<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended December 31, 1996
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No Fee required)
For the transition period from _________________ to _________________.
Commission File No.: 0-21707
FORT BROOKE BANCORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in Its charter)
Florida 59-3382134
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
510 Vonderburg Drive, Brandon, Florida 33509-1970
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(Address of Principal Executive Offices) (Zip Code)
(813) 685-2000
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of Exchange
Title of Each Class on which Registered
- --------------------------------------------------------------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
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(Title of Class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Rule 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates of
the registrant at March 1, 1997: $12,298,591
Number of shares outstanding of the registrant's single class of common
stock, as of March 1, 1997: 990,553 shares
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into this Annual
Report on Form 10-K: (1) 1996 Annual Report to shareholders, dated March 28,
1997, into Part II; (2) Joint Proxy Statement and Prospectus, dated February 6,
1997 and disseminated to registrant's shareholders in connection with the
conduct of a special meeting of shareholders held March 13, 1997, into Parts I
and II; and (3) Exhibit 2. (the Registrant's Articles of Incorporation, filed
for record as of April 8, 1996) and Exhibit 3. (the Registrant's current Bylaws)
to the Registrant's Form 8-A Registration Statement, filed November 8, 1996,
into Part IV.
2
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FORT BROOKE BANCORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K
<TABLE>
<CAPTION>
PART I PAGE NO.
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<S> <C> <C>
ITEM 1. - BUSINESS 4
ITEM 2. - PROPERTIES 4
ITEM 3. - LEGAL PROCEEDINGS 4
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 4
PART II
ITEM 5. - MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS 4
ITEM 6. - SELECTED FINANCIAL DATA 4
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION 4
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 5
ITEM 9. - CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 5
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 5
ITEM 11. - EXECUTIVE COMPENSATION 8
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 8
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 10
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS
ON FORM 8-K 11
</TABLE>
3
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PART I
ITEM 1. BUSINESS
The information required by Item 1. is set forth in the Joint Proxy
Statement and Prospectus, dated February 6, 1997, under the heading, "BUSINESS
OF FORT BROOKE," and is incorporated herein by specific reference thereto.
ITEM 2. PROPERTIES
The information required by Item 2. is set forth in the Joint Proxy
Statement and Prospectus, dated February 6, 1997, under the heading, "BUSINESS
OF FORT BROOKE Properties," and is incorporated herein by specific reference
thereto.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings reportable under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The information required by Item 5. is set forth in the Joint Proxy
Statement and Prospectus, dated February 6, 1997, under the heading,
"COMPARATIVE MARKET PRICES AND DIVIDENDS - Fort Brooke," and is incorporated
herein by specific reference thereto.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6. is set forth in the 1996 Annual
Report to shareholders, dated March 28, 1997, under the heading, "SELECTED
FINANCIAL DATA," and is incorporated herein by specific reference thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The information required by Item 7. is set forth in the 1996 Annual
Report to shareholders, dated March 28, 1997, under the heading, "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION," and is
incorporated herein by specific reference thereto.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8. is set forth in the 1996 Annual
Report to shareholders, dated March 28, 1997, under the heading, "CONSOLIDATED
FINANCIAL STATEMENTS," and is incorporated herein by specific reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Registrant, their ages and
years of service as a director (inclusive of service as a director of the
Registrant's wholly owned subsidiary, Fort Brooke Bank) are as follows:
<TABLE>
<CAPTION>
Position Years of
Name and with the Service as
Residential Address Age Bank Director
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<S> <C> <C> <C>
John D. Adams, 65 Director and 18
507 Brantwood Court Secretary
Valrico, FL 33594
Melvin R. Belisle 60 Director 5
906 Centerbrook Drive
Brandon, FL 33511
Tommy W. Brown 56 Director 18
28007 Villa Road
Dade City, FL 33525
Richard H. Eatman 54 Director, President and 9
705 Centerbrook Drive Chief Executive Director
Brandon, FL 33511
</TABLE>
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<TABLE>
<S> <C> <C> <C>
H. Rex Etheredge 50 Director 4
918 Centerbrook Drive
Brandon, FL 33511
Joseph Garcia 66 Director 3
2014 Woodberry Road
Brandon, FL 33511
Riley L. Hogan 62 Director 3
1704 Cottage Way Court
Brandon, FL 33510
Alex D. MacKinnon 57 Director 5
334 Blanca Avenue
Brandon, FL 33606
Thomas H. Miller 60 Chairman of the 18
610 North Sylvan Drive Board of Directors
Brandon, FL 33511
Charles W. Poe 68 Director 3
4601 San Miguel
Tampa, FL 33629
William F. Poe 65 Director 3
70 Ladoga
Tampa, FL 33606
Reese T. Poppell 58 Director 4
2807 Wedgewood Drive
Plant City, FL 33567
Sam Rampello 56 Director 18
1107 Riverhills Drive
Temple Terrace, FL 33617
David C. Worthington 63 Director 3
510 Vonderburg Drive
Post Office Box 2388
Brandon, FL 33511
</TABLE>
JOHN D. ADAMS, SR. is president of Adams Air and Hydraulics, Inc., a
hydraulic and pneumatic sales, service and engineering company.
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MELVIN R. BELISLE is President of Fife Industrial Pipe Co., Brandon,
FL.
TOMMY W. BROWN is Chief Executive Officer of Brown Automatic
Sprinklers, Inc., Tampa.
RICHARD H. EATMAN has been a Director, as well as the President and
Chief Executive Officer of Fort Brooke Bank since 1989.
H. REX ETHEREDGE is Chief Executive Officer of Columbia Brandon
Regional Medical Center.
JOSEPH GARCIA is managing partner of the Tampa, Florida law firm of
Garcia & Fields, P.A. and a general partner of Big Bend Farms, Ltd. He is also
Chairman of the Tampa Port Authority.
RILEY L. HOGAN JR. is the general manager of The Tampa Independent
Dairy Farmers Association. He also serves as a Director of the Tampa Port
Authority.
ALEX D. MACKINNON is President of Yale Industrial Trucks, Inc. He also
serves on the Board of Trustees of Brandon Hospital. He is a member of the Board
of Trustees of the Tampa Sports Authority.
THOMAS H. MILLER is an owner-agent with State Farm Insurance Companies.
He has also served as secretary/treasurer of Wise Land Development, Inc.
(formerly known as Spivey and Miller Restaurant Systems, Inc.) since 1974. He is
active with the Brandon Chamber of Commerce.
CHARLES W. POE is President of Poe Industries, Inc., a consulting firm,
and is a director of Poe & Brown, Inc., a publicly held general insurance agency
in Florida. Previously, Mr. Poe was owner and chief executive officer and
president of City Ready Mix Company in Plant City, Florida for many years.
WILLIAM F. POE is President/Owner of Poe Investments, Inc. Mr. Poe is
Director of Poe & Brown, Inc., a publicly owned general insurance agency
headquartered in Tampa. He served as mayor of the City of Tampa from 1974
through 1979.
REESE T. POPPELL is President and CEO of Poppell Insurance Inc., and
President of Redelco, Inc.
SAMUEL J. RAMPELLO is Supervisor of School Finance and Special Programs
in the Hillsborough County School System, and is a past member of the
Hillsborough County School Board.
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DAVID C. WORTHINGTON, M.D., is a physician and former Chief of the
Department of Surgery of Brandon Hospital. He is also former Chairman of the
Board of Trustees of Brandon Hospital and formerly served as Medical Director of
The Village at Brandon, a Nursing Home.
Each director is elected for a term of one year normally to expire at
the annual meeting of the Registrant's shareholders or at such other time as his
successor is elected and shall have qualified. The Registrant's board of
directors held nine regular meetings following its activation in March 1996.
Each current director attended at least 75% of those meetings. The board of
directors has appointed no committees to review or consider any aspects of the
Registrant's operations. Each officer of the Registrant is elected by and serves
at the pleasure of the board of directors.
ITEM 11. EXECUTIVE COMPENSATION
No director of the Registrant is paid compensation for his attendance
at board of director meetings, and no officer is paid compensation separate from
that which he receives in exchange for the performance of his services as an
officer of the Registrant's wholly owned subsidiary, Fort Brooke Bank (the
"Bank"). The following table sets forth certain information regarding the
compensation paid to Mr. Eatman, the Registrant's president and chief executive
officer and its only officer who received more than $100,000 during all of
calendar year 1996 in exchange for the services rendered to the Bank.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND ANNUAL OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
RICHARD H. EATMAN 1996 $135,000 $30,000 N/A
1995 $130,000 $20,000 N/A
1994 $128,000 $20,000 N/A
========================================================================
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table enumerates, as of December 31, 1996, the name,
position with the Registrant, if any, and ownership, both by numerical holding
and percentage interest, of each person known to own more than five percent of
the Registrant's outstanding common stock, each of the directors of the
Registrant, individually, and all of the directors and executive officers of the
Registrant as a group:
8
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<TABLE>
<CAPTION>
Name and Position # of Shares Percentage
of Beneficial Owner Beneficially Owned(1) Ownership(2)
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<S> <C> <C>
John D. Adams, Secretary and Director 43,580 4.40%
Melvin R. Belisle, Director 28,142 2.84
Tommy W. Brown, Director 10,367 1.05
Richard H. Eatman, President,
Chief Executive Officer and Director(3) 41,528 4.19
H. Rex Etheredge, Director 1,391 .14
Joseph Garcia, Director 10,999 1.11
Riley L. Hogan, Jr., Director 17,492 1.77
A. D. "Sandy" MacKinnon, Director 9,100 .92
Thomas H. Miller, Chairman
of the Board 75,070 7.58
Charles W. Poe, Director 32,153 3.25
William F. Poe, Director 19,730 1.99
</TABLE>
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(1) In accordance with applicable regulations, a person will be deemed
to be the beneficial owner of a security if he or she has or shares voting or
investment power with respect to such security or has the right to acquire such
ownership within the succeeding 60 day period.
(2) In calculating the percentage ownership for a given individual or
group, the number of shares of stock deemed outstanding will include unissued
shares subject to options which are exercisable within the succeeding 60 day
period.
(3) Includes 28,250 shares which are subject to purchase by Mr. Eatman
upon exercise of option grants, and an additional 435 shares held by Mr.
Eatman's wife, as to which he disclaims beneficial ownership.
9
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<TABLE>
<S> <C> <C>
Reese T. Poppell, Director 3,300 .33
Sam Rampello, Director 4,630 .47
David C. Worthington, Director 12,874 1.30
All directors and executive
officers as a group (14
persons, including those
above named) 310,356 31.33%
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth below, there are neither pending nor proposed any direct or
indirect material transactions between the Registrant and any of its
directors, officers or controlling shareholders outside the ordinary
course of business.
Mr. Eatman, the Registrant's President and Chief Executive Officer, is employed
by the Registrant's wholly owned subsidiary, Fort Brooke Bank, pursuant
to the terms of a written employment agreement, under which he has been
paid an annual base salary of $100,000 plus any normal salary
increases, as well as fringe benefits normal to his position. He is
also entitled to six months of severance pay in the event his
termination is effected without cause, or $250,000 in the event his
termination is effected as a result of a major change of control in
Fort Brooke's ownership. That latter amount was awarded to Mr. Eatman
in February 1997 as a result of the decision by the Registrant's board
of directors, subject to approval of its shareholders (which was
granted at a special meeting conducted on March 13, 1997), to merge
with and into The Colonial BancGroup, Inc., a regional bank holding
company headquartered in Montgomery, Alabama. Such merger is expected
to be consummated in late April 1997, shortly following which the
Registrant's wholly owned subsidiary, Fort Brooke Bank, will be merged
with and into Colonial Bank, thereby eliminating Mr. Eatman's existing
employment agreement.
The Florida Business Corporation Act provides that directors and officers of a
corporation, including the Registrant, may be indemnified in certain
instances against certain liabilities which they may incur by virtue of
their relationship with the corporation. The Registrant's bylaws
provide for such indemnification, and for the advancement of expenses
pursuant to the Florida Act, to each person who is or was a director or
officer of the Registrant and each person who is or was serving at the
request of the Registrant as a director or officer of another
corporation if the person may be indemnified under the Florida Act. The
Registrant also presently maintains directors' and officers' liability
insurance to offset such requirement.
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PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The financial statements required to be filed as part of this
Report, and the report thereon by Hacker, Johnson, Cohen & Grieb, P.A., are
referenced in Item 8. above and set forth in the 1996 Annual Report to
shareholders, dated March 28, 1997, a copy of which is being filed herewith.
(b) No financial statement schedule is required to be filed herewith.
(c) The exhibits required to be filed herewith are listed on the
"Exhibit Index" commencing on Page 13 herein and incorporated by reference.
(d) The Registrant has no financial statements required by Regulation
S-X which are excluded from the annual report to shareholders by Rule 14a-3(b).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FORT BROOKE BANCORPORATION
Date: March 28, 1997 By:/s/Richard H. Eatman
-------------------------------------
Chief Executive Officer
Date: March 28, 1997 By:/s/Edmund R. Komlodi
-------------------------------------
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant, and in the capacities and on the date indicated.
Date: March 28, 1997 /s/ Thomas H. Miller
------------------------------------------
Thomas H. Miller, Chairman of the
Board of Directors
Date: March 28, 1997 /s/ John D. Adams
------------------------------------------
John D. Adams, Director
11
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Date: March 28, 1997 /s/ Melvin R. Belisle
------------------------------------------
Melvin R. Belisle, Director
Date: March 28, 1997 /s/ Tommy W. Brown
------------------------------------------
Tommy W. Brown, Director
Date: March 28, 1997 /s/ Richard H. Eatman
------------------------------------------
Richard H. Eatman, Director
Date: March 28, 1997 /s/ H. Rex Etheredge
------------------------------------------
H. Rex Etheredge, Director
Date: March 28, 1997 /s/ A. D. MacKinnon
------------------------------------------
A. D. MacKinnon, Director
Date: March 28, 1997 /s/ Reese T. Poppell
------------------------------------------
Reese T. Poppell, Director
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
---------------------------------------
FOR THE CALENDAR YEAR ENDED Commission File
DECEMBER 31, 1996 Number 0-21707
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------------
FORT BROOKE BANCORPORATION
EXHIBITS INDEX
Description of
Exhibit # Exhibits
3.1 Articles of Incorporation: filed as Exhibit 2. to
the Registrant's Form 8-A Registration Statement, dated
November 8, 1996, and incorporated herein by reference
3.2 The Registrant's current Bylaws: filed as Exhibit 3. to
the Registrant's Form 8-A Registration Statement, dated
November 8, 1996, and incorporated herein by reference
10.1 Agreement and Plan of Merger, by and between The
Colonial BancGroup, Inc. and the Registrant, dated
November 18, 1996
13.1 Fort Brooke Bancorporation 1996 Annual Report
21 All subsidiaries of the Registrant
27 Financial Data Schedule (for SEC use only)
13
<PAGE> 1
EXHIBIT 10.1
Exhibit 10.1
to the
Annual Report on Form 10-K
for
the year ended December 31, 1996
for
Fort Brooke Bancorporation
Agreement and Plan of Merger, by and between The
Colonial BancGroup, Inc. and the Registrant, dated
November 18, 1996
[Attached]
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.,
AND
FORT BROOKE BANCORPORATION
DATED AS OF
NOVEMBER 18, 1996
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
CAPTION PAGE
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<S> <C> <C>
ARTICLE 1 - NAME
1.1 Name..........................................................
ARTICLE 2 - MERGER - TERMS AND CONDITIONS
2.1 Applicable Law................................................
2.2 Corporate Existence...........................................
2.3 Articles of Incorporation and Bylaws..........................
2.4 Resulting Corporation's Officers and Board....................
2.5 Stockholder Approval..........................................
2.6 Further Acts..................................................
2.7 Effective Date and Closing....................................
2.8 Subsidiary Bank Merger........................................
ARTICLE 3 - CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock......................
3.2 Surrender of Acquired Corporation Stock.......................
3.3 Fractional Shares.............................................
3.4 Adjustments...................................................
3.5 BancGroup Stock...............................................
3.6 Dissenting Rights.............................................
ARTICLE 4 - REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BANCGROUP
4.1 Organization..................................................
4.2 Capital Stock.................................................
4.3 Financial Statements; Taxes...................................
4.4 No Conflict with Other Instrument.............................
4.5 Absence of Material Adverse Change............................
4.6 Approval of Agreements........................................
4.7 Tax Treatment.................................................
4.8 Title and Related Matters.....................................
4.9 Subsidiaries..................................................
4.10 Contracts.....................................................
4.11 Litigation....................................................
4.12 Compliance....................................................
</TABLE>
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<TABLE>
<S> <C> <C>
4.13 Registration Statement........................................
4.14 SEC Filings...................................................
4.15 Form S-4......................................................
4.16 Brokers.......................................................
4.17 Government Authorization......................................
4.18 Absence of Regulatory Communications..........................
4.19 Disclosure....................................................
ARTICLE 5 - REPRESENTATIONS, WARRANTIES AND
COVENANTS OF ACQUIRED CORPORATION
5.1 Organization..................................................
5.2 Capital Stock.................................................
5.3 Subsidiaries..................................................
5.4 Financial Statements; Taxes...................................
5.5 Absence of Certain Changes or Events..........................
5.6 Title and Related Matters.....................................
5.7 Commitments...................................................
5.8 Charter and Bylaws............................................
5.9 Litigation....................................................
5.10 Material Contract Defaults....................................
5.11 No Conflict with Other Instrument.............................
5.12 Governmental Authorization....................................
5.13 Absence of Regulatory Communications..........................
5.14 Absence of Material Adverse Change............................
5.15 Insurance.....................................................
5.16 Pension and Employee Benefit Plans............................
5.17 Buy-Sell Agreement............................................
5.18 Brokers.......................................................
5.19 Approval of Agreements........................................
5.20 Disclosure....................................................
5.21 Registration Statement........................................
5.22 Loans; Adequacy of Allowance for Loan Losses..................
5.23 Environmental Matters.........................................
5.24 Transfer of Shares............................................
5.25 Collective Bargaining.........................................
5.26 Labor Disputes................................................
5.27 Derivative Contracts..........................................
ARTICLE 6 - ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup.............................
6.2 Additional Covenants of Acquired Corporation..................
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 7 - MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation
7.2 Press Release
7.3 Mutual Disclosure
7.4 Access to Properties and Records
7.5 Notice of Adverse Changes
ARTICLE 8 - CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval of Shareholders......................................
8.2 Regulatory Authority Approval.................................
8.3 Litigation....................................................
8.4 Registration Statement........................................
8.5 Tax Opinion...................................................
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations, Warranties and Covenants.....................
9.2 Adverse Changes...............................................
9.3 Closing Certificate...........................................
9.4 Opinion of Counsel............................................
9.5 Fairness Opinion..............................................
9.6 NYSE Listing..................................................
9.7 Other Matters.................................................
9.8 Material Events...............................................
ARTICLE 10 - CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants.....................
10.2 Adverse Changes...............................................
10.3 Closing Certificate...........................................
10.4 Opinion of Counsel............................................
10.5 Controlling Shareholders......................................
10.6 Other Matters.................................................
10.7 Dissenters....................................................
10.8 Material Events...............................................
10.9 Severance Agreements..........................................
10.10 Pooling of Interest...........................................
ARTICLE 11 - TERMINATION OF REPRESENTATIONS AND WARRANTIES......................
ARTICLE 12 - NOTICES............................................................
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 13 - AMENDMENT OR TERMINATION
13.1 Amendment.....................................................
13.2 Termination...................................................
13.3 Damages.......................................................
ARTICLE 14 - DEFINITIONS........................................................
ARTICLE 15 - MISCELLANEOUS
15.1 Expenses......................................................
15.2 Benefit.......................................................
15.3 Governing Law.................................................
15.4 Counterparts..................................................
15.5 Headings......................................................
15.6 Severability..................................................
15.7 Construction..................................................
15.8 Return of Information.........................................
15.9 Equitable Remedies............................................
15.10 Attorneys' Fees...............................................
15.11 No Waiver.....................................................
15.12 Remedies Cumulative...........................................
15.13 Entire Contract...............................................
</TABLE>
iv
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this
the 18th day of November 1996, by and between FORT BROOKE BANCORPORATION
("Acquired Corporation"), a Florida corporation, a THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, Acquired Corporation operates as a bank holding company for
its wholly owned subsidiary, Fort Brooke Bank (the "Bank"), with its principal
office in Brandon, Florida; and
WHEREAS, BancGroup is a bank holding company with Subsidiary banks in
Alabama, Florida, Georgia and Tennessee; and
WHEREAS, Acquired Corporation wishes to merge with BancGroup; and
WHEREAS, it is the intention of BancGroup and Acquired Corporation that
such Merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of section 368(a) of the Code, as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Parties hereto agree as follows:
ARTICLE 1
NAME
1.1 Name. The name of the corporation resulting from the Merger shall
be "The Colonial BancGroup, Inc."
