevocable with respect to the rights exercised for which the
election made. The election must be made with respect to all the rights received
by the shareholder in a particular distribution in respect of all the stock of
the same class owned by the shareholder in the issuing corporation at the time
of the distribution. The election should be in the form of a statement attached
to the shareholder's return. (Reg. Section 1.307-2)
Our opinion is based and conditioned upon the initial and continuing
accuracy of the facts and factual matters set forth in the "Initial Offering"
and the financial information contained in the Registration Statement. In
rendering this opinion, we have assumed that all the representations, warranties
and statements made or agreed to by the CCBI are true and accurate; that any
representations, warranties or statements made in the "Initial Offering", "to
the best knowledge of", or otherwise similarly qualified, is correct without
qualification and that all the covenants contained in the "Initial Offering" are
performed without waiver or breach of any material provision thereof. Our
opinion is also based upon the existing provisions of the Internal Revenue Code
of 1986, as amended, regulations promulgated or proposed thereunder and
interpretations thereof by the Internal Revenue Service and the courts, all of
which are subject to change with prospectus or retroactive effect, and our
opinion could be adversely affected or rendered obsolete by any such change.
Decisions concerning federal income tax are complex and should be made
based upon knowledge of the unique circumstances of each individual. Each
shareholder of CCBI should consult his or her advisor concerning the effects of
this transaction on his or her taxes and whether or not to make the election
under Section 307 of the Internal Revenue Code discussed herein.
We hereby consent to the filing of this opinion as an exhibit to the
Securities and Exchange Commission Form SB-2 Registration Statement and the use
of our name in the Prospectus in connection with the caption "Summary Federal
Income Tax Consequences". In giving this consent, we do not thereby admit that
we are within the category of persons whose consent is required under Section 7
of the Act and the rules and regulations thereunder.
Sincerely,
IGLER & DOUGHERTY, P.A.
/s/ Igler & Dougherty, P.A.
<PAGE>
EXHIBIT 10.1
INCENTIVE STOCK OPTION PLAN
FOR KEY OFFICERS AND EMPLOYEES
4
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CITIZENS COMMUNITY BANCORP, INC.
1996 INCENTIVE STOCK OPTION PLAN
1. PURPOSE. The purpose of the Citizens Community Bancorp, Inc. ("CCB") 1996
Incentive Stock Option Plan (the "Plan") is to advance the interests of CCB and
its shareholders by providing key employees of CCB and its affiliates, upon
whose judgment, initiative and efforts the successful conduct of the business of
CCB and its affiliates largely depends, with an additional incentive to perform
in a superior manner, as well as, to attract people of experience and ability.
2. DEFINITIONS.
(a) "Board of Directors" means the Board of Directors of CCB.
(b) "Affiliate" means (i) a member of a controlled group of
corporations of which CCB is a member or (ii) an unincorporated trade or
business which is under common control with CCB as determined in accordance with
Section 414(c) of the Internal Revenue Code (the "Code") and the regulations
issued thereunder. For purposes hereof, a "controlled group of corporations"
shall mean a controlled group of corporations as defined in Section 1563(a) of
the Code determined without regard to Section 1563(a)(4) and (e)(3)(C).
(c) "Award" means an Award of Non-Statutory Stock Options, Incentive
Stock Options, and/or Limited Rights granted under the provisions of the Plan.
(d) "Committee" means the Compensation Committee of the Board of
Directors.
(e) "Plan Year or Years" means a calendar year or years commencing on
or after January 1, 1996.
(f) "Date of Grant" means the actual date on which an Award is granted
by the Committee.
(g) "Common Stock" means the Common Stock of CCB, par value, $.01 per
share.
(h) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the reported closing price of the Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
System (as published by the Wall Street Journal, if published) on the day prior
to such date or if the Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was traded thereon. If the Common Stock
is not traded on a national market reported by the National Association of
Securities Dealers Automated Quotation System, the Fair Market Value means the
average of the closing bid and ask sale prices on the last previous date on
which a sale is reported in an over-the-counter transaction. In the absence of
any over-the-counter transactions, the Fair Market Value means the highest price
at which the stock has sold in an arms length transaction during the 90 days
1
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immediately following the grant date. In the absence of an arms length
transaction during such 90 days, Fair Market Value means the book value of the
common stock or the issue price of $9.00 per share, which ever is higher.
(i) "Limited Right" means the right to receive an amount of cash based
upon the terms set forth in Section 9.
(j) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him. Additionally, a medical doctor selected or approved
by the Board of Directors must advise the Committee that it is either not
possible to determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder of said
participant's lifetime.
(k) "Termination for Cause" means the termination upon an intentional
failure to perform stated duties, breach of a fiduciary duty involving personal
dishonesty, which results in material loss to CCB or one of its affiliates or
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order issued to CCB or one of its
affiliates.
(l) "Participant" means an employee of CCB or its affiliates chosen by
the Committee to participate in the Plan.
(m) "Change in Control" of CCB means a change in control that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or any successor disclosure item; provided that, without limitation, such
a Change in Control (as set forth in 12 U.S.C. Section 1841[a][2] of the Bank
Holding Company Act of 1956, as amended) shall be deemed to have occurred if any
person (as such term is used in Sections 13[d] and 14[d] of the Exchange Act in
effect on the date first written above), other than any person who on the date
hereof is a director or officer of CCB or the Bank, (i) directly or indirectly,
or acting through one or more other persons, owns, controls or has power to vote
25% or more of any class of the then outstanding voting securities of CCB or the
Bank; or (ii) controls in any manner the election of the directors of CCB. For
purposes of this Agreement, a "Change in Control" shall be deemed not to have
occurred in connection with a reorganization, consolidation, or merger of the
Company where the stockholders of the Company, immediately before the
consummation of the transaction, will own at least 50% of the total combined
voting power of all classes of stock entitled to vote of the surviving entity
immediately after the transaction.
(n) "Normal Retirement" means retirement at the normal or early
retirement date as set forth in any tax qualified plan of the Bank.
3. ADMINISTRATION. The Plan shall be administered by the Compensation Committee
of the Board of Directors. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations as it deems
necessary for the proper administration of the Plan and to make whatever
2
<PAGE>
determinations and interpretations in connection with the Plan it deems as
necessary or advisable. All determinations and interpretations made by the
Committee shall be binding and conclusive on all Participants in the Plan and on
their legal representatives and beneficiaries.
4. TYPES OF AWARDS. Awards under the Plan may be granted in any one or a
combination of: (a) Incentive Stock Options; (b) Non-Statutory Stock Options;
and (c) Limited Rights as defined below in paragraphs 7-9 of the Plan.
5. STOCK SUBJECT TO THE PLAN. Subject to adjustment as provided in Section 13,
the maximum number of shares reserved for issuance under the Plan is 100,000
shares of Common Stock of CCB, par value $.01 per share. To the extent that
options or rights granted under the Plan are exercised, the shares covered will
be unavailable for future grants under the Plan; to the extent that options
together with any related rights granted under the Plan terminate, expire or are
cancelled without having been exercised or, in the case of Limited Rights
exercised for cash, new Awards may be made with respect to these shares.
6. ELIGIBILITY. Officers and other employees of CCB or its affiliates shall be
eligible to receive Incentive Stock Options, Non-Statutory Stock Options and/or
Limited Rights under the Plan. Directors who are not employees or officers of
CCB or its affiliates shall not be eligible to receive Awards under the Plan.
7. NON-STATUTORY STOCK OPTIONS.
7.1 Grant of Non-Statutory Stock Options.
The Committee may, from time to time, grant Non-Statutory Stock Options to
eligible employees. Non-Statutory Stock Options granted under this Plan are
subject to the following terms and conditions:
(a) Price.
The purchase price per share of Common Stock deliverable upon the
exercise of each Non-Statutory Stock Option shall not be less than 100%
of the Fair Market Value of CCB's Common Stock on the date the option
is granted. Shares may be purchased only upon full payment of the
purchase price. Payment of the purchase price may be made, in whole or
in part, through the surrender of shares of the Common Stock of CCB at
the Fair Market Value of such shares determined in the manner described
in Section 2(h).
(b) Terms of Options.
The term during which each Non-Statutory Stock Option may be exercised
shall be determined by the Committee, but in no event shall a
Non-Statutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant.
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The Committee shall determine the date on which each Non-Statutory Stock Option
shall become exercisable in installments. The shares comprising each installment
may be purchased in whole or in part at any time after such installment becomes
purchasable. The Committee may, in its sole discretion, accelerate the time at
which any Non-Statutory Stock Option may be exercised in whole or in part.
Notwithstanding the above, in the event of a Change in Control of CCB, all
Non-Statutory Stock Options shall become immediately exercisable.
(c) Termination of Employment.
Upon the termination of an employee's service for any reason other than
Disability, Normal Retirement, death or Termination for Cause, his
Non-Statutory Stock Options shall be exercisable only as to those
shares which were immediately purchasable by him at the date of
termination and only for a period of three months following
termination. In the event of Termination for Cause, all rights under
his Non-Statutory Stock Options shall expire upon termination. In the
event of the death, Disability or Normal Retirement of any employee,
all Non-Statutory Stock Options held by the employee, whether or not
exercisable at such time, shall be exercisable by the employee or his
legal representatives or beneficiaries for three years following the
date of his death, Normal Retirement or cessation of employment due to
Disability, provided that in no event shall the period extend beyond
the expiration of the Non-Statutory Stock Option term.
8. INCENTIVE STOCK OPTIONS.
8.1 Grant of Incentive Stock Options.
The Committee may, from time to time, grant Incentive Stock Options to eligible
employees. Incentive Stock Options granted pursuant to the Plan shall be subject
to the following terms and conditions:
(a) Price.
The purchase price per share of Common Stock deliverable upon the
exercise of each Incentive Stock Option shall be not less than 100% of
the Fair Market Value of CCB's Common Stock on the date the Incentive
Stock Option is granted. However, if an employee owns stock equal to
more than 10% of the total combined voting power of all classes of
Common Stock of CCB (or, under Section 425(d) of the Code, is deemed to
own Common Stock representing more than 10% of the total combined
voting power of all such classes of Common Stock), the purchase price
per share of Common Stock deliverable upon the exercise of each
Incentive Stock Option shall not be less than 110% of the Fair Market
Value of CCB's Common Stock on the date the Incentive Stock Option is
granted. Shares may be purchased only upon payment of the full purchase
price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Common Stock of CCB at the Fair
Market Value of such shares determined in the manner described in
Section 2(h).
4
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(b) Amounts of Options.
Incentive Stock Options may be granted to any eligible employee in such
amounts as determined by the Committee; provided that the amount
granted is consistent with the terms of Section 422A of the Code. In
the case of an option intended to qualify as an Incentive Stock Option,
the aggregate Fair Market Value (determined as of the time the option
is granted) of the Common Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant
during any calendar year (under all plans of the Participant's employer
corporation and its parent and subsidiary corporations) shall not
exceed $100,000. The provisions of this Section 8.1(b) shall be
construed and applied in accordance with Section 422A(d) of the Code
and the regulations, if any, promulgated thereunder.
(c) Terms of Options.
The term during which each Incentive Stock Option may be exercised
shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10
years from the Date of Grant. If any employee, at the time an Incentive
Stock Option is granted to him, owns Common Stock representing more
than 10% of the total combined voting power of CCB (or, under Section
425(d) of the Code, is deemed to own Common Stock representing more
than 10% of the total combined voting power of all such classes of
Common Stock, by reason of the ownership of such classes of Common
Stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such employee, or by or for any
corporation, partnership, estate or trust of which such employee is a
shareholder, partner or beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five
years from the Date of Grant. No Incentive Stock Option granted under
this Plan is transferable except by will or the laws of descent and
distribution and is exercisable in his lifetime only by the employee to
which it is granted.
The Committee shall determine the date on which each Incentive Stock Option
shall become exercisable and may provide that an Incentive Stock Option shall
become exercisable in installments. The shares comprising each installment may
be purchased in whole or in part at any time after such installment becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent with the terms of Section 422A of the Code. The Committee may, in
its sole discretion, accelerate the time at which any Incentive Stock Option may
be exercised in whole or in part, provided that it is consistent with the terms
of Section 422A of the Code. Notwithstanding the above, in the event of a Change
in Control of CCB, all Incentive Stock Options shall become immediately
exercisable.
(d) Termination of Employment.
Upon the termination of an employee's service for any reason other than
Disability, Normal Retirement, death or Termination for Cause, his
Incentive Stock Options shall be exercisable only as to those shares
which were immediately purchasable by him at the date of termination
and only for a period of three months following termination. In the
event of Termination for Cause all rights under his Incentive Stock
Options shall expire upon termination.
