<PAGE>
PEOPLES BANCORP, INC.
a proposed bank holding company for
PEOPLES BANK OF WEST GEORGIA
(In Organization)
to be headquartered in Carrollton, Carroll County, Georgia
$6,250,000 MINIMUM OFFERING -- 625,000 SHARES OF COMMON STOCK AT $10 PER SHARE
$8,000,000 MAXIMUM OFFERING -- 800,000 SHARES OF COMMON STOCK AT $10 PER SHARE
MINIMUM PURCHASE - 100 SHARES ($1,000)
Peoples Bancorp, Inc. (the "Company") has been formed to become a bank
holding company which will own all of the issued stock of Peoples Bank of West
Georgia (In Organization) (the "Bank"). The Bank is currently being organized
under the laws of the State of Georgia as a state-chartered commercial bank with
deposits to be insured by the Federal Deposit Insurance Corporation (the
"FDIC"). The Bank received its bank charter from the Georgia Department of
Banking and Finance (the "DBF") on October 11, 1996, and received preliminary
approval of its application for federal deposit insurance from the FDIC on
October 30, 1996. Neither the Company nor the Bank has commenced operations and
neither will do so unless this offering provides the funds required to
capitalize the Bank and the Company and the Bank receives a permit to begin
business from the DBF and final approval of insurance of deposit accounts by the
FDIC. The Company is offering for sale a minimum of 625,000 shares and a
maximum of 800,000 shares (the "Shares") of the $.01 par value common stock (the
"Common Stock") with minimum proceeds to the Company of at least $6,250,000
after payment of any sales commissions. The organizers, directors and officers
of the Company and Bank currently intend to subscribe for at least 326,400
Shares of this offering. See "Management" and "Principal Shareholders." There
has been no public market for the Common Stock and there can be no assurance
that an active trading market will develop as a result of this offering. See
"The Offering" and "Description of Capital Stock."
This offering will not be completed unless the Company's directors have
determined in their reasonable discretion that an adequate provision has been
made to obtain the Bank's permit to begin business and insurance of accounts.
Such regulatory approvals generally are conditioned upon the Company and the
Bank satisfying certain conditions within specified time periods, including the
capitalization of the Bank from the proceeds of this offering.
(Continued on next page)
----------------------------
THESE SECURITIES ARE NOT SAVINGS DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
COMPANY INVOLVES A HIGH DEGREE OF RISK AND INVESTORS SHOULD NOT INVEST ANY FUNDS
IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE
THE "RISK FACTORS" SECTION OF THE PROSPECTUS FOR A DISCUSSION OF THOSE RISKS
THAT MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISK TO AN INVESTOR.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
====================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
- --------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................. $ 10 $0 $ 10
Minimum Offering(3)....... $6,250,000 $0 $6,250,000
Maximum Offering(3)....... $8,000,000 $0 $8,000,000
====================================================================
</TABLE>
(Footnotes on next page)
THE DATE OF THIS PROSPECTUS IS NOVEMBER 15, 1996.
<PAGE>
(Cover page continued)
The Company believes that all regulatory conditions will be satisfied
within two months following the release of subscription proceeds from the
escrow account for the minimum offering, depending on the length of time
required to complete the minimum offering. Subscription proceeds will not
be released from the escrow account until (i) the Company receives
subscriptions for at least 625,000 Shares with proceeds to the Company of
at least $6,250,000 after any commissions paid, and (ii) the Bank directors
have made adequate provisions for satisfying (as they determine in their
reasonable discretion) any regulatory conditions that may be imposed prior
to obtaining a permit to begin business from the DBF and insurance of
deposit accounts from the FDIC. However, there is a possibility the Bank
will not obtain require final regulatory approvals and that the Bank may
not be permitted to open for business, even if this offering is completed,
the Shares issued and proceeds expended. In that event, purchasers of the
Shares would likely suffer a material loss or, in an extreme case, a
complete loss of their investment. See "Risk Factors," "The Offering" and
"Business."
The Company's offices are currently located at 516 Bankhead Highway,
Carrollton, Georgia 30117, and its telephone number is (770) 838-9608.
----------------------------
(Footnotes from previous page)
(1) The Shares are being offered on behalf of the Company by the organizers,
directors and executive officers of the Company and the Bank. Such
associated persons will receive no compensation for selling the Shares, but
shall be reimbursed for reasonable expenses incurred by them in connection
with this offering. Such associated persons are not deemed to be "brokers"
solely by reason of their participation in this offering in accordance with
Rule 3a4-1 of the Securities Act of 1934, as amended. The offering is not
underwritten and the Company has employed no brokers, dealers, or
salespersons in connection with the sale of the Shares. However, the
Company reserves the right to simultaneously offer the Shares through
registered securities broker-dealers or sales persons and to pay reasonable
commissions not to exceed 8.0% of gross offering proceed to such persons,
subject to the condition that the proceeds to the Company of the offering
are not less than $6,250,000 net of commissions paid.
(2) Before deduction of expenses payable by the Company estimated at $38,000 for
registration fees, legal and accounting fees, printing costs and other
offering expenses.
(3) This offering consists of a minimum offering of 625,000 Shares and a maximum
offering of 800,000 Shares. The minimum offering is being made on a "best
efforts, all or none" basis and all subscription proceeds will be deposited
in an escrow account with The Bankers Bank, Atlanta, Georgia, pending
acceptance or rejection of subscriptions and completion of the minimum
offering. If subscription proceeds from the sale of the minimum offering
are not deposited in the escrow account by January 31, 1997 (which period
may be extended for up to three 90-day periods by the Company without notice
to subscribers but not beyond October 31, 1997), subscriptions will be
canceled and all proceeds will be returned promptly to subscribers by mail
in full without interest. After completion of the minimum offering, the
----------------
sale of up to the additional 175,000 Shares of the maximum offering may be
continued on a "best efforts basis" through October 31, 1997 or opening of
the Bank, and all subscription proceeds shall be deposited in a non-escrow
Company deposit account at The Bankers Bank pending acceptance or rejection
of subscriptions. The Company will accept or reject subscriptions within 15
days of receipt. Interest earned on all subscription proceeds will be paid
to the Company whether or not the minimum offering is completed.
Subscriptions are not binding until accepted by the Company. The Company
reserves the right to accept or reject subscriptions, in whole or in part,
in its sole discretion. Subscriptions which have been accepted will be
subsequently canceled by the Company in the event the conditions of this
offering have not been timely satisfied. Proceeds of rejected or canceled
subscriptions would be returned promptly to subscribers by mail in full
without interest after the occurrence of such event and in any event no
----------------
later than October 31, 1997. All costs and expenses in excess of interest
earned on subscription proceeds of this offering will be borne by the
organizers and directors of the Company in the event the minimum offering
fails and all subscriptions are canceled.
The Company may not be required to file reports under the Securities
Exchange Act of 1934, as amended, after 1996 or 1997. However, the Company
intends to furnish its shareholders with annual reports that include audited
financial statements in any event.
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<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE
PURCHASERS SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE MAKING AN
INVESTMENT DECISION.
THE COMPANY AND THE BANK
Peoples Bancorp, Inc. (the "Company") was incorporated on August 27, 1996
for the purpose of becoming a bank holding company for its proposed wholly-owned
subsidiary, Peoples Bank of West Georgia (In Organization) (the "Bank"). The
Company filed applications to the Board of Governors of the Federal Reserve
System (the "FRB") and the Georgia Department of Banking and Finance (the "DBF")
on November 4, 1996 for authority to become a bank holding company which will
own all of the issued stock of the Bank. Those applications are pending with
the FRB and DBF but have not yet been approved. The holding company structure
will provide the Company with greater flexibility than the Bank would otherwise
have to expand and diversify its business activities, such as through newly
formed subsidiaries or through acquisitions.
The Bank has been organized under the laws of the State of Georgia as a
state-chartered commercial bank with deposits to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). The Bank received its bank charter
approval from the DBF on October 11, 1996 and received preliminary approval of
its application for federal deposit insurance from the FDIC on October 30, 1996.
The Bank is to be located in Carrollton, Carroll County, Georgia, which will be
the Bank's primary service area. The Bank is currently in the process of
fulfilling the conditions established by the DBF and FDIC in order to obtain a
permit to begin business from the DBF and insurance of deposit accounts from the
FDIC. The regulatory approvals from the FRB, the FDIC and the DBF are or will
be variously effective for three months to two years with provision for
extensions to provide adequate time to complete the offering and commence
business operations. The Organizers believe that any regulatory approval to
extend expiration dates will be approved by the agencies in due course. Upon
approval of the Company's holding company applications by the FRB and DBF, the
issuance of the permit to begin business by the DBF and insurance of deposit
accounts by the FDIC, the Bank will be permitted to begin business and no
further regulatory approvals will be required. The Bank will then seek to
attract deposits from the general public and will make commercial, consumer and
real estate loans. Customer deposits with the Bank will be insured to the
maximum extent provided by law through the FDIC. See "Business."
The applications for the Company to become a bank holding company and for
the Bank to become a state-chartered commercial bank were submitted by Messrs.
Timothy I. Warren, Steve R. Adams, John B. Bohannon, Ann C. Carter, Lester H.
Harmon, William P. Johnson, Phillip Kauffman, Jeff R. Matthews, Charles J.
Puckett, William C. Seaton and Mark S. Swindle, the organizers and directors of
the Company and the Bank (the "Organizers"). The Company and the Bank have
employed Timothy I. Warren as their President and Chief Executive Officer and
Elaine B. Lovvorn has been employed as Senior Vice President, Chief Financial
and Operations Officer of the Bank. As a full-time employee, and the Chief
Executive Officer, Mr. Warren has primary responsibility for the organizational
efforts of the Company and the Bank, and the loss of Mr. Warren's services could
cause organizational efforts to fail. See "Management," "Principal
Shareholders" and "Certain Transactions."
Neither the Company nor the Bank has commenced their respective operations
as a bank holding company or as a commercial bank and neither will do so unless
the required capitalization of the Bank by the Company is obtained from proceeds
of this offering and regulatory approvals are obtained. The Company believes
that all regulatory conditions will be satisfied within two months following the
release of subscription proceeds from the escrow account for the minimum
offering, depending on the length of time required to complete the minimum
offering. See "Risk Factors -- Burdens of Government Regulation; Requirement
for Further Regulatory Approvals," "Business" and "Supervision and Regulation."
Subject to the approval of the DBF and a final determination by the
Organizers, the Bank's and Company's permanent offices are to be located at 631
Bankhead Highway, Carrollton, Carroll County, Georgia 30117 (the "Main Office").
However, the Company's offices are currently located at 516 Bankhead Highway in
Carrollton (the
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<PAGE>
"Temporary Offices"), and the Bank proposes to begin business at that location
pending construction of the Main Office. The Company's telephone number is
(770) 838-9608.
THE OFFERING
This offering consists of a minimum offering of 625,000 Shares offered on a
"best efforts, all or none" basis and an additional 175,000 Shares offered on a
"best efforts" basis for a maximum offering of up to 800,000 Shares. The
minimum number of Shares required to be sold will increase to the extent
necessary to result in net proceeds to the Company of at least $6,250,000 after
paying sales commissions not to exceed 8.0% of gross offering proceeds in the
event the Company retains securities broker-dealers or sales persons to assist
with the offering. A minimum subscription of 100 Shares ($1,000) has been
established by the Company.
The Organizers of the Bank currently intend to subscribe for 326,400 Shares
of this offering. The Organizers may, but are not obligated to, purchase
additional Shares if such purchases are necessary to complete the minimum
offering. The maximum aggregate number of Shares that these Organizers may
purchase in the minimum offering is 393,750 Shares. The foregoing numerical
limitation does not apply to any Shares of this offering to be purchased by any
additional persons who may become officers or directors of the Company or the
Bank after the date of this Prospectus or to additional Shares purchased once
the minimum offering has been achieved. See "Management," "Principal
Shareholders" and "Certain Transactions."
USE OF PROCEEDS
The Company and the Bank will use the net proceeds of this offering (i) to
capitalize the Bank through the purchase of 600,000 shares of the Bank's common
stock at a price of $10.00 per share, (ii) to pay directly or to repay amounts
borrowed by the Company (and guaranteed by the Organizers) pursuant to a
$350,000 line of credit from Peoples Bank of Fannin County (the "Organization
Loan") used to pay organizational, offering and pre-opening expenses, (iii) to
purchase, construct and furnish the Main Office for the Company and the Bank,
(iv) to fund rent and other operating expenses of the Temporary Offices, and
(iv) for general corporate purposes, including supporting the Bank's growth and
engaging in other permitted activities. See "Use of Proceeds," "Business,"
"Supervision and Regulation" and "Certain Transactions."
RISK FACTORS
An investment in the securities offered by this prospectus involves
substantial risks, including the following:
o The Company and the Bank will be subject to extensive government
regulation and control, which will limit the scope of Company and Bank
activities and impose compliance burdens and costs.
o Neither the Company nor the Bank has commenced their respective
operations and neither will do so unless the required capitalization
of the Bank by the Company is obtained from proceeds of this offering
and regulatory approvals are obtained. There can be no assurance that
the Company or the Bank will not be delayed in or precluded from the
commencement of their respective business operations, even if proceeds
of this offering have been expended and Shares issued.
o The Bank will experience competition in attracting and retaining
deposit accounts, making commercial, consumer and real estate loans
and providing other services in its primary service area with many
well-established commercial banks and savings institutions which may
have competitive advantages over the Bank.
o The Company and the Bank are presently being organized and therefore
neither has any prior operating history. New commercial banking
institutions are frequently not profitable in the initial years of
operations and no assurance can be given as to the ultimate success of
the Bank.
-4-
<PAGE>
o The profitability of the Bank will be materially affected by economic
conditions and other uncertainties beyond the Bank's control due to
the nature of its business.
o The Bank's marketing focus on small to medium sized businesses and
real estate developers and builders, as well as on middle class
customers, may involve certain lending risks beyond those inherent to
commercial banking institutions who rely on larger businesses and more
wealthy customers.
o The Company has entered into an employment agreement with an
individual with banking experience to serve as president of the Bank,
but the success of the Company and the Bank will depend upon the
ability of the Company and the Bank to employ and retain skilled
banking personnel at all levels of their business.
o The public offering price for the securities being offered hereby was
determined by the Board of Directors of the Company and bears no
relation to any established criteria of value.
o The Company does not anticipate paying cash dividends on its Common
Stock in the immediate future and regulatory requirements restrict the
amount of dividends that it may pay.
o Although the securities being offered hereby will be freely
transferable immediately upon issuance, there is no current public
market for the Common Stock and it is not currently expected that an
active trading market will develop in the near future.
o Upon completion of this offering, the Organizers of the Company will
own a substantial percentage of the Company's outstanding Common Stock
and stock options will be issued in the future to officers and key
employees of the Company and the Bank, which will result in control of
the Board of Directors and policies of the Company and the Bank by the
Organizers, directors and officers of the Company.
o A shareholder's percentage ownership interest in the Company acquired
pursuant to this offering is subject to dilution under certain
circumstances following the completion of the offering.
o Certain provisions in the Company's Articles of Incorporation and
Bylaws may discourage non-negotiated take-over attempts which certain
shareholders might deem to be in their best interest and may tend to
perpetuate existing management.