ARTICLE 2
MERGER -- TERMS AND CONDITIONS
2.1 APPLICABLE LAW. On the Effective Date, Acquired Corporation shall
be merged with and into BancGroup (herein referred to as the "Resulting
Corporation" whenever reference is made to it as of the time of merger or
thereafter). The Merger shall be undertaken pursuant to the provisions of and
with the effect provided in the DGCL and, to the extent applicable, the FBCA.
The offices and facilities of Acquired Corporation and of BancGroup shall become
the offices and facilities of the Resulting Corporation.
2.2 CORPORATE EXISTENCE. On the Effective Date, the corporate existence
of Acquired Corporation and of BancGroup shall, as provided in the DGCL and the
FBCA, be merged into and continued and the Resulting Corporation shall be deemed
to be the same corporation as
1
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Acquired Corporation and BancGroup. All rights, franchises and interests of
Acquired Corporation and BancGroup, respectively, in and to every type of
property (real, personal and mixed) and choses in action shall be transferred to
and vested in the Resulting Corporation by virtue of the Merger without any deed
or other transfer. The Resulting Corporation on the Effective Date, and without
any order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interests, including appointments,
designations and nominations and all other rights and interests as trustee,
executor, administrator, transfer agent and registrar of stocks and bonds,
guardian of estates, assignee, and receiver and in every other fiduciary
capacity and in every agency, and capacity, in the same manner and to the same
extent as such rights, franchises and interests were held or enjoyed by Acquired
Corporation and BancGroup, respectively, on the Effective Date.
2.3 ARTICLES OF INCORPORATION AND BYLAWS. On the Effective Date, the
certificate of incorporation and bylaws of the Resulting Corporation shall be
the restated certificate of incorporation and bylaws of BancGroup as they exist
immediately before the Effective Date.
2.4 RESULTING CORPORATION'S OFFICERS AND BOARD. The board of directors
and the officers of the Resulting Corporation on the Effective Date shall
consist of those persons serving in such capacities of BancGroup as of the
Effective Date.
2.5 STOCKHOLDER APPROVAL. This Agreement shall be submitted to the
shareholders of Acquired Corporation at the Stockholders Meeting to be held as
promptly as practicable consistent with the satisfaction of the conditions set
forth in this Agreement. Upon approval by the requisite vote of the shareholders
of Acquired Corporation as required by applicable Law, the Merger shall become
effective as soon as practicable thereafter in the manner provided in section
2.7 hereof.
2.6 FURTHER ACTS. If, at any time after the Effective Date, the
Resulting Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (i) to vest,
perfect, confirm or record, in the Resulting Corporation, title to and
possession of any property or right of Acquired Corporation or BancGroup,
acquired as a result of the Merger, or (ii) otherwise to carry out the purposes
of this Agreement, BancGroup and its officers and directors shall execute and
deliver all such proper deeds, assignments and assurances in law and do all acts
necessary or proper to vest, perfect or confirm title to, and possession of,
such property or rights in the Resulting Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and directors. If the
Resulting Corporation are fully authorized in the name of Acquired Corporation
or BancGroup, or otherwise, to take any and all such action.
2.7 EFFECTIVE DATE AND CLOSING. Subject to the terms of all
requirements of Law and the conditions specified in this Agreement, the Merger
shall become effective on the date specified in the Certificate of Merger to be
issued by the Secretary of State of the State of Delaware (such time being
herein called the "Effective Date"). The Closing shall take place at
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<PAGE> 9
the offices of BancGroup, in Montgomery, Alabama, at 11:00 a.m. on the date that
the Effective Date occurs or at such other place and time that the Parties may
mutually agree.
2.8 SUBSIDIARY BANK MERGER. BancGroup and Acquired Corporation
anticipate that immediately after the Effective Date the Bank will merge with
and into Colonial Bank, BancGroup's Florida incorporated Subsidiary bank
("Colonial Bank"). The exact timing and structure of such merger are not known
at this time, and BancGroup in its discretion will finalize such timing and
structure at a later date. Acquired Corporation will cooperate with BancGroup in
the execution of appropriate documentation relating to such merger.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 CONVERSION OF ACQUIRED CORPORATION DOCK. (a) On the Effective Date,
each share of common stock of Acquired Corporation outstanding and held by
Acquired Corporation's shareholders (the "Acquired Corporation Stock"), shall be
converted by operation of law and without any action by any hole for thereof
into shares of BancGroup Common Stock at a per share price of $31.50 (the
"Merger Consideration") as specified below. Specifically, each outstanding share
of Acquired Corporation Stock shall (subject to section 3.3 hereof), be
converted into such numb her of shares of BancGroup Common Stock equal to $31.50
divided by the Market Value. The "Market Value" shall represent the per share
market value of the BancGroup Common Stock at the Effective Date and shall be
determined by calculating the average of the closing prices of the Common Stock
of BancGroup as reported by the NYSE on each of the ten (10) consecutive trading
days ending on the trading day immediately preceding the Effective Date,
provided that if the Market Value, as calculated, is less than $32.00, the
Market Value shall be deemed to be $32.00, and if the Market Value, as
calculated, is greater than $39.00, the Market Value shall be deemed to be
$39.00. Accordingly, the maxi number of shares of BancGroup Common Stock to be
issued in the Merger shall be 975,076 and the minimum number of shares of
BancGroup Common Stock to be issued in the Merger shall be 800,062 assuming
990,553 shares of Acquired Corporation common stock outstanding. To the extent
that the number of shares of Acquired Corporation Stock may increase based upon
the exercise of Acquired Corporation Options, the number of shares of BancGroup
Common Stock to be issued in the Merger shall be increased with each share of
Acquired Corporation Stock outstanding at the Effective Date exchanged for share
is of BancGroup Common Stock equal to $31.50 divided by the Market Value,
provided th for this purpose the Market Value shall be deemed to be no less than
$32.00 and no greater than $39.00.
(b)(i) On the Effective Date, BancGroup shall assume all Acquired
Corporation Options outstanding, and each such option shall cat to represent a
right to acquire Acquired Corporation common stock and shall, instead, represent
the right to acquire BancGroup Common Stock on substantially the sate terms
applicable to the Acquired Corporation Options except as specified below in this
section. The number of shares of BancGroup Common Stock to be issued pursuant to
such options shall equal the number of shares of Acquired Corporation common
stock $] object to such Acquired Corporation Options multiplied by the Exchange
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<PAGE> 10
Ratio, provided that no fractions of shares of BancGroup Common Stock shall be
issued and the number of shares of BancGroup Common Stock to be issued upon the
exercise of Acquired Corporation Options, if a fractional share exists, shall
equal the number of whole shares obtained by rounding to the nearest whole
number, giving account to such fraction. The exercise price for the acquisition
of BancGroup Common Stock shall be the exercise price for each share of Acquired
Corporation common stock subject to such c options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be done.
For purposes of this section 3.1(b)(i), the "Exchange Ratio" shall mean the
result obtained by dividing $31.50 by the Market Value. It is intended that the
assumption by BancGroup of the Acquired Corporation Options shall be undertaken
in a manner that will not constitute a "modification" as defined in Section 424
of the Code as to any stock option which is an "incentive stock option."
Schedule 3.1 hereto sets forth the names of all persons holding Acquired
Corporation Options, the number of shares of Acquired Corporation common stock
subject to such options, the exercise price and the expiration date of such
options.
(ii) As an alternative to the assumption of Acquired Corporation
Options provided for in section 3.1(b)(i), the holder of each such option may
elect on the Effective Date, by properly surrendering to Acquired Corporation
the Acquired Corporation Options, to receive shares of BancGroup Common Stock
for the difference between the exercise price (the "Exercise Price") of the
Acquired Corporation so surrendered and $31.50. The number of shares of
BancGroup Common Stock to be issued to such holder shall be such number of
shares as shall equal ($31.50 less the Exercise Price) divided by the Market
Value.
(iii) BancGroup shall file at its expense a registration statement with
the SEC on Form S-8 or such other appropriate form (including the Form S-4 to be
filed in connection with the Merger) with respect to the shares of BancGroup
Common Stock to be issued pursuant to Acquired Corporation Options and shall use
its reasonable best efforts to maintain the effectiveness of such registration
statement outstanding. Such shares shall also be registered or qualified for
sale under the securities laws of any state in which registration or
qualification is necessary.
3.2 SURRENDER OF ACQUIRED CORPORATION STOCK. After the Effective Date,
each holder of an outstanding certificate or certificates which prior thereto
represented shares of Acquired Corporation Stock who is entitled to received
BancGroup Common Stock shall be entitled, upon surrender to BancGroup Common
Stock shall be entitled, upon surrender to BancGroup of their certificate or
certificates representing shares of Acquired Corporation Stock (or an affidavit
or affirmation by such holder of the loss, theft, or destruction of such
certificate or certificates in such form as BancGroup may reasonably require
and, if BancGroup reasonably requires, a bond of indemnity in form and amount,
and issued by such sureties, as BancGroup may reasonably require), to receive in
exchange therefor a certificate or certificates representing the number of whole
shares of BancGroup Common Stock into and for which the shares of Acquired
Corporation Stock so surrendered shall have been converted, such certificates to
be of such denominations and registered in such names as such holder may
reasonably request. Until so surrendered and exchanged, each such outstanding
certificate which, prior to the Effective Date,
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<PAGE> 11
represented shares of Acquired Corporation Stock and which is to be converted
into BancGroup Common Stock shall for all purposes evidence owners hip of the
BancGroup Common Stock into and for which such shares shall have been so
converted, except that no dividends or other distributions with respect to such
BancGroup (common Stock shall be made until the certificates previously
representing shares of Acquired Corporation Stock shall have been properly
tendered.
3.3 FRACTIONAL SHARES. No fractional shams of BancGroup Common Stock
shall be issued, and each holder of shares of Acquired Corporation Stock having
a fractional interest arising upon the conversion of such shares|into shares of
BancGroup Common Stock shall, at the time of surrender of the certificates
previously representing Acquired Corporation Stock, be paid by BancGroup an
amount in cash equal to the Market Value of such fractional share.
3.4 ADJUSTMENTS. In the event that prior to the Effective Date
BancGroup Common Stock shall be changed into a different number of shares or a
different class of shares by reason of any recapitalization or reclassification,
stock dividend, combination, stock split, or reverse stock split of the
BancGroup Common Stock, an appropriate and proportionate adjustment shall be
made in the number of shares of BancGroup Common Stock into which the Acquired
Corporation Stock shall he converted.
3.5 BANCGROUP STOCK. The shares of Common Stock of BancGroup issued and
outstanding immediately before the Effective Date shall continue to be issued
and outstanding shares of the Resulting Corporation.
3.6 DISSENTING RIGHTS. Any shareholder of Acquired Corporation who
shall have, prior to the vote with respect to approval of the Merger, furnished
notice of intent to demand payment for his shares if the Merger is approved, who
shall not have voted such shares in favor of this Agreement and who shall have
complied with all other requirements set forth in the FBCA relating to the
establishment Of preservation of rights of dissenting shareholders, shall be
entitled to receive payment for the fair value of his Acquired Corporation
Stock. If after the Effective Date dissenting shareholder of Acquired
Corporation fails to perfect, or effectively withdraws or loses, his right to
appraisal and payment for his shares of Acquired Corporation Stock, BancGroup
shall issue and deliver the consideration to which such holder of shares of
Acquired Corporation Stock is entitled under Section 3.1 (without interest) upon
surrender of such holder of the certificate or certificates representing shares
of Acquired Corporation Stock held by him.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
BancGroup represents, warrants and covenants to and with Acquired
Corporation as follows:
4.1 ORGANIZATION. BancGroup is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. BancGroup
has the necessary
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<PAGE> 12
corporate powers to carry on its business as presently conducted and is
qualified to do business in every jurisdiction in which the character and
location of the Assets owned by it or the nature of the business transacted by
it requires qualification or in which the failure to qualify could, individually
or in the aggregate, have a Material Adverse Effect.
4.2 CAPITAL STOCK. (a) The authorized capital stock of BancGroup
consists of (A) 44,000,000 shares of Common Stock, $2.50 par value per shard, of
which as of September 19, 1996, 16,296,558 shares were validly issued and
outstanding, fully paid and nonassessable and are not subject to preemptive
rights (not counting additional shares subject to issue pursuant to stock option
and other plans and convertible debentures), and (B) 1,000,000 shares of
Preference Stock, $2.50 par value per share, none of which are issued and
outstanding. The shares of BancGroup Common Stock to be issued in the Merger are
duly authorized and, when so issued, will be validly issued and outstanding,
fully paid and nonassessable, will have been registered under the 1933 Act, and
will have been registered or qualified under the securities laws of all
jurisdictions in which such registration or qualification is required, based
upon information provided by Acquired Corporation.
(b) The authorized capital stock of each Subsidiary of BancGroup is
validly issued and outstanding, fully paid and nonassessable, and each
Subsidiary is wholly owned, directly or indirectly, by BancGroup.
4.3 FINANCIAL STATEMENTS; TAXES. (a) BancGroup has delivered to
Acquired Corporation copies of the following financial statements of BancGroup.
(i) Consolidated balance sheets as of December 31, 1994, and
December 31, 1995, and for the nine months ended September 30, 1996;
(ii) Consolidated statements of operations for each of the
three years ended December 31, 1993, 1994 and 1995, and for the nine months
ended September 30, 1996;
(iii) Consolidated statements of cash flows for each of the
three years ended December 31, 1993, 1994 and 1995, and for the nine months
ended September 30, 1996; and
(iv) Consolidated statements of changes in shareholders'
equity for the three years ended December 31, 1993, 1994 and 1995, and for the
nine months ended September 30, 1996.
All such financial statements are in all material respects in accordance with
the books and records of BancGroup and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, all as more particularly set forth in the
notes to such statements. Each of the consolidated balance sheets presents
fairly as of its date the consolidated financial condition of BancGroup and its
Subsidiaries. Except as and to the extent reflected or reserved against in such
balance sheets (including the notes thereto) BancGroup did not have, as of the
dates of such balance sheets, any material Liabilities c or
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<PAGE> 13
obligations (absolute or contingent) of a nature customarily reflected in a
balance sheet or the notes thereto. The statements of consolidated income,
shareholders' equity and changes in consolidated financial position present
fairly the results of operations and changes id financial position of BancGroup
and its Subsidiaries for the periods indicated. The foregoing representations,
insofar as they relate to the unaudited interim financial statement, of
BancGroup for the nine months ended September 30, 1996, are subject in all cases
to normal recurring year-end adjustments and the omission of footnote
disclosure.
(b) All Tax returns required to be fill d by or on behalf of
BancGroup have been timely filed (or requests for extensions therefor have been
timely filed and granted and have not expired), and all returns filed are
complete and accurate in all material respects. All Taxes shown on these returns
to be due and all additional assessments receded have been paid. The amounts
recorded for Taxes on the balance sheets provided under section 4.3(a) are, to
the Knowledge of BancGroup, sufficient in all material respects for the payment
of all unpaid federal, state, county, local, foreign or other Taxes (including
any interest or penalties) of BancGroup accrued for or Applicable to the period
ended on the dates thereof, and all years and periods prior thereto and for
which BancGroup may at such dates have been liable in its own right or as
transferee of the Assets of, or as successor to, any other corporation or other
party. No audit, examination or investigation is presently being conducted or,
to the Knowledge of BancGroup, threatened by any taxing authority which is
likely to result in a material Tax Liability, no material unpaid Tax
deficiencies or additional liabilities of any sort have been proposed by any
governmental representative and no agreements for extension of time for the
assessment of any material amount of Tax have been entered into by or on behalf
of BancGroup BancGroup has withheld from its employees (and timely paid to the
appropriate governmental entity) proper and accurate amounts for all periods in
material compliance with all Tax withholding provisions of applicable federal,
state, foreign and local Laws (including without limitation, income, social
security and employment Tax withholding for all hues of compensation).
4.4 NO CONFLICT WITH OTHER INSTRUMENT. The consummation of the
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material Contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which BancGroup or any of its Subsidiaries
is a party or by which they or their Assets may be bound; will not conflict with
any provision of the restated certificate of incorporation or bylaws of
BancGroup or the articles of incorporation or bylaws of any of its Subsidiaries;
and will not violate any provision of any Law, regulation, judgment or decree
binding on them or any of their Assets.
4.5 ABSENCE OF MATERIAL ADVERSE CHANCE. Since the date of the most
recent balance sheet provided under section 4.3(a)(i) above, there have been no
events, changes or occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancGroup.
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<PAGE> 14
4.6 APPROVAL OF AGREEMENTS. The board of directors of BancGroup has
approved this Agreement and the transactions contemplated by it and has
authorized the execution and delivery by BancGroup of this Agreement. This
Agreement constitutes the legal, valid and binding obligation of BancGroup,
enforceable against it in accordance with its terms. Approval of this Agreement
by the stockholders of BancGroup is not required by applicable law. Subject to
the matters referred to in section 8.2, BancGroup has full power, authority and
legal right to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. BancGroup lies no Knowledge of any fact or
circumstance under which the appropriate regulatory approvals required by
section 8.2 will not be granted without the imposition of material conditions or
material delays.
4.7 TAX TREATMENT. BancGroup has no present plan to sell or otherwise
dispose of any of the Assets of Acquired Corporation, subsequent to the Merger,
and BancGroup intends to continue the historic business of Acquired Corporation.
4.8 TITLE AND RELATED MATTERS. BancGroup has good and marketable title
to all the properties, interests in properties and Assets, real and personal,
reflected in the most recent balance sheet referred to in section 4.3(a), or
acquired after the date of such balance sheet (except properties, interests and
Assets sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes of such balance sheet, (ii) liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the knowledge of BancGroup, the material structures and
equipment of BancGroup comply in all material respects with the requirements of
all applicable Laws.
4.9 SUBSIDIARIES. Each Subsidiary of BancGroup has been duly
incorporated and is validly existing as a corporation in good standing under the
Laws of the jurisdiction of its incorporation and each Subsidiary has been duly
qualified as a foreign corporation to transact business and is in good standing
under the Laws of each other jurisdiction in which it clowns or leases
properties, or conducts any business so as to require such qualification and in
which the failure to be duly qualified could have a Material Adverse Effect upon
BancGroup and its Subsidiaries considered as or the enterprise; each of the
banking Subsidiaries of BancGroup has its deposits fully insured by the Federal
Deposit Insurance Corporation to the extent provided by the Federal Deposit
Insurance Act; and the businesses of the non-bank Subsidiaries of BancGroup are
permitted to subsidiaries of registered bank holding companies.
4.10 CONTRACTS. Neither BancGroup nor any of its Subsidiaries is in
violation of its respective certificate of incorporation or bylaws or in Default
in the performance or observance of any material obligation, agreement, cc
covenant or condition contained in any Contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by which it
or its property may be bound.
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<PAGE> 15
4.11 LITIGATION. Except as disclosed in or reserved for BancGroup's
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which is likely to have any Material Adverse Effect or prospective
Material Adverse Effect, or which is likely to materially and adversely affect
the properties or Assets thereof or which is likely to materially affect or
delay the consummation of the transactions contemplated by this Agreement; all
pending legal or governmental proceedings to which BancGroup or any Subsidiary
is a party or of which any of their properties is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material; and
neither BancGroup for any of its Subsidiaries have any contingent obligations
which could be considers material to BancGroup and its Subsidiaries considered
as one enterprise which a re not disclosed in the Registration Statement as it
may be amended or supplemented.
4.12 COMPLIANCE. BancGroup and its Subsidiaries, in the conduct of
their businesses, are to the Knowledge of BancGroup, in material compliance with
all material federal, state or local Laws applicable to their or the conduct of
their businesses.
4.13 REGISTRATION STATEMENT. At the time the Registration Statement
becomes effective and at the time of the Stockholders' Meeting, the Registration
Statement, including the Proxy Statement which shall constitute a part thereof,
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations thereunder, will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statement therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information furnished in
writing to BancGroup by Acquired Corporation or any of its representatives
expressly for use in the Proxy Statement or information included in the Prop
Statement regarding the business of Acquired Corporation, its operations, Assets
and capital.