5
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In the event of death or Disability of any employee, all Incentive Stock Options
held by such employee, whether or not exercisable at such time, shall be
exercisable by the employee or his legal representatives or beneficiaries for
one year following the date of his death or cessation of employment due to
Disability. Upon termination of an employee's service due to Normal Retirement,
all Incentive Stock Options held by such employee, whether or not exercisable at
such time, shall be exercisable for a period of one year following the date of
his Normal Retirement, provided however, that such option shall not be eligible
for treatment as an Incentive Stock Option in the event such option is exercised
more than three months following the date of his Normal Retirement. In no event
shall the period extend beyond the expiration of the Incentive Stock Option
term.
9. LIMITED RIGHTS.
9.1 Grant of Limited Rights.
The Committee may grant a Limited Right simultaneously with the grant of any
option, with respect to all or some of the shares covered by such option.
Limited Rights granted under this Plan are subject to the following terms and
conditions:
(a) Terms of Rights.
In no event shall a Limited Right be exercisable in whole or in part
before the expiration of six months from the date of grant of the
Limited Right. A Limited Right may be exercised only in the event of a
Change in Control of CCB.
The Limited Right may be exercised only when the underlying option is
eligible to be exercised, provided that the Fair Market Value of the
underlying shares on the day of exercise is greater than the exercise
price of the related option.
Upon exercise of a Limited Right, the related option shall cease to be
exercisable. Upon exercise or termination of an option, any related
Limited Rights shall terminate. The Limited Rights may be for no more
than 100% of the difference between the exercise price and the Fair
Market Value of the Common Stock subject to the underlying option. The
Limited Right is transferable only when the underlying option is
transferable and under the same conditions.
(b) Payment.
Upon exercise of a Limited Right, the holder shall promptly receive
from CCB an amount of cash equal to the difference between the Fair
Market Value on the Date of Grant of the related option and the Fair
Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which
such Limited Right is being exercised.
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(c) Termination of Employment.
Upon the termination of an employee's service for any reason other than
Disability, Normal Retirement, death or Termination for Cause, any
Limited Rights held by him shall be exercisable only as to those shares
of the related option which were immediately purchasable at the date of
termination and for a period of three months following termination. In
the event of Termination for Cause, all Limited Rights held by him
shall expire immediately.
Upon termination of an employee's employment for reason of death, or
Disability, all Limited Rights held by such employee shall be
exercisable by the employee or his legal representative or
beneficiaries for a period of one year from the date of such
termination with respect to Limited Rights related to Incentive Stock
Options, and for a period of three years from the date of such
termination with respect to Limited Rights related to Non-Statutory
Stock Options. Upon termination of an employee's employment for reason
of Normal Retirement, all Limited Rights held by such employee shall be
exercisable by the employee or his legal representative or beneficiary
for one year with respect to Limited Rights granted with respect to
Incentive Stock Options and three years with respect to Limited Rights
granted with respect to Non-Statutory Stock Options. In no event shall
the period extend beyond the expiration of the term of the related
option.
10. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY. An optionee shall have no
rights as a shareholder with respect to any shares covered by a Non-Statutory
and/or Incentive Stock Option until the date of issuance of a stock certificate
for such shares. Nothing in this Plan or in any Award granted confers on any
person any right to continue in the employ of CCB or its affiliates or to
continue to perform services for CCB or its affiliates or interferes in any way
with the right of CCB or its affiliates to terminate his services as an officer
or other employee at any time.
No Award under the Plan shall be transferable by the optionee other than by will
or the laws of descent and distribution and may only be exercised during his
lifetime by the optionee, or by a guardian or legal representative.
11. AGREEMENT WITH GRANTEES. Each Award of Options, and/or Limited Rights will
be evidenced by a written agreement, executed by the Participant and CCB or its
affiliates which describes the conditions for receiving the Awards including the
date of Award, the purchase price if any, applicable periods, and any other
terms and conditions as may be required by the Board of Directors or applicable
securities law.
12. DESIGNATION OF BENEFICIARY. A Participant may, with the consent of the
Committee, designate a person or persons to receive, in the event of death, any
stock option or Limited Rights Award to which he would then be entitled. Such
designation will be made upon forms supplied by and delivered to CCB and may be
revoked in writing. If a Participant fails effectively to designate a
beneficiary, then his estate will be deemed to be the beneficiary.
13. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding shares of Common Stock of CCB by reason of any stock dividend or
7
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split, recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, the
Committee will make such adjustments to previously granted Awards, to prevent
dilution or enlargement of the rights of the Participant, including any or all
of the following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock which may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock covered by Awards already made under the Plan;
(c) adjustments in the purchase price of outstanding Incentive and/or
Non-Statutory Stock Options, or any Limited Rights attached to such
options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award.
14. WITHHOLDING. There will be deducted from each distribution of cash and/or
Common Stock under the Plan the amount of tax required by any governmental
authority to be withheld.
15. AMENDMENT OF THE PLAN. The Board of Directors may at any time, and from time
to time, modify or amend the Plan in any respect; provided however, that if
necessary to continue to qualify the Plan under the Securities and Exchange
Commission Rule 16(b)-3, shareholder approval would be required for any such
modification or amendments which:
(a) increases the maximum number of shares for which options may be
granted under the Plan (subject, however, to the provisions of Section
13 hereof);
(b) reduces the exercise price at which Awards may be granted;
(c) extends the period during which options may be granted or exercised
beyond the times originally prescribed; or
(d) changes the persons eligible to participate in the Plan.
Failure to ratify or approve amendments or modifications to subsections (a)
through (d) of this Section by shareholders shall be effective only as to the
specific amendment or modification requiring such ratification. Other
provisions, sections, and subsections of this Plan will remain in full force and
effect.
No such termination, modification or amendment may affect the rights of a
Participant under an outstanding Award.
8
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16. EFFECTIVE DATE OF PLAN. The Plan shall be adopted by the Board of Directors
and shall become effective upon such date of adoption, or other date as
determined by the Board. Following the Effective Date of the Plan, the Plan
shall be submitted to shareholders for approval. If the Plan shall not be
approved by shareholders, the Plan and any Awards granted thereunder shall be
null and void.
17. TERMINATION OF THE PLAN. The right to grant Awards under the Plan will
terminate upon the earlier of ten (10) years after the Effective Date of the
Plan or the issuance of Common Stock or the exercise of options or related
rights equaling the maximum number of shares reserved under the Plan as set
forth in Section 5. The Board of Directors has the right to suspend or terminate
the Plan at any time, provided that no such action will, without the consent of
a Participant, adversely affect his rights under a previously granted Award.
18. APPLICABLE LAW. The Plan will be administered in accordance with the laws of
the State of Florida.
Adopted this ___ day of _____________, 1996 by the Company's Board of
Directors.
/s/ Stephen A. McLaughlin
---------------------
Stephen A. McLaughlin
Secretary
9
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EXHIBIT 10.2
1998 DIRECTORS' STOCK OPTION PLAN
<PAGE>
CITIZENS COMMUNITY BANCORP, INC.
1998 DIRECTORS' STOCK OPTION AND LIMITED RIGHTS PLAN
1. PURPOSE
The purpose of Citizens Community Bancorp, Inc.'s ("Company") 1998
Directors' Stock Option and Limited Rights Plan ("Directors' Plan") is to
advance the interests of the Company, its subsidiaries and its shareholders by
providing the directors of the Company or its wholly owned subsidiaries,
("Subsidiaries"), upon whose judgment, initiative and oversight the successful
conduct of the business of the Company depends, with an additional incentive to
serve on the Board of Directors for the Company or its Subsidiaries, as well as,
to attract people of experience and ability to serve as Directors in the future.
2. DEFINITIONS
(a) "Board of Directors" means the Board of Directors of the
Company.
(b) "Award" means an Award of Non-Statutory Stock Options and/or
Limited Rights granted under the provisions of the Directors'
Plan.
(c) "Committee" means the Compensation Committee of the Board of
Directors.
(d) "Directors' Plan Year or Years" means a calendar year or years
commencing on or after January 1, 1998.
(e) "Date of Grant" means the actual date on which an Award is
granted by the Committee.
(f) "Common Stock" means the common stock of the Company, par
value, $0.01 per share.
(g) "Fair Market Value" means, when used in connection with the
Common Stock on a certain date, the reported closing price of
the Common Stock as reported by the National Association of
Securities Dealers Automated Quotation System (as published by
the Wall Street Journal, if published) on the day prior to
such date or if the Common Stock was not traded on such date,
on the next preceding day on which the Common Stock was traded
thereon. If the Common Stock is not traded on a national
market reported by the National Association of Securities
Dealers Automated Quotation System, the Fair Market Value
means the average of the closing bid and ask sale prices on
the last previous date on which a sale is reported in an
over-the-counter transaction. In the absence of any
over-the-counter transactions, the Fair Market Value means the
highest price at which the stock has sold in an arms length
transaction during the 90 days immediately preceeding the
grant date. In the absence of an arms length transaction
during such 90 days, Fair Market Value means the book value of
the common stock or the adjusted original issue price of $4.50
per share, whichever is higher.
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(h) "Limited Right" means the right to receive an amount of cash
based upon the terms set forth in Section 8.
(i) "Termination for Cause" means the termination upon an
intentional failure to perform stated duties, breach of a
fiduciary duty involving personal dishonesty, which results in
material loss to the Company or one of its affiliates or
willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease-and-desist order issued to the Company or one of its
subsidiaries.
(j) "Participant" for the Plan means a director of the Company or
its Subsidiaries chosen by the Committee to participate in the
Directors' Plan.
(k) "Change in Control" of the Company means a change in control
that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act")
or any successor disclosure item; provided that, without
limitation, such a Change in Control (as set forth in 12
U.S.C. Section 1841[a][2] of the Bank Holding Company Act of
1956, as amended) shall be deemed to have occurred if any
person (as such term is used in Sections 13[d] and 14[d] of
the Exchange Act in effect on the date first written above),
other than any person who on the date hereof is a director or
officer of the Company, (i) directly or indirectly, or acting
through one or more other persons, owns, controls or has power
to vote 25% or more of any class of the then outstanding
voting securities of the Company; or (ii) controls in any
manner the election of the directors of the Company. For
purposes of this Agreement, a "Change in Control" shall be
deemed not to have occurred in connection with a
reorganization, e.g. consolidation or merger of the Company
where the stockholders of the Company, immediately before the
consummation of the transaction, will own at least 50% of the
total combined voting power of all classes of stock entitled
to vote of the surviving entity immediately after the
transaction.
(l) "Date of Affiliation" means the date on which a director was
first elected or appointed to the Board of Directors of the
Company or one of its Subsidiaries whichever is earlier.
3. ADMINISTRATION
The Directors' Plan shall be administered by the Compensation Committee
of the Board of Directors. The Committee is authorized, subject to the
provisions of the Directors' Plan, to establish such rules and regulations as it
deems necessary for the proper administration of the Directors' Plan and to make
whatever determinations and interpretations in connection with the Directors'
Plan it deems as necessary or advisable. All determinations and interpretations
made by the Committee shall be binding and conclusive on all Participants in the
Directors' Plan and on their legal representatives and beneficiaries.
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4. TYPES OF AWARDS
Awards under the Directors' Plan may be granted in any one or a
combination of the following, as defined below in Sections 7 and 8 of the
Directors' Plan:
(a) Non-Statutory Stock Options; and
(b) Limited Rights
5. STOCK SUBJECT TO THE DIRECTORS' PLAN
Subject to adjustment as provided in Section 12, the maximum number of
shares reserved for issuance under the Directors' Plan is 150,000 shares of
Common Stock outstanding (sometimes referred to herein as "Option Shares"). To
the extent that options or rights granted under the Directors' Plan are
exercised, the shares covered will be unavailable for future grants under the
Directors' Plan; to the extent that options together with any related rights
granted under the Directors' Plan terminate, expire or are canceled without
having been exercised or, in the case of Limited Rights exercised for cash, new
Awards may be made with respect to these shares.
6. ELIGIBILITY
The directors of the Company and its Subsidiaries ("Directors"), except
for those directors who are also salaried officers of the Company or its
Subsidiaries, shall be eligible to receive Non-Statutory Stock Options and/or
Limited Rights under the Directors' Plan. The maximum number of Option Shares
that a Participant shall be eligible to be awarded shall be: (i) Company
Directors - 10,000; (ii) Subsidiary Directors - 5,000.
7. GRANT OF NON-STATUTORY STOCK OPTIONS
The Committee may, from time to time, grant Non-Statutory Stock Options
to Directors. Non-Statutory Stock Options granted under this Directors' Plan are
subject to the following terms and conditions:
(a) Price.
The purchase price per share of Common Stock deliverable upon the
exercise of each Non-Statutory Stock Option shall not be less than 110%
of the Fair Market Value of the Common Stock on the date the option is
granted or $5.00 whichever is greater. Shares may be purchased only
upon full payment of the purchase price. Payment of the purchase price
may be made, in whole or in part, through the surrender of shares of
the Common Stock of the Company at the Fair Market Value of such shares
determined in the manner described in Section 2(g).