See "Risk Factors."
-5-
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF THE COMMON STOCK OFFERED HEREBY INVOLVES A
SUBSTANTIAL DEGREE OF RISK AND SHOULD BE UNDERTAKEN ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THESE SHARES WILL NOT BE INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. IN
ADDITION TO INDIVIDUAL CONSIDERATIONS AND FACTORS SET FORTH ELSEWHERE IN THIS
PROSPECTUS, PERSONS INTERESTED IN PURCHASING SHARES OF THE COMMON STOCK SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE MAKING A DECISION TO SUBSCRIBE.
BURDENS OF GOVERNMENT REGULATION. The Company and the Bank will be subject
to extensive government regulation and control. This regulation not only
imposes cost and compliance burdens but also limits and defines the scope and
nature of the Company's and the Bank's activities. See "Business" and
"Supervision and Regulation."
REQUIREMENT FOR FURTHER REGULATORY APPROVALS. Neither the Company nor the
Bank has commenced their respective operations as a bank holding company or as a
commercial bank and neither will do so unless the required capitalization of the
Bank by the Company is obtained from proceeds of this offering, the FRB and DBF
approve the Company's holding company applications, the DBF issues a permit to
begin business and the FDIC authorizes insurance of deposit accounts. Although
the Company does not foresee any difficulty in meeting the requirements and time
deadlines established for obtaining such authorizations, there can be no
assurance that the Company or the Bank will not be delayed in or precluded from
the commencement of their respective business operations.
There is also a possibility that this offering could be completed, the
Shares issued and offering proceeds expended as described in "Use of Proceeds"
without the DBF ultimately issuing a permit to begin business or the FDIC
ultimately granting insurance of deposit accounts. In that event, the Company's
directors could determine to pursue voluntary dissolution of the Bank and to
propose that the shareholders approve the liquidation of the Company and to
distribute net assets to the Company's shareholders. In the event the Bank does
not open for business, it would likely result in a material loss to purchasers
of the Shares and, in an extreme case, a subscriber could lose the entire amount
of his investment. The Organizers will have the discretion to determine whether
adequate provision has been made to satisfy remaining conditions for required
regulatory approvals if the minimum offering is completed, and will have an
economic incentive to do so because offering proceeds will be used to repay the
Organization Loan guaranteed by the Organizers. See "Certain Transactions."
EXPECTED UNPROFITABLE OPERATIONS. New commercial banking institutions are
generally not profitable in the initial years of operations, and the Organizers
of the Company and the Bank do not expect to achieve profitable operations on a
current basis until at least the second full year of operations. No assurance
can be given as to when or whether the Bank's operations will become profitable.
COMPETITION WITH WELL-ESTABLISHED FINANCIAL INSTITUTIONS. The Bank will
experience competition in attracting and retaining deposit accounts, making
commercial, consumer and real estate loans and providing other services in its
primary service area with many well-established financial institutions which may
have competitive advantages as a result of greater resources and higher lending
limits (by virtue of their greater capitalization) than the Company or the Bank.
Such competitors also may offer their customers certain services which the Bank
will not provide directly but might be offered indirectly by the Bank through
correspondent institutions. Moreover, entry into the Bank's primary service
area of other independent institutions may affect the Bank's competitive
position. In addition to commercial banks and savings institutions, the Bank
will be competing with credit unions, brokerage firms, money market funds, and
other financial institutions which provide services similar to the deposit,
lending and other services to be offered by the Bank, and which may have
competitive advantages as a result of greater capitalization or being subject to
different regulations.
In order to compete with other financial institutions in its primary
service area, the Bank will rely principally upon local advertising and
promotional activity and upon personal contacts by its directors, officers and
shareholders to attract business and acquaint potential customers with the
personalized services to be offered by an independent,
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<PAGE>
locally-owned and headquartered commercial bank. The Organizers believe that
the Bank will be able to compete effectively with other institutions, but no
assurance can be given in this regard. See "Business."
LACK OF OPERATING HISTORY. The Company and the Bank are presently being
organized and neither has any prior operating history. Since the Company will
function principally as a bank holding company, its success will depend on the
Bank's operations. The business of commercial banking involves primarily the
acceptance by the Bank of deposits from customers, and the investment by the
Bank of those funds in either securities (for instance, United States Treasury
obligations) or loans to customers of the Bank. Profits from operations depend,
in large part, on the spread between the interest income earned by the Bank on
its investments and loans and the interest paid by the Bank on deposits.
Deposit flows are influenced by a number of factors including interest rates on
money market funds and other competing investments, account maturities and
levels of personal income and savings. Lending activities are influenced by,
among other things, the demand for and supply of housing, commercial ventures
and consumer goods, conditions in the local economy, and the availability and
cost of funds. Sources of funds for lending activities include deposits, loan
payments, proceeds from sales of loans, investment returns and borrowings. No
assurance can be given as to the ultimate success of the Bank. See "Business."
POTENTIAL ADVERSE IMPACT OF ECONOMIC CONDITIONS AND OTHER UNCERTAINTIES.
The results of operations of commercial banking institutions depend to a large
extent on the level of "net interest income" or "rate differentials" (i.e., the
difference between the income earned on loans, securities and other assets, and
the interest paid on deposits and other borrowings). Net interest income is
materially affected by general economic and political conditions (both domestic
and international), the monetary and fiscal policies of the federal government
and the regulatory policies of governmental agencies. Conditions such as
fluctuating interest rates, money supply policies, inflation, recession,
unemployment, natural resource policies, international conflicts, and other
factors beyond the Bank's control may adversely affect the profitability of the
Bank. See "Business" and "Supervision and Regulation."
Management anticipates that a majority of the Bank's borrowers and
depositors will be businesses and individuals located and doing business in and
around Carrollton, Carroll County, Georgia. Any factors which adversely affect
the local economy would be likely to have an adverse effect on the performance
of the Bank.
LENDING RISKS. The risk of nonpayment (or deferred payment) of loans is
inherent to commercial banking institutions. The Bank's marketing focus on
small to medium sized businesses and real estate developers and builders, as
well as on middle-class customers may, however, involve certain lending risks
not inherent in loans to larger business and real estate developers and builders
or to more wealthy customers. Larger organizations would have greater capacity
to repay amounts loaned by the Bank in the event of an economic downturn or
other adversity than the smaller companies to which the Bank will be lending.
Management of the Bank intends to carefully evaluate all loan applicants and to
attempt to minimize its credit risk exposure by use of thorough loan application
and approval procedures. Because the Bank will create its loan portfolio from
all new customers, it will be several years before the quality of the Bank's
established loan portfolio can be fully evaluated. See "Business."
NEED FOR RETENTION OF PERSONNEL WITH BANKING MANAGEMENT EXPERIENCE. The
Bank has an employment agreement with Mr. Warren as President of the Bank, and
expects to enter into employment agreements with other executive officers of the
Bank. The Bank also has employed Elaine B. Lovvorn as Senior Vice President and
Chief Financial and Operations Officer. The Bank intends to employ a staff of
experienced banking personnel at all levels of services to its customers. The
DBF has required the Bank to employ a Senior Credit Officer before the DBF
issues a permit to begin business. The Bank is actively seeking qualified
candidates to fill this position. Any person selected by the Bank to serve as
Senior Credit Officer will be subject to prior approval by the DBF and FDIC.
There can be no assurance that the Bank will be able to retain a person to act
in such capacity who is acceptable to the DBF and the FDIC. The ability of the
Company and the Bank to conduct their operations in an organized, efficient and
profitable manner will depend greatly upon the skills of banking personnel and
on their continued employment by the Company and the Bank. See "Management."
ARBITRARY OFFERING PRICE. Since neither the Company nor the Bank has any
prior operating history, the public offering price for the securities being
offered hereby was determined by the Board of Directors of the Company and bears
no relationship to assets, book value, earnings or other established criteria of
value. In fixing
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<PAGE>
the public offering price, the Board of Directors considered, among other
things, the Bank's business plan, the regulatory requirement that the Bank have
an initial capitalization of at least $6,000,000, the marketability of various
offering prices, and the offering prices of other newly-organized bank holding
companies and financial institutions. The Board has determined to seek
sufficient capital from this initial public offering in order to reach the goals
of the Bank's business plan and to provide support for the Bank's growth and to
engage in other permitted activities. See "Business."
RESTRICTIONS ON DIVIDENDS. In order to preserve its capital to facilitate
growth and expansion of its business, the Company does not anticipate paying
cash dividends on its Common Stock in the immediate future. Furthermore, the
Company's primary source of funds for the payment of dividends will be dividends
from the Bank, and there are regulatory requirements and limitations on the
amount of dividends that the Bank may pay to the Company. See "Dividend Policy"
and "Supervision and Regulation."
LIMITED TRADING MARKET. The securities being offered hereby will not be
subject to any specific restrictions on transfer (with the exception of
securities held by the Company's directors, officers and affiliates) and will be
freely transferrable immediately upon issuance. Nevertheless, prior to this
offering there has been no public market for the Common Stock and it is not
currently expected that an active trading market will develop for at least
several years after this offering, if ever. As a result, shareholders who
desire to sell their Common Stock may be required to locate purchasers on their
own and may not be able to do so.
POTENTIAL CONTROL BY MANAGEMENT. Upon completion of this offering, the
Organizers and current officers of the Company anticipate owning approximately
40.8% of the outstanding Shares of the Company's Common Stock assuming a maximum
offering is achieved (or approximately 52.2% assuming a minimum offering is
achieved). The Company also expects to grant stock options to officers and key
employees of the Company and the Bank in the future, with options with respect
to 23,000 Shares currently expected to be granted prior to commencing
operations. The Organizers, directors and officers of the Company may, by
virtue of their ownership of Shares, control the Board of Directors and the
policies of the Company and the Bank. The foregoing percentages may increase
upon the addition of new directors and officers who determine to purchase Shares
or if any Organizers determine to purchase additional Shares in this offering or
otherwise, which increase cannot be currently determined. See "Management,"
"Principal Shareholders" and "Certain Transactions."
ANTICIPATED DILUTION. The Common Stock offered hereby is not subject to
preemptive rights, so that shareholders are not entitled to purchase additional
Shares of Common Stock if such Common Stock is offered to others. As a result,
a shareholder's percentage ownership interest in the Company would be diluted if
additional Shares of Common Stock are sold by the Company to others. Similarly,
the exercise by any of the officers and employees of the Company or the Bank who
may receive stock options would dilute a shareholder's percentage ownership
interest in the Company. See "Management," "Certain Transactions" and
"Description of Capital Stock."
CHANGE IN CONTROL PROVISIONS. Certain provisions included in the Company's
Articles of Incorporation and Bylaws are designed to encourage potential
acquirors to negotiate directly with the Board of Directors of the Company. The
Board of Directors believes that these provisions are prudent and will reduce
the Company's vulnerability to take-over attempts and certain other transactions
which may not have been negotiated with and approved by the Board. The Board of
Directors believes that it is in the best interest of the Company and
shareholders to encourage potential acquirors to negotiate directly with the
Board. However, these provisions may discourage non-negotiated take-over
attempts which certain shareholders might deem to be in their best interest and
may tend to perpetuate existing management. These provisions include authority
for the Company to issue shares of preferred stock, a supermajority voting
requirement for approval of mergers and business combinations, staggered terms
for members of the Board of Directors, and super majority voting requirements
for amendments to certain provisions of the Articles of Incorporation and the
Bylaws and for removal of directors.
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<PAGE>
THE OFFERING
TERMS OF THE OFFERING
The Company is offering for sale a minimum of 625,000 Shares and a
maximum of 800,000 Shares. The minimum offering is being made on a "best
efforts, all or none" basis and all subscription proceeds will be deposited in
an escrow account with The Bankers Bank, Atlanta, Georgia ("Escrow Agent" or the
"Escrow Account"), pending acceptance of subscriptions and completion of the
minimum offering. The minimum number of Shares required to be sold will
increase to the extent necessary to result in net proceeds to the Company of at
least $6,250,000 after paying sales commissions (not to exceed 8.0% of gross
offering proceeds) in the event the Company retains securities broker-dealers or
sales persons to assist with the offering. The expiration date of the minimum
offering (as such date may be extended, the "Expiration Date") will be the
earlier of the date all Shares offered hereby are sold or 5:00 p.m. Eastern time
on January 31, 1997 (which period may be extended for up to three 90-day periods
by the Company without notice to subscribers but not beyond October 31, 1997).
If at least $6,250,000 of subscription proceeds from the sale of the minimum
offering are not deposited in the escrow account by the Expiration Date,
subscriptions will be canceled and all proceeds will be returned promptly to
subscribers promptly by mail in full without interest.
----------------
After completion of the minimum offering, the sale of the additional
up to 175,000 Shares of the maximum offering may continue on a "best efforts
basis" through the earlier of October 31, 1997 or the opening of the Bank for
business. All subscription proceeds after completion of the minimum offering
will be deposited in a non-escrow Company deposit account at Escrow Agent
pending acceptance or rejection of subscriptions. Interest earned on all
subscription proceeds will be paid to the Company whether or not related
subscriptions are accepted or rejected or the minimum offering is completed.
The Company reserves the right to terminate the offering after accepting
subscriptions for less than the maximum offering, provided subscriptions in at
least the amount of the minimum offering have been accepted at such time.
The Company and the Bank require regulatory approvals from the FRB,
DBF and FDIC before the Bank may commence banking operations. Such regulatory
approvals generally are conditioned upon the Company and the Bank satisfying
certain conditions within specified time periods, including the capitalization
of the Bank from the proceeds of this offering. The Company believes that all
regulatory conditions will be satisfied within two months following the release
of subscription proceeds from the escrow account for the minimum offering,
depending on the length of time required to complete the minimum offering.