4.14 SEC FILINGS. (a) BancGroup has heretofore delivered to Acquired
Corporation copies of BancGroup's: (i) Annual Report on Form 10-K for the fiscal
year ended December 31, 1995; (ii) 1995 Annual Report to Shareholders; (iii)
Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, June 30,
and September 30, 1996; and (iv) any reports on Form 8-K, filed by BancGroup
with the SEC since December 31, 1995. Since December 31, 1995, BancGroup has
timely filed all reports and registration statements and the documents required
to be filet the SEC under the rules and regulations of the SEC and all such
reports and registration statements or other documents have complied in all
material respects, as of their respective filing dates and effective dates, as
the case may be, with all the applicable requirements of the 1933 Act and the
1934 Act. As of the respective filing and effective dates, none of such reports
or registration statements or other documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated there)
nor
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<PAGE> 16
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The documents incorporated by reference time they were
filed with the SEC, complied in all m of the 1934 Act and Regulations thereunder
and w] information in the Registration Statement will not co fact or omit to
state a material fact required to be s statements therein not misleading at the
time the Re or at the time of the Stockholders Meeting.
4.15 FORM S-4. The conditions for use of a registration statement on
SEC Form S-4 set forth in the General Instructions on Form S-4 have been or will
be satisfied with respect to BancGroup and the Registration Statement.
4.16 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by BancGroup
directly with Acquired Corporation and without the intervention of any other
person, either as a result of any act of BancGroup or otherwise in such manner
as to give rights to any valid claim against BancGroup for finders fees,
brokerage commission or other like payments.
4.17 GOVERNMENT AUTHORIZATION. BancGroup and its Subsidiaries have all
Permits that, to the Knowledge of BancGroup and its Subsidiaries, are or will be
legally required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of them.
4.18 ABSENCE OF REGULATORY COMMUNICATIONS. Neither BancGroup nor any of
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject, pursuant to which such Agency has imposed or has indicated it may
impose any material restrictions on the operations of, or the business conducted
by, such company or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.
4.19 DISCLOSURE. No representation or warranty, or any statement or
certificate furnished or to be furnished to Acquired Corporation by BancGroup,
contains or will contain any untrue statement of a material fact, or omit or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
CORPORATION
Acquired Corporation represents, warrants and covenants to and with
BancGroup as follows:
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<PAGE> 17
5.1 ORGANIZATION. Acquired Corporation is a Florida corporation, and
the Bank is a Florida state bank. Each Acquired Corporation Company is duly
organized, validly existing and in good standing under the respective Laws of
its jurisdiction of incorporation and has all requisite power and authority to
carry on its business as it is now being conducted and is qualified to do
business in every jurisdiction in which the character and location of the Assets
owned by it or the nature of the business transaction by it requires
qualification or in which the failure to qualify could, individually, or in the
aggregate, have a Material Adverse Effect.
5.2 CAPITAL STOCK. (i) As of October 31, 1996, the authorized capital
stock of Acquired Corporation consisted of 10,000,000 shares of common stock,
$.001 par value per share, 990,553 shares of which are issued and outstanding.
All of such shares which are outstanding are validly issued, fully paid and
nonassessable and not subject to preemptive rights. Acquired Corporation has
60,410 shares of its common stock subject to exercise at any time pursuant to
Acquired Corporation Options. Except for the foregoing, Acquired Corporation
does not have any other arrangements or commitments obligating it to issue
shares of its capital stock or any securities convertible into or having the
right to purchase shares of its capital stock, including the granting of
additional options to purchase its common stock.
5.3 SUBSIDIARIES. Acquired Corporation has no direct Subsidiaries other
than the Bank, and there are no Subsidiaries of the Bank. Acquired Corporation
owns all of the issued and outstanding capital stock of the Bank free and clear
of any liens, claims or encumbrances of any kind. All of the issued and
outstanding shares of capital stock of the Subsidiaries have been validly issued
and are fully paid and non-assessable. As of October 31, 1996, there were
2,000,000 shares of the common stock par value $8.00 per share, authorized of
the Bank, 990,553 of which are issued and outstanding and wholly owned by
Acquired Corporation. The Bank has no arrangements or commitments obligating it
to issue shares of its capital stock or any securities convertible into or
having the right to purchase shares of its capital stock.
5.4 FINANCIAL STATEMENTS; TAXES.(a) Acquired Corporation has delivered
to BancGroup copies of the following financial statements of Acquired
Corporation:
(i) Consolidated statements of financial condition as of
December 31, 1995 and 1996, and for the nine months ended September 30, 1996;
(ii) Consolidated statements of incline for each of the three
years ended December 31, 1994, 1995 and 1996, and for the nine months ended
September 30, 1996;
(iii) Consolidated statements of stockholders' equity for each
of the three years ended December 31, 1994, 1995, and 1996, and for the nine
months ended September 30, 1996; and
(iv) Consolidated statements of cash flow for the three years
ended December 31, 1994, 1995 and 1996, and for the nine months ended September
30, 1996.
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All of the foregoing financial statements are in all material respects
in accordance with the books and records of Acquired Corporation and have been
prepared in accordance with the generally accepted accounting principles applied
on a consistent basis throughout the periods indicated, except for changes
required by GAAP, all as more particularly set forth in the notes to such
statements. Each of such balance sheets presents fairly as of its date the
financial condition of Acquired Corporation. Except as and to the extent
reflected or reserved against in such balance sheets (including the notes
thereto), Acquired Corporation did not have, as of the date of such balance
sheets, any material Liabilities or obligations (absolute or contingent) of a
nature customarily reflected in a balance sheet or the notes thereto. The
statements of income, stockholders' equity and cash flows present fairly the
results of operation, changes in shareholders equity and cash flows of Acquired
Corporation for the periods indicated. The foregoing representations, insofar as
they relate to the unaudited interim financial statements of Acquired
Corporation for the nine months ended September 30, 1996, are subject in all
cases to normal recurring year-end adjustments and the omission of footnote
disclosure.
(b) Except as set forth on Schedule 5.4(b), all Tax returns
required to be filed by or on behalf of Acquired Corporation has been timely
filed (or requests for extensions therefor have been timely filed and granted
and have not expired), and all returns filed are complete and accurate in all
material respects. All Taxes shown on these returns to be due and all additional
assessments received have been paid. The amounts recorded for Taxes on the
balance sheets provided under section 5.4(a) are, to the Knowledge of Acquired
Corporation, sufficient in all respects for the payment of all unpaid federal,
state, county, local, foreign and Other Taxes (including any interest or
penalties) of Acquired Corporation accrued for or applicable to the period ended
on the dates thereof, and all years and periods prior thereto for which Acquired
Corporation may at such dates have been liable in its own right or as a
transferee of the Assets of, or as successor to, any other corporation or other
party. No audit, examination or investigation is presently being conducted or,
to the Knowledge of Acquired Corporation, threatened by any taxing authority
which is likely to result in a material Tax Liability, no material unpaid Tax
deficiencies or additional liability of any sort have been proposed by any
governmental representative and no agreements for extension of tit re for the
assessment of any material amount of Tax have been entered into by or on behalf
of Acquired Corporation. Acquired Corporation has not executed an extension or
waive r of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(c) Each Acquired Corporation Company has withheld from its
employees (and timely paid to the appropriate governmental entity) proper and
accurate amounts for all periods in material compliance with all Tax withholding
provisions of applicable federal, state, foreign and local Laws (including
without limitation, income, social security and employment Tax withholding for
all types of compensation). Each Acquired Corporation Company is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under section 3406 of the Code.
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5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 5.5, since the date of the most recent balance sheet provided under
section 5.4(a)(i) above, no Acquired Corporation Company has
(a) issued, delivered or agreed to issue or deliver any stock,
bonds or other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued or to be issued upon the
exercise of Acquired Corporation Options existing on the date hereof;
(b) borrowed or agreed to borrow any funds or incurred, or
become subject to, any Liability (absolute or contingent) except borrowings,
obligations (including purchase of federal funds) and Liabilities incurred in
the ordinary course of business and consistent with past practice;
(c) paid any material obligation or Liability (absolute or
contingent) other than current Liabilities reflected in or shown on the most
recent balance sheet referred to in section 5.4(a)(i) and current Liabilities
incurred since that date in the ordinary course of business and consistent with
past practice;
(d) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or redeem, any of
its outstanding securities, provided, however, that Acquired Corporation shall
be permitted to pay a cash dividend to its shareholders for the fourth quarter
of 1996 and the first quarter of 1997. Such dividend shall be equal to $Dividend
x .88732, where $Dividend equals the per share dividend paid by BancGroup for
that quarter in question;
(e) except in the ordinary course of business, sold or
transferred, or agreed to sell or transfer, any of its Assets, or canceled, or
agreed to cancel, any debts or claims;
(f) except in the ordinary course of business, entered or
agreed to enter into any agreement or arrangement granting any preferential
rights to purchase any of its Assets, or requiring the consent of any party to
the transfer and assignment of any of its Assets;
(g) suffered any Losses or waived any rights of value which in
either event in the aggregate are material considering its business as a whole;
(h) except in the ordinary course of business, made or
permitted any amendment or termination of any Contract, agreement or license to
which it is a party if such amendment or termination is material considering its
business as a whole;
(i) except in accordance with normal and usual practice, made
any accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former officer or
employee;
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(j) except in accordance with normal and usual practice,
increased the rate of compensation payable to or to become payable to any of its
officers or employees or made any material increase in any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan, payment or arrangement made to, for or with any of its
officers or employees;
(k) received notice or had Knowledge or reason to believe that
any of its substantial customers has terminated or intends to terminate its
relationship, which termination would have a Material Adverse Effect on its
financial condition, results of operations, business, Assets or properties;
(l) failed to operate its business in the ordinary course so
as to preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;
(m) failed to operate its business in the ordinary course so
as to preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;
(n) agreed in writing, or otherwise, to take any action
described in clauses (a) through (m) above.
Between the date hereof and the Effective Date, no Acquired Corporation
Company, without the express written approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of this section 5.5 except as permitted
therein or as contemplated in this Agreement, and no Acquired Corporation
Company will enter into or amend any material Contract, other than Loans or
renewals thereof entered into in the ordinary course of business, without the
express written consent of BancGroup.
5.6 TITLE AND RELATED MATTERS. (a) Title. Acquired Corporation has good
and marketable title to all the properties, interest in properties and Assets,
real and personal, reflected in the most recent balance sheet referred to in
section 5.4(a)(i), or acquired after the date of such balance sheet (except
properties, interests and Assets sold or otherwise disposed of since such date,
in the ordinary course of business), free and clear of all mortgages, Liens,
pledges, charges or encumbrances except (i) mortgages and other encumbrances
referred to in the notes to such balance sheet, (ii) Liens for current Taxes not
yet due and payable and (iii) such imperfections of title and easements as do
not mater ally detract from or interfere with the present use of the properties
subject thereto or affected thereby, or otherwise materially impair present
business operations at such properties. The Acquired Corporation has no
Knowledge that any of the material structures and equipment of each Acquired
Corporation Company fail to comply in any material respect with the requirements
of all applicable Laws.
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(b) Leases. Schedule 5.6(b) sets forth a list and description
of all real and personal property owned or leased by any Acquired Corporation
Company, either as lessor or lessee.
(c) Personal Property. Schedule 5.6(c) sets forth a
depreciation schedule of each Acquired Corporation Company's fixed Assets as of
October 31, 1996.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a
description of all agreements relating to data processing computer software and
hardware now being used in the business operations of any Acquired Corporation
Company. Acquired Corporation is not aware of any defects, irregularities or
problems with any of its computer hardware or software which renders such
hardware or software unable to satisfactorily perform the tasks and functions to
be performed by them in the business of any Acquired Corporation Company.
5.7 COMMITMENTS. Except as set forth in Schedule 5.7, no Acquired
Corporation Company is a party to any oral or written (i) Contracts for the
employment of any officer or employee which is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus, deferred compensation, savings, stock
option, severance pay, pension or retirement plan, agreement or arrangement,
(iii) loan agreement, indenture or similar agreement relating to the borrowing
of money by such party, (iv) guaranty of any obligation for the borrowing of
money or otherwise, excluding endorsements made for collection, and guaranties
made in the ordinary course of business, (v) consulting or other similar
material Contracts, (vi) collective bargaining agreement, (vii) agreement with
any present or former officer, director or shareholder of such party, or (viii)
other Contract, agreement or other commitment which is material to the business,
operations, property, prospects or Assets or to the condition, financial or
otherwise, of any Acquired Corporation Company. Complete and accurate copies of
all Contracts, plans and other items so listed have been made or will be made
available to BancGroup for inspection.
5.8 CHARTER AND BYLAWS. Schedule 5.8 contains true and correct copies
of the articles of incorporation and bylaws of each Acquired Corporation
Company, including all amendments thereto, as currently in effect. There will be
no changes in such articles of incorporation or bylaws prior to the Effective
Date, without the prior written consent of BancGroup.
5.9 LITIGATION.There is no Litigation (whether or not purportedly on
behalf of Acquired Corporation) pending or, to the Knowledge of Acquired
Corporation, threatened against or affecting any Acquired Corporation Company
(nor is Acquired Corporation aware of any facts which are likely to give rise to
any such Litigation) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involves the possibility of
any judgment or Liability not fully covered by insurance in excess of a
reasonable deductible amount or which may have a Material Adverse Effect on
Acquired Corporation, and no Acquired Corporation Company is in Default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which Default would have a Material
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Adverse Effect on Acquired Corporation. To the Knowledge of Acquired
Corporation, each Acquired Corporation Company has complied in all material
respects with all material applicable Laws and Regulations including those
imposing Taxes, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its properties and the conduct of its business, which, if not
complied with, would have a Material Adverse Effect on Acquired Corporation.
5.10 MATERIAL CONTRACT DEFAULTS. Except disclosed on Schedule 5.10, no
Acquired Corporation Company is in Default in any material respect under the
terms of any material Contract, agreement, lease or other commitment which is or
may be material to the business, operations, properties or Assets, or the
condition, financial or otherwise, of such company and the Acquired Corporation
has no Knowledge of any event which, with notice or lapse of time, or both, may
be or become an event of Default under any such material Contract, agreement,
lease or other commitment in respect of which adequate steps have not been taken
to prevent such a Default from occurring.
5.11 NO CONFLICT WITH OTHER INSTRUMENT. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of or constitute a Default under any material Contract,
indenture, mortgage, deed of trust or other material agreement or instrument to
which an, Acquired Corporation Company is a party and will not conflict with any
provision of the charter or bylaws of any Acquired Corporation Company.
5.12 GOVERNMENTAL AUTHORIZATION. Each Acquired Corporation Company has
all Permits that, to the knowledge of Acquired Corporation, are or will be
legally required to enable any Acquired Corporation Company to conduct its
business in all material respects as now conducted by each Acquired Corporation
Company.
5.13 ABSENCE OF REGULATORY COMMUNICATION. Except as provided in
Schedule 5.13, no Acquired Corporation Company is subject to, nor has any
Acquired Corporation Company received during the past three years, any written
communication directed specifically to it from any Agency to which it is
subject, pursuant to which such Agency has imposed or has indicated it may
impose any material restrictions on the operations of, or the business conducted
by, such company or in which such Agency has raised any material question
concerning the condition, financial or otherwise, of such Company.
5.14 ABSENCE OF MATERIAL ADVERSE CHANGE. To the Knowledge of Acquired
Corporation, since the date of the most recent balance sheet provided under
section 5.4(a)(i), there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on any Acquired Corporation Company.
5.15 INSURANCE. Each Acquired Corporation Company has in effect
insurance coverage and bonds with reputable insurers which, in respect to
amounts, types and risks, insured,
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management of Acquired Corporation reasonably believes to be adequate for the
type of business conducted by such company. No Acquired Corporation Company is
liable for any material retroactive premium adjustment. All insurance policies
and bonds are valid, enforceable and in full force and effect, and no Acquired
Corporation Company has received any notice of any material premium increase or
cancellation with respect to any of its insurance policies or bonds. Within the
last three years, no Acquired Corporation Company has been refused any insurance
coverage which it has sought or applied for, and it has no reason to believe
that existing insurance coverage cannot be renewed as and when the same shall
expire, upon terms and conditions as favorable as those presently in effect,
other than possible increases in premiums that do not result from any
extraordinary loss experience. All policies of insurance presently held or
policies containing substantially equivalent coverage will be outstanding and in
full force with respect to each Acquired Corporation Company at all times from
the date hereof to the Effective Date.
5.16 PENSION AND EMPLOYEE BENEFIT PLANS.
(a) To the Knowledge of Acquired Corporation, all employee benefit
plans of each Acquired Corporation Company have been established in compliance
with, and such plans have been operated in material compliance with, all
applicable Laws. Except as set forth in Schedule 5.16, no Acquired Corporation
Company sponsors or otherwise maintains a "pension plan" within the meaning of
section 3(2) of ERISA or any other retirement plan other than the Bank's 401k
Profit Sharing Plan that is intended to qualify under section 401 of the Code,
nor do any unfunded Liabilities exist with respect to any employee benefit plan,
past or present. To the Knowledge of Acquired Corporation, no employee benefit
plan, any trust created thereunder or any trustee or administrator thereof has
engaged in a "prohibited transaction," as defined in section 4975 of the Code,
which may have a Material Adverse Effect on the condition, financial or
otherwise, of any Acquired Corporation Company.
(b) To the Knowledge of Acquired Corporation, no amounts payable to any
employee of any Acquired Corporation Company will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code and
regulations thereunder.
5.17 BUY-SELL AGREEMENT. To the Knowledge of Acquired Corporation,
there are no agreements among any of its shareholders granting to any person or
persons a right of first refusal in respect of the sale, transfer, or other
disposition of shares of outstanding securities by any shareholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.
5.18 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by Acquired
Corporation directly with BancGroup and without the intervention of any other
person, either as a result of any act of Acquired Corporation, or otherwise, in
such manner as to give rise to any valid claim against Acquired Corporation for
a finder's fee, brokerage commission or other like payment.
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5.19 APPROVAL OF AGREEMENTS. The board of "directors of Acquired
Corporation has approved this Agreement and the transactions contemplated by
this Agreement and has authorized the execution and delivery by Acquired
Corporation of this Agreement. Subject to the matters referred to in section
8.2, Acquired Corporation has full power, authority and legal right to enter
into this Agreement, and, upon appropriate vote of the shareholders of Acquired
Corporation in accordance with this Agreement, Acquired Corporation shall have
full power, authority and legal right to consummate She transactions
contemplated by this Agreement.
5.20 DISCLOSURE. No representation or warranty, nor any statement or
certificate furnished or to be furnished to BancGroup by Acquired Corporation,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
5.21 REGISTRATION STATEMENT.At the time the Registration Statement
becomes effective and at the time of the Stockholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of Acquired Corporation, its Assets, properties, operations, and
capital stock or to information furnished in writing by Acquired Corporation or
its representatives expressly for inclusion in the Proxy Statement.
5.22 LOANS; ADEQUACY OF ALLOWANCE FOR LOAN LOSSES. All reserves for
loan losses shown on the most recent financial statements furnished by Acquired
Corporation have been calculated in accordance with prudent and customary
banking practices and are adequate in all material respects to reflect the risk
inherent in the loans of any Acquired Corporation Company. Acquired Corporation
has no Knowledge of any fact which is likely to require a future material
increase in the provision for loan losses or a material decrease in the loan
loss reserve reflected in such financial statements. Each loan reflected as an
Asset on the financial statements of Acquired Corporation is the legal, valid
and binding obligation of the obliger of each loan, enforceable in accordance
with its terms subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors' rights generally and to
general equitable principles. No Acquired Corporation Company has in its
portfolio any loan exceeding its legal lending limit, nor, except as disclosed
on Schedule 5.22, any known significant delinquent, substandard, doubtful, loss,
nonperforming or problem loans.