(b) Terms of Options.
The term during which each Non-Statutory Stock Option may be exercised
shall be determined by the Committee, but in no event shall a
Non-Statutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant.
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(c) Vesting.
The Committee shall determine the date on which each Non-Statutory
Stock Option shall become exercisable in installments. Any required
vesting period shall commence on the Participant's Date of Affiliation.
The shares comprising each installment may be purchased in whole or in
part at any time after such installment becomes exercisable. The
Committee may, in its sole discretion, accelerate the time at which any
Non-Statutory Stock Option may be exercised in whole or in part.
Notwithstanding the above, in the event of a Change in Control of the
Company, or the death of a Director, all Non-Statutory Stock Options
shall become immediately exercisable.
(d) Termination of Service.
Upon the termination of a Directors' service for any reason other than
retirement, death or disability or termination for cause, his or her
Non-Statutory Stock Options shall be exercisable only as to those
shares which were immediately purchasable by him at the date of
termination and only for a period of 30 days following termination and
in the event of retirement 90 days following retirement. In the event
of termination for cause, all rights under his Non-Statutory Stock
Options shall expire upon termination. In the event of the death or
disability of a Director, all Non-Statutory Stock Options held by the
Director, whether or not exercisable at such time, shall be exercisable
by the Director, or the Director's legal representatives or
beneficiaries for twelve (12) months following the date of his death or
disability; provided that in no event shall the period extend beyond
the expiration of the Non-Statutory Stock Option term.
8. GRANT OF LIMITED RIGHTS
The Committee may grant a Limited Right simultaneously with the grant
of any option, with respect to all or some of the shares covered by such option.
Limited Rights granted under the Directors' Plan are subject to the following
terms and conditions:
(a) Terms of Rights.
In no event shall a Limited Right be exercisable in whole or in part
before the expiration of six months from the date of grant of the
Limited Right. A Limited Right may be exercised only upon the
occurrence of all of the following conditions: (i) a Change in Control
of the Company; and (ii) the Fair Market Value of the underlying shares
on the day of exercise is greater than the exercise price of the
related option.
Upon exercise of a Limited Right, the related option shall cease to be
exercisable. Upon exercise or termination of an option, any related
Limited Rights shall terminate. The Limited Rights may be for no more
than 100% of the difference between the exercise price and the Fair
Market Value of the Common Stock subject to the underlying option
pursuant to Section 2(g) herein. The Limited Right is transferable only
when the underlying option is transferable and under the same
conditions.
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(b) Payment.
Upon exercise of a Limited Right, the holder shall promptly receive
from the Company an amount of cash equal to the difference between the
Fair Market Value on the Date of Grant of the related option and the
Fair Market Value of the underlying shares on the date the Limited
Right is exercised, multiplied by the number of shares with respect to
which such Limited Right is being exercised.
(c) Termination of Service.
Upon the termination of a Directors' service for any reason other than
retirement, death or disability or termination for cause, any Limited
Rights held by him shall be exercisable only as to those shares of the
related option which were immediately purchasable by him at the date of
termination and only for a period of 30 days following termination. In
the event of Termination for Cause, all Limited Rights shall expire
upon termination. In the event of termination of service for reason of
death or disability, all Limited Rights held by the Director, whether
or not exercisable at such time, shall be exercisable by the Director
or his legal representatives or beneficiaries for twelve (12) months
following the date of his death or disability; provided that in no
event shall the period extend beyond the expiration of the related
Non-Statutory Stock Option term.
9. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY
An optionee shall have no rights as a shareholder with respect to any
shares covered by a Non-Statutory Stock Option until the date of issuance of a
stock certificate for such shares. Nothing in the Directors' Plan or in any
Award granted confers on any person any right to continue to serve as a director
for the Company or its Subsidiaries.
No Award under the Directors' Plan shall be transferable by the
optionee other than by will or the laws of descent and distribution and may only
be exercised during his lifetime by the optionee, or by a guardian or legal
representative.
10. AGREEMENT WITH PARTICIPANTS
Each Award of Options and/or Limited Rights will be evidenced by a
written agreement, executed by the Participant and the Company which describes
the conditions for receiving the Awards including the date of Award, the
purchase price, applicable periods, and any other terms and conditions as may be
required by the Board of Directors or applicable securities law.
11. DESIGNATION OF BENEFICIARY
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any stock option or Limited
Rights Award to which he would then be entitled. Such designation will be made
upon forms supplied by and delivered to the Company and may be revoked in
writing. If a Participant fails effectively to designate a beneficiary, then his
estate will be deemed to be the beneficiary.
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12. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend, split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, the Committee will make such adjustments to
previously granted Awards, to prevent dilution or enlargement of the rights of
the Participant, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock which may be awarded under the Directors' Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock covered by Awards already made under the Directors' Plan;
(c) adjustments in the purchase price of outstanding Non-Statutory
Stock Options, or any Limited Rights attached to such options.
No such adjustments may, however, materially change the value of
benefits available to a Participant under a previously granted Award.
13. WITHHOLDING
There will be deducted from each distribution of cash and/or Common
Stock under the Directors' Plan the amount of tax required to be withheld by any
governmental authority if any.
14. AMENDMENT OF THE DIRECTORS' PLAN
The Board of Directors may at any time, and from time to time, modify
or amend the Directors' Plan in any respect; provided however, that if necessary
to continue to qualify the Directors' Plan under the Securities and Exchange
Commission Rule 16(b)-3, shareholder approval would be required for any such
modification or amendments which:
(a) increases the maximum number of shares for which options may
be granted under the Directors' Plan (subject, however, to the
provisions of Section 13 hereof);
(b) reduces the minimum purchase price at which Awards may be
granted;
(c) extends the period during which options may be granted or
exercised beyond the times originally prescribed; or
(d) changes the persons eligible to participate in the Directors'
Plan.
Failure to ratify or approve amendments or modifications to Subsections
(a) through (d) of this Section by shareholders shall be effective only as to
the specific amendment or modification requiring such ratification. Other
provisions, sections, and subsections of this Directors' Plan will remain in
full force and effect.
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No such termination, modification or amendment may affect the rights of
a Participant under an outstanding Award.
15. EFFECTIVE DATE OF DIRECTORS' PLAN
The Directors' Plan shall be adopted by the Board of Directors and
shall become effective upon such date of adoption, or other date as determined
by the Board ("Effective Date"). Following the Effective Date of the Directors'
Plan, the Directors' Plan shall be submitted to the Company's shareholders for
approval. If the Directors' Plan is not approved by shareholders the Directors'
Plan and any Awards granted thereunder shall be null and void.
16. TERMINATION OF DIRECTORS' PLAN
The right to grant Awards under the Directors' Plan will terminate upon
the earlier of 10 years after the Effective Date of the Directors' Plan or the
issuance of Common Stock or the exercise of options or related rights equaling
the maximum number of shares reserved under the Directors' Plan as set forth in
Section 5. The Board of Directors has the right to suspend or terminate the
Directors' Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect his rights under a previously granted
Award.
17. APPLICABLE LAW
The Directors' Plan will be administered in accordance with the laws of
the State of Florida.
Adopted this 24th day of February, 1998 by the Board of Directors of
the Company.
/s/Stephen A. McLaughlin
---------------------
Stephen A. McLaughlin, Secretary
Adopted on the ___ day of ____________, 1998 by the Company's
shareholders.
-----------------
Richard Storm, Jr.
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[GRAPHIC OMITTED]
NON-EMPLOYEE DIRECTOR'S STOCK OPTION
AGREEMENT
STOCK OPTION AND LIMITED RIGHTS AGREEMENT made this ___ day of
______________, 1998, between CITIZENS COMMUNITY BANCORP, INC. ("Company"), and
____________________________ ("Participant"). For purposes of this Agreement,
the terms and conditions contained herein relative to the Director's Stock
Option Plan ("Plan") shall have the same meanings as those terms and conditions
of the Plan as set forth and approved by the Board of Directors of the Company
at a meeting on October 21, 1997 and further clarified at a meeting of the Board
of Directors of the Company on November 18, 1997; Company and Participant do
hereby agree that this Agreement is specifically conditioned upon approval of
the Plan by the Shareholders of the Company at the Annual Meeting of
Shareholders on April 30, 1998.
WHEREAS, the purpose of the Plan is to provide incentives to advance
the interests of the Company and its shareholders by providing Directors of the
Company and its affiliates, upon whose judgment, initiative and efforts the
successful conduct of the business of the Company and its affiliates largely
depends, with an additional incentive to perform in a superior manner, as well
as, to attract Directors of experience and ability;
WHEREAS, the Plan provides for the grant of an option to purchase
shares of the common stock of the Company, par value, $0.01 per share ("Common
Stock") to Directors of the Company or its affiliates, and the Stock Option
Committee has granted Participant an option to purchase Shares of Common Stock
together with Limited Rights, which option is intended to be a non-statutory
incentive stock option;
THEREFORE, to evidence the grant of the Option and Limited Rights and
subject to the terms and conditions as provided in the Plan, the Company and the
Participant hereby agree as follows:
1. Grant of Option. The Company hereby evidences and confirms its grant
to the Participant an option to purchase ____________ Shares shares of Common
Stock, with Limited Rights attached to all such shares at an exercise price of
$7.00 per share (the "Exercise Price"). Such option is hereinafter referred to
as the "Option" and the shares of stock subject to the Option are hereinafter
sometimes referred to as the "Option Shares." The Option and Limited Rights
shall be subject to the provisions of the Plan and this Agreement. The Option is
intended by the parties hereto to be, and shall be treated as, a non-statutory
stock option.
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2. Term of Option. The term of the Option will be for a period of ten
(10) years, beginning on ___________________ and ending on ___________________
("Option term").
3. Installment Exercise. Subject to such further limitations as are
provided herein, the Option shall become exercisable in four (4) installments,
the Participant having the right hereunder to purchase from the Company the
following number of Option Shares upon exercise of the Option, on and after the
following dates, in cumulative fashion:
(a) on and after the second anniversary of the Participant's Date of
Affiliation, 50% of the total number of Option Shares;
(b) on and after the third anniversary of the Participant's Date of
Affiliation, 75% of the total number of Option Shares;
(c) on and after the fourth anniversary of the Participant's Date of
Affiliation, 100% of the total number of Option Shares;
The grant of the Option shall impose no obligation upon the Participant
to exercise the Option. Notwithstanding the foregoing installment
exercise schedule, in the event of a Change in Control of the Company
or the death of the participant, the Option and Limited Rights, whether
or not exercisable at such time, shall become immediately exercisable.
4. Manner of Exercise. The Participant may exercise the Option with
respect to all or any part of the number of Option Shares then exercisable
thereunder by delivering to the Secretary of the Company written notice of
intent to exercise signed by Participant or the person or persons exercising the
Option. Such notice shall state the number of shares of Common Stock with
respect to which the Option is being exercised. Such notice shall be accompanied
by payment of the full Exercise Price. As soon as practicable after such notice
and payment shall have been received, the Company shall deliver a stock
certificate(s) representing the number of shares of Common Stock with respect to
which the Option has been exercised in the name of the person or persons
exercising the Option. Payment of the Exercise Price shall be made in cash or by
check, or, in whole or in part, through the surrender of shares of Common Stock,
which shares will be valued at Fair Market Value on the date of exercise of the
Option. The Participant shall not be entitled to any rights as a stockholder
with respect to shares of Common Stock being acquired pursuant to the exercise
of the Option, unless and until certificates
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evidencing such Common Stock are issued. No adjustments shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificates are issued.
In the event the Option shall be exercised by any person other than the
Participant pursuant to Section 7 hereof, the notice of exercise of the Option
shall be accompanied by proof satisfactory to the Committee administering the
Plan of the right of such person to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and nonassessable.
5. Securities Laws; Holding Period. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be obligated to cause to be
issued or delivered any certificate evidencing Common Stock purchased pursuant
to the exercise of the Option, unless and until the Company is advised by its
counsel that the issuance and delivery of such certificate is in compliance with
all applicable laws, regulations and governmental authority and the requirements
of any exchange upon which the Common Stock may be traded. The Company shall in
no event be obligated to register any securities pursuant to the Securities Act
of 1933 (as now in effect or as hereafter amended) ("Securities Act") or to take
any other affirmative action in order to cause the issuance and delivery of such
certificate(s) to comply with any such law, regulation or requirement.
Shares subject to Participant's Option are restricted securities
subject to the restrictions on resale as provided in Rule 144 of the Securities
Act. Shares acquired under the Option will be required to be held for one year
after exercise before they may be sold and appropriate legend reflecting this
restriction shall be placed on the shares, unless (i) the issuance of shares of
Common Stock pursuant to the exercise of options under the Plan is registered
under the Securities Act or (ii) the subsequent sale of shares acquired upon
exercise of the option is registered under the Securities Act, or (iii) an
exemption from registration is available.