Subscription proceeds will not be released from the escrow account until (i) the
Company receives subscriptions for at least 625,000 Shares with proceeds to the
Company of at least $6,250,000 after any commissions paid, and (ii) the Bank
directors have made adequate provisions for satisfying (as they determine in
their reasonable discretion) any regulatory conditions that may be imposed prior
to obtaining a permit to begin business from the DBF and insurance of deposit
accounts from the FDIC. There is a possibility, however, that the Bank will not
receive its permit to begin business or insurance of deposit accounts or open
for business, even if this offering is completed, the Shares issued and proceeds
expended. This event could result in a material loss to purchasers of the
Shares. See "Risk Factors" and "Certain Transactions."
The Shares are being offered on behalf of the Company by the
Organizers, directors and executive officers of the Company and the Bank. Such
persons will receive no compensation for selling the Shares, but will be
reimbursed for reasonable expenses incurred by them in connection with this
offering. This offering is not underwritten and the Company has employed no
brokers or dealers in connection with the sale of the Shares. However, the
Company reserves the right to simultaneously offer the Shares through registered
securities broker-dealers or salespersons and to pay reasonable commissions to
such persons, subject to the condition that the proceeds to the Company of the
offering are not less than $6,250,000 net of commissions paid not to exceed 8.0%
of gross offering proceeds. Such broker-dealers may be deemed "underwriters" as
such term is defined under the Securities Act of 1933. As of the date of this
Prospectus, no broker-dealer has been retained by the Company in connection with
the sale of the Shares offered hereby.
The Organizers currently intend to subscribe for 326,400 Shares of
this offering. The Organizers may, but are not obligated to, purchase
additional Shares if such purchases are necessary to complete the minimum
offering. The maximum aggregate number of Shares that these Organizers may
purchase in the minimum offering is 393,750
-9-
<PAGE>
Shares, or 63% of the minimum offering. The foregoing numerical limitation does
not apply to any Shares of this offering to be purchased by any additional
persons who become officers or directors of the Company or the Bank after the
date of this Prospectus, or to additional Shares purchased once the minimum
offering has been achieved. No Organizer or director (including immediate
family members and affiliates) will be permitted to purchase in this offering an
amount of Shares which would exceed 20% of the total number of Shares
outstanding upon completion of this offering. Shares purchased in this offering
by the Organizers, directors and Bank officers are being purchased for
investment purposes and not for resale. See "Management," "Principal
Shareholders" and "Certain Transactions." No person may purchase 10% or more of
the total number of Shares outstanding upon completion of this offering without
submitting financial and any other required information to the appropriate
regulatory authorities.
METHOD OF SUBSCRIPTION
A minimum subscription of 100 Shares ($1,000) has been established by
the Company for this offering. However, the Company reserves the right to
accept subscriptions for less than the minimum subscription, in its sole
discretion.
In order to purchase the Shares offered hereby a prospective investor
must:
(1) COMPLETE AND SIGN THE SUBSCRIPTION AGREEMENT ACCOMPANYING THIS
PROSPECTUS;
(2) MAKE FULL PAYMENT FOR THE PURCHASE PRICE FOR THE SHARES IN UNITED
STATES CURRENCY BY CHECK, BANK DRAFT OR MONEY ORDER PAYABLE TO
"PEOPLES BANCORP, INC. ESCROW ACCOUNT"; AND
(3) DELIVER THE SUBSCRIPTION AGREEMENT, TOGETHER WITH FULL PAYMENT FOR THE
PURCHASE PRICE, TO PEOPLES BANCORP, INC., TIMOTHY I. WARREN,
PRESIDENT, 516 BANKHEAD HIGHWAY, CARROLLTON, GEORGIA 30117.
All subscription payments received prior to completion of the minimum
offering will be promptly deposited in an escrow account with the Escrow Agent.
The Escrow Agent will invest subscription proceeds in short-term, interest-
bearing government securities or bank certificates of deposit until released
from the escrow account. The Escrow Agent, by accepting appointment as such, in
no way endorses the purchase of the Company's securities by any person.
SUBSCRIPTION ACCEPTANCE
Subscriptions are not binding until accepted by the Company. Deposit of
funds in the escrow account pending satisfaction of the conditions listed above
shall not be deemed to be an acceptance of the subscriptions to which the funds
relate. The Company reserves the right to accept or reject subscriptions, in
whole or in part, in its sole discretion. This permits the Company to refuse to
sell the Shares to any person submitting a subscription agreement or to accept
part but not all of a subscription so that a subscriber might ultimately be
issued fewer than the full number of Shares for which he or she subscribes. In
determining which subscriptions to accept, in whole or in part, the Company may
take into account the order in which subscriptions are received and a
subscriber's potential to do business with, or to refer customers to, the Bank.
The Company will determine whether to accept or reject a subscription within 15
days of receipt. In the event the Company rejects all or a part of a
subscription, the Escrow Agent will refund to the subscriber by mail, all or the
appropriate portion of the amount remitted with the subscription without
-------
interest promptly after the occurrence of such event. In addition,
- --------
subscriptions which have been accepted may be subsequently canceled by the
Company in the event the Company does not obtain regulatory approval to become a
bank holding company or the Bank does not receive a permit to begin business.
Canceled subscriptions would be returned to subscribers promptly by mail in full
without interest. All costs and expenses of this offering and of the
- ----------------
organization of the Company and the Bank in excess of interest earned on
subscription proceeds will be borne by the Organizers in the event subscriptions
are canceled.
-10-
<PAGE>
Certificates representing the securities offered hereby will be issued by
the Company and mailed to investors as soon as practicable after subscription
proceeds are released from the escrow account following completion of the
minimum offering and during the maximum offering period.
USE OF PROCEEDS
The net proceeds from the sale of the Shares offered hereby after deducting
estimated offering expenses of $38,000 will be between $6,212,000 if the minimum
of 625,000 Shares are sold and $7,962,000 if the maximum of 800,000 Shares are
sold. Offering expenses will be paid by the Company through draws on the
Organization Loan and repaid from the gross proceeds of this offering.
The Organizers also expect the Company and the Bank to incur approximately
$64,000 of organizational expenses and preopening expenses of approximately
$175,000 (assuming the minimum offering is completed on January 31, 1997 and the
Bank begins operation in the Temporary Offices on March 31, 1997), which would
be offset in part by estimated preopening investment income on offering proceeds
of approximately $50,000. Offering, organizational and preopening expenses
incurred prior to conclusion of the offering have been paid or reimbursed to the
Organizers through draws by the Company on the Organization Loan (which has been
guaranteed by the Organizers). To the extent such amounts and accrued interest
thereon will exceed $370,000, additional offering, organizational and preopening
expenses will be paid through draws on any additional line of credit established
for the Company and/or advances by the Organizers, with all of such amounts to
be repaid by the Company together with accrued interest from net offering
proceeds.
The Company will capitalize the Bank with a minimum of $6,000,000 and up to
$7,700,000 of the net offering proceeds by purchasing between 600,000 and
770,000 shares of the Bank's stock at a price of $10.00 per share. After the
anticipated expenditure of approximately $1,857,000 in the aggregate, the Bank
will have remaining working capital of between approximately $4,143,000 and
$5,843,000 to be used for the purposes of making loans and investments in the
course of the Bank's operations and to pay operating expenses (to the extent
such expenses are not met by operating income). See "Business" and "Certain
Transactions."
The remaining balance of the net proceeds of this offering of between
approximately $190,000 and $240,000 (depending on the number of Shares sold)
will be retained to establish the Company's working capital and for general
corporate purposes, including supporting the Bank's growth and engaging in other
permitted activities.
The following table sets forth in tabular form the estimated use by the
Company and the Bank of the gross proceeds of the minimum and maximum offerings
based on the best estimate of management at this time and assuming that the
offering is concluded as of January 31, 1997 and that the Bank commences
operations on March 31, 1997 in the Temporary Offices, for purposes of
projecting offering, organizational and preopening expenses and for computing
interest payable on the Organization Loan. Preopening expenses will increase,
with a corresponding reduction in working capital available to the Company and
Bank, in the event completion of the offering is delayed for any reason.
-11-
<PAGE>
USE OF PROCEEDS
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
----------- -----------
<S> <C> <C>
Gross offering proceeds/(1)/........................ $6,250,000 $8,000,000
========== ==========
Anticipated use of proceeds by the Company:
Offering expenses...............................
Organizational expenses/(2)/.................... 38,000 38,000
Working capital................................. 22,000 22,000
Capitalization of the Bank through purchase of 190,000 240,000
common stock of the Bank....................
6,000,000 7,700,000
Total............................................... ---------- ----------
Anticipated use of capital by the Bank: $6,250,000 $8,000,000
Organizational expenses/(2)/.................... ========== ==========
Preopening operating expenses/(2)(3)/...........
Land and Bank premises /(4)/....................
Furniture, fixtures and equipment............... $ 42,000 $ 42,000
Working capital................................. 125,000 125,000
1,460,000 1,460,000
Total............................................... 230,000 230,000
4,143,000 5,843,000
---------- ----------
$6,000,000 $7,700,000
========== ==========
</TABLE>
- ----------
/(1)/ Assuming the sale of 625,000 Shares and 800,000 Shares, respectively, at a
price of $10.00 per Share.
/(2)/ Organizational expenses consist primarily of consulting fees for market
analysis and business plan required as part of the application process,
filing fees, accounting, appraisal and legal fees and expenses. Preopening
operating expenses consist primarily of salaries and benefits, rent and
occupancy expense, and interest expense. Such expenses have been estimated
through March 31, 1997. All of such expenses as well as those for premises
and leasehold improvements, and for furniture, fixtures and equipment are
expected to be incurred provided that the offering proceeds are released
from escrow.
/(3)/ Assuming $175,000 of gross expenses, net of anticipated preopening income
of $50,000.
/(4)/ In order to facilitate organization of the Company and the Bank, the
Organizers may determine to accelerate expenditures for Temporary Office
renovations, Main Office construction or otherwise in anticipation of
completing the minimum offering, which could require that they advance
additional funds or guarantee additional Company debt to be repaid from
offering proceeds.
The Organizers reserve the right to modify the foregoing use of proceeds as
circumstances require and in order to facilitate the organization of the Company
and the establishment of the Bank's business.
DIVIDEND POLICY
In order to preserve its capital to facilitate growth and expansion of its
business, the Company does not anticipate paying cash dividends on its Common
Stock in the immediate future. The payment of cash dividends by the Company
will be subject to determination by the Board of Directors and will depend on
favorable operating results, financial conditions, tax considerations, and other
relevant factors. At present, the only source of funds from which the Company
would pay cash dividends would be dividends paid to the Company by the Bank.
The Bank similarly does not anticipate paying cash dividends to the Company in
the near future in order to preserve its capital
-12-
<PAGE>
to facilitate growth and expansion of its business. Payment of cash dividends
by the Bank is also subject to regulatory requirements and limitations. See
"Business" and "Supervision and Regulation."
No assurances can be given that any dividends will be declared by the
Company or, if declared, what the amount of the dividends will be or whether
such dividends, once declared, would continue.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
August 31, 1996 and as adjusted to give pro forma effect to the sale by the
Company of the minimum offering of 625,000 Shares and the maximum offering of
800,000 Shares and the receipt of the net proceeds anticipated by the Company
from such sale, which will result in initial compliance with all regulatory
capital requirements. All offering proceeds, without interest, will be returned
----------------
to subscribers in the event the minimum offering is not completed.
<TABLE>
<CAPTION>
OUTSTANDING/(1)/ AS ADJUSTED/(2)/
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSUME MINIMUM OFFERING:
Advances from Organizers -- $ 98,100 -- $ 0
======== ==========
Preferred Stock, $.01 par value;
1,000,000 shares authorized None None
0 0
Common stock, $.01 par value;
10,000,000 shares authorized; one share 6,250
issued, 625,000 to be issued as adjusted 1 -- 625,000 ----------
--------
Capital surplus 10 6,206,750
-------- ----------
Accumulated deficit (23,404) (125,000)
-------- ----------
Total equity $(23,394) $6,087,000
======== ==========
ASSUME MAXIMUM OFFERING:
Advances from Organizers -- $ 98,100 -- $ 0
======== ----------
Preferred stock, $.01 par value;
1,000,000 shares authorized None None
0 0
Common stock, $.01 par value;
10,000,000 shares authorized; one share
issued, 800,000 to be issued as adjusted 1 -- 800,000 8,000
-------- ----------
Capital surplus 10 7,954,000
-------- ----------
Accumulated deficit $(23,404) (125,000)
-------- ----------
Total equity $(23,394) $7,837,000
======== ==========
</TABLE>
- ----------
/(1)/ In August 1996, the Company issued one Share of Common Stock to Mr. Warren
for $10 in connection with the organization of the Company.
/(2)/ Expenses related to this offering are estimated to be $38,000 and will be
charged to the capital surplus upon completion of the offering.
Accumulated deficit represents gross preopening and organizational
expenses of $175,000 estimated to the opening of the Bank, less estimated
investment income for the preopening period of $50,000.
-13-
<PAGE>
BUSINESS
THE COMPANY
The Company was incorporated on August 27, 1996 for the purpose of becoming
a bank holding company for its proposed wholly-owned subsidiary, the Bank. The
Company has filed applications with the FRB and the DBF for authority to become
a bank holding company which will own all of the issued stock of the Bank.
Neither the Company nor the Bank has commenced their respective operations
as a bank holding company or as a commercial bank and neither will do so unless
the required capitalization of the Bank by the Company is obtained from proceeds
of this offering and regulatory approvals are obtained. See "Supervision and
Regulation."
The Company's offices are currently located at 516 Bankhead Highway,
Carrollton, Georgia 30117, in the Temporary Offices, and its telephone number is
(770) 838-9608. Subject to the approval of the DBF and final determination of
the Organizers, the Main Office will be located at 631 Bankhead Highway,
Carrollton, Georgia 30117. The Company will maintain its offices at the same
location as the Bank's offices.
The Company is authorized to engage in any activity permitted by law to a
corporation, subject to applicable federal and state regulatory restrictions on
the activities of bank holding companies. The holding company structure will
provide the Company with greater flexibility than the Bank would otherwise have
to expand and diversify its business activities, such as through newly formed
subsidiaries or through acquisitions. While the Company has no present plans to
engage actively in any other business activities, management anticipates
studying the feasibility of establishing or acquiring subsidiaries to engage in
other business activities to the extent permitted by law. See "Supervision and
Regulation."
The principal assets of the Company will consist initially of the net
proceeds of this offering and the Bank's stock. These assets will be used to
fund the initial activities of the Company. The Company's needs for additional
capital will depend to a great extent upon the capital needs of the Bank, which
in turn will depend upon the level of deposits and total assets of the Bank.