5.23 ENVIRONMENTAL MATTERS. Except as provided in Schedule 5.23, to the
Knowledge of Acquired Corporation, each Acquired Corporation Company is in
material compliance with all Laws and other governmental requirements relating
to the generation, management, handling, transportation, treatment, disposal,
storage, delivery, discharge, release or emission of any waste, pollution, or
toxic hazardous or other substance (the "Environmental Laws"), and Acquired
Corporation has no Knowledge that any Acquired Corporation Company has not
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complied with all regulations and requirements promulgated by the Occupational
Safety and Health Administration that are applicable to any Acquired Corporation
Company. To the Knowledge of Acquired Corporation, there is no Litigation
pending or threatened with respect to any violation or alleged violation of the
Environmental Laws. Acquired Corporation has no Knowledge, with respect to
Assets of or owned by any Acquired Corporation Company, that (i) there has been
spillage, leakage, contamination or release of any substances for which the
appropriate remedial action has not been completed; (ii) any owned or leased
property is contaminated with or contains any hazardous substance or waste; and
(iii) there are any underground storage tanks on any premises owned or leased by
any Acquired Corporation Company. Acquired Corporation has no Knowledge of any
facts which might suggest that any Acquired Corporation Company has engaged in
any management practice with respect to any of its past or existing borrowers
which could reasonably be expected to subject any Acquired Corporation Company
to any Liability, either directly or indirectly, under the principles of law as
set forth in United States v. Fleet Factors Corp., 901 F.2 d 1550 (11th Cir.
1990) or any similar principles. Moreover, Acquired Corporation has no Knowledge
that any Acquired Corporation Company has extended credit, either or j a secured
or unsecured basis, to any person or other entity engaged in any activities
which would require or requires such person or entity to obtain any Permit under
any Environmental Law which has not been obtained.
5.24 TRANSFER OF SHARES. Acquired Corporation has no Knowledge of any
plan or intention on the part of Acquired Corporation's shareholders to sell or
otherwise dispose of any of the BancGroup Common Stock to be received by them in
the Merger that would, reduce such shareholders' ownership to a number of shares
having, in the aggregate, a fair market value of less than fifty (50%) percent
of the total fair market value of Acquired Corporation common stock outstanding
immediately before the Merger.
5.25 COLLECTIVE BARGAINING. There are no labor contracts, collective
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any Acquired Corporation Company and any union or labor
organization covering any of Acquired Corporation's Company's employees and none
of said employees are represented by any union or labor organization.
5.26 LABOR DISPUTES. To the Knowledge of Acquired Corporation, each
Acquired Corporation Company is in material compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, wages and hours. No Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. Relations between
management and each Acquired Corporation Company and the employees are amicable
and there have not been, nor to the Knowledge of Acquired Corporation, are there
presently, any attempts to organize employees, nor to the Knowledge of Acquired
Corporation, are there plans for any such attempts.
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5.27 DERIVATIVE CONTRACTS. No Acquired Corporation Company is a party
to or has agreed to enter into a swap, forward, future, option, cap, floor or
collar financial contract, or any other interest rate or foreign currency
protection contract or derivative security not included in Acquired
Corporation's financial statements which is a financial derivative contract
(including various combinations thereof).
ARTICLE 6
ADDITIONAL COVENANTS
6.1 ADDITIONAL COVENANTS OF BANCGROUP. BancGroup covenants to and with
Acquired Corporation as follows:
(a) Registration Statement and Other Filings. BancGroup shall
prepare and file with the SEC the Registration Statement on Form S-4 (or such
other form as may be appropriate) and all amendments and supplements thereto, in
form reasonably satisfactory to Acquired Corporation and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement. BancGroup
shall use reasonable good faith efforts to prepare all necessary filings with
any Agencies which may be necessary for approval to consummate the transactions
contemplated by this Agreement.
(b) Blue Sky Permits. BancGroup shall use its best efforts to
obtain, prior to the effective date of the Registration Statement, all necessary
state securities Law or "blue sky" Permits and approvals required to carry out
the transactions contemplated by this Agreement.
(c) Financial Statements. BancGroup shall furnish to Acquired
Corporation:
(i) As soon as practicable and in any event within
forty-five (45) days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of operations of
BancGroup for such period and for the period beginning at the commencement of
the fiscal year and ending at the end of such quarterly period, and a
consolidated statement of financial condition of BancGroup as of the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding periods ending in the preceding fiscal year, subject to changes
resulting from year-end adjustments;
(ii) Promptly upon receipt thereof, copies of all
audit reports submitted to BancGroup by independent auditors in connection with
each annual, interim or special audit of the books of BancGroup made by such
accountants;
(iii) As soon as practicable, copies of all such
financial statements and reports as it shall send to its stockholders and of
such regular and periodic reports as BancGroup may file with the SEC or any
other Agency; and
(iv) With reasonable promptness, such additional
financial data as Acquired Corporation may reasonably request.
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(d) No Control of Acquired Corporation by BancGroup.
Notwithstanding any other provision hereof, until the Effective Date, the
authority to establish and implement the business policies of Acquired
Corporation shall continue to reside solely in Acquired Corporation's officers
and board of directors.
(e) Listing. Prior to the Effective Date, BancGroup shall use
its reasonable efforts to list the shares of BancGroup Common Stock to be issued
in the Merger on the NYSE or other quotations system on which such shares are
primarily traded.
(f) Employee Benefit Matters. On The Effective Date, all
employees of any Acquired Corporation Company shall, at BancGroup's option,
either become employees of the Resulting Corporation or its Subsidiaries or be
entitled to severance benefits in accordance with Colonial Bank's severance
policy as of the date of this Agreement. All employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or its
Subsidiaries on the Effective Date shall be entitled, to the extent permitted by
applicable Law, to participate in all benefit plans of Colonial Bank to the same
extent as Colonial Bank employees, except as stated Otherwise in this section.
Employees of any Acquired Corporation Company who become employees of the
Resulting Corporation or its Subsidiaries on the Effective Date shall be allowed
to participate as of the Effective Date in the medical and dental benefits plan
of Colonial Bank as new employees of Colonial Bank, and the time of employment
of such employees who are employed at least 30 hours per week with any Acquired
Corporation Company as of the Effective Date shall be counted as employment
under such dental and medical plans of Colonial Bank for purposes of calculating
any 30 day waiting period and pre-existing condition limitations. To the extent
permitted by applicable Law, the period of service with the appropriate Acquired
Corporation Company of all employees who become employees of the Resulting
Corporation or its Subsidiaries on the Effective Date shall be recognized only
for vesting and eligibility purposes under Colonial Bank's benefit plans. In
addition, if the Effective Date falls within an annual period of coverage under
any group health plan or group dental plan of the Resulting Corporation and its
Subsidiaries, each such Acquired Corporation Company employee shall be given
credit for covered expenses paid by that employee under comparable employee
benefit plans of the Acquired Corporation Company during the applicable coverage
period through the Effective Date towards satisfaction of any annual deductible
limitation and out-of-pocket maximum that may apply under that group health plan
or group dental plan of the Resulting Corporation and its Subsidiaries.
(g) Acquisition of Discovery Period Insurance Coverage.
BancGroup shall, or shall cause Colonial Bank to, use its reasonable best
efforts to purchase a runoff "discovery period" extension under the Acquired
Corporation's existing director and officer liability insurance policy covering
persons who are currently covered by such insurance for a period of two years
after the Effective Date; provided, that neither BancGroup nor Colonial Bank
shall be obligated to pay more than $20,000 in premium costs for such coverage.
(h) Indemnification. Subject to the conditions set forth in
the succeeding paragraph, for a period of five years after the Effective Date
BancGroup shall, and shall cause
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Colonial Bank to, indemnify, defend and hold harmless each person entitled to
indemnification from the Acquired Corporation (each being an "Indemnified
Party") against all liabilities arising out of actions or omissions occurring
upon or prior to the Effective Date (including without limitation the
transactions contemplated by this Agreement) to the maximum extent authorized
under Section 607.0850 of the FBCA.
(i) Any Indemnified Party wishing to claim
indemnification under this subsection (b), upon learning of any such liability
or Litigation, shall promptly notify BancGroup thereof. In the event of any such
Litigation (whether arising before or after the Effective Date (i) BancGroup or
Colonial Bank shall have the right to assume the defense thereof with counsel
reasonably acceptable to such Indemnified Party and, upon assumption of such
defense, BancGroup shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
BancGroup or Colonial Bank elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between BancGroup and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and BancGroup or
Colonial Bank shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided that
BancGroup shall be obligated pursuant to this subsection to pay for only one
firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation; and
(iii) BancGroup shall not be liable for any settlement effected without its
prior consent; and further provided that BancGroup and Colonial Bank shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(ii) In consideration of and as a condition precedent to the
effectiveness of the indemnification obligations provided by BancGroup in this
section to a director or officer of the Acquired Corporation, such director or
officer of the Acquired Corporation shall have delivered to BancGroup on or
prior to the Effective Date a letter in form reasonably satisfactory to
BancGroup concerning claims such directors or officer may have against Acquired
Corporation. In the letter, the directors or officer shall: (i) acknowledge the
assumption by BancGroup as of the Effective Date of all Liability (to the extent
Acquired Corporation is so liable) for claims for indemnification arising under
section 6.1(h) hereof; (ii) affirm that they do not have nor are they aware of
any claims they might have (other than those referred to in the following clause
(iii) against Acquired Corporation; (iii) identify any claims or any facts or
circumstances of which they are aware that could give rise to a claim for
indemnification under section 6.1(h)(i) hereof; and (iv) release as of the
Effective Date any and all claims that they may have against any Acquired
Corporation Company other than (A) those referred to in the foregoing clause
(iii) and disclosed in the letter of the director or officer, (B) claims which
have not yet been asserted against such director or officer (other than claims
arising from facts and circumstances of which such director or of fleer in such
director or executive officer's letter), (C) claims arising from any transaction
contemplated by this Agreement or disclosed in any schedule to this Agreement,
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and (D) claims arising in the ordinary course of business of any Acquired
Corporation Company after the date of the letter.
(iii) Acquired Corporation hereby represents and warrants to
BancGroup that it has no Knowledge of any claim, pending or threatened, or of
any facts or circumstances that could give rise to any obligation by BancGroup
to provide the indemnification required by this section 6.1(h) other than as
disclosed in the letters of the directors and executive officers referred to in
section 6.1(h)(iii) hereof or described in any schedule to this Agreement and
claims arising from any transaction Contemplated by this Agreement.
(i) ADDITIONAL COVENANTS OF ACQUIRED CORPORATION. Acquired Corporation
covenants to and with BancGroup as follows:
(i) Operations. (i) Acquired Corporation will conduct its
business and the business of each Acquired Corporation Company in a proper and
prudent manner and will use its best efforts to maintain its relationships with
its depositors, customers and employees. No Acquired Corporation Company will
engage in any material transaction outside the ordinary course of business or
make ally material change in its accounting policies or methods of operation,
nor will Acquired Corporation permit the occurrence of any change or event which
would render any of the representations and warranties in Article 5 hereof
untrue in any material respect at and as of the Effective Date with the same
effect as though such representations and warranties had been made at and as of
such Effective Date. Acquired Corporation will take no action that would prevent
or impede the Merger from qualifying (i) for pooling of interests accounting
treatment or (ii) as a reorganization with the meaning of Section 368 of the
Code.
(ii) If requested by BancGroup, Acquired Corporation shall use
its best efforts to cause all officers and directors of any Acquired Corporation
Company that own any stock of Acquired Corporation and all shareholders of
Acquired Corporation who own more than five percent (5%) of Acquired Corporation
outstanding shares of common stock, to execute an acknowledgment that such
person has no present plan, intention, or binding commitment to sell or
otherwise dispose of the BancGroup Common Stock to be received in the Merger
within twelve (12) months after the Effective Date.
(iii) Stockholders Meeting: Best Efforts. Acquired Corporation
will cooperate with BancGroup in the preparation of the Registration Statement
and any regulatory filings and will cause the Stockholders Meeting to be held
for the purpose of approving the Merger as soon as practicable after the
effective date of the Registration Statement, and will use its best efforts to
bring about the transactions contemplated by this Agreement, including
stockholder approval of this Agreement, this Agreement is terminated as provided
herein.
(iv) Prohibited Negotiations. Until the termination of this
Agreement, neither Acquired Corporation nor any of Acquired Corporation's
directors or officers (or any person representing any of the foregoing) shall
solicit or encourage inquiries or proposals with respect to, furnish any
information relating to or participate in any negotiations or discussions
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concerning, an Acquisition Proposal other than as contemplated by this
Agreement. Acquired Corporation will notify BancGroup immediately if any such
Acquisition Proposal is received by Acquired Corporation, if any such
information is requested from Acquired Corporation, or if any such negotiations
or discussions are sought to be initiated with Acquired Corporation, and
Acquired Corporation shall instruct Acquired Corporation's officers, directors,
agents or affiliates or their subsidiaries to refrain from doing any of the
above; provided, however, that Acquired Corporation may communicate information
about such an Acquisition Proposal to its shareholders if and to the extent that
legal counsel provides a written opinion to Acquired Corporation (a copy of
which shall be provided in advance to BancGroup that it is required to do so in
order to comply with its legal obligations. Acquired Corporation shall
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons other than BancGroup conducted
hereto with respect to any of the foregoing.
(v) Director Recommendation. The members of the Board of
Directors of Acquired Corporation agree to support publicly the Merger,
provided, however, that nothing contained herein shall be deemed to prohibit any
officer or director of Acquired Corporation from full filling his fiduciary duty
or from taking any action that is required by Law.
(vi) Shareholder voting. Acquired Corporation shall on the
date of execution of this Agreement obtain and submit to BancGroup an agreement
from certain of its shareholders substantially in the form set forth in Exhibit
A.
(vii) Financial Statements. Acquired Corporation shall furnish
to BancGroup:
(1) As soon as practicable and in any event within 45
days after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated statements of operations of Acquired
Corporation for such period and for the period beginning at the commencement of
the fiscal year and ending at the end of such quarterly period, and a
consolidated statement of financial condition of Acquired Corporation as of the
end of such quarterly period, setting forth in each case in comparative form
figures for the corresponding periods ending in the preceding fiscal year,
subject to changes resulting from year-end adjustments;
(2) Promptly upon receipt thereof, copies of all
audit reports submitted to Acquired Corporation by independent auditors in
connection with each annual, interim or special audit of the books of Acquired
Corporation made by such accountants;
(3) As soon a practicable, copies of all such
financial statements and reports as it shall send to its stockholders and of
such regular and periodic reports as Acquired Corporation may file with the SEC
or any other Agency; and
(4) With reasonable promptness, such additional
financial data as BancGroup may reasonably request.
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(5) Fiduciary Duties. Prior to the Effective Date,
(i) no director or officer (each an "Executive") of any Acquired Corporation
Company shall, directly or indirectly, own, manage, operate, join, control, be
employed by or participate in the ownership, proposed ownership, management,
operation or control of or be connected in any manner with, any business,
corporation or partnership which is competitive to the business of any Acquired
Corporation Company, (ii) all Executives, at all times, shall satisfy their
fiduciary duties to Acquired Corporation and its Subsidiaries, and (iii) such
Executives shall not (except as required in the course of his or her employment
with any Acquired Corporation Company) communicate or divulge to, or use for thy
benefit of himself or herself or any other person, firm, association or
corporation, without the express written consent of Acquired Corporation, any
confidential information which is possessed, owned or used by or licensed by or
to any Acquired Corporation Company or confidential information belonging to
third parties which any Acquired Corporation Company shall be under obligation
to keep secret or which may be communicated to, acquired by or learned of by the
Executive in the course of or as a result of his or her employment with any
Acquired Corporation Company.
(6) Certain Practices. At the request of BancGroup,
(i) Acquired Corporation shall consult with BancGroup and advise BancGroup
through its bank Subsidiary in Orlando, Florida of all of the Bank's loan
requests over $2,000,000 that are not single-family residential loan requests or
of any other loan request outside the Bank's normal course of business, and (ii)
Acquired Corporation will consult with BancGroup to coordinate, on a basis
mutually satisfactory to Acquired Corporation and BancGroup, such business
issues as the Acquired Corporation reasonably believes should be brought to the
attention of BancGroup. Acquired Corporation and the Bank shall not be required
to undertake any of such activities, however, except as such activities may be
in compliance with existing Law and Regulations.
ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
7.1 BEST EFFORTS; COOPERATION. Subject to the terms and conditions
herein provided, BancGroup and Acquired Corporation each agrees to use its best
efforts promptly to take, or cause to be taken, all actions and do, or cause to
be done, all things necessary, proper or advisable under applicable Laws or
otherwise, including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, to consummate and make
effective, as soon as practicable, the transactions contemplated by this
Agreement. The officers of each Party to this Agreement shall fully cooperate
with officers and employees, accountants, counsel and other representatives of
the other Parties not only in fulfilling the duties hereunder of the Party of
which they are officers but also in assisting, directly or through direction of
employees and other persons under their supervision or control, such as stock
transfer agents for the Party, the other Parties requiring information which is
reasonably available from such Party.
7.2 PRESS RELEASE. Each Party hereto agrees that, unless approved by
the other Parties in advance, such Party will not make any public announcement,
issue any press release or other
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publicity or confirm any statements by any person not a party to this Agreement
concerning the transactions contemplated hereby. Notwithstanding the foregoing,
each Party hereto reserves the right to make any disclosure if such Party, in
its reasonable discretion, deems such disclosure required by Law. In that event,
such Party shall provide to the other Party the text of such disclosure
sufficiently in advance to enable the other Party to have a reasonable
opportunity to comment thereon.
7.3 MUTUAL DISCLOSURE. Each Party hereto agrees to promptly furnish to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Form 8-K, Form 10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to shareholders, Tax returns, Form S-8 registration statements
and similar documents.
7.4 ACCESS TO PROPERTIES AND RECORDS. Each Party hereto shall afford
the officers and authorized representatives of the other Party full access to
the Assets, books and records of such Party in order that such other Parties may
have full opportunity to make such investigation as they shall desire of the
affairs of such Party and shall furnish to such Parties such additional
financial and operating data and other information as to its businesses and
Assets as shall be from time to time reasonably requested. All such information
that may be obtained by any such Party will be held in confidence by such party,
will not be disclosed by such Party or any of its representatives except in
accordance with this Agreement, and will not be used by such Party for any
purpose other than the accomplishment of the Merger as provided herein.
7.5 NOTICE OF ADVERSE CHANGES. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of BancGroup and Acquired Corporation to cause the
transactions contemplated by this Agreement to be consummated shall be subject
to the satisfaction, in the sole discretion of the Party relying upon such
conditions, or before the Effective Date of all the following conditions, except
as such Parties may waive such conditions in writing:
8.1 APPROVAL BY SHAREHOLDERS. At the Stockholders Meeting, this
Agreement and the matters contemplated by this Agreement shall have been duly
approved by the vote of the holders of not less than the requisite number of the
issued and outstanding voting securities of Acquired Corporation as is required
by applicable Law and Acquired Corporation's articles of incorporation and
bylaws.
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8.2 REGULATORY AUTHORITY APPROVAL. Orders, Consents and approvals, in
form and substance reasonably satisfactory to BancGroup and Acquired
Corporation, shall have been entered by the Board of Governors of the Federal
Reserve System and other appropriate bank regulatory Agencies (i) granting the
authority necessary for the consummation of the transactions contemplated by
this Agreement, including the merger of the Bank with Colonial Bank as
structured pursuant to section 2.8 hereof and (ii) satisfying all other
requirements prescribed by Law. No Order, Consent or approval so obtained which
is necessary to consummate the transactions as contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable good faith
judgment of the Board of Directors of BancGroup would so materially adversely
impact the economic benefits of the transaction as contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
8.3 LITIGATION. There shall be no pending or threatened Litigation in
any court or any pending or threatened proceeding by any governmental
commission, board or Agency, with a view to seeking or in which it is sought to
restrain or prohibit consummation of the transactions contemplated by this
Agreement or in which it is sought to obtain divestiture, rescission or damages
in connection with the transactions contemplated by this Agreement and no
investigation by any Agency shall be pending or threatened which might result in
any such suit, action or other proceeding.
8.4 REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall be in effect; no proceedings for such purpose,
or under the proxy rules of the SEC or any bank regulatory authority pursuant to
the 1934 Act, and with respect to the transactions contemplated hereby, shall be
pending before or threatened by the SEC or any bank regulatory authority, and
all approvals or authorizations for the offer of BancGroup Common Stock shall
have been received or obtained pursuant to any applicable state securities Laws,
and no stop order or proceeding with respect to the transactions contemplated
hereby shall be pending or threatened under any such state Law.