6. Exercise of Limited Rights. In no event shall Limited Rights be
exercisable, in whole or in part, before the expiration of six months from the
date of grant. Subject to such further limitations as are provided herein, in
the event of a Change in Control, the Participant, the Participant's surviving
beneficiary or the Participant's legal representative, shall have the right, in
lieu of purchasing shares of Common Stock covered by the Option, during the term
that the underlying Option is exercisable, to relinquish the Option with respect
to any or all of such shares and to receive from the Bank an amount of cash
equal to the difference between the Fair Market Value on the Date
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of Grant of the related Option and the Fair Market Value of the underlying
shares of the Common Stock on the date the Limited Rights are exercised,
multiplied by the number of shares with respect to which such Limited Rights are
being exercised.
Limited Rights with respect to the Option may be exercised by written
notice delivered to the Bank signed by the Participant. Such notice shall state
the number of shares of the Common Stock in respect to which Limited Rights are
being exercised, the date of exercise and the Fair Market Value of the Common
Stock on such date. Within fourteen days following delivery of such written
notice to the Bank, the Bank shall deliver to the Participant cash or such other
form of payment acceptable to the Participant in the amount as determined above
with respect to the Limited Rights being exercised.
The Limited Right may be exercised only when the underlying option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
option.
Upon any exercise of a Limited Right, the related Option or portion
thereof shall cease to be exercisable. Upon exercise or termination of the
Option, any related Limited Rights shall terminate. The Limited Rights may be
for no more than 100% of the difference between the exercise price and the Fair
Market Value of the Common Stock subject to the underlying option.
7. Transferability. The Option and the Limited Rights may be exercised
during Participant's lifetime only by him, and neither the Option, the Limited
Rights nor this Agreement shall be assignable or transferable by him, other than
by will or by the laws of descent and distribution. No such transfer of the
Option, the Limited Rights or this Agreement by the Participant by will or the
laws of descent and distribution shall be effective to bind the Company, unless
the Company shall have been furnished with written notice thereof and such other
evidence as the Committee administering the Plan may deem necessary or desirable
to establish the validity of the transfer. The Option, the Limited Rights and
this Agreement shall not be pledged, hypothecated, sold, assigned, transferred
or otherwise encumbered or disposed of except as provided herein. Any purported
pledge, hypothecation, sale, assignment, transfer or other encumbrance or
disposition of the Option or this Agreement contrary to the provisions hereof
shall be null and void and without effect. The levy of any execution,
attachment, or similar process upon the Option, the Limited Rights or this
Agreement shall be null and void and without effect.
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8. Designation of Beneficiary. Participant may designate a person or
persons to receive, in the event of death, any rights that may be available to
him pursuant to the Plan under the Option, the Limited Rights and this
Agreement. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked in writing. If Participant fails effectively to
designate a beneficiary, then Participant's estate will be deemed to be the
beneficiary.
9. Rights in Event of Termination.. Upon the termination of
Participant's term as a Director for any reason other than retirement, death or
disability , the Option held by him shall be exercisable only as to those shares
which were immediately purchasable by him/her at the date of termination, but
only for a period of three months following termination and in the event of
retirement 90 days following retirement. In no event, however, shall the period
extend beyond the expiration of the Option term. In the event of termination for
cause, all rights shall expire immediately upon termination.
10. Rights in Event of Death. In the event of death of the Participant,
the Option, whether or not exercisable at such time, shall be exercisable by the
Participant or his legal representatives or beneficiaries for one year following
the date of his death. In no event, however, shall the period extend beyond the
expiration of the Option term.
11. Dilution and Other Adjustments. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares, or other similar corporate change, the Committee shall
make such proportionate adjustments to the Option, if any, as it deems equitable
in the number of shares of Common Stock covered by the Option and in the
Exercise Price per share of the Option, to prevent dilution or enlargement of
the rights of Participant under this Option Agreement.
12. Notice. Any notice required or permitted under this Agreement shall
be deemed given when delivered in person, when mailed by registered mail with
return receipt requested, or by overnight courier upon receipt of the notice.
The notice should be addressed to the Chairman of the Board, Citizens Community
Bancorp, Inc., P.O. Box 1999, Marco Island, Florida 34146-1999, and to
Participant at such address as he may designate in writing to the Company.
13. Modification and Waiver. Neither this Agreement nor any provision
hereof can be changed, modified, amended, discharged, terminated or waived
orally or by any course of dealing or purported course of dealing, unless agreed
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12
<PAGE>
to in writing signed by Participant (or his legal representative) and the
Company. The waiver of or failure to enforce any breach of this Agreement shall
not be deemed to be a waiver or acquiescence in any other breach thereof.
14. Governing Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida. Venue for
purposes of bringing an action to enforce the terms of this Agreement shall be
Collier County, Florida.
15. Withholding. There may be deducted from each distribution of cash
and/or stock under the Plan an amount of cash or stock relating to withholding
tax imposed by any governmental authority.
16. Holding Period. The Participant hereby acknowledges that the shares
available under this Agreement are restricted shares and are subject to resale
restrictions.
17. Participant Acknowledgment. The Participant hereby acknowledges
that all decisions, determinations and interpretations of or by the committee in
respect of the Plan and this Option Agreement shall be final and conclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above mentioned.
CITIZENS COMMUNITY BANCORP, INC.
Marco Island, Florida
[SEAL]
Attest:
By: /s/Richard Storm, Jr.
Richard Storm, Jr.
Chairman of the Board
Attest: ACCEPTED AND AGREED TO:
Participant Name
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT BETWEEN
CITIZENS COMMUNITY BANK OF FLORIDA AND
MICHAEL A. MICALLEF, JR.
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<PAGE>
EMPLOYMENT AGREEMENT
BY AND BETWEEN
CITIZENS COMMUNITY BANK OF FLORIDA
AND
MICHAEL A. MICALLEF, JR.
THIS EMPLOYMENT AGREEMENT ("Agreement") is made, effective this 13th
day of May, 1997, by and between Citizens Community Bank of Florida, a
state-chartered commercial bank with its principal office in Marco Island,
Florida ("Bank", "Employer", "we" or "us"), Citizens Community Bancorp, Inc. and
Michael A. Micallef, Jr. ("Employee" or "you") (collectively, the Employer and
the Employee are sometimes referred to as the "Parties").
RECITAL
We wish to retain you as our and Chief Executive Officer to perform the
duties and responsibilities as are described in this Agreement and as our Board
of Directors ("Board") may assign to you from time to time. You wish to become
employed by us and act as our Chief Executive Officer in accordance with the
terms and provisions of this Agreement. This Agreement contains all of the terms
and provisions of the employment relationship.
OPERATIVE TERMS:
NOW, THEREFORE, in consideration of the mutual s contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto represent, warrant, undertake, covenant
and agree as follows:
1. Employment and Term. We shall employ you and you shall be employed
by us pursuant to the terms of this Agreement to perform the services specified
in Section 2 of this Agreement on our behalf. This Agreement shall be effective
the week of June 2, 1997 (the "Commencement Date") and terminate on the day
immediately preceding twelve (12) months from the Commencement Date (the
"Term"), unless terminated earlier pursuant to the provisions of Sections 8, 9
or 10 of this Agreement. The Term shall automatically be renewed for successive
six (6) month terms unless either of the Parties notifies the other in writing
of their desire to terminate this Agreement at the expiration of the Term or
renewal thereof. Such notice must be given at least thirty (30) days prior to
the expiration of the Term. Any such renewal shall be on the same terms and
provisions set forth herein. For purposes of this Agreement, the word "Term"
shall include any renewal or extension of the initial twelve-month term of this
Agreement.
2. Position, Responsibilities and Duties. During the Term, you shall
serve in the following capacities and shall fulfill the following
responsibilities and duties:
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(a) Chief Executive Officer: You shall serve in the position
of our Chief Executive Officer, through election by our Board. In such
capacity, you shall have the same powers, duties and responsibilities
of supervision and management of the Bank usually accorded to the Chief
Executive Officer of similar financial institutions. In addition, you
shall use your best efforts to perform the duties and responsibilities
enumerated in this Agreement and any other duties assigned to you by
our Board and to utilize and develop contacts and customers to enhance
the business of the Bank. Specifically, you shall devote your full
business time and attention and use your best efforts to accomplish and
fulfill the following duties and responsibilities as well as other
duties assigned to you from time to time by the Board:
(i) manage all personnel of the Bank;
(ii) serve as a member of the Board of Directors,
if and when elected to such a position;
(iii) serve on such committees of the Board as you
are appointed from time to time;
(iv) keep the Board informed of important
developments concerning the Bank, industry
developments and regulatory initiatives
affecting the Bank;
(v) maintain adequate expense records relating
to your activities on our behalf;
(vi) establish and implement marketing efforts to
increase the business of the Bank;
(vii) supervise the Chief Lending Officer
(viii) coordinate with our attorneys and
accountants and other service providers to
the extent necessary to further the business
of the Bank, keeping in compliance with
government laws and regulations and
otherwise keeping the Bank in as good a
financial and legal posture as possible; and
(ix) conduct and undertake all other activities,
responsibilities, and duties normally
expected to be undertaken and accomplished
by the Chief Executive Officer of a
financial institution similar in scope and
operation to our business.
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(b) General Duties: During the Term, and except for illness,
vacation periods and leaves of absences, you shall devote all of your
working time, attention, skill and best efforts to accomplish and
faithfully perform all of the duties assigned to you on a full-time
basis. You shall, at all times, conduct yourself in a manner that will
reflect positively upon us. You shall obtain such licenses,
certificates, accreditations and professional memberships and
designations as we may reasonably require from time to time. You shall
join and maintain membership in such social and civic organizations as
you or we deem appropriate to foster your contacts and business network
in the community.
(c) Policies and Manual: You agree to comply with the policies
and procedures that we adopt and implement from time to time as
described in our Employee Manual, including any policies relating to a
"drug fee work place". In that regard you agree to submit to the same
testing procedures, which apply to all Bank employees. You have read
and understand the contents of the Employee Manual and acknowledge that
we may modify, amend, supplement and update the Employee Manual from
time to time as we determine appropriate.
3. Compensation. During the Term, we shall compensate you by paying you
in accordance with the following provisions:
(a) Base Salary: We will pay you an annual salary of
Seventy-Nine Thousand Dollars ($79,000) (the "Base Salary") in
accordance with our regular payroll practices reduced appropriately by
deductions for federal income withholding taxes, social security taxes
and other deductions required by applicable laws. We may adjust the
Base Salary from time to time based upon our evaluation of your
performance, but not below a annual salary of Seventy-Nine Thousand
Dollars ($79,000) without your written concurrence.
(b) Incentive Stock Options: We will designate you as a key
employee eligible for the grant of incentive stock options under the
Citizens Community Bancorp, Inc., 1996 Stock Option Plan (the "Stock
Option Plan"). In that connection, the Company will grant to you under
the terms of the Stock Option Plan, an option to acquire up to 15,000
shares of the Company's common stock, over a ten-year period. The grant
of the stock options shall be made strictly in accordance with the
terms of the Stock Option Plan and in accordance with the Company's
standard form of Stock Option Agreement. The options will contain an
exercise price of $10 per share, will vest 20 percent per year. As part
of the consideration for the Stock Options, you agree that for a period
of 18 months following any event of termination defined herein you will
not accept employment with any existing or proposed business
organization which then competes or intends to compete with the Company
or the Bank anywhere in Collier County, Florida.
(c) Bonus: We may pay you a bonus when, in our sole
discretion, we determine that your performance merits special
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compensation. We will consider a bonus at the conclusion of each
calendar year for which you are employed based on achievement of goals
pre-established by the Board, payable on such terms and conditions as
we determine.
4. Payment of Business Expenses. You are authorized to incur reasonable
expenses in performing your duties hereunder. We will reimburse you for
authorized expenses, according to our established policies, promptly after your
presentation to us of an itemized account of such expenditures.
5. Vacation. You are entitled to take up to three (3) weeks paid
vacation time during the fiscal year, beginning January 1, 1998 and each year
thereafter, on a non-cumulative basis.
6. Fringe Benefits.
(a) Medical Benefits: You are entitled to participate in all
medical and health care benefit plans through health insurance, medical
reimbursement plans or other plans, if any, provided, or to be
provided, by us for our employees on the same basis as is typically
provided by us to our other employees.
(b) Other Benefit Plans: You are entitled to participate in
all of our employee benefit programs, if any, including without
limitation, pension plans, profit-sharing plans, 401(k) plans, medical
insurance plans, group life insurance plans, thrift plans, disability
plans, deferred compensation plans, stock option plans, education
programs and general bonus payments as may be in effect from time to
time or at any time, if any, provided, or to be provided, by us for our
employees on the same basis as is typically provided by us to our
employees. Nothing contained herein shall be deemed to, or have an
effect that would, exclude you from (I) any supplemental compensation
or other benefits you might become entitled to as our employee, and
(ii) special incentive compensation programs designed solely for you.