The Bank's capital needs for at least the next three years are expected to be
satisfied principally from the proceeds of this offering and from normal
business operations. If, after the first three years, the Bank were to grow at
a more rapid rate than anticipated by management, the Bank's capital needs could
exceed the amount of capital retained by the Company. Management believes that
additional capital may be available through the sale of additional securities or
debt offerings should the need for additional capital arise.
THE BANK
The Bank is currently being organized under the laws of the State of
Georgia as a state-chartered commercial bank with deposits to be insured by the
FDIC. The Bank received its bank charter from the DBF on October 11, 1996 and
received preliminary approval of its application for federal deposit insurance
from the FDIC on October 30, 1996. The Bank has until October 11, 1998 to
complete its organization and October 30, 1997 to satisfy conditions for
insurance of deposit accounts under the terms of its preliminary approvals,
although the Organizers believe extensions would be granted in due course, if
required. The Bank is to be located in Carrollton, Carroll County, Georgia, its
primary service area, and is the process of fulfilling the DBF and FDIC
conditions.
The Bank is required to have an initial capitalization of at least
$6,000,000. The Company is committed to provide that amount of initial capital
for the Bank from the net proceeds of this offering by purchasing 600,000 shares
of the Bank's $5 par value stock at a price of $10 per share. The $10 per share
purchase price for the Bank's common stock was arbitrarily established based
upon normal industry practice which has been generally approved by the DBF. The
per share price could have been established at any level, provided that one-half
of the per share price was allocated to capital and one-half to surplus and
provided that the total of capital and surplus was sufficient to meet the
minimum capitalization level set by the DBF for the Bank.
Upon the issuance of a permit to begin business by the DBF and of insurance
of accounts by the FDIC, the Bank will engage in attracting deposits from the
general public and will make commercial, consumer and real estate
-14-
<PAGE>
loans. The permit to begin business will be issued to the Bank when it has
satisfied the conditions in the DBF's approval of the Bank's charter
application, including but not limited to matters such as the adoption by the
Bank's Board of Directors of a written loan policy, liquidity policy, investment
policy and funds management policy. Those written policies have not been
formulated at this time, but will be completed, submitted for approval and
revised as required during this offering. Customer deposits with the Bank will
be insured to the maximum extent provided by law through the FDIC. It is
currently anticipated that the Bank will commence operations in the Temporary
Offices within two months after completion of the minimum offering.
The Organizers developed market analysis with respect to the proposed
primary service as described below and a proprietary business plan that were
included in their applications to the DBF and FDIC. The Bank's business plan
for its initial years of operation relies principally upon local advertising and
promotional activity and upon personal contacts by its directors, officers and
shareholders to attract business and to acquaint potential customers with the
Bank's personalized services. The Bank intends to emphasize a high degree of
personalized client service in order to be able to serve each customer's banking
needs. The Bank's marketing approach will emphasize the advantages of dealing
with an independent, locally-owned and headquartered commercial bank to meet the
particular needs of individuals, professionals and small to medium-sized
businesses and real estate developers and builders in the community. All
banking services will be continually evaluated with regard to their
profitability and efforts will be made to modify the Bank's business plan if the
plan does not prove successful.
Management believes that the Bank's business plan will make the Bank
profitable by the end of its second full year of operations. However, that
business plan forecasts one year of unprofitable operations and it has been the
experience in the banking industry for new financial institutions to lose money
in the first years of operations. There can be no assurance as to when or
whether the Bank's operations will become profitable.
PRIMARY SERVICE AREA
The Bank's primary service area will be Carrollton, Georgia and surrounding
acres of Carroll County. Carrollton is located fifty miles west of Atlanta,
eighty miles east of Birmingham and fourteen miles south of Interstate 20. With
a currently estimated population of approximately 16,000, Carrollton serves as a
retail, commercial, education, manufacturing and health care center for several
counties in the western part of Georgia and the eastern part of Alabama. The
world's largest privately owned rod and cable manufacturing company and the
world's largest record manufacturing company are both located in Carrollton.
Other companies in Carrollton engage in business such as advanced aerospace
industry technology, fiber optics for the communication industry, textiles,
plastics and other manufacturing products.
Carroll County is served by a number of highway connections with the rest
of the state and country via Interstate 20, U.S. Highway 27 and Georgia Highways
61 and 78, as well as local roads.
The currently anticipated site selected for the Main Office, 631 Bankhead
Highway, Carrollton, would place the Bank's office near the center of the city
on one of its busiest thoroughfares. This location provides connections with
all major roads leading into the city and affords roughly equal access to all
parts of Carroll County.
COMPETITION
The Bank will experience competition in attracting and retaining business
and personal checking and savings accounts, and making commercial, consumer and
real estate loans and providing other services in its primary service area. The
primary factors in competing for such accounts are interest rates, the range of
financial services offered, convenience of office locations and flexible office
hours. Direct competition for such accounts comes from other commercial banks,
savings institutions, credit unions, brokerage firms and money market funds.
The primary factors in competing for loans are interest rates, loan origination
fees and the range of lending services offered. Competition for origination of
loans normally comes from other commercial banks, savings institutions, credit
unions and mortgage banking firms. Such entities may have competitive
advantages as a result of greater resources and higher lending limits (by virtue
of their greater capitalization). Such competitors also may offer their
customers certain
-15-
<PAGE>
services which the Bank will not provide directly but might be offered
indirectly by the Bank through correspondent institutions.
Within Carroll County there are six commercial banks (Citizens Bank and
Trust of West Georgia, Regions Bank (formerly The Community Bank of Carrollton),
NationsBank of Georgia, N.A., SouthTrust Bank of Georgia, N.A., SunTrust Bank
and West Georgia National Bank of Carrollton) operating a total of twenty
offices. In addition, there is one federal savings association (Carrollton
Federal Bank) that operates four offices in Carroll County. There are currently
four financial institution offices located within one mile of the currently
proposed Main Office site.
Competition may be further increased as a result of the enactment of the
Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994 (the
"Interstate Banking Act") on September 29, 1994. Beginning in September 1995,
bank holding companies, upon meeting certain criteria, were authorized to
acquire existing banks on a nationwide basis without regard to state statutes to
the contrary. Effective June 1, 1997, the Interstate Banking Act will permit
mergers of banks on an interstate basis, unless states in which such banks are
located pass legislation specifically prohibiting out-of-state banks from
operating interstate branches within their boundaries. In addition, the
Interstate Banking Act provides for de novo interstate branching where states
enact legislation specifically authorizing interstate branching within the host
state. In addition, Georgia law has been changed to allow inter-county
branching without limitation beginning July 1, 1998. See "Supervision and
Regulation -- Recent Legislative Developments."
EMPLOYEES
As of the date of this Prospectus, the only employees of the Company and
the Bank are Timothy I. Warren, the President and Chief Executive Officer of the
Company and the Bank, Elaine B. Lovvorn, Senior Vice President and Chief
Financial and Operations Officer of the Bank and Secretary and Treasurer of the
Company, and their administrative assistant. Unless the Company expands its
operations into other activities permitted by law to a bank holding company, it
is unlikely that the Company will have many employees.
During the first year of operations, management anticipates that the Bank
will employ approximately 13 persons of whom it is estimated three will be
officers of the Bank, four will be tellers and six will be customer service,
lending, bookkeeping and secretarial personnel. In addition to the current
employees, the Bank will employ a Senior Credit Officer who is subject to the
approval of the DBF and the FDIC. The DBF has required as a condition to its
issuance of a permit to begin business that this officers be hired by the Bank.
See "Management."
BANK OFFICES
The Bank intends to begin operations in the Temporary Offices pending
construction of the Main Office. The Temporary Office consists of a two-story
brick building with approximately 3,500 square feet of space on the main floor.
Phillip Kauffman, one of the Organizers, leased the building for a term ending
March 1998 at a monthly rental rate of $2,500. The Temporary Office lease was
assigned by Mr. Kauffman and assumed by the Company on September 13, 1996. See
"Certain Transactions -- Temporary Office Lease Assumption." The Organizers
anticipate that the Bank will commence operation in the Temporary Office within
approximately 60 days after completion of the minimum offering and after
expenditures of approximately $30,000 for improvements.
The Main Office will be a two-story building with approximately 6,000
square feet of finished space on the first floor and 4,000 square feet of
unfinished space on the second floor. The Main Office plans provide for six
inside teller stations, four outside drive-up teller stations, and one outside
automatic teller machine. Total construction costs of the Main Office are
currently expected to be $1,130,000, with construction expected to be completed
between approximately six and 12 months after completion of the minimum
offering. Management anticipates that there will be approximately 48 parking
spaces adjacent to the Main Office, which will provide sufficient parking for
customers. The currently anticipated Main Office site would be purchased from
Charles J. Puckett, one of the Organizers, for $300,000. See "Certain
Transactions -- Main Office Site Purchase." The Bank premises will require
furniture, fixtures and equipment in order to make the premises suitable for its
banking operations, which management estimates will cost approximately $230,440.
-16-
<PAGE>
The Bank intends to open from 9:00 a.m. to 4:00 p.m., Monday through
Thursday, from 9:00 a.m. to 6:00 p.m. on Friday, and from 9:00 a.m. to 12:00
p.m. on Saturday. Management intends that the Bank's drive-through teller
station will be open from 8:30 a.m. to 4:00 p.m. Monday through Thursday, 8:30
a.m. to 6:00 p.m. on Friday, and 8:30 a.m. to 12:00 p.m. on Saturday.
BANKING SERVICES GENERALLY
The Bank will offer a full range of commercial banking services to
individual, professional and business customers in its primary service area.
These services will include personal and business checking accounts and savings
and other time certificates of deposit. The transaction accounts and time
certificates will be at rates competitive with those offered in the Bank's
primary service area. Customer deposits with the Bank will be insured to the
maximum extent provided by law through the FDIC. The Bank plans to issue credit
cards to act as a merchant depository for cardholder drafts under both Visa and
MasterCard. The Bank intends to offer night depository and bank-by-mail
services and to sell traveler's checks (issued by an independent entity) and
cashier's checks. The Bank does not anticipate offering trust and fiduciary
services initially and will rely on trust and fiduciary services offered by
correspondent banks until the Bank determines that it is profitable to offer
such services directly.
LENDING ACTIVITIES
GENERAL CREDIT RISK. The Bank will seek to attract deposits from the
general public and will use such deposits, together with borrowings and other
sources of funds, to originate and purchase loans. The Bank will offer a full
range of short and medium-term commercial, consumer and real estate loans. The
Bank will attempt to react to prevailing market conditions and demands in its
lending activities, while avoiding excessive concentrations of any particular
loan category. The Bank has not yet fixed specific goals with respect to
lending concentration by type of loan and the Bank's written loan policy is in
the process of being developed and will be approved by the DBF prior to issuing
a permit to begin business to the Bank. The Bank will develop a loan approval
process which will provide for various levels of officer lending authority.
When a loan amount exceeds an officer's lending authority, it will be
transferred to an officer with a higher limit with ultimate lending authority
resting with the Loan Committee of the Board of Directors.
The risk of nonpayment (or deferred payment) of loans is inherent in making
all loans. However, management of the Bank intends to carefully evaluate all
loan applicants and to attempt to minimize its credit risk exposure by use of
thorough loan application and approval procedures that will be established for
each category of loan prior to beginning operation. In determining whether to
make a loan, the Bank shall consider matters such as the borrower's credit
history, analyze the borrower's income and ability to service the loan and
evaluate the need for collateral to secure recovery in the event of default.
Under Georgia law, the Bank is limited in the amount it can loan to a single
borrower (and its related interests) to no more than 15% of the Bank's statutory
capital base unless the loan in excess of 15% of the statutory capital base is
approved by the Bank's board of directors and unless the entire amount of the
loan is secured. In no event, however, may the loan be greater than 25% of the
Bank's statutory capital base. The Organizers expect that the Bank's legal
lending limit under Georgia law for one borrower based upon its initial
statutory capital base will be approximately $625,000 for unsecured loans and
$1,250,000 for fully secured loans. The Bank's loan policy, when developed and
approved by the DBF, may establish a lower lending limit. The Bank will
maintain an allowance for loan losses based upon management's assumptions and
judgments about the ultimate collectibility of loans in its portfolio and
provide an allowance for possible loan losses based upon a percentage of the
outstanding balances and for specific loans when their ultimate collectibility
is considered questionable. Certain risks with regard to specific categories of
loans are described below.
COMMERCIAL LOANS. Commercial lending activities will be directed
principally toward businesses whose demand for funds will fall within the Bank's
anticipated lending limit, such as small to medium-size professional firms,
retail and wholesale businesses, light industry and manufacturing concerns
operating in and around the Bank's primary service area. The types of loans
provided will include principally term loans with variable interest rates
secured by equipment, inventory, receivables and real estate, as well as secured
and (to a limited extent) unsecured working capital lines of credit. Repayment
of these loans will be dependent upon the financial success of the business
borrower and, in the discretion of the Bank, personal guarantees may be obtained
from the principals of
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business borrowers and/or third parties to further support the borrower's
ability to service the debt and reduce the risk of nonpayment.
REAL ESTATE LOANS. Real estate lending will be oriented toward short-term
interim loans and construction loans. The Bank may originate a limited number
of variable-rate residential and other mortgage loans for its own account and
both variable and fixed-rate residential mortgage loans for resale. The
residential loans will be secured by first mortgages on one-to-four family
residences in the Bank's market area. Loans secured by second mortgages on a
borrower's residence may also be made. Under Georgia law, a Bank will make
loans secured by real estate only where such loans are for not more than 75% of
the fair market value of the real estate in the case of a single maturity loan
or for not more than 90% of the value of the real estate in the case of
amortized loans.
CONSUMER LOANS. Consumer lending will be made on a secured or unsecured
basis and will be oriented primarily to the needs of the Bank's customers, with
an emphasis on automobile financing, home improvements, debt consolidation and
other personal needs. Consumer loans will generally involve more risk than
first mortgage loans because the collateral for a defaulted loan may not provide
an adequate source of repayment of the outstanding loan balance because of
damage to the collateral or other loss of value and the remaining deficiency
often does not warrant further collection efforts. In addition, consumer loan
performance is dependent upon the borrower's continued financial stability and
are therefore more likely to be adversely affected by job loss, divorce, illness
or personal bankruptcy. Various federal and state laws, including federal and
state bankruptcy and insolvency laws, may also limit the amount which can be
recovered.
ASSET AND LIABILITY MANAGEMENT
The primary assets of the Bank will consist of its loan portfolio and
investment account. Consistent with the requirements of prudent banking
necessary to maintain liquidity, management will seek to match maturities and
rates of loans and the investment portfolio with those of deposits, although
exact matching is not always possible. Management will seek to invest the
largest portion of the Bank's assets in commercial, consumer and real estate
loans. The Bank anticipates that loans will be limited to less than 75% of
deposits and capital funds; however, this ratio may be exceeded in the Bank's
initial period of operation. It is anticipated that the Bank's investment
account will consist primarily of marketable securities of the United States
government, federal agencies and state and municipal governments, generally with
varied maturities.