8.5 TAX OPINION. An opinion of Coopers & Lybrand, LLP, shall have been
received in form and substance reasonably satisfactory to the Acquired
Corporation and BancGroup to the effect that (i) the Merger will constitute a
"reorganization" within the meaning of section 368 of the Code; (ii) no gain or
loss will be recognized by BancGroup or Acquired Corporation; (iii) no gain or
loss will be recognized to the shareholders of Acquired Corporation who receive
shares of BancGroup Common Stock except to the extent of any taxable "boot"
received by such persons from BancGroup, and except to the extent of any
dividends received from Acquired Corporation prior to the Effective Date; (iv)
the basis of the BancGroup Common Stock received in the Merger will be equal to
the sum of the basis of the shares of Acquired Corporation common stock
exchanged in the Merger and the amount of gain, if any, which was recognized by
the exchanging Acquired Corporation shareholder, including any portion treated
as a dividend, less the value of taxable boot, if any, received by such
shareholder in the Merger; (v) the holding period of the BancGroup Common Stock
will include the holding period of the shares of Acquired Corporation common
stock exchanged therefor if such shares of Acquired
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<PAGE> 34
Corporation common stock are capital assets in the hands of the exchanging
Acquired Corporation shareholder; and (vi) cash received by an Acquired
Corporation shareholder in lieu of a fractional share interest of BancGroup
Common Stock will be treated as having been received as a distribution in full
payment in exchange for the fractional share interest of BancGroup Common Stock
which he or she would otherwise be entitled to receive and will qualify as
capital gain or loss (assuming the Acquired Corporation common stock is a
capital asset in his or her hands as of the Effective Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Notwithstanding any
investigation made by or on behalf of Acquired Corporation, all representations
and warranties of BancGroup contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of such Effective Date, and BancGroup shall have
performed in all material respects all agreements and covenants required by this
Agreement to be performed by it on or prior to the Effective Date.
9.2 ADVERSE CHANGES. There shall have been no changes after the date of
the most recent balance sheet provided under section 4.3(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition or affairs of BancGroup
which in their total effect constitute a Material Adverse Effect, nor shall
there have been any material changes in the Laws governing the business of
BancGroup or which would impair the rights of Acquired Corporation or its
shareholders pursuant to this Agreement.
9.3 CLOSING CERTIFICATE. In addition to any other deliveries required
to be delivered hereunder, Acquired Corporation shall have received a
certificate from the President or a Vice President and from the Secretary or
Assistant Secretary of BancGroup dated as of the Closing certifying that:
(a) the Board of Directors of BancGroup has duly adopted
resolutions approving the substantive terms of this Agreement and authorizing
the consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) each person executing this Agreement on behalf of
BancGroup is an officer of BancGroup holding the office or offices specified
therein and the signature of each person set forth on such certificate is his or
her genuine signature;
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(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;
(d) such persons have no knowledge of a basis for any material
claim, in any court or before any Agency or arbitration or otherwise against, by
or affecting BancGroup or the business, prospects, condition (financial or
otherwise), or Assets of BancGroup or which would prevent the performance of
this Agreement or the transactions contemplated by this Agreement or declare the
same unlawful or cause the rescission thereof;
(e) to such persons' knowledge, the Proxy Statement delivered
to Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any material
fact required to be stated thereon or necessary to make the statements therein
not misleading in light of the circumstances under which they were made (it
being understood that such persons need not express a statement as to
information concerning or provided by Acquired Corporation for inclusion in such
Proxy Statement); and
(f) the conditions set forth in this Article 9 insofar as they
relate to BancGroup have been satisfied.
9.4 OPINION OF COUNSEL. Acquired Corporation shall have received an
opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated
as of the Closing, substantially in the form set forth in Exhibit B here To.
9.5 FAIRNESS OPINION. Acquired Corporation shall have received prior to
the mailing of the Proxy Statement from The Carson Medlin Company a letter
setting forth its opinion that the Merger Consideration to be received by the
shareholders of Acquired Corporation under the terms of this Agreement is fair
to them from a financial point of view, and such opinion shall not have been
withdrawn as of the Effective Date.
9.6 NYSE LISTING. The shares of BancGroup Common Stock to be issued
under this Agreement shall have been approved for listing on the NYSE.
9.7 OTHER MATTERS. There shall have been furnished to counsel for
Acquired Corporation certified copies of such corporate records of BancGroup and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
9.8 MATERIAL EVENTS. There shall have been no determination by the
board of directors of Acquired Corporation that the transact contemplated by
this Agreement have become impractical because of any state of war , declaration
of a banking moratorium in the United States or a general suspension of trading
on the NYSE or any other exchange on which BancGroup Common Stock may be traded.
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<PAGE> 36
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BANCGROUP
The obligations of BancGroup to cause the transactions contemplated by
this Agreement to be consummated shall be subject to the satisfaction on or
before the Effective Date of all of the following conditions except as BancGroup
may waive such conditions in writing:
10.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Notwithstanding any
investigation made by or on behalf of BancGroup, all representations and
warranties of Acquired Corporation contained in this Agreement shall be true in
all material respects on and as of the Effective Date as if such representations
and warranties were made on and as of the Effective Date, and Acquired
Corporation shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Effective Date.
10.2 ADVERSE CHANGES. There shall have been no changes after the date
of the most recent balance sheet provided under section 5.4(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition, or affairs of Acquired
Corporation which constitute a Material Adverse Effect, nor shall there have
been any material changes in the Laws governing the business of Acquired
Corporation which would impair BancGroup's rights pursuant to this Agreement.
10.3 CLOSING CERTIFICATE. In addition to tiny deliveries required to be
delivered hereunder, BancGroup shall have received a certificate from Acquired
Corporation executed by the President or Vice President and from the Secretary
or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:
(a) the Board of Directors of Acquired Corporation has duly
adopted resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this Agreement
and such resolutions have not been amended or modified and remain in full force
and effect;
(b) the shareholders of Acquired Corporation have duly adopted
resolutions approving the substantive terms of the Merger and the transactions
contemplated thereby and such resolutions have not been amended or modified and
remain in full force and effect;
(c) each person executing this Agreement on behalf of Acquired
Corporation is an officer of Acquired Corporation holding the office or offices
specified therein and the signature of each person set forth on such certificate
is his or her genuine signature;
(d) the articles of incorporation and bylaws of Acquired
Corporation and the Bank referenced in section 5.8 hereof remain in full force
and effect and have not been amended or modified since the date hereof;
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(e) to such persons' knowledge, the Proxy Statement delivered
to Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made (it
being understood that such persons need only express a statement as to
information concerning or provided by Acquired Corporation for inclusion in such
Proxy Statement); and
(f) the conditions set forth in this Article 10 insofar as
they relate to Acquired Corporation have been satisfied.
10.4 OPINION OF COUNSEL. BancGroup shall have received an opinion of
Bush Ross Gardner Warren & Rudy, P.A., counsel to Acquired Corporation, dated as
of the Closing, substantially as set forth in Exhibit C hereto.
10.5 CONTROLLING SHAREHOLDERS. Each shareholder of Acquired Corporation
who may be an "affiliate" of Acquired Corporation, within the meaning of Rule
145 of the general rules and regulations under the 1933 Act shall have executed
and delivered an agreement satisfactory to BancGroup to the effect that such
person shall not make a "distribution" (within the meaning of Rule 145) of the
Common Stock which he receives upon the Effective Date and that such Common
Stock will be held subject to all applicable provisions of the 1933 Act and the
rules and regulations of the SEC thereunder, and the undersigned will not sell
or otherwise reduce Ask relative to any shares of BancGroup Common Stock
received in the Merger until financial results concerning at least 30 days of
post-Merger combined operations have been published by BancGroup within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. Acquired Corporation recognizes and acknowledges that BancGroup Common
Stock issued to such persons may bear a legend, in form reasonably acceptable to
the Acquired Corporation, evidencing the agreement described above.
10.6 OTHER MATTERS. There shall have been furnished to counsel for
BancGroup certified copies of such corporate records of Acquired Corporation and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
10.7 DISSENTERS. The number of shares as to which shareholders of
Acquired Corporation shall have exercised dissenters rights of appraisal under
section 3.6 does not exceed 10 percent of the outstanding shares of common stock
of Acquired Corporation.
10.8 MATERIAL EVENTS. There shall have been no determination by the
board of directors of BancGroup that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or general suspension of trading on the
NYSE or any exchange on which BancGroup Common Stock may be traded.
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10.9 SEVERANCE AGREEMENT. A severance agreement, in form and substance
reasonably satisfactory to BancGroup and Richard H. Eatman, shall have been
executed between BancGroup and Richard H. Eatman.
10.10 POOLING OF INTEREST. BancGroup shall have received the written
opinion of Coopers & Lybrand, L.L.P., that the Merger will qualify for the
pooling of interests method of accounting under generally accepted accounting
principles.
ARTICLE 11
TERMINATION OF REPRESENTATIONS AND WARRANTIES
All representations and warranties provided in Articles 4 and 5 of this
Agreement or in any closing certificate pursuant to Articles 9 and 10 shall
terminate and be extinguished at and shall not survive the Effective Date. All
covenants, agreements and undertakings required by this Agreement to be
performed by any Party hereto following the Effective Date shall survive such
Effective Date and be binding upon such Party. If the Merger is not consummated,
all representations, warranties, obligations, covenants, or agreements hereunder
or in any certificate delivered hereunder relating to the transaction which is
not consummated shall be deemed to be terminated or extinguished, except that
Sections 7.2, 7.4, Article 11, Article 15 and any applicable definitions of
Article 14, shall survive. Items disclosed in the Exhibits and Schedules
attached hereto are incorporated into this Agreement and form a part of the
representation,, warranties, covenants or agreements to which they relate.
Information provided in such Exhibits and Schedules is provided only in response
to the specific section of this Agreement which calls for such information.
ARTICLE 12
NOTICES
All notices, requests, demands, consents, approvals and other
communications under this Agreement shall be in writing and shall be given to
the recipient party by hand delivery; or by sending a copy thereof by first
class or express mail, postage prepaid, by telegram (with messenger service
specified), or by courier service (with charges prepaid), in each case to the
address indicated below or to such other address as the recipient shall have
provided in accordance with the terms hereof; or by sending a copy thereof by
whatever telecopier service the recipient shall have designated below (or by
subsequent notice provided in accordance with the terms hereof). If the notice
is sent by mail, telegraph or courier services, it shall be deemed to have been
given that the recipient when deposited in the United States mail or with a
telegraph office or courier service for delivery to that party; or if by
telecopier, when the sending party is in receipt of documentary evidence that
the transmission has been successfully completed. Whenever the furnishing of
notice is required, the same may be waived by the party entitle id to receive
such notice. Until further notice is provided, the address and telecopier number
of each party is as stated below:
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As to BancGroup:
One Commerce Street, Suite 800
Montgomery, Alabama 33602
Attention: W. Flake Oakley, IV
Telecopier No. (334) 240-6019
Copy to: Michael D. Waters, Esq.
Miller, Hamilton, Snider & Odom, L.L.C.
One Commerce Street, Suite 802
Montgomery, Alabama 36104
Telecopier No. (334) 265-4533
As to Acquired Corporation:
510 Vonderburg Drive
Brandon, Florida 33511
Attention: Richard H. Eatman, President
Telecopier No. (813) 651-1629
Copy to: Jeremy P. Ross, Esq.
Bush Ross Gardner Warren & Rudy, P.A.
220 South Franklin Street
Tampa, Florida 33602
Telecopier No. 813) 223-9620
ARTICLE 13
AMENDMENT OR TERMINATION
13.1 AMENDMENT. This Agreement may be amended by the mutual consent of
BancGroup and Acquired Corporation before or after approval of the transactions
contemplated herein by the shareholders of Acquired Corporation.
13.2 TERMINATION. This Agreement may be terminated at any time prior to
or on the Effective Date whether before or after action thereon by the
shareholders of Acquired Corporation, as follows:
(a) by the mutual consent of the respective boards of
directors of Acquired Corporation and BancGroup;
(b) by the board of directors of either Party (provided that
the terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a breach by the other Party of any representation or warranty contained in
this Agreement which cannot be or has not been cured within thirty (30) days
after the giving of written notice to the breaching Party of such breach
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snd which breach would provide the non-breaching Party the ability to refuse to
consummate the Merger for failure to satisfy the condition set forth in section
10.1 of this Agreement in the case of BancGroup and section 9.1 of this
Agreement in the case of Acquired Corporation;
(c) by the board of directors of either Party (provided that
the terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within thirty (30) days
after the giving of written notice to the breaching Party of such breach, or if
any of the conditions to the obligations of such Party contained in this
Agreement in Article 9 as to Acquired Corporation or Article 10 as to BancGroup
shall not have been satisfied in full; or
(d) by the board of directors of either BancGroup or Acquired
Corporation if all transactions contemplated by this Agreement shall not have
been consummated on or prior to June 30, 1997, if the failure to consummate the
transactions provided for in this Agreement on or before such date is not caused
by any breach of this Agreement by the Party electing to terminate pursuant to
this section 13.2(d).
13.3 DAMAGES. In the event of termination pursuant to section 13.2,
Acquired Corporation and BancGroup shall not be liable for damages for any
breach of warranty or representation contained in this Agreement made in good
faith, and, in that case, the expenses incurred shall be borne as set forth in
section 15.1 hereof.
ARTICLE 14
DEFINITIONS
(a) The following terms, which are capitalized in this
agreement, shall have the meanings set forth below for the purpose of this
Agreement:
Acquired Corporation Fort Brooke Bancorporation, a Florida
corporation.
Acquired Corporation Company Shall mean Acquired Corporation, the Bank,
any Subsidiary of Acquired Corporation or
the Bank, or any person or entity acquired
as a Subsidiary of Acquired Corporation or
the Bank in the future and owned by Acquired
Corporation or the Bank at the Effective
Date.
Acquired Corporation Options Options respecting the issuance of 60,410
shares of Acquired Corporation common
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stock pursuant to Acquired Corporation's
stock option plans.
Acquired Corporation Stock Shares of common stock, par value $.001 per
share, of Acquired Corporation.
Acquisition Proposal Shall mean, with respect to a Party, any
tender offer or exchange offer or any
proposal for a merger, acquisition of all of
the stock or assets of, or other business
combination involving such Party or any of
its Subsidiaries or the acquisition of a
substantial equity interest in, or a
substantial portion of the assets of, such
Party or any of its Subsidiaries.
Agencies Shall mean, collectively, the Federal Trade
Commission, the United State Department of
Justice, the Board of Governors of the
Federal Reserve System, the Federal
Insurance Deposit Corporation, the Office of
Thrift Supervision, all state regulatory
agencies having jurisdiction over the
Parties and their respective Subsidiaries,
HUD, the VA, the FHA, the GNMA, the FNMA,
the FHLMC, the NYSE, and the SEC.
Agreement Shall mean this Agreement and Plan of Merger
and the Exhibits and Schedules delivered
pursuant hereto and incorporated herein by
reference.
Assets Of a Person shall mean all of the assets,
properties, businesses and rights of such
Person of every kind, nature, character a
aid description, whether real, personal or
mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or
utilized in such Person's business, directly
or indirectly, in whole or in part, whether
or not carried on the books and records of
such Person, and whether or not owned in the
name of such Person or any Affiliate of such
Person and wherever located.
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The Colonial BancGroup, Inc., a Delaware
corporation with its principal offices in
Montgomery, Alabama.
BancGroup Bank Fort Brooke Band, a Florida state bank.
Closing The closing of thy transactions contemplated
hereby as described in section 2.7 of this
Agreement.
Code The Internal Revenue Code of 1986, as
amended.
Colonial Bank BancGroup's Subsidiary bank located in
Orlando, Florida.
Common Stock BancGroup's Common Stock authorized
and defined in the restated certificate of
incorporation of BancGroup, as amended.
Consent Any consent, approval, authorization,
clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
Contract Any written or oral agreement, arrangement,
authorization, commitment, contract,
indenture, instrument, lease, obligation,
plan, practice, restriction, understanding
or undertaking of any kind or character, or
other document to which any Person is a
party or that is binding on any Person or
its capital stock, Assets or business.
Default Shall mean (i) any breach or violation of or
default under any Contract, Order or Permit,
(ii) any occurrence of any event that with
the passage of time or the giving of notice
or both would constitute a breach or
violation of or default under any Contract,
Order or Permit, or (iii) any occurrence of
any event that with or without the passage
of time or the giving of notice would give
rise
36
<PAGE> 43
to a right to terminate or revoke, change
the current terms of, or renegotiate, or to
accelerate, increase, or impose any
Liability under, any Contract, Order or
Permit.
DGCL The Delaware General Corporation Law.
Effective Date Means the date and time at which the
Merger becomes effective as defined in
section 2.7 hereof.
Environmental Laws Means the laws, regulations and governmental
requirements referred to in section 5.23
hereof.
ERISA The Employee Retirement Income Security Act
of 1974, as amended.
Exchange Ratio The ratio obtained by dividing $31.50 by the
Market Value, as set forth in section
3.1(b).
Exercise Price The exercise price of Acquired
Corporation Options as set forth in section
3.1(b)(ii).
Exhibits A through C, inclusive, shall mean the
Exhibits so marked, copies of which are
attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein
and made a part hereof, and may be referred
to in this Agreement and any other related
instrument or document without being
attached hereto.
FBCA The Florida Business Corporation Act
Knowledge Means the actual knowledge of the Chairman,
President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer,
General Counsel or any Senior or Executive
Vice President of BancGroup, in the case of
knowledge of BancGroup, or of Acquired
Corporation and the Bank, in the case of
knowledge of Acquired Corporation.
37
<PAGE> 44
Law Any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or
statute applicable to a Person or its
Assets, Liabilities or business, including
those promulgated, interpreted or enforced
by any Agency.
Liability Any direct or indirect, primary or
secondary, liability, indebtedness,
obligation, penalty, cost or expense
(including costs of investigation,
collection and defense), deficiency,
guaranty or endorsement of or by any Person
(other than endorsements of notes, bills,
checks, and drafts presented for collection
or deposit in the ordinary course of
business) of any type, whether accrued,
absolute or contingent, liquidated or
unliquidated, matured or unmatured, or
otherwise.
Lien Any conditional sale agreement, default of
title, easement, encroachment, encumbrance,
hypothecaffon, infringement, lien, mortgage,
pledge, reservation, restriction, security
interest, title retention or other security
arrangement, or any adverse right or
interest, charge, or claim of any nature
whatsoever of, on, or with respect to any
property or property interest, other than
(i) Liens for current property Taxes not yet
due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges
to secure deposits and other Liens incurred
in the ordinary course of the banking
business, and (iii) Liens in the form of
easements and restrictive covenants on real
property which do not create a Material
Adverse Effect with respect to the use of
such property by the current owner thereof.
Litigation Any action, arbitration, complaint, criminal
prosecution, governmental or other
examination or investigation, hearing,
inquiry, administrative or other proceeding
38
<PAGE> 45
relating to or affecting a Party, its
business, its Assets (including Contracts
related to it), or the transactions
contemplated by this Agreement.
Loss Any and all direct or indirect payments,
obligations, recoveries, deficiencies,
fines, penalties, interest, assessments,
losses, diminution in the value of Assets,
damages, punitive, exemplary or
consequential damages (including, but not
limited to, lost income and profits and
interruptions of business), liabilities,
costs, expenses (including without
limitation, reasonable attorneys' fees and
expenses, and consultant's fees and other
costs of defense or investigation), and
interest on any amount payable to a third
party as a result of the foregoing.
Material For purposes of this Agreement shall be
determined in light of the facts and
circumstances of the matter in question;
provided that any specific monetary amount
stated in this Agreement shall determine
materiality in that instance.
Material Adverse Effect On a Party shall mean an event, change or
occurrence which has a material adverse
impact on (i) the financial position,
Assets, business, or results of operations
of such Party and its Subsidiaries, taken as
a whole, or (ii) the ability of such Party
to perform its obligations under this
Agreement or to consummate the Merger or the
other transactions contemplated by this
Agreement, provided that "material adverse
impact" shall not be deemed to include the
impact of (x) changes in banking and similar
laws of general applicability or
interpretations thereof by courts or
governmental authorities, (y) changes in
generally accepted accounting principles or
regulatory accounting principles generally
39
<PAGE> 46
applicable to banks and their holding
companies, and (z) the Merger and compliance
with the provisions of this Agreement on the
operating performance of the Parties.
Merger The merger of Acquired Corporation with
BancGroup as contemplated in this Agreement.