(c) Automobile Allowance: We will pay you an annual automobile
allowance of $6,000, payable in monthly installments of $500, to
reimburse you for expenses you may incur for the business use of your
personal automobile.
(d) Relocation Allowance: We will pay you $6,000 for expenses
incurred for relocating your family to the Marco Island, Florida area.
We will either pay such expenses directly to you upon presentation of
satisfactory evidence of an executed non-contingent lease with a term
of at least 7 months or a purchase and sale agreement for housing
located not more than 15 miles from the Bank's Marco Island main office
location. In the event you terminate your employment pursuant to this
and without cause on or before December 1, 1997, you agree to reimburse
the Bank the full amount of this payment.
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7. Disability/Illness.
(a) Illness: We shall pay you the full portion of the Base
Salary for any period of your illness or incapacity: provided that such
illness or incapacity does not render you unable to perform your duties
under this Agreement for a period longer than three (3) consecutive
months or for lesser consecutive periods which in the aggregate total
three months in any one calendar year. At the end of such three-month
period, or at such time that your periods of illness or incapacity
total in the aggregate more than three months in any one calendar year,
we may terminate your employment and this Agreement.
(b) Disability: If we terminate your employment pursuant to
your disability as determined under subsection 7(a) above, then we
shall pay to you, as a disability payment, an amount equal to your
monthly Base Salary, payable in accordance with our standard payroll
practices, commencing on the effective date of your termination and
ending on the earlier of:
(i) the date you return to full time employment
with us in the same capacity as you were
employed prior to your termination for
disability:
(ii) your full time employment by another
employer;
(iii) three (3) months after the date of such
termination, after which you will be
entitled to receive benefits under any
disability insurance plan provided by the
Bank; or
(iv) the date of your death.
We may satisfy our obligations to you in this Section of this Agreement, at our
option, through the purchase of disability insurance; and, if we decide to do
so, the provisions of the policy will control the amounts paid to you. Such
disability payments will be coordinated with any disability plans made available
to you pursuant to Section 6 of this Agreement.
(c) Continuation of Coverages: During any period of illness or
disability, we will continue any other life, health and disability
coverages for you substantially identical to the coverage maintained by
us for you prior to your termination for disability or the onset of
your illness. However, such coverages shall cease upon the earlier of:
(i) your full time employment by another
employer;
(ii) one (1) year after the date of such
termination (with the exception of
disability insurance coverage); or
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(iii) the date of your death.
(d) No Reduction in Base Salary: During the period in which
you are disabled or subject to illness or incapacity, there shall be no
reduction in your Base Salary, other than as described in this
Agreement.
8. Death During Employment. If you die during the Term, this Agreement
shall terminate and we will pay your estate the portion of your compensation
which would be payable to you up to the first working day of the first month
after your death occurs. After such payment, we shall have no further financial
obligation to you or to your estate under this Agreement; except that any
compensation payable to you under any benefit plan maintained by us will be paid
pursuant to its terms.
9. Termination.
(a) Death, Illness or Incapacity: This Agreement and your
employment shall terminate upon your death, illness or incapacity in
accordance with the provisions of Sections 7 and 8 of this Agreement.
(b) Termination Without Cause: We may terminate this Agreement
and your employment at any time for any reason without prior notice.
However, if we terminate your employment for any reason other than for
"good cause" (as defined under Subsection 9(c) below), we will pay to
you as severance the full portion of the Base Salary we then pay to you
for the remainder of the term of this Agreement or for six (6) months
following such Termination, whichever is longer, in accordance with our
standard payroll practices.
(c) Termination for Good Cause: We may, at any time, terminate
this Agreement and your employment without notice for "good cause". If
we terminate your employment for good cause, we shall not be obligated
to pay to you any severance. The term "good cause" shall mean any of
the following acts committed by you:
(i) Personal dishonesty;
(ii) Incompetence;
(iii) A pattern of socially unacceptable behavior;
(iv) Willful misconduct;
(v) Breach of fiduciary duty involving personal
profit;
(vi) Intentional failure to perform stated
duties;
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(vii) Willful violation of any law, rule or
regulation (other than traffic violations or
similar offenses) or any final cease-and-
desist order; or
(viii) Material breach of any provision of this
Agreement
(d) Change in Control: In the event of a change in control of
the Company or the Bank, defined herein as the sale of more than 50
percent of the outstanding share of capital stock of either the Company
or the Bank, you will be entitled to terminate your employment at your
option, anytime during the 6 month period following the effective date
of the change in control, and we or our successors will pay you a
Termination Payment equal to your then Annual Base Salary in a lump sum
payment.
(e) Effective Date of Termination: The termination of this
Agreement and your employment shall be effective upon our delivery to
you of written notice or at such later time as may be specified in such
notice, and you shall immediately vacate our premises on or before such
effective date.
(f) Post-Termination Obligations: We shall pay to you such
compensation as is otherwise required by us to pay to you after the
termination of your employment pursuant to this Agreement. However, any
such payment to you shall be subject to your providing us with
post-termination cooperation. Such cooperation shall include the
following:
(i) you shall furnish such information and
assistance to us as may be reasonably
required by us in connection with any
litigation or settlement of any dispute
between us, a borrower and/or any other
third parties (including without limitation
serving as a witness in court or other
proceedings);
(ii) you shall provide such information or
assistance to us in connection with any
regulatory examination by any state or
federal regulatory agency;
(iii) you shall keep our trade secrets and other
proprietary or confidential information
secret to the fullest extent practicable,
subject to compliance with all applicable
laws.
10. Required Provisions by Regulation. The Parties mutually acknowledge
that the laws and regulations governing us require that certain provisions be
provided in each employment agreement with officers and employees of the Bank.
The Parties agree to be bound by all of the following provisions:
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(a) Suspension/Temporary Prohibition: If you are suspended
and/or temporarily prohibited from participating in the conduct of our
affairs by a notice served under section 8(e) or (g)(1) of the Federal
Deposit Insurance Act [12 U.S.C. ss.1818(e)(3) and (g)(1)] our
obligations under this Agreement shall be suspended as of the date of
such service unless stayed by appropriate proceedings. If the charges
and the notice are dismissed, we may in our discretion:
(i) pay you all or part of your compensation
withheld while the obligations under this
Agreement are suspended; and
(ii) reinstate (in whole or part) any of our
obligations which were suspended.
(b) Permanent Prohibition: If you are removed and/or
permanently prohibited from participating in the conduct of our affairs
by an order issued under section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act [12 U.S.C. ss.1818(e)(4) or (g)(1)], all of our
obligations under this Agreement shall terminate as of the effective
date of the order, but your vested rights, if any shall not be
affected.
(c) Default Under FDIA: If the Bank is in default, as defined
in Section 3(x)(1) of the FDIA (12 U.S.C. Section 1813 [x][1] to mean
an adjudication or other official determination by any court of
competent jurisdiction, the appropriate federal banking agency or other
public authority pursuant to which a conservator, receiver or other
legal custodian is appointed for the Bank, all obligations under this
Agreement shall terminate as of the date of default, but vested rights
of the Employee and the Bank as of the date of termination shall be not
affected
(d) Golden Parachute: Any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Section 1828 (k) and
any regulations promulgated thereunder.
(i) by the Director or his or her designee, at
the time the Federal Deposit Insurance
Corporation ("FDIC") enters into an
agreement to provide assistance to or on
behalf of the Bank under the authority
contained in Section 13(c) of the Federal
Deposit Insurance Act; or
(ii) by the Director or his or her designee, at
the time the Director or his or her designee
approves a supervisory merger to resolve
problems related to operation of the Bank or
when the Bank's determined by the Director
to be in unsafe or unsound condition. For
purposes of this subsection of this
Agreement, the term "Director" shall mean
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the Director of the FDIC. Any of your rights
that have already vested, however, shall not
be affected by such action.
11. Fees and Kickbacks. It shall be considered a material breach of
this Agreement if you receive: (i) either directly or indirectly any fee,
kickback, or thing of value in connection with any loan made by us; or (ii) any
portion, split or percentage of any charge, either directly or indirectly, given
to or accepted by us or any subsidiary or affiliate, in connection with any loan
made by us or our affiliates; or (iii) any fee, kickback or compensation of any
kind in connection with the participation by us in any loan from any other
source.
12. Indebtedness. It is the present policy of the Bank that no loans
will be made by the Bank to any of its Directors or Executive Officers, however,
if, during the Term, you become indebted to us for any reason, we may, at our
election, set off and collect any sums due us from you, out of any amounts which
we may owe to you from your Base Salary or other compensation.
13. Maintenance of Trade Secrets and Confidential Information. You
shall use your best efforts and utmost diligence to guard and protect all of our
trade secrets and confidential information. You shall not, either during the
Term or after termination of this Agreement, for whatever reason, use for
yourself or for any other Person, in any capacity, or divulge or disclose in any
manner to any Person, the identity of our customers, or our customer lists,
methods of operation, marketing and promotional methods, processes, techniques,
systems, formulas, programs or other trade secrets or confidential information
relating to our business. Upon termination of this Agreement or your employment,
for any reason, you shall immediately return and deliver to us all records and
papers and all matters of whatever nature which bear trade secrets or
confidential information.
14. Competitive Activities.
(a) You agree that during the term of your employment
hereunder, except with the express consent of the Board of Directors,
you will not, directly or indirectly, engage or participate in, become
a director of, or render advisory or other services for, or in
connection with, or become interested in, or make any financial
investment in any firm, corporation, business entity or business
enterprise competitive with or to any business of the Bank; provided,
however, that you shall not hereby be precluded or prohibited from
owning passive investments, including investments in the securities of
other financial institutions, so long as such ownership does not
require you to devote substantial time to management or control of the
business or activities in which you have invested.
(b) You agree and acknowledge that by virtue of your
employment hereunder, you will acquire an intimate knowledge of the
activities and affairs of the Bank, including trade secrets and other
confidential matters. Because of the special, unique, and extraordinary
services that you are capable of performing for the Bank or one of its
competitors, you recognize that the services to be rendered by you
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hereunder are of a character giving them a peculiar value, the loss of
which cannot be adequately or reasonably compensated for by damages.
You, therefore, agree that during the term of this Agreement, and for a
period of eighteen (18) months after termination of this Agreement, you
shall not become employed, directly or indirectly, whether as an
employee, independent contractor, consultant, or otherwise, in the
financial services industry with any business enterprise or business
entity, or Person in existence at such time in Collier County, Florida
or with any group or person whose intent is to organize another
financial institution within Collier County, Florida.
You hereby agree that the duration of the anticompetitive
covenant set forth herein is reasonable, and its geographic scope is
not unduly restrictive.
15. Discoveries, Inventions and Improvements.
(a) Our Rights: You shall report to us all of your
discoveries, inventions, improvements, programs or ideas of whatever
nature, conceived or made by you relating to our business during the
Term. All such discoveries, inventions, improvements, programs or ideas
of whatever nature which are applicable in any way to our business
shall be our sole and exclusive property. You shall deliver to us all
of the original copies of such discoveries, inventions, improvements,
programs or ideas upon the termination of your employment. In addition,
at our request you will sign and deliver to us whatever documents,
assignments, bills of sale, or conveyances that we consider necessary
in order to perfect our property rights described in this Section 15.
(b) Copyrights and Patents: We have the absolute right to
obtain copyrights, trademarks or patents with respect to any of the
discoveries, inventions, improvements, programs or ideas you develop
during the Term or any derivative products from the foregoing, and that
all such copyrights, trademarks, or patents shall be our sole and
exclusive property. At our request, you will sign and deliver to us any
documents that we consider necessary for the protection of our
interests in discoveries, inventions, improvements, trade secrets and
confidential information, or to further our business.
(c) Licenses: We have the sole and exclusive right to license
other Persons to use the products, ideas, improvements, discoveries or
inventions produced by you pursuant to your employment under this
Agreement, and all monies derived therefrom shall be our sole and
exclusive property.
(d) Development Rights: We have the exclusive right to
develop, refine, enhance, modify and/or implement any ideas concepts,
programs, strategies or improvements, developed by you during the Term.
(e) Property of Employer: All programs, documentation,
customer lists, manuals, products, reports and any other information,
whatsoever, pertaining to our business are our sole property. You shall
refrain from use, disclosure or sale, directly or indirectly,
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of such programs, product, documentation, customer lists, manuals,
reports and other information.
16. Remedies for Breach.
(a) Arbitration: The Parties Agree that, except for the
specific remedies for Injunctive Relief and other equitable relief
contained in Subsection 16(b) and (c) below, any controversy or claim
arising out of or relating to this Agreement or any breach thereof,
including, without limitation, any claim that this Agreement or any
portion thereof is invalid, illegal or otherwise voidable, shall be
submitted to binding arbitration before and in accordance with the
rules of the American Arbitration Association and judgment upon the
determination and/or award of such arbitrator may be entered in any
court having jurisdiction thereof. Provided, however, that this clause
shall not be construed to permit the award of punitive damages to
either party. The prevailing party to said arbitration shall be
entitled to an award of reasonable attorney's fees. The situs of
arbitration shall be in Collier County, Florida.