The Bank's investment policy will provide for a portfolio divided among
issues purchased to meet one or more of the following objections: (i) to
complement strategies developed in assets/liquidity management, including
desired liquidity levels; (ii) to maximize after-tax income from funds not
needed for day-to-day operations and loan demand; and (iii) to provide
collateral necessary for acceptance of public funds. Management anticipates
that its policy will allow the Bank to deal with seasonal deposits fluctuations
and to provide for basic liquidity consistent with the Bank's loan demand. When
possible, maturation will match anticipated liquidity demands. Longer term
securities may be selected for a combination of yield and exemption from federal
income taxation when appropriate. Deposit accounts will represent the majority
of the liabilities of the Bank. These will include transaction accounts, time
deposits and certificates of deposit.
Initially, the Bank anticipates deriving its income principally from
interest charged on loans and, to a lesser extent, from interest earned on
investments, from fees received in connection with the origination of loans and
from other services. The Bank's principal expenses are anticipated to be
interest expense on deposits and operating expenses. The funds for such
activities are anticipated to be provided principally by operating revenues,
deposit growth, purchase of federal funds from other banks, repayment of
outstanding loans and sale of loans and investment securities.
SUPERVISION AND REGULATION
The following summaries of statutes and regulations affecting bank holding
companies and banks do not purport to be complete. Such summaries are qualified
in their entirety by reference to such statutes and regulations.
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<PAGE>
SUPERVISION AND REGULATION OF THE COMPANY
The Company will be a bank holding company within the meaning of the
federal Bank Holding Company Act of 1956, as amended, and the Georgia Bank
Holding Company Act. As a bank holding company, the Company will be required to
file with the FRB and the DBF annual reports and information regarding its
business operations and those of its subsidiary. A bank holding company and its
subsidiary will also be subject to examination by these agencies.
A bank holding company is required by the federal Bank Holding Company Act
to obtain approval from the FRB prior to acquiring, directly or indirectly,
ownership of more than 5% of the voting stock of or control of any bank that is
not already majority owned or controlled by that bank holding company. The
Riegle Community Development and Regulatory Improvement Act of 1994 (the
"Regulatory Improvement Act") provides for the creation of a community
development financial institution's fund to promote economic revitalization in
community development. Banks are allowed to participate in such community
development banks. The Regulatory Improvement Act also contains (i) provisions
designed to enhance small business capital formation and to enhance disclosure
with regard to high cost mortgages for the protection of consumers, and (ii)
more than 50 regulatory relief provisions that apply to banks and thrift
institutions, including the coordination of examinations by various federal
agencies, coordination of frequency and types of reports financial institutions
are required to file and reduction of examinations for well capitalized
institutions.
The federal Bank Holding Company Act also prohibits bank holding companies,
with certain exceptions, from acquiring more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks and other subsidiaries authorized by the
statute or furnishing services to, or performing services for, subsidiaries
without the prior approval of the FRB. The FRB is authorized to approve, among
other things, the ownership of shares by a bank holding company in any company
the activities of which it has determined by order or regulation to be so
closely related to banking or to managing or controlling banks as to be a proper
incident thereto. Notice to and review by the FRB of such activities would be
necessary before the Company could engage in such activities. The FRB is
empowered to differentiate between activities that are initiated de novo by a
bank holding company or a subsidiary and activities commenced by acquisition of
a going concern.
A bank holding company may be compelled by bank regulatory authorities to
invest additional capital in the event the subsidiary bank experiences either
significant loan losses or rapid growth of loans or deposits. In addition, a
bank holding company may be required to provide additional capital to other
banks that it acquires as a condition to obtaining the approvals and consents of
regulatory authorities in connection with such acquisitions. FRB policy
requires a bank holding company to act as a source of financial strength and to
take measures to preserve and protect bank subsidiaries in situations where
additional investments in a troubled bank may not be warranted.
The Company will also be a bank holding company within the meaning of the
Georgia Bank Holding Company Act, which provides that, without prior approval of
the DBF, it is unlawful for (i) any bank holding company to acquire direct or
indirect ownership or control of more than 5% of the voting shares of any bank,
(ii) any bank holding company or subsidiary thereof, other than a bank, to
acquire all or substantially all of the assets of the bank, or (iii) any bank
holding company to merge or consolidate with any other bank holding company. It
also is unlawful for a bank holding company to acquire direct or indirect
ownership or control of 5% or more of the voting shares of a bank in Georgia
unless such bank has been in existence and continuously operating as a bank for
a period of five years or more prior to the date of application to the
commissioner for approval of such acquisition. This restriction is not
applicable to companies, such as the Company, that will control only the one
bank that is to be acquired. However, these companies are themselves prohibited
from acquiring another bank until the initial bank has been incorporated for a
period of twenty-four months. The effect of these provisions on the Company is
to prevent the possibility that the Company or the Bank will be acquired by an
existing bank holding company for a minimum of five years, and to prohibit the
Company from acquiring another bank for a period of two years.
As a bank holding company, the Company is subject to capital adequacy
guidelines as established by the FRB. The FRB established risk-based capital
guidelines for bank holding companies effective March 15, 1989.
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<PAGE>
Beginning on December 31, 1992, the minimum required ratio for total capital to
risk weighted assets became 8 percent (of which at least 4 percent must consist
of Tier 1 capital). Tier 1 capital (as defined in regulations of the FRB)
consists of common and qualifying preferred stock and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and other intangible
assets required to be deducted under the FRB's guidelines.
The FRB's guidelines apply on a consolidated basis to bank holding
companies with total consolidated assets of $150 million or more. For bank
holding companies with less than $150 million in total consolidated assets (such
as the Company), the guidelines will be applied on a bank only basis, unless the
bank holding company is engaged in nonbanking activity involving significant
leverage or has significant amount of debt outstanding that is held by the
general public. The FRB has stated that risk-based capital guidelines establish
minimum standards and that bank holding companies generally are expected to
operate well above the minimum standards.
The Company is a legal entity separate and distinct from the Bank.
Therefore, the stock of the Company is subject to the registration requirements
of the Securities Act of 1933. The Company may also be subject to the
requirements of the Securities Exchange Act of 1934, which include, without
limitation, the filing of annual, quarterly and other reports with the
Securities and Exchange Commission.
SUPERVISION AND REGULATION OF THE BANK
The Bank will be examined and regulated by the DBF and the FDIC. Pursuant
to regulations adopted by the DBF, the Bank must have the approval of the
Commissioner to pay cash dividends unless at the time of such payment (i) the
total classified assets at the most recent examination of the Bank do not exceed
80% of the Bank's equity capital and reserves as reflected by such examination;
(ii) the aggregate amount of dividends declared or anticipated to be declared in
the calendar year does not exceed 50% of the net profits, after taxes but before
dividends, for the previous calendar year; and (iii) the ratio of the Bank's
equity capital and reserves to adjusted total assets is not less than 6%. In
addition, the DBF (i) will prohibit the payment of any dividends by the Bank
unless and until the Company and the Bank have become cumulatively profitable on
a consolidated basis and (ii) will require that the Bank maintain a capital-to-
asset ratio of not less than 8% during the first three years of operation.
The Bank will be a member of the FDIC, which currently insures the deposits
of each member bank to a maximum of $100,000 per depositor. For this
protection, the Bank will pay a semi-annual statutory assessment and will be
subject to the rules and regulations of the FDIC. The FDIC has the authority to
prevent the continuance or development of unsound and unsafe banking practices.
The FDIC is also authorized, among other things, to approve conversions,
mergers, consolidations and assumption of deposit liability transactions between
insured banks and uninsured banks or institutions, and to prevent capital or
surplus diminution in such transactions where the resulting, continuing, or
assumed bank is an insured nonmember state bank.
The Bank, as a state chartered bank, will be permitted to branch only to
the extent that banks are permitted to branch under Georgia law. In January
1996, the Georgia legislature passed a bill designed to eliminate Georgia's
county-wide branching restrictions. The new law provides that effective July 1,
1996, banks in Georgia, with prior approval of the DBF (and the appropriate
federal regulatory authority), may establish up to three new branches to be
located in any county in the state. Effective July 1, 1998, Georgia banks may
establish and unlimited number of branches in any county in the state, upon
receipt of appropriate regulatory approvals.
Federal banking regulations applicable to all banks, among other things (i)
provide federal bank regulatory agencies with powers to prevent unsafe and
unsound banking practices; (ii) restrict preferential loans by banks to
"insiders" of banks; (iii) require banks to keep information on loans to
principal shareholders and executive officers; and (iv) prohibit certain
director and officer interlocks between financial institutions.
The FDIC has adopted final risk-based capital guidelines for all FDIC
insured state chartered banks that are not members of the Federal Reserve
System. As of December 31, 1992, all banks are required to maintain a minimum
ratio of total capital to risk weighted assets of 8 percent (of which at least 4
percent must consist of Tier 1 capital). Tier 1 capital of state chartered
banks (as defined in regulations) generally consists of (i) common
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stockholders equity; (ii) noncumulative perpetual preferred stock and related
surplus; and (iii) minority interests in the equity accounts of consolidated
subsidiaries.
In addition, the FDIC adopted a minimum ratio of Tier 1 capital to total
assets of banks. This capital measure is generally referred to as the leverage
capital ratio. The FDIC has established a minimum leverage capital ratio of 3
percent if the FDIC determines that the institution is not anticipating or
experiencing significant growth and has well-diversified risk, including no
undue interest rate exposure, excellent asset quality, high liquidity, good
earnings and, in general, is considered a strong banking organization, rated
Composite 1 under the Uniform Financial Institutions Rating Systems. Other
financial institutions are expected to maintain leverage capital at least 100 to
200 basis points above the minimum level.
On December 19, 1991, the Federal Deposit Insurance Corporation Improvement
Act of 1991 (the "Improvement Act") was enacted into law. The Improvement Act
provides for, among other matters, addressing the safety and soundness of
deposit insurance funds, prompt regulatory corrective action by federal agencies
when a bank begins to experience difficulties that may threaten loss to the
FDIC, revised limitations on borrowings by insiders of banks, their parent bank
holding companies and their affiliates, limited guarantees of capital
restoration by bank holding companies of their subsidiary banks and provisions
for depository institution conversions. The FDIC has adopted regulations which,
among other matters, implement provisions of the Improvement Act that require or
permit the FDIC to take specific supervisory actions when FDIC-insured
institutions come within one of five specific capital categories. The five
capital categories are designated as (1) well capitalized, (2) adequately
capitalized, (3) undercapitalized, (4) significantly undercapitalized, and (5)
critically undercapitalized.
The Company will be an "affiliate" of the Bank within the meaning of the
Federal Reserve Act, which, among other things, imposes restrictions on loans to
the Company by the Bank or investments by the Bank in securities of the Company
and on the use of such securities as collateral for loans by the Bank to any
borrower. The Company will also be subject to certain restrictions with respect
to engaging in the business of issuing, underwriting and distributing
securities.
MONETARY POLICY
Banking is a business that depends on interest rate differentials. In
general, the difference between the interest rates paid by the Bank on its
deposits and other borrowings and the interest rate received on loans extended
to its customers and on securities held in its portfolios comprises the major
portion of the Bank's earnings.
The earnings and growth of the Bank and of the Company are affected not
only by general economic conditions, both domestic and foreign, but also by the
monetary and fiscal policies of the United States and its agencies, particularly
the FRB. The FRB implements national monetary policy (as opposed to fiscal
policy), such as seeking to curb inflation and combat recession, by its open
market operations in the United States government securities, adjustments in the
amount of industry reserves that banks and other financial institutions are
required to maintain and adjustments to the discount rates applicable to
borrowings by banks from the Federal Reserve System. The actions of the FRB in
these areas influence the growth of bank loans, investments and deposits and
also affect interest rates charged and paid on deposits. The nature and impact
of any future changes in monetary policies cannot be predicted with certainty.
RECENT LEGISLATIVE DEVELOPMENTS
On September 29, 1994, the "Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994" (the "Interstate Banking Act") was enacted. In general,
the Interstate Banking Act will, among other matters, permit bank holding
companies, upon receipt of appropriate regulatory approvals, (i) to consolidate
their multistate bank subsidiaries into a single bank on or after June 1, 1997,
unless the state legislatures act to "opt-out" of this provision prior to such
effective date; and (ii) to acquire banks in any state one year after the
effective date of the Interstate Banking Act. The Interstate Banking Act will
also permit banks, upon receipt of appropriate regulatory approvals, to
establish de novo branches across state lines, so long as the individual states
-- ----
into which the potential de novo entrant proposes to branch specifically pass
-- ----
legislation to authorize out-of-state banks to branch in that state on a de
--
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<PAGE>
novo basis. The Interstate Banking Act generally prohibits an interstate
- ----
acquisition (other than an initial entry into a state by a bank holding
company)), which would result in either the control of more than (i) 10% of the
total amount of insured deposits in the United States, or (ii) 30% of the total
amount of insured deposits in the home state of the target bank, unless such 30%
limitation is waived by the home state on a basis which does not discriminate
against out-of-state institutions.
The Riegle Community Development and Regulatory Improvement Act of 1994
(the "Regulatory Improvement Act") provides for the creation of a community
development financial institution's fund to promote economic revitalization in
community development. Banks are allowed to participate in such community
development banks. The Regulatory Improvement Act also contains (i) provisions
designed to enhance small business capital formation and to enhance disclosure
with regard to high cost mortgages for the protection of consumers, and (ii)
more than 50 regulatory relief provisions that apply to banks and thrift
institutions, including the coordination of examinations by various federal
agencies, coordination of frequency and types of reports financial institutions
are required to file and reduction of examinations for well capitalized
institutions.
In January 1996, the Georgia legislative passed a law effective July 1,
1996 that eliminated Georgia's inter-county branching restrictions. Until July
1, 1998 and subject to regulatory approval, banks may establish up to three new
branches located in any county in Georgia. Effective on July 1, 1998, Georgia
banks may establish an unlimited number of banks with appropriate regulatory
approval.
The United States Congress and the Georgia General Assembly have
periodically considered and adopted legislation that has resulted in, and could
further result in, deregulation of both banks and other financial institutions.