Merger Consideration The distribution of BancGroup Common Stock
and cash for each share of Acquired
Corporation Stock as provided in section
3.1(a) hereof.
NYSE The New York Stock Exchange.
Order Any administrative decision or award,
decree, injunction, judgment, order,
quasijudicial decision or award, ruling, or
writ of any federal, state, local or foreign
or other court, arbitrator, mediator,
tribunal, administrative agency or Agency.
Party Shall mean Acquired Corporation or
BancGroup, and "Parties" shall mean both
Acquired Corporation and BancGroup.
Permit Any federal, state, local, and foreign
governmental approval, authorization,
certificate, easement, filing, franchise,
license, notice, permit, or right to which
any Person is a party or that is or may be
binding upon or inure to the benefit of any
Person or its securities, Assets or
business.
Person A natural person or any legal, commercial or
governmental entity, such as, but not
limited to, a corporation, general
partnership, joint venture, limited
partnership, limited liability company,
trust, business association, group acting in
concert, or any person acting in a
representative capacity.
40
<PAGE> 47
Proxy Statement The proxy statement used by Acquired
Corporation to solicit the approval of its
stockholders of the transactions
contemplated by this Agreement, which shall
include the prospectus of BancGroup relating
to the issuance of the BancGroup Common
Stock to the shareholders of Acquired
Corporation.
Registration Statement The registration statement on Form S-4, or
such other appropriate form, to be filed
with the SEC by BancGroup, and which has
been agreed to by Acquired Corporation, to
register the shares of BancGroup Common
Stock offered to stockholders of the Bank
pursuant to his Agreement, including the
Proxy Statement.
Resulting Corporation BancGroup, as the surviving corporation
resulting from the Merger.
SEC United States Securities and Exchange
Commission.
Stockholders Meeting The special meeting of stockholders of
Acquired Corporation called to approve the
transactions contemplated by this Agreement.
Subsidiaries Shall mean all those corporations, banks,
associations, or other entities of which the
entity in question owns or controls 5% or
more of the outstanding equity securities
either directly or through an unbroken chain
of entities as to each of which 5% or more
of the outstanding equity securities is
owned directly or indirectly by its parent;
provided, however, there shall not be
included any such entity acquired through
foreclosure or any such entity the equity
securities of which are owned or controlled
in a fiduciary capacity.
41
<PAGE> 48
Tax or Taxes Means any federal, state, county, local,
foreign, and other taxes, assessments,
charges, fares, and impositions, including
interest and penalties thereon or with
respect thereto.
1933 Act The Securities Act of 1933, as amended.
1934 Act The Securities Exchange Act of 1934, as
amended.
ARTICLE 15
MISCELLANEOUS
14.1 EXPENSES. Each Party hereto shall bear its own legal, auditing,
trustee, investment banking, regulatory and other expenses in connection with
this Agreement and the transactions contemplated hereby.
14.2 BENEFIT. This Agreement shall inure to the benefit of and be
binding upon Acquired Corporation and BancGroup, and their respective
successors. This Agreement shall not be assignable by any Party without the
prior written consent of the other Party.
14.3 GOVERNING LAW. Except to the extent that the laws of the State of
Florida apply to the Merger, this Agreement shall be governed by, and construed
in accordance with the Laws of the State of Delaware without regard to any
conflict of Laws.
14.4 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.
14.5 HEADINGS. The headings of the various articles and sections of
this Agreement are for convenience of reference only and shall not be deemed a
part of this Agreement or considered in construing the provisions thereof.
14.6 SEVERABILITY. Any term or provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
term or provision shall remain valid and in effect in any other circumstances or
situation.
42
<PAGE> 49
14.7 CONSTRUCTION. Use of the masculine pronoun herein shall be deemed
to refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.
14.8 RETURN OF INFORMATION. In the event of termination of this
Agreement prior to the Effective Date, each Party shall return to the other,
without retaining copies thereof, all confidential or non-public documents, work
papers and other materials obtained from the other Party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other person or entity, and
not use such information in connection with its business.
14.9 EQUITABLE REMEDIES. The parties hereto agree that, in the event of
a breach of this Agreement by either Party, the other Party may be without an
adequate remedy at law owing to the unique nature of the contemplated
transactions. In recognition thereof, in addition to (and not in lieu of) any
remedies at law that may be available to the nonbreaching Party, the
non-breaching Party shall be entitled to obtain equitable relief, including the
remedies of specific performance and injunction, in the event of a breach of
this Agreement by the other Party, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to
constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which it
would otherwise be entitled.
14.10 ATTORNEYS' FEES. If any Party hereto shall bring an action at law
or in equity to enforce its rights under this Agreement (including an action
based upon a misrepresentation or the breach of any warranty, covenant,
agreement or obligation contained herein), the prevailing Party in such action
shall be entitled to recover from the other Party its costs and expenses
incurred in connection with such action (including fees, disbursements and
expenses of attorneys and costs of investigation).
14.11 NO WAIVER. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right;
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
14.12 REMEDIES CUMULATIVE. All remedies provided in this Agreement, by
law or otherwise, shall be cumulative and not alternative.
43
<PAGE> 50
14.13 ENTIRE CONTRACT. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement.
IN WITNESS WHEREOF, Acquired Corporation and BancGroup have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
ATTEST: FORT BROOKE BANCORPORATION
- -------------------------------- --------------------------------------------
By: John Adams By: Richard H. Eatman
----------------------------- -----------------------------------------
Its: Secretary Its: President and Chief Executive Officer
---------------------------- ----------------------------------------
(CORPORATE SEAL)
44
<PAGE> 51
ATTEST: THE COLONIAL BANCGROUP, INC.
By: By:
----------------------------- -----------------------------------------
Its: Assistant Secretary Its: Chief Financial Officer
---------------------------- ----------------------------------------
(CORPORATE SEAL)
45
<PAGE> 52
EXHIBIT A
November 18, 1996
Mr. Robert E. Lowder
Chairman of the Board and
Chief Executive Officer
The Colonial BancGroup, Inc.
Post Office Box 1108
Montgomery, Alabama 36101
RE: Merger
Dear Mr. Lowder:
I am writing to confirm the following agreement between The Colonial
BancGroup, Inc. ("BancGroup") and the undersigned regarding the proposed merger
between Fort Brooke Bancorporation ("Acquired Corporation") and BancGroup
pursuant to the Agreement and Plan of Merger dated as of November 18, 1996 (the
"Agreement"). In consideration of the merger and until the merger is consummated
in accordance with the Agreement or the Agreement is terminated in accordance
with its terms, whichever is the first to occur, I agree to vote all of the
shares of Acquired Corporation that I own directly or indirectly or otherwise
have the power to vote in favor of the merger of Acquired Corporation and
BancGroup and in favor of the other transactions contemplated between the two
parties under the agreement, provided that the foregoing is subject to my
receipt of the Proxy Statement as defined in the Agreement. Furthermore, for the
same period of time I will vote any shares I own in Acquired Corporation against
any business combination or other reorganization of any kind involving Acquired
Corporation or its subsidiaries with any entity other than BancGroup.
Sincerely yours,
46
<PAGE> 53
EXHIBIT B
_______________________, 1996
(OPINION OF COUNSEL FOR BANCGROUP)
Acquired Corporation
______________________
______________________
______________________
Gentlemen:
We have acted as counsel to The Colonial BancGroup, Inc. ("BancGroup"),
a Delaware corporation, in connection with the merger of [______________]
Corporation ("Acquired Corporation"), with and into BancGroup, pursuant to the
Agreement and Plan of Merger ("Agreement") dated as of _______________________,
1996 by and between BancGroup and Acquired Corporation. We have Also acted as
counsel to BancGroup in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "1933 Act"), of a Registration Statement on Form S-4,
Registration No. _______________ (the "Registration Statement"), and other
related matters. The terms used in this opinion that are defined in the
Agreement shall have the same definitions where used herein, unless otherwise
defined herein.
In connection with our representation of BancGroup and in order to
render this opinion pursuant to section 9.4 of the Agreement, we have examined
such records, agreements, instruments, documents, and certificates of officers
and employees of BancGroup and of other persons, and such questions of law, as
we deemed necessary or appropriate. In all such examinations, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity to the original documents of documents
submitted to us as certified or photostatic copies. We have relied on
certificates issued to us by the secretaries of state and other appropriate
government officials of the various states in which BancGroup is incorporated or
qualified and, except as expressly set forth in any such documents or
hereinafter, we have assumed the authority of the person or persons who have
executed any such documents on behalf of any person or persons, state or any
other entity.
Upon the basis of the foregoing, we are of He that:
(a) BancGroup is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to carry
47
<PAGE> 54
Acquired Corporation
______________________
Page _______
on its business as now conducted. Each of BancGroup's subsidiary banks is a
wholly-owned subsidiary of BancGroup and is a banking corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation with full corporate power and authority to carry on its
business as now conducted;
(b) The Agreement has been duly authorized, approved and adopted by all
requisite corporate action of the board of directors of BancGroup, this being
the only corporate authorization required under BancGroup's certificate of
incorporation, bylaws and applicable law, has been duly executed and delivered
by BancGroup, and constitutes a valid and legally binding agreement of BancGroup
enforceable in accordance with its terms;
(c) The execution, delivery and performance by BancGroup of the
Agreement will not violate the restated certificate of incorporation of bylaws
of BancGroup and, to the best of our knowledge but without independent
verification, will not violate, result in a breach of, or constitute a default
under any material lease, loan agreement, indenture, mortgage, deed of trust or
other material agreement or instrument known to us to which BancGroup is a
party;
(d) All consents, approvals, authorization, or orders required to be
obtained by BancGroup for the consummation of the transactions contemplated by
the Agreement have been obtained;
(e) The shares of BancGroup Common Stock to be issued pursuant to the
Agreement are duly authorized and will be when so issued, validly issued and
outstanding, fully paid and nonassessable;
(f) The authorized, issued and outstanding shares of capital stock of
BancGroup are as stated in the Agreement, all of which are validly issued, fully
paid and nonassessable and not issued in violation of the preemptive rights of
any stockholder;
(g) To our knowledge, there is no action, suit, proceeding or
investigation pending or currently threatened against BancGroup which questions
the validity of the Agreement or the right of BancGroup to enter into the
Agreement, or to consummate the transactions contemplated thereby, or which
might result, either individually or in the aggregate, in any changes in the
assets, condition, affairs or prospects of BancGroup which are materially
adverse to BancGroup, financially or otherwise, or any change in the current
equity ownership of BancGroup. To our knowledge, BancGroup is not a party to nor
is BancGroup subject to the provisions of any currently order, writ, injunction
or decree of any court or government agency or instrumentality.
(h) To our knowledge, BancGroup is in compliance with all applicable
Federal state, municipal and other political subdivision or governmental agency
statutes, ordinances and
48
<PAGE> 55
Acquired Corporation
______________________
Page _______
regulations in every applicable jurisdiction, in respect of the ownership of its
properties and the conduct of its business, including, without limitation,
antitrust and fair trade practice laws. To our knowledge, there are no
investigations, audits or other proceedings by any Federal, state or municipal
governmental agency pending or threatened against BancGroup.
(i) To our knowledge, BancGroup is not in default under any term or
condition of any instrument evidencing, creating or securing an y material
indebtedness of BancGroup and there has been no default in any material
obligation to be performed by BancGroup under any other material contract,
lease, agreement, commitment or undertaking to which it is a party or by which
it or its assets or properties are bound; nor has BancGroup waived any material
right under any such contract, lease, agreement, commitment or undertaking.
(j) The Registration Statement has become effective and, to our
knowledge, no stop order suspending its effectiveness has been issued nor have
any proceedings for that purpose been instituted; and
(k) The Registration Statement complies us to form in all material
respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder. We do not know of any contracts or of
documents of a character required to be filed as an exhibit to the Registration
Statement, or required to be incorporated by reference into the Prospectus or
required to be described in the Registration Statement or Prospectus which has
not been filed or incorporated by reference or described as required. While we
have made no independent investigation or verification of factual information
relating to BancGroup set forth in the Registration Statement, during the course
of our representation of BancGroup, nothing has come to our attention to
indicate that the Proxy Statement delivered to Acquired Corporation's
stockholders, or any amendments or revisions thereto so delivered, as of the
date thereof, contained or incorporated by reference any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made (it being understood that we do not
hereby express an opinion as to the financial statements, the notes thereto or
other financial or statistical data contained or incorporated by reference in
such Registration Statement or as to any information concerning or provided by
Acquired Corporation for inclusion in the Registration Statement).
We give no opinion as to the laws of any jurisdiction other than the
general corporation law of the State of Delaware and the laws of the United
States and the State of Alabama. We are licensed to practice law only in the
State of Alabama.
The opinions rendered herein are as of the date hereof. We assume no
obligation, and specifically disclaim any responsibility, to update or
supplement these opinions to reflect any
49
<PAGE> 56
Acquired Corporation
______________________
Page _______
facts which hereafter may come to our attention or any changes in facts or law
subsequent to the date hereof.
These opinions have been furnished to you at your request, and we
consider them to be a confidential communication which may not be furnished,
reproduced, distributed, or disclosed to anyone without our prior written
Consent. These opinions are rendered solely for your information and assistance
in connect ion with the transactions contemplated in the Agreement. They may not
be relied upon by any other person or for any other purpose without our prior
written consent.
Sincerely,
Miller, Hamilton, Snider & Odom, L.L.C.
cc: Mr. W. Flake Oakley, IV
50
<PAGE> 57
Acquired Corporation
______________________
Page _______
EXHIBIT C
(OPINION OF COUNSEL FOR ACQUIRED CORPORATION)
_________________, 1996
The Colonial BancGroup, Inc.
One Commerce Street, Suite 800
Montgomery, AL 36104
Gentlemen:
We have acted as counsel to __________________________________
("Acquired Corporation"), a _________________ corporation, in connection with
the trap contemplated by that certain Agreement and Plan of Merger (the
"Agreement") dated as of _____________________, 1996, by and between Acquired
Corporation and The Colonial BancGroup, Inc. ("BancGroup"). We render this
opinion pursuant to section 10.4 of th ~ Agreement. Capitalized terms not
otherwise defined in this letter have the definitions set forth in the
Agreement.
In rendering the opinions set forth in this letter, we have relied, as
to factual matters that affect our opinions, on our examination of the following
documents, and we have made no independent verification of the facts asserted to
be true and correct in those documents:
[Add list]
Based upon the foregoing and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:
1. Acquired Corporation is a corporation duly organized, validly
existing and in good standing under the laws of __________________. Acquired
Corporation (the "Bank") is a ___________ bank duly chartered, organized,
validly existing and in good standing under the laws of ___________________, and
is a wholly owned subsidiary of Acquired Corporation. Acquired Corporation has
the full corporate power and authority to own its properties and to conduct its
business as now conducted and to own lease and operate all of its properties.
The
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<PAGE> 58
The Colonial BancGroup, Inc.
____________________________
Page ____
Bank is an "insured institution" as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, and its deposits are insured by the
__________________ Insurance Fund, to the extent provided by applicable law.
2. Acquired Corporation has the requisite corporate power and authority
to execute, deliver and perform its undertakings and obligations under the
Agreement and to consummate the transactions provided for therein. The
execution, delivery and performance of the Agreement and the consummation of the
transactions provided for therein have been duly and validly authorized by all
necessary corporate action with respect thereto on the part of Acquired
Corporation and its shareholders. The Agreement constitutes a legal, valid and
binding obligation of Acquired Corporation, end in accordance with the
respective terms thereof.
3. The execution, delivery, performance and compliance with the terms
of the Agreement by Acquired Corporation do not violate a or ___________________
law, rule or regulation or any provision Incorporation or Bylaws or, to our
knowledge will constitute a default under any material lease, loan or trust or
other material agreement or instrument Corporation is a party.
4. The authorized capital stock of Acquired Corporation consists of
__________ shares of common stock, par value $_________ per share (the
"Shares"), of which ____________ Shares are issued and outstanding. All such
issued and outstanding Shares have been duly authorized and validly issued, are
fully paid and nonassessable and are free of preemptive rights.
5. To our knowledge, there is no action, suit, proceeding or
investigation pending or currently threatened against Acquired Corporation which
questions the validity of the Agreement or the right of Acquired Corporation to
enter into the Agreement, or to consummate the transactions contemplated
thereby, or which might result, either individually or in the aggregate, in any
changes in the assets, condition, affairs or prospects of Acquired Corporation
which are materially adverse to Acquired Corporation, financially or otherwise,
or any change in the current equity ownership of Acquired Corporation. To our
knowledge, Acquired Corporation is not a party to nor is Acquired Corporation
subject to the provisions of any currently effective order, writ, injunction or
decree of any court or government agency or instrumentality.
6. To our knowledge, Acquired Corporation is in compliance with all
applicable Federal, state, municipal and other political subdivision or
governmental agency statutes, ordinances and regulations in every applicable
jurisdiction, in respect of the ownership of its properties and the conduct of
its business, including, without limitation, antitrust and fair trade practice
laws. To our knowledge, there are no investigations, audits or other proceedings
by any
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<PAGE> 59
The Colonial BancGroup, Inc.
____________________________
Page ____
Federal, state or municipal governmental agency pending or threatened against
Acquired Corporation.
7. To our knowledge, Acquired Corporation is not in default under any
term or condition of any instrument evidencing, creating or securing any
material indebtedness of Acquired Corporation, and there has been no default in
any material obligation to be performed by Acquired Corporation under any other
material contract, lease, agreement, commitment or undertaking to which it is a
party or by which it or its assets or properties are bound; nor has Acquired
Corporation waived any material right under any such contract, lease, agreement,
commitment or undertaking.
Our opinion concerning the validity, binding effect and enforceability
of the Agreement means that: (a) the Agreement constitutes an effective contract
under applicable law; (b) the Agreement is not invalid in it. entirety because
of a specific statutory prohibition or public policy, and is not subject in its
entirety to a contractual defense; and (c) subject to the last sentence of this
paragraph, some remedies are available if Acquired Corporation is in material
default under the Agreement. This opinion does not mean that (a) any particular
remedy is available upon a material default, or (b) every provision of the
Agreement will be upheld or enforced in any circumstance by a court.
Furthermore, the validity, binding effect, and the enforceability of the
Agreement may be limited or otherwise affected by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar statutes,
rules and regulations, or other laws affecting the enforcement of creditors
rights and remedies generally, and (b) the unavailability of, or limitation on
the availability of, a particular right or remedy (whether in a proceeding in
equity or at law) because of an equitable principle or a requirement as to
commercial reasonableness, conscionability or good faith.
We are licensed to practice only in the State of , and our opinions
expressed herein are limited to the application of laws in the State of and the
Federal laws of the United States of America, and do not extend to any laws of
any other state or nation..
This opinion is intended solely for your use in connection with the
above-described transaction and may not be relied upon, used, quoted, made
available to, or circulated to or by any third person or entity, in whole or in
part, without prior consent.
Very truly yours,
By:
-------------------------------------
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<PAGE> 1
EXHIBIT 13.1
The Colonial BancGroup, Inc.
____________________________
Page ____
Exhibit 13.1
to the
Annual Report on Form 10-K
for
the year ended December 31, 1996
for
Fort Brooke Corporation
Fort Brooke Bancorporation 1996 Annual Report
[Attached]
<PAGE> 2
FORT BROOKE BANCORPORATION
1996 ANNUAL REPORT
<PAGE> 3
1996 ANNUAL REPORT
<TABLE>
CONTENTS PAGE
<S> <C>
Corporate Profile and General Information...................................1
Common Stock Prices and Dividends and Office Locations......................2
Consolidated Financial Highlights...........................................3
Selected Financial Data.....................................................4
Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................5-20
Consolidated Financial Statements.......................................21-42
Independent Auditors' Report...............................................43
Officers and Directors..................................................44-45
</TABLE>
<PAGE> 4
CORPORATE PROFILE
Fort Brooke Bancorporation (the "Holding Company") is a one-bank holding company
and its only current business is the ownership and operation of Fort Brooke Bank
(the "Bank"). The Holding Company and the Bank are collectively referred to as
the "Company." On July 10, 1996, the common stockholders of the Bank exchanged
their common shares for common shares of the Holding Company, and at that time
the Bank became a wholly-owned subsidiary of the Holding Company. The formation
of the Holding Company and exchange of shares has been accounted for as a
pooling of interests. Shares held by dissenting shareholders were purchased and
retired prior to the exchange. The Bank is a state-chartered commercial bank
headquartered in Brandon, Florida. At December 31, 1996, Fort Brooke operated
eight retail banking offices in Hillsborough County, Florida and had total
assets of $205.8 million and total stockholders' equity of $16.0 million. The
Bank also owned all of the common shares of BDW Holdings Inc. BDW Holdings
Inc.'s only business activity was the ownership of a parcel of other real estate
owned. BDW Holdings, Inc. was dissolved in December, 1996.