(b) Injunctive Relief: The Parties acknowledge and agree that
the services to be performed by you are special and unique and that
money damages cannot fully compensate us in the event of your violation
of the provisions of Sections 13, 14 and 15 of this Agreement. Thus, in
the event of a breach of any of the provisions of such Sections, you
agree that we, upon application to a court of competent jurisdiction,
shall be entitled to an injunction restraining you from any breach of
the terms and provision of such Sections of this Agreement. If we
prevail in an action seeking an injunction restraining you, you shall
pay all costs and reasonable attorneys fees incurred by us in and
relating to obtaining such injunction. Such injunctive relief may be
obtained without bond and your sole remedy, in the event of the entry
of such injunction, shall be the dissolution of such injunction, if
warranted, upon hearing duly had. You hereby waive any and all claims
for damages by reason of the wrongful issuance of any such injunction.
(c) Cumulative Remedies: Notwithstanding any other provision
of this Agreement, the injunctive relief described in subsection 16(a)
above and all other remedies provided for in this Agreement which are
available to us as a result of your breach of this Agreement, are in
addition to and shall not limit any and all remedies existing at or in
equity which are also available to us.
17. Assignment. We may assign this Agreement to any other Person at any
time upon such terms and conditions as we consider appropriate, if such
assignment is made in conjunction with an acquisition of control of the Bank.
Upon such assignment, all of our rights herein shall inure to the benefit of the
assignee. Your rights and obligations herein are personal to you and therefore
none of your rights or obligations hereunder are assignable to anyone else.
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18. Miscellaneous.
(a) Amendment of Agreement: Unless as otherwise provided
herein, this Agreement may not be modified or amended except in writing
signed by both Parties.
(b) Certain Definitions: For purposes of this Agreement, the
following terms whenever capitalized herein shall have the following
meanings:
(i) "Person" shall mean any natural person,
corporation, partnership (general or
limited), trust, bank or any other business
entity.
(ii) "Affiliate" shall mean a Person that,
directly or indirectly, through one or more
intermediaries, controls, is controlled by,
or is under common control with, such
Person. With respect to the Employee, the
term includes his spouse, parents, lineal
descendants, brothers and sister.
(iii) "Attorneys Fees" shall include the legal
fees and disbursements charged by attorneys
and their related travel and lodging
expenses, court costs, paralegal fees, etc.
incurred in settlement, trial, appeal or in
bankruptcy proceedings.
(iv) "Term" shall include the time period
specified in Section 1 of this Agreement and
include any renewals or extensions thereof.
(c) Headings for Reference Only: The headings of paragraphs,
sections and subsections herein are included solely for convenient
reference and shall not control the meaning of the interpretation of
any of the provisions of this Agreement.
(d) Governing Law/Jurisdiction: This Agreement shall be
construed in accordance with and governed by the laws of the State of
Florida. Any and all litigation involving the Parties and their rights
and obligations herein shall be brought in the appropriate federal or
state courts in Collier County, Florida, and the Parties hereby consent
to the jurisdiction of such courts.
(e) Severability: If any of the provisions of this Agreement
shall be held invalid for any reason, the remainder of this Agreement
shall not be affected thereby and shall remain in full force and effect
in accordance with the remainder of its terms.
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(f) Entire Agreement: Waiver: This Agreement and all other
documents incorporated or referred to herein, contain the entire
agreement of the Parties and there are no representations, inducements
or other provisions other than those expressed in writing herein. No
modification, waiver or discharge of any provision or any breach of
this Agreement shall be effective unless it is in writing signed by
both Parties. Our waiver of your breach of any provision of this
Agreement, shall not operate, or be construed, as a waiver of any
subsequent breach by you of that provision or of any other provision of
this Agreement.
(g) Pronouns: As used herein, words in the singular include
the plural, and the masculine include the feminine and neuter gender,
as appropriate.
(h) Successors and Assigns: Except as otherwise provided
herein, the rights and obligations of the Parties under this Agreement
shall inure to the benefit of and shall be binding upon their
successors and assigns.
(i) Prior Agreements: This Agreement amends, supplants and
supersedes any and all prior agreements between the Parties.
(k) Notices: Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing, and hand
delivered or if sent by regular mail or reputable commercial next-day
air carrier (e.g. Federal Express) to the Employee at the address for
him in our records or, to us at our principal office, Attn: Secretary
to the Board of Directors. Such notices shall be deemed received on the
next business day following mailing or depositing with the carrier.
(l) Recital: The Recital set forth at the beginning of this
Agreement shall be deemed to be incorporated into this Agreement by
this reference as if fully set forth herein, and this Agreement shall
be interpreted with reference to and in light of such Recital.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the day and year first above written.
/s/ Stephen McLaughlin CITIZENS COMMUNITY BANCORP, INC.
Witness
By: /s/ James S. Hagedorn
James S. Hagedorn
Vice Chairman
CITIZENS COMMUNITY BANK OF
FLORIDA
/s/ Stephen McLaughlin By: /s Joel M. Cox, Sr.
Witness Joel M. Cox, Sr.
Chairman of the Board
EMPLOYEE
/s/ Amanda Cox /s/ Michael A. Micallef, Jr.
Witness Michael A. Micallef, Jr.
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EXHIBIT 10.4
ESCROW AGREEMENT WITH THE INDEPENDENT
BANKERS' BANK OF FLORIDA
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March ___, 1998
Page 1
March ___, 1998
Independent Bankers' Bank of Florida
P.O. Box 4998
Orlando, Florida 32802-4998
Attention: John Wulbern, President
Gentlemen:
(1) Citizens Community Bancorp, Inc., a Florida corporation (the
"Company"), proposes to offer for sale up to 1,000,0000 shares of its common
stock, $0.01 par value, (the "Common Stock") in an Initial Offering (to existing
shareholders and depositors) and then to the general public in a Community
Offering. The Initial Offering and Community Offering are collectively referred
to as the "Offering". The Common Stock being issued shall be registered under
the Securities Act of 1933, as amended. The Common Stock will be offered at a
price of $7.50 per share with a minimum subscription per subscriber of 100
shares. A minimum of 300,000 shares ($2,250,000) of Common Stock must be sold by
5:00, p.m., Local Time, on _________, 1998 (120 days after the date of the
Prospectus) or the Offering will be terminated and of the funds held in the
Escrow Account (together with interest) will be refunded to the subscribers.
(2) The Company hereby appoints and designates you as Escrow Agent for
the purposes set forth herein. By your signature hereto, you acknowledge and
accept said appointment and designation. The Company understands that you, by
accepting said appointment and designation, in no way endorse the merits of the
Offering described herein. The Company agrees to notify any person acting on its
behalf that your position as Escrow Agent does not constitute such an
endorsement, and to prohibit said persons from the use of your name as an
endorsee of such Offering. The Company further agrees to allow you to review any
sales literature in which your name appears and which is used in connection with
such Offering.
(3) The Common Stock shall deliver all payments received for purchase
of the Common Stock (the "Subscription Funds") to you in the form in which they
are received along with copies of Order Forms and written acceptances of the
Company for Units for which the Subscription Funds represent payment, within six
(6) business days after their receipt. Upon receipt of such written acceptance
by the Company, the Escrow Agent shall deposit such funds into the Escrow
Account. The Company shall also deliver to you completed copies of the Order
Forms for each subscriber, along with such subscriber's name, address, number of
shares subscribed and social security or taxpayer identification number.
(4) Subscription Funds shall be held and disbursed by you in accordance
with the terms of this Agreement.
(5) In the event any Subscription Funds are dishonored for payment for
any reason, you agree to orally notify the Company thereof as soon as
practicable and to confirm same in writing and to return such dishonored
Subscription Funds to the Company in the form in which they were delivered to
you.
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March ___, 1998
Page 2
(6) Should the Company elect to accept a subscription for less than the
number of shares of Common Stock shown in the purchaser's Order Form, by
indicating such lesser number of shares of Common Stock on the written
acceptance of the Company transmitted to you, you shall deposit such payments in
the Escrow Account and then, upon separate instruction from the Company, remit
within ten (10) days after such deposit to such subscriber at the address shown
in his Order Form that amount of his Subscription Funds in excess of the amount
which constitutes full payment of the number of subscribed shares of Common
Stock accepted by the Company as shown in the Company's written acceptance,
without interest or diminution. Said address shall be provided by the Company to
you as requested.
(7) Definitions as used herein:
(a)"Total Receipts" shall mean the sum of all Subscription
Funds delivered to you pursuant to Paragraph (3) hereof, less (i) all
Subscription Funds returned pursuant to Paragraphs (5) and (6) hereof; and (ii)
all Subscription Funds which have not been paid by the financial institution
upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Local Time, on
_________ ___, 1998 (120 days following the Effective Date of registration of
the Offering with the Securities and Exchange Commission) for the Minimum
Offering and ____________, 1999 for the Community Offering, unless previously
terminated by the Company. If the Minimum Offering is sold and closed, any
profit or earnings received on the Subscription Funds held in the Escrow Account
will be retained by the Company. After the Minimum Offering has closed, the
Company will continue to offer shares in the Community Offering. Subscription
Funds received in the Community Offering will be disbursed at the instructions
of the Company. It is anticipated that there will be one closing per month. The
Company will notify you of the date of Effective Date of registration as soon as
practicable after such date has been determined.
(c) "Closing Date" shall mean the business day on which the
Company after determining that all of the Offering conditions have been met,
selects in its sole discretion. The Closing Date shall be confirmed in writing
to you by the Company.
(8) If, on or before the Expiration Date, of the Minimum Offering (i)
the Total Receipts held by you equal or exceed $2,250,000; and (ii) the Company
has certified to you in writing that the Company has not cancelled the Offering,
then you shall:
(A) No later than 10:00 A.M., Local Time, one day
prior to Closing Date (as that term is defined
herein,) deliver to the Company all Order Forms
provided to you; and
(B) On the Closing Date, no later than 10:00 o'clock
A.M., Local Time, upon receipt of 24-hour written
instructions from the Company, remit all amounts
representing Subscription Funds, plus any profits or
earnings, held by you pursuant hereto to the Company
in accordance with such instructions.
(9) If (i) the Escrow Release Conditions are not met by the Expiration
Date or the Offering is canceled by the Company at any time prior to the
Expiration Date, then upon written instructions from the Company you shall
promptly remit to each subscriber at the address set forth in his Order Form an
amount equal to the amount of his Subscription Funds thereunder, plus any
profits or earnings thereon. The earnings accruing to any individual subscriber
under this paragraph shall be a prorated share of the gross earnings on all
funds under escrow, weighted by the amount and the duration of the funds
tendered for the
<PAGE>
March ___, 1998
Page 3
individual subscription in accordance with the formula contained in the
Prospectus - TERMS OF THE OFFERING. Under no circumstances will earnings accrue
to any subscription canceled for any reason other than those provided for in
this paragraph.
(10) Pending disposition of the Subscription Funds under this
Agreement, you shall invest such funds upon oral instructions, followed in
writing, given to you by Richard Storm, Jr., Chairman and President or Stephen
A. McLaughlin, Vice President of the Company, in Federal Funds, in short-term
direct obligations of the United States government (either directly or under
repurchase agreement), in FDIC insured money market deposit accounts (not to
exceed $100,000), and/or in short-term FDIC insured certificates of deposit (not
to exceed $100,000), but in any case with maturities of 90 or less. If no such
instructions are received by you, you will nevertheless invest the Subscription
funds in any or all of the foregoing accounts or instruments as you may
determine in your sole discretion.
(11) Your obligations as Escrow Agent hereunder shall terminate upon
your transferring all funds you hold hereunder pursuant to the terms of
Paragraphs (8) or (9) herein, as applicable.
(12) You shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, or other paper or document
which you believe to be genuine and what it purports to be.
(13) You shall not be liable for anything which you may do or refrain
from doing in connection with this Escrow Agreement, except your own gross
negligence or willful misconduct.
(14) You may confer with legal counsel in the event of any dispute or
questions as to the construction of any of the provisions hereof, or your duties
hereunder, and you shall incur no liability and you shall be fully protected in
acting in accordance with the opinions and instructions of such counsel. Any and
all expenses and legal fees in this regard will be paid by the Company.