Such legislation could further eliminate geographic restrictions on banks and
bank holding companies and current prohibitions against banks engaging in
certain non-banking activities. Such legislative changes could place the
Company in more direct competition with other financial institutions, including
mutual funds, securities brokerage firms, insurance companies and investment
banking firms. The effect of any such legislation on the business of the
Company cannot be accurately predicted. The Company cannot predict what other
legislation might be enacted or what other regulations might be adopted, and if
enacted or adopted, the effect thereof.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The members of the Board of Directors of the Company are divided into three
classes that serve staggered three-year terms. The members of one class are
elected at each annual meeting of shareholders and hold office until the third
annual meeting following their election or until successors are elected and
qualified. The following table sets forth certain information with respect to
the current directors and executive officers of the Company and the Bank.
<TABLE>
<CAPTION>
POSITION POSITION
NAME AGE WITH COMPANY WITH BANK
- -------------------- --- -------------------------- ---------------------------------
<S> <C> <C> <C>
Timothy I. Warren 35 President, Chief Executive President, Chief Executive
Officer and Director Officer and Director
Steve R. Adams 43 Director Director
John B. Bohannon 49 Vice Chairman of the Board Vice Chairman of the Board of
of Directors Directors
Ann C. Carter 48 Director Director
Lester H. Harmon 50 Director Director
William P. Johnson 63 Director Director
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Phillip Kauffman 49 Chairman of the Board of Chairman of the Board of
Directors Directors
Elaine B. Lovvorn 52 Secretary Senior Vice President, Chief
Financial and Operations Officer
Jeff R. Matthews 40 Director Director
Charles J. Puckett 63 Director Director
William C. Seaton 48 Director Director
Mark S. Swindle 48 Director Director
</TABLE>
The business and residential addresses respectively of the above-named
Directors and Executive Officers of the Company are as follows: Mr. Warren, 516
Bankhead Highway, Carrollton, Georgia 30117 and 4141 Tyus Road, Carrollton,
Georgia 30117; Mr. Adams, 1952 Highway 27 N., Carrollton, Georgia 30117 and 565
Miller Academy Road, Carrollton, Georgia 30117; Mr. Bohannon, 205 Bankhead
Avenue, Carrollton, Georgia 30117 and 115 Habersham Place, Carrollton, Georgia
30117; Ms. Carter, 205 Bankhead Avenue, Carrollton, Georgia 30117 and 356 Club
Drive, Carrollton, Georgia 30117; Mr. Harmon, 155 Sage Street, Temple, Georgia
30179 and 70 Harmon Road, Temple, Georgia 30179; Mr. Johnson, 306 Tanner Street,
Carrollton, Georgia 30117 and 108 W. Club Drive, Carrollton, Georgia 30117; Mr.
Kauffman, 500 Industrial Ct. W., Villa Rica, Georgia 30180 and 120 Lisa Lane,
Carrollton, Georgia 30117; Ms. Lovvorn, 516 Bankhead Highway, Carrollton,
Georgia 30117 and 114 Mill Street, Bowdon, Georgia 30108; Mr. Matthews, P.O. Box
324, Villa Rica, Georgia 30180 and 250 Garst Road, Carrollton, Georgia 30116;
Mr. Puckett, 2208 Bankhead Highway, Carrollton, Georgia 30117 and 88 Mallard
Lake, Carrollton, Georgia 30117; Mr. Seaton, 102 Wedgewood Drive, Carrollton,
Georgia 30117 and 50 N. Hill Street, Carrollton, Georgia 30117; Mr. Swindle, 105
Somerset Place, Suite A, Carrollton, Georgia 30117 and 109 Stonewall Drive,
Carrollton, Georgia 30117.
Ms. Carter and Messrs. Harmon and Seaton are currently serving in Class I with
terms expiring in 1997, Messrs. Adams, Bohannon, Matthews and Swindle are
currently serving in Class II with terms expiring in 1998, and Messrs. Johnson,
Kauffman, Puckett and Warren are currently serving in Class III with a term
expiring in 1999. The business experience of each of the directors and executive
officers of the Company and the Bank is set forth below.
Timothy I. Warren will serve as the President, Chief Executive Officer and a
Director of the Company and the Bank upon its organization. Mr. Warren has been
involved in banking since 1980. Mr. Warren was President, Chief Executive
Officer and a Director of The Community Bank of Carrollton from April 1991 to
July 1996, when that bank was merged into Regions Bank, and the President, Chief
Executive Officer and a Director of The Bank of Villa Rica from February 1996
and until that bank was also merged into Regions Bank in July 1996. Mr. Warren
then served as an area manager for Regions Bank in the former bank market areas
until leaving Regions Bank in August 1996 to assume his current positions with
the Company and the Bank.
Steve R. Adams will serve as a Director of the Company and the Bank. Mr.
Adams founded West Georgia Ambulance (providing emergency ambulance service) and
Adams Transportation (providing multi-transportation services). In January
1996, Mr. Adams sold West Georgia Ambulance to AMR, a publicly-traded company
listed on the New York Stock Exchange. Mr. Adams remains the Chief Operating
Officer of the West Georgia Division of AMR.
John B. Bohannon will serve as Vice Chairman of the Board of Directors of the
Company and the Bank. Since 1974, Mr. Bohannon has been President of First
Realty Associates, Inc. Mr. Bohannon was a Director of The Community Bank of
Carrollton from September 1987 until June 1996.
Ann C. Carter will serve as a Director of the Company and the Bank and is an
interior design specialist. Ms. Carter was a director of The Community Bank of
Carrollton from September 1987 until June 1996.
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<PAGE>
Lester H. Harmon will serve as a Director of the Company and the Bank. Since
1974, Mr. Harmon has been the owner and President of West Georgia Crown and
Bridge. Mr. Harmon was a Director of The Community Bank of Carrollton from
September 1987 until June 1996.
William P. Johnson will serve as a Director of the Company and the Bank. Mr.
Johnson has practiced law in Carrollton, Georgia since 1957, and is a senior
partner in the law firm of Johnson, Dangle and Parmer. Mr. Johnson currently is
the President of Universal Furniture, and a Director of Temple Manufacturing.
Mr. Johnson was a Director of The Community Bank of Carrollton from September
1987 until June 1996.
Phillip Kauffman will serve as Chairman of the Board of Directors of the
Company and the Bank. Since December 1989, Mr. Kauffman has been the President
of Leuco-Henderson, a tooling manufacturer. Mr. Kauffman was a Director of The
Community Bank of Carrollton from September 1987 until November 1995.
Elaine B. Lovvorn will serve as Secretary of the Company and Senior Vice
President, Chief Financial and Operations Officer of the Bank upon its
organization. Mrs. Lovvorn has been involved in banking for 33 years and has
held banking officer positions as either an operations officer or financial
officer for more than 20 years. She assisted in the organization of Carroll
National Bank in July 1987, and served as that bank's Cashier through September
1991 when it was acquired by Synovus Financial Corporation. She then joined The
Community Bank of Carrollton as a Senior Vice President and Controller in March
1992, remaining there through February 1994 before returning to her home town of
Bowdon to serve as the manager of a $40 million branch of Carrollton Federal
Savings and Loan Association. Mrs. Lovvorn then rejoined The Community Bank in
November 1994 and remained there through August 1996, when that bank was
converted into a Regions Bank branch and Mrs. Lovvorn joined the Company.
Jeff R. Matthews will serve as a Director of the Company and the Bank. Since
1978, Mr. Matthews has been self-employed as a timber dealer and real estate
developer.
Charles J. Puckett will serve as a Director of the Company and the Bank. Mr.
Puckett has been the owner and President of People's Dodge/Chrysler/Jeep since
1977. Mr. Puckett was a Director of The Community Bank of Carrollton from
September 1987 until June 1996.
William C. Seaton will serve as a Director of the Company and the Bank. Mr.
Seaton has been the President of Seaton Development Co., Inc., a real estate
development company, since May 1973. From August 1985 until January 1995, Mr.
Seaton co-owned Eagle Outdoor Advertising, Inc., which is involved in building
and marketing billboards. Mr. Seaton has been the sole owner of that firm since
January 1995. Mr. Seaton was also a Director of The Community Bank of
Carrollton from September 1987 until June 1996.
Mark S. Swindle will serve as a Director of the Company and the Bank. Mr.
Swindle has been President of BSA Activewear, a manufacturer of active
sportswear apparel, since May, 1989. Mr. Swindle was also a Director of The
Community Bank of Carrollton from September 1987 until June 1996.
The Bylaws of the Company and the Bank provide for the Board of Directors to
have between six and twenty directors, which shall be fixed from time to time by
resolution of the Board. The Board of Directors of the Company and the Bank
have fixed by resolution the number of directors currently to be eleven members.
The individuals listed as directors in the foregoing table are presently serving
as directors of the Company and as directors of the Bank. The Board of
Directors of the Bank intends to maintain a loan committee, an investment
committee, and an audit committee. The DBF and the FDIC have the authority to
disallow any individual from serving as a director of the Bank.
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<PAGE>
REMUNERATION
The directors of the Company and the Bank other than Timothy I. Warren have
not received and will not receive fees or other compensation in connection with
the organization of the Company and the Bank. The directors of the Company and
the Bank will not be paid fees for their service on or at meetings of the Board
of Directors or committees thereof, until such time as the Bank has become
profitable on a cumulative basis.
Timothy I. Warren has entered into an employment agreement with the Bank to
serve as President and Chief Executive Officer of the Company and the Bank
providing for an annual minimum base salary of $135,000. Mr. Warren has agreed
to be paid at the annual rate of $100,000 until the Company accepts
subscriptions for the minimum 625,000 shares. Elaine B. Lovvorn has also been
retained with an annual base salary of $42,000 until the Company accepts
subscriptions for the minimum offering at which time her annual base salary will
increase to $55,000. Mr. Warren may receive a performance bonus ranging from 0%
to 50% of annual base salary and will be awarded based upon the Bank's
performance and upon the Bank's composite rating received in its most recent
report of examination by its primary Federal regulatory authority.
In addition, the Company also intends to implement an Employee Incentive Stock
Option Plan for employees of the Bank and reserve a total of 75,000 shares out
of the Company's total authorized shares for this purpose. The Company
currently expects to grant options with respect to 15,000 shares to Mr. Warren
under the terms of his employment agreement and additional options with respect
to an additional 8,000 shares to Ms. Lovvorn and other Bank officers soon after
establishing the plan, all with an exercise price per share equal to the initial
offering price of $10.00.
Mr. Warren's employment agreement also provides for employee benefits such as
annual vacation, the use of a Bank-owned automobile, life and medical insurance
with dependant coverage, dental insurance, country club membership and
reimbursement for reasonable business related expenses.
Mr. Warren's employment under the employment agreement commenced on August 15,
1996, and will terminate in July of 2001, unless terminated sooner because of
his death, disability or for cause. The agreement will automatically renew for
one year after the expiration of the initial term unless either party gives 90
days prior written notice to the contrary. If terminated without cause he is
entitled to receive his annual base salary payable in 48 bi-monthly equal
payments, net of withholding.
In addition, the employment agreement provides for severance pay for Mr.
Warren in the event of Mr. Warren's termination (except for cause) after a
change of control of the Bank. Under the employment agreement, the term
"control" means the acquisition of 25 percent or more of the voting securities
of the Bank by any person, or persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934 or the acquisition of
between 10 percent and 25 percent if the Board of Directors of the Bank or the
Comptroller of the Currency, the Federal Deposit Insurance Corporation or the
Federal Reserve Bank has made a determination that such acquisition constitutes
or will constitute control of the Bank.
The employment agreement provides that if the employee is terminated after 365
days as a result of a change of control, the employee shall be entitled to
receive his salary through the last day of the calendar month of the
termination, or payment in lieu of the notice period. In addition, Mr. Warren
would receive an amount equal to three times his then existing annual base
salary. The employment agreement further provides that the payment shall also
be made in connection with, or within 120 days after, a change of control of the
Bank if such change of control was opposed by Mr. Warren on the Bank's Board of
Directors. This payment would be in addition to any amount otherwise owed to
the employee pursuant to the employment agreement.
In the event of a change of control, the following items would be
automatically considered due and payable to Mr. Warren under the employment
agreement: (i) non-forfeitable deferred compensation shall be paid in full; (ii)
long-term performance plan objective payments as described in Section II, 2, f,
shall be declared accomplished and earned based upon performance up to date of
the change of control; and (iii) in the event that the employee is a
-25-
<PAGE>
participant in a restricted stock plan, or share option plan, and such plan is
terminated involuntarily as a result of the change of control, all stock and
options shall be declared 100% vested and distributed.
LIMITATION ON DIRECTORS' LIABILITY
The Company's Articles of Incorporation contain a provision which, in
accordance with Georgia law, eliminates or limits the personal liability of
directors to their corporations or the shareholders thereof for monetary damages
for certain breaches of their duty of care or other duty. This provision
provides that a director of the company shall not be personally liable for
monetary damages for a breach of his or her duty of care or other duty as a
director, except for liabilities for (i) any appropriation, in violation of the
director's duties, of any business opportunity of the Company, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) authorization of improper dividends or redemptions, or
(iv) any transaction from which the director derived an improper personal
benefit. Liability for monetary damages remains unaffected by such provision if
liability is based on any of these grounds. Liability for monetary damages for
violations of federal securities laws would also remain unaffected. The
provision does not eliminate a director's fiduciary duty, nor does it preclude a
shareholder from pursuing injunctive or other equitable remedies.
The provision under Georgia law was prompted in part by adverse changes in the
cost and availability of director and officer liability insurance and by a
concern that corporations would encounter difficulties in attracting and
retaining qualified directors. The Board of Directors believes this provision
in the Company's Articles of Incorporation is essential to maintain and improve
the ability of the Company to attract and retain competent directors.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the issuer pursuant to the foregoing provisions or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
CERTAIN TRANSACTIONS
ORGANIZERS' AND DIRECTORS' SHARES
The Organizers currently intend to subscribe for 326,400 Shares of this
offering. The Organizers may, but are not obligated to, purchase additional
Shares if such purchases are necessary to complete the minimum offering. No
Organizer, director or officer and his affiliates will be permitted to purchase
in this offering an amount of Shares which would exceed 20% (including Shares
owned by their immediate family members and affiliates) of the total number of
Shares outstanding upon completion of this offering. The maximum aggregate
number of Shares that these Organizers and directors may purchase to complete
the minimum offering is 393,750 Shares, or 63% of the 625,000 Shares included in
the minimum offering. The foregoing numerical limitation does not apply to any
Shares to be purchased by any additional directors or to additional Shares
purchased after the minimum offering has been achieved. Shares purchased in
this offering by Organizers are being purchased for investment purposes and not
for resale. See "Business," "Management" and "Principal Shareholders."
In August 1996, the Company issued one Share of Common Stock to Timothy I.