GENERAL INFORMATION
ANNUAL MEETING A special meeting of the Stockholders was held at the
Main Office of the Bank located at 510 Vonderburg
Drive, Brandon, Florida at 4:00 P.M., March 13, 1997.
The shareholders voted for the merger of the Company
into The Colonial BancGroup, Inc. If the merger is
not completed by June 30, 1997, an annual meeting of
the stockholders will be scheduled.
TRANSFER AGENT AND
REGISTRAR Fort Brooke Bank
510 Vonderburg Drive
Brandon, Florida 33511
CORPORATE COUNSEL Bush Ross Gardner Warren & Rudy, P.A.
220 South Franklin Street
Tampa, Florida 33602
INDEPENDENT
AUDITORS Hacker, Johnson, Cohen & Grieb
Certified Public Accountants
500 North Westshore Boulevard
Tampa, Florida 33609
1
<PAGE> 5
COMMON STOCK PRICES AND DIVIDENDS
The Company's common stock is not actively traded but is listed on the
electronic bulletin board. Raymond James & Associates, Inc., and Robert W. Baird
& Co. Incorporated, both facilitate transactions in the Company's stock. The
Company paid cash dividends of $.25 per share in March, 1996 and $.2396 per
share in November, 1996. Future dividends, if any, will be determined by the
Board of Directors.
As of January 31, 1997, the Bank had 642 holders of record of common stock.
OFFICE LOCATIONS
Brandon
510 Vonderburg Drive
Apollo Beach
205 Apollo Beach Boulevard, Suite 100
Plant City
2318 Jim Redman Parkway
Seffner
1707 Parsons Avenue South
Tampa
410 Ware Boulevard
4427 Kennedy Boulevard
200 East Madison Street
12002 Anderson Road
2
<PAGE> 6
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1996 1995
---- ----
(Dollars in thousands, except
AT YEAR END: for per share figures)
<S> <C> <C>
Assets ............................................... $ 205,686 $ 187,116
Loans, net ........................................... $ 138,487 $ 122,511
Investment securities ................................ $ 39,400 $ 43,719
Deposits ............................................. $ 185,887 $ 168,297
Stockholders' equity ................................. $ 15,713 $ 15,800
Book value per share (1) ............................. $ 15.86 $ 15.71
Shares outstanding (1) ............................... 990,553 1,005,920
Equity-to-assets ratio ............................... 7.64% 8.44%
Nonperforming assets-to-total assets ratio (2) ....... .68% 1.10%
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR: 1996 1995 1994
---- ---- ----
(Dollars in thousands, except for per share figures)
<S> <C> <C> <C>
Interest income ............................................. $14,881 $13,929 $11,613
Net earnings ................................................ $ 830 $ 1,664 $ 619
Earnings per share .......................................... $ .83 $ 1.65 $ .63
Return on average assets .................................... .43% .93% .36%
Return on average equity .................................... 5.08% 11.18% 4.59%
Average equity-to-average assets ratio ...................... 8.45% 8.27% 7.79%
Noninterest expenses to average assets ...................... 4.40% 3.41% 4.17%
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE AVERAGE YIELD OR RATE
YIELD OR RATE AT DURING THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------ ---------------------------------
1996 1996 1995 1994
---- ---- ---- ----
YIELDS AND RATES:
<S> <C> <C> <C> <C>
Loan portfolio................................................. 8.93% 9.28% 9.50% 8.74%
Investment securities.......................................... 6.25% 6.21% 5.97% 5.07%
Other interest-earnings assets................................. 6.94% 4.69% 5.76% 4.88%
All interest-earnings assets................................... 8.32% 8.38% 8.40% 7.43%
Deposits and borrowings........................................ 4.31% 4.26% 4.24% 3.44%
Interest-rate spread (3)....................................... 4.01% 4.12% 4.16% 3.99%
Net yield on average interest
earning assets (4)......................................... 5.06% 5.03% 4.55%
</TABLE>
- --------------------
(1) Reflects 10% stock dividend declared in 1995.
(2) Nonperforming assets consist of nonaccrual loans and other real estate
owned.
(3) Average yield on all interest-earning assets less average rate paid on
all interest-bearing liabilities.
(4) Net interest income divided by average interest-earning assets.
3
<PAGE> 7
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share figures)
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
AT YEAR END:
Cash and cash equivalents ......................................... $ 17,722 11,997 8,436 17,650 12,344
Investment securities ............................................. 39,400 43,719 45,041 44,095 37,621
Loans, net ........................................................ 138,487 122,511 112,370 102,052 107,143
All other assets .................................................. 10,077 8,889 9,463 8,997 7,901
-------- --------- --------- ------- -------
Total assets ................................................ $205,686 187,116 175,310 172,794 165,009
======== ========= ========= ======= =======
Deposit accounts .................................................. 185,887 168,297 157,877 158,212 148,724
All other liabilities ............................................. 4,086 3,019 3,676 1,111 3,745
Stockholders' equity .............................................. 15,713 15,800 13,757 13,471 12,540
-------- --------- --------- ------- -------
Total liabilities and stockholders' equity .................. $205,686 187,116 175,310 172,794 165,009
======== ========= ========= ======= =======
FOR THE YEAR:
Total interest income ............................................. 14,881 13,929 11,613 11,296 12,654
Total interest expense ............................................ 5,890 5,588 4,504 4,630 6,071
-------- --------- --------- ------- -------
Net interest income ............................................... 8,991 8,341 7,109 6,666 6,583
Provision for credit losses ....................................... 762 705 184 344 1,726
-------- --------- --------- ------- -------
Net interest income after provision for credit losses ............. 8,229 7,636 6,925 6,322 4,857
Other income ...................................................... 1,564 1,266 1,319 1,435 1,708
Other expenses .................................................... 8,494 6,129 7,213 6,312 6,487
-------- --------- --------- ------- -------
Earnings before income tax provision .............................. 1,299 2,773 1,031 1,445 78
Income tax provision .............................................. 469 1,109 412 522 34
-------- --------- --------- ------- -------
Net earnings ...................................................... $ 830 1,664 619 923 44
======== ========= ========= ======= =======
Net earnings per share (1) ........................................ $ .83 1.65 .63 .95 .05
======== ========= ========= ======= =======
Weighted average number of shares outstanding (1) ................. 998,595 1,005,920 984,711 966,864 867,243
========= ========= ========= ======= =======
RATIOS AND OTHER DATA:
Return on average assets .......................................... .43% .93% .36% .56% .03%
Return on average equity .......................................... 5.08% 11.18% 4.59% 7.16% .37%
Average equity to average assets .................................. 8.45% 8.27% 7.79% 7.81% 7.09%
Interest-rate spread during the period ............................ 4.12% 4.16% 3.99% 3.92% 3.73%
Net yield on average interest-earning assets ...................... 5.06% 5.03% 4.55% 4.41% 4.30%
Noninterest expenses to average assets ............................ 4.40% 3.41% 4.17% 3.82% 3.90%
Ratio of average interest-earning assets to average
interest-bearing liabilities ................................ 1.28 1.26 1.19 1.16 1.14
Nonperforming loans and real estate owned as a percentage of
total assets at end of year ................................. .64% 1.10% 1.47% 1.39% 2.00%
Allowance for credit losses as a percentage
of total loans at end of year ............................... 1.94% 1.37% 1.37% 1.37% 1.05%
Total number of banking offices ................................... 8 7 7 8 7
Total shares outstanding at end of year (1) ....................... 990,553 1,005,920 1,005,920 966,864 966,864
Book value per share at end of year (1) ........................... $ 15.86 $ 15.71 $ 13.68 $ 13.93 $ 12.97
</TABLE>
- ------------------------------
(1) Presented to reflect 10% stock dividend declared in 1995.
4
<PAGE> 8
MANAGEMENT'S DISCUSSION OF ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Fort Brooke Bancorporation (the "Holding Company") is a one-bank holding company
and its only current business is the ownership and operation of Fort Brooke Bank
(the "Bank"). The Holding Company and the Bank are collectively referred to as
the "Company." On July 10, 1996, the common stockholders of the Bank exchanged
their common shares for common shares of the Holding Company, and at that time
the Bank became a wholly-owned subsidiary of the Holding Company. The formation
of the Holding Company and exchange of shares has been accounted for as a
pooling of interests. Shares held by dissenting shareholders were purchased and
retired prior to the exchange.
The Bank is a state-chartered SAIF-insured commercial bank headquartered in
Brandon, Florida. On July 13, 1994, the Bank merged with the Merchant
Bancorporation of Florida ("Merchant"). Merchant was a one-bank holding company
founded in 1984. The Bank, through seven banking offices, provides a wide range
of banking services to individuals and businesses located primarily in
Hillsborough County, Florida. The Bank also owned all of the common shares of
BDW Holdings Inc. ("Subsidiary"). The subsidiary's only business activity is the
ownership of a parcel of other real estate. The Subsidiary was desolved in
December 1996.
The Company's consolidated assets amounted to $205.7 million as of December 31,
1996, an increase of 10% over total assets of $187.1 million as of December 31,
1995. During the year ended December 31, 1996 net loans receivable increased
$16.0 million or 13%. The Company's portfolio of investment securities decreased
to $39.4 million as of December 31, 1996 from $43.7 million as of December 31,
1995. The Bank's deposits increased to $185.9 million as of December 31, 1996
from $168.3 million as of December 31, 1995, a 10.5% increase. The Company, for
the year ended December 31, 1996, had consolidated net earnings of $830,000
compared to consolidated net earnings of $1.7 million for 1995.
REGULATION AND LEGISLATION
As a state-chartered commercial bank, Fort Brooke is subject to extensive
regulation by the Florida Department of Banking and Finance ("Florida DBF") and
the Federal Deposit Insurance Corporation ("FDIC"). The Bank files reports with
the Florida DBF and the FDIC concerning its activities and financial condition,
in addition to obtaining regulatory approvals prior to entering into certain
transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Florida DBF and the
FDIC to monitor the Bank's compliance with the various regulatory requirements.
The Bank is also subject to regulation by the Federal Reserve Board of Governors
with respect to reserves required to be maintained against deposits and certain
other matters. As a Florida corporation, the Bank is also subject to the Florida
Act and the regulation of the Florida Department of State under the authority to
administer and implement the Florida Act.
PENDING ACQUISITION OF COMPANY
On November 18, 1996, the Company entered into an agreement to merge the Company
into Colonial Bancgroup ("Colonial"). Colonial will exchange sufficient common
stock to equal $31.50 per share for all the outstanding shares of the Company.
This transaction is subject to the approval of stockholders and various
regulatory authorities.
CREDIT RISK
Fort Brooke's primary business is making commercial, business, consumer and real
estate loans. That activity entails potential loan losses, the magnitude of
which depend on a variety of economic factors affecting borrowers which are
beyond the control of the Bank. While Fort Brooke has instituted underwriting
guidelines and credit review procedures to protect the Bank from avoidable
credit losses, some losses will inevitably occur.
5
<PAGE> 9
The following table sets forth certain information regarding nonaccrual loans
and real estate owned, including insubstance foreclosed loans, the ratio of such
loans and real estate owned to total assets as of the dates indicated, and
certain other related information:
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Real estate loans:
Residential ................................... $ 177 184 112 70 66
Commercial .................................... 140 542 528 18 90
Consumer and other loans .......................... 35 186 108 61 50
------- ------ ------ ------ ------
Total nonperforming loans ..................... 352 912 748 149 206
Other real estate owned:
Real estate acquired by foreclosure or
deed in lieu of foreclosure ................... 959 1,147 1,847 2,076 2,246
Insubstance foreclosed loans ...................... -- -- 72 177 844
------ ------ ------ ------
Total nonperforming loans,
and other real estate owned ............. 1,311 2,059 2,667 2,402 3,296
Allowance for loan losses .............................. (2,682) (1,702) (1,562) (1,426) (1,145)
------- ------ ------ ------ ------
Total nonperforming loans,
insubstance foreclosed loans
and other real estate owned, net ........ $(1,371) 357 1,105 976 2,151
====== ====== ====== ======
Total nonperforming loans to
total assets ............................ .17% .49% .43% .09% .12%
======= ====== ====== ====== ======
Total nonperforming loans,
insubstance foreclosed loans
and other real estate owned to
total assets ............................ .64% 1.10% 1.47% 1.39% 2.00%
======= ====== ====== ====== ======
Total nonperforming loans,
insubstance foreclosed loans
and other real estate owned,
net to total assets ..................... (.67)% .19% .63% .56% 1.30%
======= ====== ====== ====== ======
</TABLE>
6
<PAGE> 10
The following table sets forth information with respect to activity in the
Bank's allowance for loan losses during the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Average loans outstanding, net ....................... $ 129,288 114,502 100,905 102,772 110,599
========= ======= ======= ======= =======
Allowance at beginning of period ..................... 1,702 1,562 1,426 1,145 1,346
Charge-offs:
Residential real estate loans ................... 41 39 -- 2 45
Commercial real estate loans .................... 133 17 32 -- 121
Commercial loans ................................ 118 410 23 60 1,823
Consumer loans .................................. 53 189 96 121 46
--------- ------- ------- ------- -------
Total loans charge-off ...................... 345 655 151 183 2,035
--------- ------- ------- ------- -------
Recoveries ........................................... 563 90 103 120 108
--------- ------- ------- ------- -------
Net charge-offs (recoveries) .................... (218) 565 48 63 1,927
--------- ------- ------- ------- -------
Provision for loan losses charged to
operating expenses .......................... 762 705 184 344 1,726
--------- ------- ------- ------- -------
Allowance at end of year ........................ $ 2,682 1,702 1,562 1,426 1,145
========= ======= ======= ======= =======
Ratio of net charge-offs to average
loans outstanding ........................... (.16) .0049 .0005 .0006 .0174
========= ======= ======= ======= =======
Ratio allowance to period end loans ............. .0190 .0137 .0137 .0137 .0105
========= ======= ======= ======= =======
Period end total loans ............................... $ 141,133 124,164 114,135 103,760 108,896
========= ======= ======= ======= =======
</TABLE>
7
<PAGE> 11
The following table presents information regarding the Bank's total allowance
for losses as well as the allocation of such amounts to the various categories
of loans ( $in thousands):
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------------- ----------------- ----------------- ----------------- -----------------
% OF % OF % OF % OF % OF
LOANS TO LOANS TO LOANS TO LOANS TO LOANS TO
TOTAL TOTAL TOTAL TOTAL TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential real
estate loans ...................... $ 354 24.6% $ 313 27.8% $ 163 10.4% $ 142 10.0% $ 115 10.0%
Commercial real
estate loans ...................... 1,606 45.0 764 42.1 680 43.5 257 18.0 200 17.5
Commercial loans .................... 488 20.3 448 20.3 544 34.9 952 66.8 750 65.5
Consumer loans
and other ......................... 234 10.1 177 9.8 175 11.2 75 5.2 80 7.0
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total allowance for
loans losses .................... $2,682 100.0% $1,702 100.0% $1,562 100.0% $1,426 100.0% $1,145 100.0%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
The following table sets forth information concerning the Bank's loan portfolio
by type of loan at the dates indicated (in thousands).
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------------- ----------------- ----------------- ----------------- -------------------
% OF % OF % OF % OF % OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
-------- ----- -------- ----- -------- ----- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate loans:
Residential .... $ 34,700 24.5% $ 34,539 27.8% $ 29,039 25.5% $ 26,832 25.9% $ 33,369 30.7%
Commercial ..... 63,546 45.1 52,269 42.1 48,184 42.2 43,080 41.5 43,457 39.9
Commercial loans . 28,594 20.3 25,247 20.3 23,774 20.8 19,661 18.9 20,412 18.7
Consumer and other
loans .......... 14,293 10.1 12,109 9.8 13,066 11.5 14,196 13.7 11,658 10.7
-------- ----- -------- ----- -------- ----- -------- ------ -------- -----
Total loans ... 141,133 100.0% 124,164 100.0% $114,063 100.0% 103,769 100.0% 108,896 100.0%
Less:
Deferred loan
costs (fees) .. 36 26 (183) (143) (161)
Other, net ..... -- 23 (20) (148) (447)
-------- -------- -------- -------- --------
Loans before
allowance
for credit
losses ...... $141,169 $124,213 $113,860 $103,478 $108,288
======== ======== ======== ======== ========
</TABLE>
8
<PAGE> 12
RESULTS OF OPERATIONS
The operating results of the Bank depend primarily on its net interest income,
which is the difference between interest income on interest-earning assets and
interest expense on interest-bearing liabilities, consisting primarily of
deposits. Net interest income is determined by the difference between yields
earned on interest-earning assets and rates paid on interest-bearing liabilities
("interest-rate spread") and the relative amounts of interest-earning assets and
interest-bearing liabilities. The Bank's interest-rate spread is affected by
regulatory, economic and competitive factors that influence interest rates, loan
demand and deposit flows. In addition, the Bank's net earnings are also affected
by the level of nonperforming loans and real estate owned, as well as the level
of its noninterest income, and its noninterest expenses, such as salaries and
employee benefits, occupancy and equipment costs and provisions for losses on
real estate owned and income taxes.
The following tables sets forth for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest/dividend income; (iv) interest-rate spread; (v)
interest margin. Average balances are based on average daily balances.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------ ---------------------------- ---------------------------
INTEREST AVERAGE INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
-------- --------- ------- -------- --------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans (1) ........................ $129,288 12,000 9.28% $114,502 10,883 9.50% $100,905 8,824 8.74%
Investment securities ............ 40,624 2,524 6.21 42,985 2,567 5.97 47,305 2,397 5.07
Other interest-earning
assets (2) .................. 7,608 357 4.69 8,315 479 5.76 8,039 392 4.88
-------- ------- ---- -------- ------- ---- -------- ------- ----
Total .................. 177,520 14,881 8.38 165,802 13,929 8.40 156,249 11,613 7.43
-------- ------- ---- -------- ------- ---- -------- ------- ----
Noninterest-earning assets ........... 15,658 14,178 16,896
-------- -------- --------
Total .................. $193,178 $179,980 $173,145
======== ======== ========
Interest-bearing liabilities:
Savings and NOW accounts ......... 32,858 653 1.99 31,331 662 2.11 32,086 653 2.03
Money market deposits ............ 19,912 550 2.76 23,296 690 2.96 27,518 654 2.38
Certificates of deposit .......... 83,220 4,601 5.53 74,911 4,135 5.52 70,157 3,141 4.48
Borrowings ....................... 2,325 86 3.70 2,223 101 4.54 1,322 56 4.24
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities .......... 138,315 5,890 4.26 131,761 5,588 4.24 131,083 4,504 3.44
-------- ------- -------- ------- -------- -------
Noninterest-bearing liabilities ...... 38,535 33,337 28,570
Stockholders' equity ................. 16,328 14,882 13,492
-------- -------- --------
Total liabilities and
stockholders' equity.. $193,178 $179,980 $173,145
======== ======== ========
Net interest/dividend income ......... $ 8,991 $ 8,341 $ 7,109
======= ======= =======
Interest-rate spread (3) ............. 4.12% 4.16% 3.99%
==== ==== ====
Net yield on average interest-
earning assets (4) ............... 5.06% 5.03% 4.55%
==== ==== ====
Ratio of average interest-earning
assets to average interest-
bearing liabilities .............. 1.28 1.26 1.19
======== ======== ========
</TABLE>
- ------------------------------
(1) Includes nonaccrual loans
(2) Includes interest-bearing deposits
(3) Interest-rate spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-
bearing liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
9
<PAGE> 13
RATE/VOLUME ANALYSIS
The following table sets forth certain information regarding changes in interest
income and interest expense of the Bank for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (1) changes in rate (change
in rate multiplied by prior volume), (2) changes in volume (change in volume
multiplied by prior rate) and (3) changes in rate-volume (change in rate
multiplied by change in volume).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 VS. 1995
-----------------------------------------------------------
INCREASE (DECREASE) DUE TO
-----------------------------------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
---- ------ ------ -----
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans .................................................. $ (252) 1,405 (36) 1,117
Investment securities .................................. 103 (141) (5) (43)
Other interest-earning assets .......................... (89) (41) 8 (122)
------- ------ ---- ------
Total ........................................ (238) 1,223 (33) 952
------- ------ ---- ------
Interest-bearing liabilities:
Deposits:
Savings and NOW accounts ........................... (38) 32 (3) (9)
Money-market deposits .............................. (47) (100) 7 (140)
Certificates of deposit ............................ (75) 459 82 466
Borrowings ............................................. (19) 5 (1) (15)
------- ------ ---- ------
Total ........................................ (179) 396 85 302
------- ------ ---- ------
Net change in net interest income before
provision for credit losses ............................ $ (59) 827 (118) 650
======= ====== ==== ======
<CAPTION>
1995 VS. 1994
-----------------------------------------------------------
INCREASE (DECREASE) DUE TO
-----------------------------------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
---- ------ ------ -----
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans .................................................. $ 767 1,188 104 2,059
Investment securities .................................. 426 (219) (37) 170
Other interest-earning assets .......................... 71 13 3 87
------- ------ ---- ------
Total ........................................ 1,264 982 70 2,316
------- ------ ---- ------
Interest-bearing liabilities:
Deposits:
Savings and NOW accounts ........................... 26 (15) (2) 9
Money-market deposits .............................. 160 (100) (24) 36
Certificates of deposit ............................ 729 213 52 994
Borrowings ............................................. 4 38 3 45
------- ------ ---- ------
Total ........................................ 919 136 29 1,084
------- ------ ---- ------
Net change in net interest income before
provision for credit losses ............................ $ 345 846 41 1,232
======= ====== ==== ======
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE YIELD
OR RATE AT
DECEMBER 31,
------------
1996
----
YIELDS AND RATES:
<S> <C>
Loan portfolio ............................................ 8.93%
Investment securities ..................................... 6.25%
All interest-earning assets ............................... 8.32%
Savings and NOW accounts .................................. 2.11%
Money market deposits ..................................... 2.80%
Certificates of deposit ................................... 5.47%
All interest-bearing liabilities .......................... 4.31%
Interest-rate spread ...................................... 4.01%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
A Florida chartered commercial bank is required to maintain a liquidity reserve
of at least 15% of its total transaction accounts and 8% of its total
nontransaction accounts less those deposits of certain public funds. The
liquidity reserve may consist of cash on hand, cash on demand with other
correspondent banks and other investments and short-term marketable securities
as determined by the rules of the Florida DBF, such as federal funds sold and
United States securities or securities guaranteed by the United States. As of
December 31, 1996, Fort Brooke has liquidity of approximately $53.8 million, or
approximately 29.2% of total deposits.