(15) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection with any
Subscription Funds involved herein or affected hereby, you shall be entitled to
refuse to comply with any such claims or demands as long as such disagreement
may continue, and in so refusing, shall make no delivery or other disposition of
any Subscription Funds then held by you under this Agreement, and in so doing
you shall be entitled to continue to refrain from acting until; (a) the right of
adverse claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court of competent jurisdiction assuming and having
jurisdiction of the Subscription funds involved herein or affected hereby; or
(b) all differences shall have been adjusted by agreement and you shall have
been notified in writing of such agreement signed by the parties hereto. In the
event of such disagreement, you may, but need not, enter into the registry or
custody of any court of competent jurisdiction in Orange County, Florida, money
or property in your hands under the terms of this Agreement, together with such
legal proceedings as you deem appropriate and thereupon to be discharged from
all further duties under this Agreement. The filing of any such legal proceeding
shall not deprive you of your compensation earned prior to such filing. You
shall have no obligation to take any legal action in connection with this
Agreement or towards its enforcement, or to appear in, prosecute or defend any
action or legal proceeding which would or might involve you in any cost,
expense, loss or liability unless indemnification shall be furnished.
(16) You may resign for any reason, upon thirty (30) days written
notice to the Company. Upon the expiration of such thirty (30) days notice
period, you may deliver all Subscription Funds and Order Forms in your
possession under this Escrow Agreement to any successor Escrow Agent appointed
<PAGE>
March ___, 1998
Page 4
by the Company, or if no successor Escrow Agent has been appointed, to any court
of competent jurisdiction. Upon either such delivery, you shall be released from
any and all liability under this Escrow Agreement. A termination under this
paragraph shall in no way change the terms of Paragraphs (15) and (17) affecting
reimbursement of expenses, indemnity and fees.
(17) You agree to charge the Company for your services hereunder a fee
of $1,500.00, plus an additional fee of $5.00 for each check issued, $10.00 for
each wire transfer, and $.50 for each photo copy necessitated in the performance
of your duties, with total fees paid not to exceed $3,500.00. All actual
expenses and costs incurred by you in performing your obligations under this
Escrow Agreement will be paid by the Company. All fees and expenses shall be
paid on the Closing Date by the Company. Any subsequent fees and expenses will
be paid by the Company upon receipt of invoice.
(18) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, to the respective addresses set forth herein. You shall not
be charged with knowledge of any fact, including but not limited to performance
or non-performance of any condition, unless you have actually received written
notice thereof from the Company or its authorized representative clearly
referring to this Escrow Agreement.
(19) The rights created by this Escrow Agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of you and the parties hereto.
(20) This Escrow Agreement shall be construed and enforced according to
laws of the State of Florida.
(21) This Escrow Agreement shall terminate and you shall be discharged
of all responsibility hereunder at such time as you shall have completed your
duties hereunder.
(22) This Escrow Agreement may be executed in several counterparts,
which taken together shall constitute a single document.
(23) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
(24) If any provision of this Escrow Agreement is declared by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(25) The Company shall provide you with its Employer Identification
Number as assigned by the Internal Revenue Service. Additionally, the Company
shall complete and return to you any and all tax forms or reports required to be
maintained or obtained by you.
(26) Your signature hereto is your consent that a signed copy hereof
may be filed with any Federal Government Agency or regulatory authority, and may
be included as an Exhibit in the Prospectus to be furnished subscribers.
<PAGE>
March ___, 1998
Page 5
Please indicate your acceptance of this Agreement by executing a copy
of this letter and returning to the undersigned.
Very truly yours,
CITIZENS COMMUNITY BANCORP, INC.
By:____________________________________
Richard Storm, Jr.
Chairman
Attest:
By:___________________________________
Stephen McLaughlin
Secretary/Treasurer
ACCEPTED AND AGREED:
Attest: INDEPENDENT BANKERS' BANK OF
FLORIDA
By:___________________________________ By:____________________________________
Title:________________________________ Title:_________________________________
(CORPORATE SEAL)
<PAGE>
EXHIBIT 12.0
STATEMENT REGARDING COMPUTATION
OF RATIOS
<PAGE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Years ended December 31,
1997 1996
------ -----
Historical:
Earnings:
Earnings (loss) before income $ 175,463 $ (533,295)
taxes
Fixed charges, excluding capitalized 1,207,396 282,873
---------- ----------
interest - see below
Earnings (loss) $1,382,859 $ (250,422)
========== ==========
Fixed charges:
Interest expense $1,207,396 $ 282,873
---------- ----------
Interest factor included in rentals
Fixed charges $1,207,396 $ 282,873
========== ==========
Ratio of earnings to fixed charges 1.14 (.88)
========== ==========
<PAGE>
EXHIBIT 23.1
CONSENT OF IGLER & DOUGHERTY, P.A.
10
<PAGE>
IGLER & DOUGHERTY, P.A.
Attorneys at Law
1501 PARK AVENUE EAST
TALLAHASSEE, FLORIDA 32301
--------
<TABLE>
<CAPTION>
<S> <C> <C>
Winter Park Office Tampa Office
Federal Trust Bank Building (850) 878-2411 TELEPHONE Park Tower - Suite 2625
1211 Orange Avenue (850) 878-1230 FACSIMILE 400 North Tampa Street
Winter Park, Florida 32789 Tampa, Florida 33602
(407) 647-0822 - Telephone REPLY TO: TALLAHASSEE OFFICE (813) 307-0510 - Telephone
(407) 647-8089 - Facsimile (813) 307-0415 - Facsimile
</TABLE>
CONSENT
We hereby consent to the references to this firm and our opinions in
the Registration Statement on Form SB-2 filed by Citizens Community Bancorp,
Inc. ("Company"), and all amendments thereto regarding the issuance and
registration of shares of common stock by the Company.
IGLER & DOUGHERTY, P.A.
/s/ Igler & Dougherty, P.A.
March 10, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF HACKER, JOHNSON, COHEN & GRIEB
<PAGE>
Accountants' Consent
The Board of Directors
Citizens Community Bancorp, Inc.
Marco Island, Florida:
We consent to the use of our report dated February 6, 1998 relating to the
consolidated balance sheets as of December 31, 1997 and 1996 and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years then ended in the Registration Statement/Prospectus on Form
SB-2 of Citizens Community Bancorp, Inc.
/S/HACKER, JOHNSON, COHEN & GRIEB PA
------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
March 9, 1998
<PAGE>
EXHIBIT 24.0
POWER OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, being a director of the Registrant (Citizens Community Bancorp,
Inc.) constitute and appoint Richard Storm, Jr. and Stephen A. McLaughlin, or
either of them, as their true and lawful attorneys-in-fact and agents with
capacities to sign any or all amendments to the Form SB-2 Registration Statement
of the Registrant, and to file to the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as each might of
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Richard Storm, Jr. Chairman of the Board, Chief March 10, 1998
- --------------------------- Executive-Officer and President
Richard Storm, Jr.
/s/Stephen A. McLaughlin Director, Vice President and March 10, 1998
- --------------------------- Chief-Financial-Officer
(Principal Financial Officer)
Stephen A. McLaughlin
/s/Diane M. Beyer Director March 10, 1998
- ---------------------------
Diane M. Beyer
/s/Joel M. Cox, Sr. Director March 10, 1998
- ---------------------------
Joel M. Cox, Sr.
/s/Thomas B. Garrison Director March 10, 1998
- ---------------------------
Thomas B. Garrison
/s/James S. Hagedorn Director March 10, 1998
- ---------------------------
James S. Hagedorn
/s/Dennis J. Lynch Director March 10, 1998
- ---------------------------
Dennis J. Lynch
/s/Louis Smith Director March 10, 1998
- ---------------------------
Louis Smith
/s/Jack G. Wolf Director March 10, 1998
- ---------------------------
Jack G. Wolf
</TABLE>
EXHIBIT 99.1
LETTER TO DEPOSITORS
REGARDING SUBSCRIPTION RIGHT
13
<PAGE>
[CITIZENS COMMUNITY BANK OF FLORIDA LETTERHEAD]
______________, 1998
Dear Depositor:
We are pleased to annouce that Citizens Community Bancorp, Inc.
(ACCBI@), a Florida corporation and parent of Citizens Community Bank of Florida
(ABank@), is offering up to 1,000,000 shares of Common Stock. CCBI is offering
the shares of Common Stock at a price of $7.50 per share on a priority basis
first in the Initial Offering to Depositors (defined for purposes of the
Offering as Florida residents who have a demand account with the Bank which has
a $1,000 minimum balance as of the Record Date) and shareholders (as of the
Record Date), the right to purchase up to a maximum of 5,000 shares of Common
Stock, and then in a Community Offering to certain members of the general public
at $7.50 per share. Net offering proceeds will increase the capital of CCBI and
support future growth of both companies.
We have enclosed the following materials which will help you learn more
about the merits of CCBI=s Common Stock as an investment. Please read and review
the materials carefully.
PROSPECTUS: This document provides detailed information about
operations at CCBI and the proposed Offering.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
common stock by returning it with your payment in the enclosed business
reply envelope. The deadline for ordering Common Stock in the Initial
Offering is 5:00 p.m. Eastern Time on ____________, 1998. CCBI must
sell a minimum of 300,000 shares of its Common Stock by ______________,
1998, or the Offering will be terminated.
We are inviting existing Depositors the opportunity to buy Common Stock
directly from CCBI without paying a commission or a fee. If you have additional
questions regarding the Offering, contact the Stock Sales Center at
1-800-895-0955, Voice Mail Box 275, Marco Island, Florida.
Sincerely,
CITIZENS COMMUNITY BANK OF FLORIDA
Richard Storm, Jr.
Chairman of the Board, President/CEO
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK FUND,
OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
EXHIBIT 99.2
LETTER TO SHAREHOLDERS
REGARDING SUBSCRIPTION RIGHT
14
<PAGE>
[CITIZENS COMMUNITY BANK OF FLORIDA LETTERHEAD]
______________, 1998
Dear Shareholder:
We are pleased to annouce that Citizens Community Bancorp, Inc.
("CCBI"), a Florida corporation and parent of Citizens Community Bank of Florida
("Bank"), is offering up to 1,000,000 shares of Common Stock. CCBI is offering
the shares of Common Stock at a price of $7.50 per share on a priority basis
first in the Initial Offering to shareholders as of the Record Date, and
Depositors (defined for purposes of the Offering as Florida residents who have a
demand account with the Bank which has a $1,000 minimum balance as of the Record
Date) the right to purchase up to 5,000 shares of Common Stock, and then in a
Community Offering to certain members of the general public at $7.50 per share.
Net offering proceeds will increase the capital of CCBI and support future
growth of both companies.
We have enclosed the following materials which will help you learn more
about the merits of CCBI's Common Stock as an investment. Please read and review
the materials carefully.
PROSPECTUS: This document provides detailed information about
operations at CCBI and the proposed Offering.
STOCK ORDER FORM & CERTIFICATION FORM: This form is used to purchase
common stock by returning it with your payment in the enclosed business
reply envelope. The deadline for ordering Common Stock in the Initial
Offering is 5:00 p.m., Eastern Time, on ____________, 1998. CCBI must
sell a minimum of 300,000 shares of its Common Stock by ______________,
1998, or the Offering will be terminated.
We are inviting existing shareholders the opportunity to buy Common
Stock directly from CCBI without paying a commission or a fee. If you have
additional questions regarding the Offering, contact the Stock Sales Center at
1-800-895-0955, Voice Mail Box 275, Marco Island, Florida.
Sincerely,
CITIZENS COMMUNITY BANK OF FLORIDA
Richard Storm, Jr.
Chairman of the Board, President/CEO
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK FUND,
OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
EXHIBIT 99.3
ACCEPTANCE FORM
15
<PAGE>
FORM OF ACCEPTANCE
(Depositors Shares)
Citizens Community Bancorp, Inc.
650 East Elkcam Circle
Marco Island, Florida 34145
To:
Dear Depositor:
Citizens Community Bancorp, Inc. ("Company") acknowledges receipt of
your subscription for __________________ shares of the Company's $0.01 par value
Common Stock and your check in the amount of $____________________.
The Company hereby accepts your subscription for the purchase of
_________ shares, for an aggregate amount of $_____________, effective as of the
date of this letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK
DULY AUTHORIZED AND FULLY PAID WILL BE ISSUED TO YOUR WITHIN 90 DAYS
FOLLOWING THAT DATE OF THIS ACCEPTANCE.
If this acceptance is for a lesser number of shares than that number
subscribed by you as indicated in your subscription agreement, your payment for
shares in excess of the number of shares accepted hereby will be refunded to you
by mail, without interest, within ten (10) days of the date hereof.
Very truly yours,
CITIZENS COMMUNITY BANCORP, INC.
By:
----------------------------------------
Stephen A. McLaughlin
Vice President
<PAGE>
EXHIBIT 99.4
STOCK ORDER FORM
<PAGE>
STOCK ORDER FORM &
CERTIFICATION
Citizens Community Bancorp, Inc.