Warren for $10 in connection with the organization of the Company and such
subscription will be redeemed for $10 per Share (the price at which they were
issued) upon the issuance of the Shares being offered hereby.
ORGANIZATION LOAN AND OFFERING ESCROW
The Organizers have established the Organization Loan, a $350,000 line of
credit with Peoples Bank of Fannin County for purposes of paying offering,
organizational and preopening expenses for the Company and the Bank and to fund
acquisition of the Main Office site, construction of the Main Office and to
purchase furniture and equipment to be used in the Bank's business. The
Organization Loan bears interest at the prime rate published in the Wall
-26-
<PAGE>
Street Journal (currently 8.250% per annum) and matures on April 18, 1997. The
Organizers have personally guaranteed repayment of amounts borrowed under the
Organization Loan. Any amounts required to pay organizational, preopening and
offering expenses which exceed the amount available under the Organization Loan
will be advanced by the Organizers either from their personal funds or through
an additional Company line of credit that would almost certainly be guaranteed
by the Organizers. Any additional funds advanced by the Organizers on behalf of
the Company and the Bank will be repaid to the Organizers from the proceeds of
this offering with interest at the Wall Street Journal prime rate. The
Company's ability to repay these loans, and relieve the Organizers from their
personal guarantees, depends upon the completion of this offering. These
arrangements also serve as an incentive for the Organizers to exercise their
discretionary authority to release offering proceeds from escrow in order to
assure that the Organization Loan is repaid. See "The Offering" and "Risk
Factors -- Requirement for Further Regulatory Approvals."
MAIN OFFICE SITE PURCHASE
Charles J. Puckett, one of the Organizers, purchased the property on which the
Main Office site will be located for $150,000 from an unrelated third party in
1987. Mr. Puckett and the Bank have entered into an agreement providing for the
purchase of the Main Office site by the Bank at a price of $300,000 contingent
on approval of the site by the DBF and completion of the minimum offering. See
also "Business -- Bank Offices."
TEMPORARY OFFICE LEASE ASSUMPTION
Phillip Kauffman, one of the Organizers, leased the Temporary Office pursuant
to a lease agreement that contemplates assignment to the Bank and the assumption
by the Bank of Mr. Kauffman's obligations under the lease. The term of the
lease will expire in March 1998. The monthly lease rate is $2,500. On
September 13, 1996, Mr. Kauffman assigned the lease to the Company. See also
"Business -- Bank Offices."
LENDING AND OTHER MATTERS
It is anticipated that the Company's directors and officers, and the
businesses and other organizations with which they are associated, will have
banking transactions in the ordinary course of business with the Bank. It will
be the policy of the Bank that any loans or other commitments to such persons or
entities will be made in accordance with applicable law and on substantially the
same terms, including interest rates and collateral, as those prevailing at a
time for comparable transactions with other persons or entities of similar
standing. See "Business." All future transactions with affiliates of the
Company and the Bank will be on terms no less favorable than could be obtained
from an unaffiliated third party and will be subject to approval by a majority
of directors including a majority of disinterested directors.
Each loan by the Bank to any officer, director or controlling person of the
Bank or any of its affiliates may be made only in compliance with the following
conditions: The loan (i) will be evidenced by a promissory note naming the Bank
as payee, will contain an annual percentage rate which is reasonably comparable
to that normally charged to non-affiliates by other commercial lenders for
similar loans made in the Bank's locale; (ii) will be repaid pursuant to
appropriate amortization schedules and contain default provisions comparable to
those normally used by other commercial lenders for similar loans made to non-
affiliates in the Bank's locale; (iii) will be made only if credit reports and
financial statements, or other reasonable investigation appropriate in light of
the nature and terms of the loan and which meet the loan policies normally used
by other commercial lenders for similar loans made to non-affiliates in the
Bank's locale show the loan to be collectible and the borrower a satisfactory
credit risk; and (iv) the purpose of the loan and the disbursement of proceeds
are reviewed and monitored in a manner comparable to that normally used by other
commercial lenders for similar loans made in the Bank's locale.
-27-
<PAGE>
PRINCIPAL SHAREHOLDERS
SHARE SUBSCRIPTIONS
The following table sets forth certain information regarding the Shares of the
Company's Common Stock that each Organizer and director intends to subscribe for
and the aggregate number of the Shares intended to be subscribed for by all
Organizers and directors as a group.
<TABLE>
<CAPTION>
ANTICIPATED SHARE OWNERSHIP
AFTER OFFERING /(2)(3)/
--------------
MINIMUM MAXIMUM
NUMBER OF OFFERING OFFERING
NAME /(1)/ SHARES PERCENT PERCENT
- ---- --------- -------- --------
<S> <C> <C> <C>
Steve R. Adams 15,000 2.40% 1.88%
Organizer and Director
John B. Bohannon 20,000/(4)/ 3.20% 2.50%
Organizer and Director
Ann C. Carter 10,000 1.60% 1.25%
Organizer and Director
Lester H. Harmon 10,000 1.60% 1.25%
Organizer and Director
William P. Johnson 60,000 9.60% 7.50%
Organizer and Director
306 Tanner St., Carrollton, Georgia 30117
Phillip Kauffman 50,000 8.00% 6.25%
Organizer and Director
500 Ind. Ct. West, Villa Rica, Georgia 30180
Elaine B. Lovvorn 4,500/(5)/ * *
Company Secretary; Bank CFO and COO
Jeff R. Matthews 30,000/(6)/ 4.80% 3.75%
Organizer and Director
Charles J. Puckett 100,000/(7)/ 16.00% 12.50%
Organizer and Director
2208 Bankhead Highway, Carrollton, Georgia 30117
William C. Seaton 10,000/(8)/ 1.60% 1.25%
Organizer and Director
Mark S. Swindle 10,000/(9)/ 1.60% 1.25%
Organizer and Director
Timothy I. Warren 25,400/(10)/ 4.06% 3.17%
President, Chief Executive Officer,
Organizer and Director
All current directors and officers as a group 326,400 52.22% 40.80%
(12 persons)/(2)(3)/
</TABLE>
-28-
<PAGE>
- -------------------------------------
/*/ Less than one percent.
/(1)/ Except as otherwise indicated, the persons named in the above table have
sole voting and investment power with respect to all Shares shown as
beneficially owned by them. The information as to beneficial ownership
has been furnished by the respective persons listed in the above table.
/(2)/ The maximum aggregate number of Shares that these Organizers, directors
and officers may purchase in the minimum offering is 393,750 Shares or
63% of the outstanding Shares of the minimum offering. These numbers do
not reflect any of these additional Shares which the Organizers and
directors may purchase if such purchases are necessary to complete the
minimum offering. The foregoing numerical limitation and the numbers of
Shares set forth above also do not include any Shares to be purchased by
any additional directors or officers of the Company or the Bank or to
additional Shares purchased after the minimum offering has been achieved.
See "The Offering" and "Certain Transactions."
/(3)/ The Organizers of the Company and the Bank may be deemed "control
persons" or "promoters" of the Company as those terms are defined under
Section 405 of the Securities Act of 1933.
/(4)/ Anticipated to include 7,500 Shares held by Mr. Bohannon's wife and 7,500
Shares owned jointly by them and with respect to which Mr. Bohannon will
share voting and investment power.
/(5)/ Includes 3,500 shares that will be subject to options to be granted to
Ms. Lovvorn. Those options will be immediately exercisable at an exercise
price of $10.00 per share and expire ten years from the date of grant.
See "Management -- Remuneration."
/(6)/ Anticipated to be held jointly with Mr. Matthews' wife, who will share
voting and investment power with respect to those Shares.
/(7)/ Mr. Puckett expects these Shares to be owned by a family limited
partnership of which Mr. Puckett would serve as the general partner and
with voting and investment power with respect to the Shares.
/(8)/ Anticipated to include Shares to be held by Mr. Seaton as custodian for
his minor children.
/(9)/ Anticipated to include 1,000 Shares owned by Mr. Swindle's wife, who will
share voting and investment power with respect to those Shares, and 270
Shares held by Mr. Swindle as custodian for his minor children.
/(10)/ Anticipated to include 100 Shares owned by Mr. Warren's wife and 300
Shares held by Mr. Warren as custodian for his minor children. Includes
15,000 shares that will be subject to options to be granted to Mr. Warren
under the terms of his employment agreement. Those options will be
immediately exercisable at an exercise price of $10.00 per share and
expire ten years from the date of grant. See "Management --
Remuneration."
OPTIONS
The following table indicates the options granted or to be granted to
persons listed above. Each of the options will have a ten-year term from the
date of grant and is immediately exercisable .
<TABLE>
<CAPTION>
Shares of Common Stock Exercise
Name Subject to Options Price Per Share Date of Exercise
- ------------------- ---------------------- --------------- ----------------
<S> <C> <C> <C>
Timothy I. Warren 15,000 $10.00 N/A
Elaine B. Lovvorn 3,500 $10.00 N/A
</TABLE>
-29-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company is authorized by its Articles of Incorporation to issue 10,000,000
Shares of Common Stock, $.01 par value. One share of Common Stock is currently
outstanding and held by an Organizer. See "Capitalization."
Shareholders are entitled to one vote per Share on all matters to be voted on
by shareholders and are not entitled to cumulate their votes in the election of
directors, which means that the holders of a majority of the Shares voting for
the election of directors can elect all of the directors then standing for
election should they choose to do so. Shareholders are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors, subject to prior regulatory approval, from funds legally available
therefor. Shareholders are entitled to share pro rata in any distribution to
the holders of Common Stock in the event of any liquidation, dissolution or
winding-up of the Company.
Shareholders have no preemptive or other subscription or conversion rights and
there are no redemption or sinking fund provisions with respect to such Shares.
The Shares offered by this Prospectus, upon payment therefor, will be fully paid
and non assessable.
PREFERRED STOCK
The Company is authorized by its Articles of Incorporation to issue up to
1,000,000 shares of preferred stock, $.01 par value per share. No shares of
preferred stock have been issued. The Company's Board of Directors may, without
further action by the shareholders, from time to time, direct the issuance of
preferred stock, in one or more series, for any proper corporate purpose with
preferences, voting powers, conversion rights, qualifications, special or
relative rights, and privileges which could adversely affect the voting power or
other rights of holders of Shares of Common Stock. Preferred stock could be
issued in one or more series with such voting, conversion or other rights as
could discourage possible acquirors of the Company from making a tender offer or
other attempt to gain control of the Company, even if such transaction was
generally favorable to the Company's shareholders. Satisfaction of any dividend
preferences on outstanding preferred stock would reduce the amount of funds
available for the payment of dividends on the Company's Common Stock. In
addition, the holders of preferred stock would normally be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of the Common Stock. The
Board of Directors has no present plans or understandings for the issuance of
any preferred stock and does not intend to issue any preferred stock except on
terms which the Board deems to be in the best interest of the Company and its
shareholders.
TRANSFER AGENT AND REGISTRAR
The Bank will act as transfer agent and registrar for the Shares of the
Company.
REPORT TO SHAREHOLDERS
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and quarterly reports containing unaudited
financial information.
SECURITIES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have a minimum of 625,000
Shares and the maximum amount of 800,000 Shares outstanding. All of these
Shares will be freely tradeable without restriction or registration under the
Securities Act of 1933, as amended (the "1933 Act"), except for Shares purchased
by persons who, as a result of positions with the Company (such as the directors
and officers) or stock ownership (such as Organizers), are "affiliates" of the
Company (as that term is defined under Rule 144 promulgated under the 1933 Act).
The Shares owned by such "affiliates" of the Company will be subject to resale
restrictions under the 1933 Act. All of the Shares issuable upon exercise of
options granted under the Company's stock option plan will be "restricted
securities" (i.e., securities which have not been registered under the 1933
Act). Securities held by "affiliates" and
30
<PAGE>
"restricted securities" may be eligible for sale in the open market in
accordance with the provisions of Rule 144 promulgated under the 1933 Act.
In general, under Rule 144, a person (including an affiliate of the Company)
who has beneficially owned restricted securities for at least two years would be
entitled to sell within any three month period in "broker's transactions" (i.e.,
transactions executed by a broker or dealer on an exchange or in over-the-
counter market), the number of securities that does not exceed the greater of 1%
of the securities then outstanding or the average weekly trading volume of the
securities in the market during the four calendar weeks preceding such sale.
Non-affiliates who have held their restricted securities for at least three
years would be entitled to sell such securities under Rule 144 without regard to
the volume limitation.
PROVISIONS PERTAINING TO CHANGE IN CONTROL
The Company's Articles of Incorporation and Bylaws contain certain provisions
that might be deemed to have a potential defensive "anti-takeover" effect. The
Board of Directors of the Company believes that the provisions described below
are prudent and will reduce the Company's vulnerability to takeover attempts and
certain other transactions which may not be negotiated with and approved by the
Board. The Board of Directors believes that it is in the best interest of the
Company and its shareholders to encourage potential acquirors to negotiate
directly with the Board and that these provisions will encourage such
negotiations and discourage hostile takeover attempts. It is also the view of
the Board of Directors that these "anti-takeover" provisions should not
discourage persons from proposing an acquisition or other transaction at prices
reflective of the true value of the Company which is in the best interest of all
shareholders. Notwithstanding these provisions, the Board of Directors has a
fiduciary obligation to act in the best interest of the shareholders and the
Company in determining corporate action.
DIRECTORSHIPS
The Company's Board of Directors is divided into three classes which must be
as close to equal in size as possible. The members of each class serve three-
year terms with the election of each class in successive years. The Company's
Bylaws provide that the size of the Board of Directors, within the six to twenty
member range specified in the Articles of Incorporation, may be increased or
decreased only by a majority vote of the directors then in office. The Articles
of Incorporation provide that any vacancies occurring on the Board of Directors,
including a vacancy created by an increase in the number of directors, shall be
filled for the remainder of the unexpired term only by a majority vote of the
directors then in office.
REMOVAL OF DIRECTORS
The Company's Articles of Incorporation provide that no director may be
removed except for cause and then only by the vote of holders of at least 75% of
the outstanding voting stock of the Company entitled to vote. However, if two-
thirds of the directors then in office approve the removal, then the vote of the
holders of a majority of the outstanding voting stock of the Company is required
to remove a director.
SPECIAL MEETINGS OF SHAREHOLDERS
The Company's Articles of Incorporation provide that a special meeting of
shareholders may be called by the Chairman of the Board, by a majority vote of
the directors then in office or by the holders of at least 75% of the
outstanding voting stock of the Company.
NO ACTION BY WRITTEN CONSENT
The Company's Articles of Incorporation provide that shareholders shall not be
entitled to take any action by written consent in lieu of taking such action at
an annual or special meeting of shareholders.
APPROVAL OF CERTAIN BUSINESS TRANSACTIONS
The Company's Articles of Incorporation provide that the vote of holders of at
least 80% of the outstanding voting stock of the Company is required to approve
certain mergers, consolidations or dispositions of assets of the
31
<PAGE>
Company or any of its subsidiaries. However, if the proposed transaction is
approved by the vote of at least two-thirds of the directors then in office,
then the vote of holders of a majority of the outstanding voting stock of the
Company is required to approve such transaction.
AMENDMENT OF THE ARTICLES OF INCORPORATION
The Company's Articles of Incorporation authorize the alteration, amendment or
repeal of certain Articles by the affirmative vote of holders of at least 80% of
the outstanding voting stock of the Company. However, if the proposed action is
approved by a vote of at least two-thirds of the directors then in office, then
the vote of holders of a majority of the outstanding voting stock of the Company
is required to approve such action. Other provisions require approval by a
majority of the outstanding voting stock of the Company.
AMENDMENT OF BYLAWS
The Company's Articles of Incorporation provide that the Bylaws may be
altered, amended or repealed, or new Bylaws adopted, by the Board of Directors
or the shareholders at a duly constituted meeting. Such action by the Board of
Directors requires the vote of two-thirds of directors then in office. Such
action by the shareholders requires the affirmative vote of holders of at least
80% of the outstanding voting stock of the Company.
LEGAL MATTERS
The legality of the Shares is being passed upon for the Company by Holland &
Knight, Suite 2000, One Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia 30309-3400.
EXPERTS
The financial statements of the Company as of August 31, 1996 included in this
Prospectus have been examined by Snyder, Camp, Stewart & Co., LLP, independent
public accountants, as stated in their opinion, appearing elsewhere herein, and
have been so included in reliance upon such opinion given upon the authority of
such firm as expert in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement under the Securities Act of
1933, as amended, with respect to the securities offered hereby with the
Securities and Exchange Commission (the "Commission"). As permitted by the
Rules and Regulations of the Commission, this Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits filed
therewith and reference is made to the Registration Statement and the exhibits
filed therewith for further information concerning the Company and the
securities offered hereby. Each statement contained in this Prospectus as to
the contents of a document filed as an exhibit to the Registration Statement is
qualified by reference to the exhibit for a complete statement of its terms and
conditions. Copies of such material, as well as periodic reports and
information filed by the Company, can be obtained upon payment of the fees
prescribed by the Commission, or may be examined at the offices of the
Commission without charge, at (i) the public reference facilities in Washington,
D.C. at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, (ii) the Northeast Regional Office in New York at 7 World Trade Center,
Suite 1300, New York, New York 10048, and (iii) the Midwest Regional Office in
Chicago, Illinois at 500 West Madison Street, Suite 1400, Chicago, Illinois
66661-2511. The Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission (the address of such site is
http://www.sec.gov).
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference herein, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to Timothy I. Warren, President, at the Company's principal
executive offices.
32
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Index to Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Balance Sheet as of August 31, 1996 F-3
Statement of Operations for the period from March 1, 1996
(inception) to August 31, 1996 F-4
Statement of Stockholder's Equity for the period from
March 1, 1996 (inception) to August 31, 1996 F-5
Statement of Cash Flows for the period from March 1, 1996
(inception) to August 31, 1996 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Peoples Bancorp, Inc.
We have audited the accompanying balance sheet of Peoples Bancorp, Inc. (A
development stage corporation) as of August 31, 1996, and the related statements
of operations, stockholder's equity and cash flows for the period from March 1,
1996 (inception) to August 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Peoples Bancorp, Inc. as of
August 31, 1996 and the results of its operations and its cash flows from March
1, 1996 (inception) to August 31, 1996 in conformity with generally accepted
accounting principles.
/s/ SNYDER, CAMP, STEWART & CO., LLP
Norcross, Georgia
September 9, 1996
F-2
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Balance Sheet
August 31, 1996
<TABLE>
<S> <C>
Assets
------
Cash $ 2,506.34
Prepaid expenses 13,514.50
Deferred organization costs 59,278.45
-----------
$ 75,299.29
===========
Liabilities and Stockholder's Equity
------------------------------------
Liabilities:
Advances from organizers $ 98,100.00
Accrued expenses 593.50
-----------
Total liabilities 98,693.50
-----------
Stockholder's equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding 0.00
Capital stock, $.01 par value; 10,000,000 shares
authorized; 1 share issued and outstanding 0.01
Additional paid-in capital 9.99
Accumulated deficit (23,404.21)
-----------
Total stockholder's equity (23,394.21)
------------
$ 75,299.29
===========
</TABLE>
See accompanying auditors' report and notes to financial statements.
F-3
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Statement of Operations
For the Period from March 1, 1996 (inception) to August 31, 1996
<TABLE>
<S> <C>
Expenses:
Occupancy expenses $ 17,225.27
Personnel expenses 5,087.22
Interest 1,091.72
----------
Net loss $(23,404.21)
===========
</TABLE>
See accompanying auditors' report and notes to financial statements.
F-4
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Statement of Stockholder's Equity
For the Period from March 1, 1996 (inception) to August 31, 1996
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Preferred Common Paid-in Development
Stock Stock Capital Stage Total
----------- ------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Proceeds from the sale of
organization shares $ - .01 9.99 - 10.00
Net loss - - - (23,404.21) (23,404.21)
---- ----- ---- ---------- ----------
Balance, August 31, 1996 $ - .01 9.99 (23,404.21) (23,394.21)
==== ===== ==== ========== ==========
</TABLE>
See accompanying auditors' report and notes to financial statements.
F-5
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Statement of Cash Flows
For the Period from March 1, 1996 (inception) to August 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $(23,404.21)
Adjustments to reconcile net loss to net cash used
in operating activities:
Increase in prepaid expenses (13,514.50)
Increase in deferred expenses (59,278.45)
Increase in accrued expenses 593.50
-----------
Net cash used for operating activities (95,603.66)
-----------
Cash flows from financing activities:
Proceeds from the sale of organization shares 10.00
Increase in advances from organizers 98,100.00
-----------
Net cash provided by financing activities 98,110.00
-----------
Net increase in cash and cash equivalents 2,506.34
Cash and cash equivalents at beginning of period -
-----------
Cash and cash equivalents at end of period $ 2,506.34
===========
Supplemental cash flow information
- ----------------------------------
Interest paid $ 498.22
===========
</TABLE>
See accompanying auditors' report and notes to financial statements.
F-6
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Notes to Financial Statements
August 31, 1996
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Peoples Bancorp, Inc. (the "Company") was incorporated on August 27, 1996,
for the purpose of becoming a bank holding company for its proposed wholly-
owned subsidiary, Peoples Bank of West Georgia (the "Bank"), which will
operate in the Carroll County area. The organizers of the Bank filed a
joint application to charter the Bank with the Department of Banking and
Finance and the Federal Deposit Insurance Corporation. The Company is also
making an application to become a bank holding company with the Federal
Reserve Bank of Atlanta.
Neither the Company nor the Bank has commenced their respective operations
as a bank holding company or as a commercial bank and neither will do so
unless regulatory approvals are obtained and the required capitalization of
the Bank by the Company is obtained from proceeds of the sale of the
Company's common stock.
Prior to the Company's incorporation on August 27, 1996, organizational and
pre-opening activities were conducted by the organizers. Expenditures on
behalf of the Company by the organizers are considered expenditures of the
Company. Costs of organizing the Company have been capitalized and will be
amortized over five years using the straight-line method upon commencement
of operations. Costs of the intended common stock offering have been
deferred and will be offset against the proceeds of the offering upon
successful completion. These costs will be charged to expense if the
minimum offering is not purchased. Additional costs are expected to be
incurred for both organization costs and stock offering costs.
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.
Financial instruments that potentially subject the Company to credit risk
include cash on deposit with banks. The fair values of cash and interest
bearing borrowings, approximate their carrying amounts.
The Company will be subject to federal and state income taxes when taxable
income is generated. No income taxes have been recognized because no
taxable income has been generated.
The Company plans to adopt a calendar year for both financial reporting and
tax reporting purposes.
F-7
<PAGE>
PEOPLES BANCORP, INC.
(A Development Stage Corporation)
Notes to Financial Statements, Continued
August 31, 1996
(2) Advances from Organizers
------------------------
Prior to incorporation, the organizers secured a line of credit with a
maximum limit of $350,100. Organizational costs, pre-opening expenses, and
offering expenses incurred prior to commencing operations, will be funded
through the use of this line. The line has a maturity date of April 18,
1997 and carries an initial interest rate of 8.25%, which varies with the
prime rate. The outstanding balance of $77,100 on August 31, 1996 is
included in advances from organizers. Upon successful completion of the
sale of common stock, the organizers will be reimbursed from the proceeds
from the offering. If the offering is not successful, the advances will not
be repaid.
(3) Common Stock Offering
---------------------
The Company intends to file a Registration Statement on Form SB-1 with the
Securities and Exchange Commission offering for sale a minimum of 625,000
and a maximum of 800,000 shares of the Company's $.01 par value common
stock at $10 per share.
(4) Stock Option Plan
-----------------
The Company plans to adopt an Employee Stock Option Plan for the granting
of options to purchase up to an aggregate of 75,000 shares of common stock.
The Company currently expects to grant options totaling 23,000 shares to
certain Bank officers soon after establishing the plan, all with an
exercise price per share equal to the initial offering price of $10.00.
(5) Stockholder's Equity
--------------------
The Company's Articles of Incorporation authorize it to issue up to
10,000,000 shares of Common Stock, par value $.01 per share. The Company's
Articles of Incorporation also authorize the issuance of 1,000,000 shares
of Preferred Stock, par value $.01 per share, which may be issued in one or
more series with such preferences, limitations and rights as shall be
determined by the Board of Directors of the Company. No Preferred Stock has
been issued, and there are no plans at this time to issue Preferred Stock
in the future.
(6) Commitments
-----------
The organizers of the Company have entered into an agreement with an
organizer of the Company for the purchase of an office facility to be used
as the site of the Company's and the Bank's operating office. The contract
purchase price is $300,000 and is contingent upon approval by regulatory
authorities and successful completion of the sale of the Company's stock.
The organizers of the Bank have entered into an employment agreement with
one of the organizing directors to serve as President and Chief Executive
Officer of the Company and the Bank providing for an annual base salary,
the right to receive a bonus (based upon performance standards), the right
to receive stock options, and other customary executive benefits.
Prior to incorporation, the organizers entered into an operating lease for
use by the Company's proposed subsidiary. The lease requires monthly rental
payments of $2,500 and will expire in February 1997 provided that notice
has been given by September 30, 1996, but otherwise extends to March 1998.
Rental payments, amounting to $15,000, have been recognized as expense
through August 31, 1996.
F-8
<PAGE>
PEOPLES BANCORP, INC.
a bank holding company for
Peoples Bank of West Georgia (In Organization)
516 Bankhead Highway
Carrollton, Georgia 30117
(770) 838-9608
Subscription For Shares of Common Stock
Ladies and Gentlemen:
Peoples Bancorp, Inc. (the "Company") is offering to sell Shares of Common
Stock (the "Shares") at a price of $10 per Share. A minimum subscription of 100
Shares ($1,000) has been established by the Company. The undersigned hereby
tenders this subscription for the purchase of the number of Shares set forth
below. The undersigned has also enclosed a check (bank draft or money order)
which represents the full subscription price, payable to the "Peoples Bancorp,
Inc. Escrow Account." All subscription payments will be promptly deposited by
the Company in an escrow account at The Bankers Bank, Atlanta, Georgia, as
Escrow Agent.
The undersigned acknowledges and agrees that:
1. The undersigned has received a copy of the Company's Prospectus. By
executing this subscription, the undersigned acknowledges and agrees to all the
terms and conditions of the offering as described in the Prospectus and all the
terms and conditions of this subscription. The subscriber by executing this
subscription is not waiving any rights available under applicable federal or
state securities laws.
2. A subscription is not binding until accepted by the Company. The Company
reserves the right to accept or reject a subscription, in whole or in part, in
its sole discretion. In determining which subscriptions to accept, in whole or
in part, the Company may take into account the order in which the subscriptions
are received and the subscriber's potential to do business with, or to refer
customers to, the Bank. The Company shall notify the subscriber by mail of its
acceptance or rejection of the subscription, in whole or in part, subject to the
terms and conditions of the offering.
The Shares purchased by the undersigned shall be registered as specified
below. If Shares are to be issued in more than one name, please specify whether
ownership is to be as individual owner, tenants in common, joint tenants with
right of survivorship, community property, etc. If Shares are to be held in
joint ownership, all joint owners should sign this subscription. If Shares are
to be issued in the name of one person for the benefit of another, please
indicate whether registration should be as trustee or custodian for such other
person.
IN WITNESS WHEREOF, the undersigned has executed this subscription on the date
set forth below and has returned the subscription, with the full subscription
price for the Shares, to the Company.
Date: , 199
------------------------ --- -------------------------------------
Signature of Subscriber
Number of Shares
Subscribed for:
---------------------- -------------------------------------
(at $10 per Share) Signature of Subscriber
Total Subscription Price: $
---------- -------------------------------------
Print Name(s) in which
Shares are to be Registered
Home Address of Subscriber:
- ------------------------------------- -------------------------------------
Street Address Social Security/Taxpayer
Identification Number
- ------------------------------------- -------------------------------------
City, State and Zip Code Telephone Number and Area Code
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary..................................................... 3
Risk Factors........................................................... 6
The Offering........................................................... 9
Use of Proceeds........................................................ 11
Dividend Policy........................................................ 12
Capitalization......................................................... 13
Business............................................................... 14
Supervision and Regulation............................................. 18
Management............................................................. 22
Certain Transactions................................................... 26
Principal Shareholders................................................. 28
Description of Capital Stock........................................... 30
Legal Matters.......................................................... 32
Experts................................................................ 32
Additional Information................................................. 32
Financial Statements................................................... F-1
Subscription Agreement................................................. A-1
</TABLE>
UNTIL FEBRUARY 13, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICI-
PATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
______________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-MATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS UNLESS
PRECEDED OR ACCOMPANIED BY THIS PROSPECTUS, NOR HAS ANY PERSON BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-TATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICI-TATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED BY LAW
TO BE DELIVERED, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.
______________________
PEOPLES BANCORP, INC.
800,000 SHARES
OF COMMON STOCK
AT $10 PER SHARE
______________________
PROSPECTUS
______________________
NOVEMBER 15, 1996