(Holding Company for Citizens Community Bank of Florida)
Note: Please read the Stock Order Form Guide and Instructions on the back of
this form before completion
- --------------------------------------------------------------------------------
Deadline: The Initial Offering ends at 5:00 p.m., Local Time, ____________,
1998. Your Stock Order Form and Certification Form, properly executed and with
the correct payment, must be received at the address on the bottom of this form
by this deadline, or it will be considered void. The Minimum Offering will
expire on ____________, 1998 and the Offering will be terminated, unless 300,000
shares of Common Stock have been subscribed for in the Offering by 5:00 p.m.,
Local Time, on ______________, 1998. The Community Offering will expire on
__________, 1999, unless terminated by the Company beforehand.
- --------------------------------------------------------------------------------
Number of Shares
(1) Number of Shares Price Per Share (2) Total Amount Due
---------------- ----------------
| | x $7.50 = | $ |
| | | |
---------------- ----------------
The minimum number of shares that may be subscribed for is 100. The maximum
amount any person may purchase in the Initial Offering is 5,000 shares. The
maximum any individual may subscribe for in the Community Offering is 15,000
shares. The total any participant may purchase in the Initial Offering and the
Community Offering (excluding officers and directors of CCBI) is 15,000 shares.
In addition, no person, together with associates of, and persons acting in
concert with such persons, may purchase more than 9.99% of the total number of
shares outstanding following the completion of the Offering.
- --------------------------------------------------------------------------------
Method of Payment Purchaser Information
- --------------------------------------------------------------------------------
(3) |_| Enclosed is a check, bank draft or money order payable to Independent
Bankers' Bank of Florida FBO CCBI of $___________.
(4) |_| Check here if you are a shareholder of CCBI as of the close of
business
|_| If purchasing through a broker/dealer, please list the on March ___,
1998. If yes, enter here the number of shares owned on that date. name,
address and phone number below: ________________________. Name:
_________________________________________________________
(5) |_| Check here if you are a Depositors with a demand account with
Citizens Community Bank of Florida. If yes, enter your account number in
the space provided.
(6) |_| Check here if you are a director, officer or employee of CCBI or a
member of such person's immediate family.
(7) |_| If purchasing through a broker/dealer, pleas list the that date.
Name:___________________________________________________________________
Street Address:_________________________________________________________
City:___________________________________________________________________
State: ___________________________________________ Zip Code: __________
Phone Number ( )_____________________________________________________
There is no penalty for early withdrawals used for this payment.
- --------------------------------------------------------------------------------
Stock Registration
- --------------------------------------------------------------------------------
(8) Form of stock ownership
|_| Individual |_| Uniform Transfer to Minors
|_| Joint Tenants |_| Uniform Gift to Minors
|_| Tenants in Common |_| Corporation
|_| Partnership |_| Individual Retirement Account
|_| Fiduciary/Trust (Under Agreement Dated ________)
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
Name Daytime Telephone
Street Address Evening Telephone
City State Zip Code County of Residence
<PAGE>
NASD Affiliation (This section only applies to those individuals who meet the
delineated criteria)
|_| Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with a NASD member, a member of the
immediately family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- --------------------------------------------------------------------------------
Acknowledgment By signing below, I acknowledge receipt of the Prospectus dated
____________, 1998 and that I have reviewed all provisions therein. I understand
that I may not change or revoke my order once it is received by CCBI. I also
certify that this stock order is for my account and there is no agreement or
understanding regarding any further sale or transfer of these shares. I
understand and agree that I am prohibited from transferring, or entering into
any agreement directly or indirectly to transfer, the legal or beneficial
ownership of subscription rights in the rights offering or the underlying
securities to the account of another person. CCBI will pursue any and all legal
equitable remedies in the event it becomes aware of the transfer of subscription
rights and will not honor orders known by it to involve such transfer. Under
penalties of perjury, I further certify that: (1) the social security number or
taxpayer identification number given above is correct; and (2) I am not subject
to backup withholding. You must cross out this item; (2) above, if you have been
notified by the Internal Revenue Service that you are subject to backup
withholding because of under-reporting interest or dividends on your tax return
By signing below, I also acknowledge that I have not waived any rights under the
Securities Act of 1933 and the Securities Exchange Act of 1934.
- --------------------------------------------------------------------------------
Signature THIS FORM MUST BE SIGNED AND DATED. THIS ORDER IS NOT VALID IF THE
STOCK ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL BE
FILED IN ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS. When purchasing as a
custodian, corporate officer, etc., include your full title. An additional
signature is required only if payment is by withdrawal from an account that
requires more than one signature to withdraw funds. If you need help completing
this Form, you may call the Stock Sales Center at 1-800-895-0955, Voice Mail Box
275.
Signature Title (if applicable) Date
Signature Title (if applicable) Date
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
Date Rec'd ___/____/____ Order # _________ Batch # _______
OFFICE USE Check # _____________ Category _________
Amount $____________ Initials _________
Independent Bankers' Bank of Florida
Attention: James H. McKillop, III, Senior Vice President
109 East Church Street
Orlando, Florida 32801
<PAGE>
CITIZENS COMMUNITY BANCORP, INC.
Item Instruction
- --------------------------------------------------------------------------------
Items 1 and 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the Subscription Price of $7.50 per share. The minimum purchase is 100
shares. With the exception of officers and directors of the Company, the maximum
amount any participant may purchase in the Offering is 15,000 shares (5,000 in
the Initial Offering, and 15,000 shares, in the aggregate, in the Initial
Offering and Community Offering). In addition, no person, together with
associates of, and persons acting in concert with such person, may purchase more
than 9.99% of the total number of shares outstanding following the completion of
the Offering.
CCBI has reserved the right to reject the subscription of any order received in
the Community Offering, if any, in whole or in part.
Item 3 - Payment for shares may be made by check, bank draft or money order made
payable to "Independent Bankers' Bank of Florida FBO CCBI." DO NOT MAIL CASH.
Your funds will be returned promptly with interest if the Offering is
terminated.
Item 4 - Check here if you were a shareholder of record of CCBI at the close of
business on ____________, 1998.
YES |_| NO |_|
If yes, then fill in the number of shares you owned as of that date. _______
Item 5 - Check here if you were a Depositor of record of CCBI at the close of
business on _____________, 1998.
YES |_| NO |_|
If yes, then fill in the demand account number. ___________________
Item 6 - Please check this box if you are a director, officer or employee of
CCBI or a member of such person's immediate family.
Item 7 - If purchasing through a broker/dealer please list the name, address and
phone number in this box.
Item 8 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of CCBI common stock.
Print the name(s) in which you want the shares registered and the mailing
address of the registration. Include the first name, middle initial and last
name of the shareholder. Avoid the use of two initials. Please omit words that
do not affect ownership rights, such as "Mrs.", "Mr.", "Dr.", "special account",
etc.
Subscription rights are not transferable. If you are a qualified shareholder, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's names. Enter the
Social Security or Tax I.D. number of one registered owner. This registered
owner must be listed on the first "NAME" line. Be sure to include your telephone
number because we will need to contact you if we cannot execute your order as
given. Review the Stock Ownership Guide and refer to the instructions for
Uniform Gift to Minors/Uniform Transfer to Minors and Fiduciaries.
<PAGE>
CITIZENS COMMUNITY BANCORP, INC.
Item Instruction
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Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
Individual - The shares are to be registered in an individual's name only. You
may not list beneficiaries for this ownership.
Joint Tenants - Joint Tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
Tenants in Common - Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
Individual Retirement Account - Individual Retirement Account ("IRA") holders
may make share purchases from their deposits through a prearranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
Federal Trust Bank does not offer a self-directed IRA. Please contact the Stock
Sales Center if you have any questions about your IRA account. There will be no
early withdrawal or IRS penalties incurred in these transactions.
Uniform Gift to Minors - For residents of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfers to
Minors Act. For residents in other states, shares may be held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, prin the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
Use the minor's Social Security Number. Only one custodian and one minor may be
designated.
Corporation/Partnership - Corporation/Partnerships may purchase shares. Please
provide the Corporation/ Partnership's legal name and Tax I.D.
Fiduciary/Trust - Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
Instructions: On the first "NAME" line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the fiduciary
is a corporation, list the corporate title on the first "NAME" line. Following
the name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated June 9, 1987.
Definition of Associate
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A person's Associates consist of the following: (a) any corporation or other
organization (other than Citizens Community Bancorp, Inc. ["CCBI"], Citizens
Community Bank of Florida ["Bank"], or a majority owned subsidiary of the Bank)
of which such person is a director, officer or partner or is directly or
indirectly the beneficial owner of 10% or more of any class of equity
securities; (b) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a similar
fiduciary capacity, provided, however, that such term shall not in include any
tax-qualified employee stock benefit plan of CCBI or the Bank in which such
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity; and (c) any relative or spouse of such person, or
any relative of such person, who either has the same home as such person or who
is a director or officer of CCBI or the Bank or any of their subsidiaries.
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CERTIFICATION FORM
(This Form Must Accompany a Signed Stock Order Form)
I ACKNOWLEDGE THAT THE COMMON STOCK WITH PAR VALUE $0.01 ("COMMON
STOCK"), OF FEDERAL TRUST CORPORATION (THE "HOLDING COMPANY") IS NOT A DEPOSIT
OR ACCOUNT AND IS NOT FEDERALLY INSURED, AND IS NOT GUARANTEED BY CITIZENS
COMMUNITY BANK OF FLORIDA, OR BY THE FEDERAL GOVERNMENT.
I further certify that, before purchasing the Common Stock of Citizens
Community Bancorp, Inc. ("CCBI"), that I received a copy of the Prospectus
dated, ___________, 1998, which discloses the nature of the Common Stock being
offered thereby and describes the following risks involved in an investment in
the Common Stock under the heading "Risk Factors" beginning on page __ of the
Prospectus:
1. Interest Rate Risk
2. Credit Risk
3. Growth by Internal Expansion and Acquisitions
4. Competition
5. Local Economic Conditions
6. Supervision and Regulations
7. Anti-Takeover Provisions
8. Absence of Shareholder Preemptive Rights
9. Voting Control
10. Dilutive Effect of Purchase Warrants and Stock Options
11. Impact on Earnings Per Share
12. Limited Trading Market
13. Shares Eligible for Future Sale
Signature Signature
(Note: If shares are to be held jointly, both parties must sign)
Date
_______________________ , 1998
EXHIBIT 4.0
SPECIMEN COMMON STOCK CERTIFICATE
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COMMON STOCK
NUMBER SHARES
CITIZENS COMMUNITY BANCORP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
MARCO ISLAND, FLORIDA
CUSIP 174900 100
SAMPLE SAMPLE SAMPLE
THAT CERTIFIES THAT
is the owner of:
FULLY PAID AND NON ASSESSABLE SHARES OF COMMON STOCK $.01 VALUE PER SHARE OF
CITIZENS COMMUNITY BANCORP, INC. The shares represented by this certificate are
transferrable only to the stock transfer books of the Corporation by the holder
of record hereof, or by his duly authorized attorney or legal representative,
upon the surrender of this certificate properly endorsed. This certificate and
the shares represented hereby are issued and shall be held subject to all the
provisions of the Articles of Incorporation of the Corporation and any
amendments thereto (copies of which are on file with the Secretary of the
Corporation), to all of which provisions the holder by acceptance hereof,
assents. The shares by this certificate are not of an insurable type and are not
of an insurable type and are not insured by the Federal Deposit Insurance
Corporation.
IN WITNESS WHEREOF, CITIZENS COMMUNITY BANCORP, INC. has caused this certificate
to be executed by the signature of its duly authorized officers and has caused
its corporate seal to be hereunto affixed.
Dated:
/s/Stephen A. McLaughlin, Secretary /s/Richard Storm, Jr., Chairman
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Stephen A. McLaughlin, Secretary Richard Storm, Jr., Chairman
<PAGE>
The Board of Directors of the Corporation is authorized by resolution or
resolutions, from time to time adopted, to provide for the issuance of common
stock and serial preferred stock in series and to fix and state the voting
powers, designations, preferences and relative, participating, optional, or
other special rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The Corporation will furnish to any
shareholder upon request and without charge a full description of each class of
stock and any series thereof.
The following abbreviations, when used in the inscription of the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-- as tenants in common
UNIF TRANS MIN ACT--_______as Custodian for______
(Cust) (Minor)
TEN ENT-- as tenants by the entities under the ____________ Uniform
(State)
JT TEN-- as joint tenants with right of Transfers to Minors Act_______
survivorship and not as tenants in common (Shares)
Additional abbreviations may also be used though not in the above list.
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For value received ________________ hereby sell, assign and transfer unto:
Please insert social security number
or other identifying number of assignee: ______________________________________
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(Please print or typewrite name and address
including postal zip code of assignee)
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represented by the within certificate, and do hereby irrevocably constitute and
appoint_______________ as the Attorney to transfer the said shares on the books
of the within named Corporation with full power of substitution in the premises.
Date____________ 19,_________
___________________________
Signature
___________________________
Signature Guaranteed
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificates in every particular without alteration
or enlargement or any change whatever.
Stock certificates submitted to the Company for transfer of ownership must be
accompanied by a ten dollar ($10.00) transfer fee payable to the Company.