The following table sets for the carrying value of the Bank's investment
portfolio as of the dates indicated:
<TABLE>
<CAPTION>
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment securities available for sale:
U.S. Government and agency obligations $ 9,455 11,856 3,268 7,803
Municipal bonds ...................... 3,331 252 2,006 3,639
Mortgage-backed securities ........... 8,603 11,969 10,889 19,034
------- ------ ------ ------
Total available for sale ......... 21,389 24,077 16,163 30,476
------- ------ ------ ------
Investment securities held to maturity:
U.S. Government and agency obligations 7,459 9,942 18,010 12,130
Municipal bonds ...................... 4,933 2,228 2,229 1,489
Mortgage-backed securities ........... 5,619 7,472 8,639 --
------- ------ ------ ------
Total held to maturity ........... 18,011 19,642 28,878 13,619
------- ------ ------ ------
Total ............................ $39,400 43,719 45,041 44,095
======= ====== ====== ======
</TABLE>
11
<PAGE> 15
The following table sets forth, by maturity distribution, certain information
pertaining to the Bank's investment securities portfolio ($ in thousands):
<TABLE>
<CAPTION>
AFTER ONE YEAR AFTER FIVE YEARS DUE AFTER
ONE YEAR OR LESS TO FIVE YEAR TO TEN YEARS TEN YEARS TOTAL
----------------- ------------------ ------------------ ---------------- ----------------
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996
U.S. Government and
agency obligations $ -- --% $12,943 6.27% $ 3,973 6.91% $ -- --% $16,916 6.42%
Municipal securities . -- -- 1,059 4.71 7,119 5.42 -- -- 8,178 5.33
Mortgage-backed
securities ........ 331 6.49 1,695 6.49 2,838 6.49 9,442 6.49 14,306 6.49
---- ---- ------- ---- ------- ----- ------ ---- ------- ----
Total ................ $331 6.49% $15,697 6.18% $13,930 6.06% $9,442 6.49% $39,400 6.21%
==== ==== ======= ==== ======= ===== ====== ==== ======= ====
</TABLE>
During the year ended December 31, 1996, the Bank's primary sources of funds
consisted of principal payments on loans and investment securities, proceeds
from sales and maturities of investment securities and net increases in
deposits. Fort Brooke used its capital resources principally to purchase
investment securities and fund existing and continuing loan commitments. At
December 31, 1996, the Bank had commitments to originate loans totalling $7.5
million. Scheduled maturities of certificates of deposit during the 12 months
following December 31, 1996 totalled $62.2 million as of December 31, 1996.
Management believes that Fort Brooke has adequate resources to fund all its
commitments, that substantially all of its existing commitments will be funded
in 1996 and, if so desired, that it can adjust the rates on certificates of
deposit to retain deposits in a changing interest rate environment.
REGULATORY CAPITAL REQUIREMENTS
Under FDIC regulations, the Bank is required to meet certain minimum regulatory
capital requirements. This is not a valuation allowance and has not been created
by charges against earnings. It represents a restriction on stockholders'
equity.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the State and Federal
regulators categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized
the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table. There are no conditions or events
since that notification that management believes have changed the Bank's
category.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES: ACTION PROVISIONS:
-------------------- -------------------- ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996:
Total capital (to Risk
Weighted Assets).................... $17,900 12.09% $11,844 8.00% $14,805 10.0%
Tier I Capital (to Risk
Weighted Assets).................... 16,049 10.84 5,922 4.00 8,883 6.0
Tier I Capital
(to Average Assets)................. 16,049 8.08 7,945 4.00 9,932 5.0
</TABLE>
12
<PAGE> 16
ASSET AND LIABILITY MANAGEMENT
As part of its asset and liability management, Fort Brooke has emphasized
establishing and implementing internal asset-liability decision processes, as
well as communications and control procedures to aid in managing the Bank's
earnings. Management believes that these processes and procedures provide Fort
Brooke with better capital planning, asset mix and volume controls, loan-pricing
guidelines, and deposit interest-rate guidelines which should result in tighter
controls and less exposure to interest-rate risk.
The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time period.
The gap ratio is computed as RSA/RSL. A gap ratio of 1.0% represents perfect
matching. A gap is considered positive when the amount of interest-rate
sensitive assets exceeds interest-rate sensitive liabilities. A gap is
considered negative when the amount of interest-rate sensitive liabilities
exceeds interest-rate sensitive assets. During a period of rising interest
rates, a negative gap would adversely affect net interest income, while a
positive gap would result in an increase in net interest income. During a period
of falling interest rates, a negative gap would result in an increase in net
interest income, while a positive gap would adversely affect net interest
income.
In order to minimize the potential for adverse effects of material and prolonged
increases in interest rates on the results of operations, Fort Brooke's
management continues to monitor asset and liability management policies to
better match the maturities and repricing terms of its interest-earning assets
and interest-bearing liabilities. Such policies have consisted primarily of: (i)
emphasizing the origination of adjustable-rate loans; (ii) maintaining a stable
core deposit base; and (iii) maintaining a significant portion of liquid assets
(cash and short-term investments).
Fort Brooke has also maintained a relatively large portfolio of liquid assets
(cash and assets maturing or repricing in one year or less) in order to reduce
its vulnerability to shifts in market rates of interest. At December 31, 1996,
8.8% of Fort Brookes' total assets consisted of cash and short-term U.S.
Government securities. Furthermore, as of such date, Fort Brooke's liquidity
ratio was 29.2%.
Fort Brooke also seeks to maintain a large stable core deposit base by providing
quality service to its customers without significantly increasing its cost of
funds or operating expenses. The success of Fort Brookes' core deposit strategy
is demonstrated by the stability of its money-market deposit accounts, savings
accounts and NOW accounts, which totaled $52.2 million, representing 28.1% of
total deposits at December 31, 1996. These accounts bore a weighted average
nominal rate of 2.32% at December 31, 1996. Management anticipates that these
accounts will increase and in the future comprise a significant portion of its
deposit base.
As of December 31, 1996, Fort Brookes' one-year negative interest-rate
sensitivity gap in dollars was $18.2 million. Although management believes that
the implementation of the foregoing strategies has reduced the potential adverse
effects of changes in interest rates on Fort Brookes' results of operations, any
substantial and prolonged increase in market rates of interest could have an
adverse impact on Fort Brookes' results of operations. Management of Fort Brooke
monitors Fort Brookes' interest-rate sensitivity on a quarterly basis.
Management utilizes the abilities of First Tennessee Bank to provide a practical
and a theoretical Gap report. The practical Gap is based on the Federal Reserve
Board's March 26, 1993 draft for incorporating Interest-Rate Risk into
Risk-based Capital Standards. Management believes that its present gap position
is appropriate for the current interest rate environment.
Fort Brooke's management goals are ahead of expectations in all areas including
liquidity, volatile dependency and rate sensitivity. Although management
believes little can be done until the maturity of Fort Brooke's deposits occur
to effect changes in rate sensitivity, the asset mix continues to move towards
less rate sensitivity pursuant to our goals for all time periods.
Management believes that a negative GAP will continue in the one year time
period, however, it should decline in line with our funds management goals.
13
<PAGE> 17
The following table sets forth certain information relating to the Bank's
interest-earning assets and interest-bearing liabilities at December 31, 1996
that are estimated to mature or are scheduled to reprice within the period shown
(1).
<TABLE>
<CAPTION>
MORE THAN
ONE YEAR TO MORE THAN
ONE YEAR FIVE YEARS FIVE YEARS TOTAL
-------- ---------- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Mortgage commercial and consumer loans (1) (2):
Adjustable rate (all property types) ....................... $ 71,674 4,367 -- 76,041
Fixed rate ................................................. 12,310 23,652 29,130 65,092
--------- ------- ------ -------
Total loans ........................................ 83,984 28,019 29,130 141,133
Interest-bearing deposits with banks ......................... 8,179 -- -- 8,179
Investments (3)(4) ........................................... 8,545 15,483 16,181 40,209
--------- ------- ------ -------
Total rate-sensitive assets ........................ 100,708 43,502 45,311 189,521
--------- ------- ------ -------
Deposit accounts (5):
Certificates of deposit .................................... 63,806 30,716 -- 94,522
Savings and NOW accounts ................................... 35,571 -- -- 35,571
Money market accounts ...................................... 16,653 -- -- 16,653
Other borrowings ........................................... 2,867 -- -- 2,867
--------- ------- ------ -------
Total rate-sensitive liabilities ................... 118,897 30,716 -- 149,613
--------- ------- ------ -------
GAP (repricing differences) .................................. $ (18,189) 12,786 45,311 39,908
========= ======= ====== =======
Cumulative GAP ............................................... $ (18,189) (5,403) 39,908
========= ======= ======
Cumulative GAP/total assets .................................. (8.84)% (2.63)% 19.40%
========= ======= ======
</TABLE>
- -------------------------
(1) In preparing the table above, adjustable-rate loans are included in the
period in which the interest rates are next scheduled to adjust rather
than in the period in which the loans mature. Fixed rate loans are
scheduled, including repayment, according to their maturities.
(2) Excludes nonaccrual loans.
(3) Investments are scheduled through repricing and maturity dates.
(4) Includes Federal Home Loan Bank stock.
(5) Checking accounts, NOW accounts, and savings accounts are regarded as
ready accessible withdrawable accounts. All other time accounts are
scheduled through the maturity dates.
14
<PAGE> 18
The table below sets forth the contractual maturity of Fort Brooke's
total loan portfolio at December 31, 1996. Demand loans, secured
exclusively by passbook savings or CD's and having no stated schedule
of repayments and no stated maturity, are reported as due within one
year. The table does not reflect anticipated prepayments.
<TABLE>
<CAPTION>
RESIDENTIAL COMMERCIAL CONSUMER
REAL REAL AND
ESTATE ESTATE OTHER
DECEMBER 31, LOANS LOANS LOANS TOTAL
- ------------ -------- ---------- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997................................... $ 2,709 15,013 29,464 47,186
1998................................... 1,451 14,940 4,321 20,712
1999................................... 1,057 14,388 2,954 18,399
2000................................... 2,223 10,134 2,831 15,188
2001 and thereafter.................... 27,770 8,803 3,075 39,648
------- ------ ------ -------
Total............................. $35,210 63,278 42,645 141,133
======= ====== ====== =======
</TABLE>
The following table show the distribution of, and certain other information
relating to, Fort Brooke Bank deposit accounts by type:
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------------
1996 1995 1994
---------------------- ---------------------- ----------------------
% OF % OF % OF
AMOUNT DEPOSIT AMOUNT DEPOSIT AMOUNT DEPOSIT
------ ------- ------ ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits ........................... $ 39,141 21.1% $ 35,181 20.9% $ 28,892 18.3%
Savings and NOW deposits .................. 35,571 19.1 31,334 18.6 32,170 20.3
Money market deposits ..................... 16,653 9.0 21,551 12.8 28,508 18.1
-------- -------- -------- -------- -------- --------
Subtotal ............................. 91,365 49.2 88,066 52.3 89,570 56.7
-------- -------- -------- -------- -------- --------
Certificate of deposits:
2.00% - 3.99% ........................ -- -- -- -- 15,405 9.8
4.00% - 5.99% ........................ 68,315 36.8 54,201 32.2 50,135 31.7
6.00% - 7.99% ........................ 26,207 14.0 26,030 15.5 2,767 1.8
-------- -------- -------- -------- -------- --------
Total certificates of deposit (1) .... 94,522 50.8 80,231 47.7 68,307 43.3
-------- -------- -------- -------- -------- --------
Total deposits ....................... $185,887 100.0% $168,297 100.0% $157,877 100.0%
======== ======== ======== ======== ======== ========
</TABLE>
15
<PAGE> 19
The following table shows the average amount of and the average rate paid on
each of the following deposit account categories during the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1996 1995 1994
------------------- ------------------- -------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE YIELD BALANCE YIELD BALANCE YIELD
------- ----- ------- ----- ------- -----
<S> <C> <C> <C>
Noninterest bearing check accounts ................ $ 35,345 --% $ 30,867 --% $26,166 --%
NOW and savings accounts .......................... 32,858 1.99 31,331 2.11 32,086 2.03
Money market accounts ............................. 19,912 2.76 23,296 2.96 27,158 2.38
Certificates of deposit ........................... 83,220 5.53 74,911 5.52 70,157 4.48
-------- ---- -------- ---- -------- ----
Total deposits ............................... $171,335 3.17% $160,405 3.42% $155,567 2.86%
======== ==== ======== ==== ======== ====
</TABLE>
The following table presents for various interest rate categories the amounts of
outstanding certificates of deposit at December 31, 1996 which mature during the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
--------------------------------------------------------------
2001 AND
1997 1998 1999 2000 THEREAFTER TOTAL
---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996:
4.00% - 4.99%................................... $10,001 -- -- -- -- 10,001
5.00% - 5.99%................................... 52,869 -- 1,635 3,126 684 58,314
6.00% - 6.99%................................... 227 21,004 3,987 -- 989 26,207
------- ------ ----- ----- ------ ------
Total certificates of deposit................... $63,097 21,004 5,622 3,126 1,673 94,522
======= ====== ===== ===== ====== ======
</TABLE>
The following table sets forth the net deposit flows of the Bank during the
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net increase (decrease) before interest credit..................................... $17,565 10,255 (286)
Net interest credited.............................................................. 25 165 (49)
------- ------ ---
Net deposit increase (decrease).................................................... $17,590 10,420 (335)
======= ====== ===
</TABLE>
Jumbo certificates ($100,000 and over) mature as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1996
----
<S> <C>
Due three months or less........................................... $ 5,699
Due over three months to six months................................ 2,126
Due over six months to one year.................................... 4,284
Due over one year.................................................. 4,754
-------
$16,863
=======
</TABLE>
16
<PAGE> 20
COMPARISON OF YEARS ENDED DECEMBER 1996 AND 1995
GENERAL
Net earnings for the year ended December 31, 1996 were $830,000 or $.83 per
share compared to $1.7 million or $1.65 per share for 1995. The decrease in
earnings was due primarily to an increase in the deposit insurance premiums as
well as increased noninterest expenses associated with the pending acquisition
of the Company.
INTEREST INCOME AND EXPENSE
Interest income increased $1.0 million or .71% to $14.9 million during the year
ended December 31, 1996. Interest on loans increased $1.1 million to $12.0
million due an increase in the average loan portfolio from $114.5 million during
1995 to $129.3 million during 1996. The increase was partially offset by a
decrease in the weighted average yield earned from 9.50% during the year 1995 to
9.28% during the year ended December 31, 1996. Interest on investment securities
decreased $43,000 to $2.5 million due to a decrease in the average investment
securities from $43.0 million during 1995 to $40.6 million during 1996. This
decrease was partially offset by an increase in the average yield on securities
during 1996 compared with 1995.
Interest expense on deposit accounts increased from $5.5 million for the year
ended December 31, 1995 to $5.8 million for the year ended December 31, 1996.
This increase was primarily the result of an increase in the average
interest-bearing deposits from 1995 to 1996.
PROVISION FOR LOAN LOSSES
The provision for loan losses is charged to earnings to bring the total
allowance to a level deemed appropriate by management and is based upon
historical experience, the volume and type of lending conducted by the Bank,
industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Bank's market areas, and other
factors related to the collectibility of the Bank's loan portfolio. The
provision for loan losses increased from $705,000 for the year ended December
31, 1995 to $762,000 during 1996. The allowance for loan losses increased from
$1.7 million at December 31, 1995 to $2.7 million at December 31, 1996.
Nonperforming assets to total assets decreased to .68% at December 31, 1996 from
1.10% at December 31, 1995. Management has adopted a more stringent method of
determining these allowances including a more aggressive and more standardized
approach to grading loans as well as using standard factors for calculating
estimated losses on nonclassified loans. Management has made this change
effective December 31, 1994 and has reported the effect of this change in the
fourth quarter of 1994. This change resulted in an provision of $.8 million
recorded in the fourth quarter of 1994. While management believes that its
allowance for loan losses is adequate as of December 31, 1996, future
adjustments to the Bank's allowance for loan losses may be necessary if economic
conditions differ substantially from the assumptions used in making the
determination.
NONINTEREST EXPENSE
Total noninterest expense increased $2.4 million for the year ended December 31,
1996 from the year ended December 31, 1995. Compensation increased $632,000
primarily as a result of an increase in staff. Occupancy expense increased
$209,000 due to the opening of a new branch. Noninterest expense also included
the one-time SAIF recapitalization assessment of $648,000. There were also
increases in loss on real estate owned, real estate expenses and professional
fees and other expenses relating to the pending acquisition of the Company.
INCOME TAX PROVISION
The income tax provision decreased from $1.1 million for the year ended December
31, 1995 to $.5 million for 1996 due to decreased earnings before income taxes.
17
<PAGE> 21
COMPARISON OF YEARS ENDED DECEMBER 1995 AND 1994
GENERAL
Net earnings for the year ended December 31, 1995 were $1.7 million or $1.65 per
share compared to $619,000 or $.63 per share for 1994. The increase in earnings
was due primarily to an increase in net interest income as well as a decrease in
noninterest expense.
INTEREST INCOME AND EXPENSE
Interest income increased $2.3 million or 19.9% to $13.9 million during the year
ended December 31, 1995. Interest on loans increased $2.1 million to $10.9
million due to an increase in the weighted average yield from 8.74% during the
year ended December 31, 1994 to 9.50% during the year ended December 31, 1995.
The increase was also due to an increase in the average loan portfolio from
$100.9 million during 1994 to $114.5 million during 1995. Interest on investment
securities increased $170,000 to $2.6 million due to an increase in the average
yield from 5.07% during 1994 to 5.97% during 1995. This increase was partially
offset by a decrease in the average amount invested in securities during 1995
compared with 1994.
Interest expense on deposit accounts increased from $4.4 million for the year
ended December 31, 1994 to $5.5 million for the year ended December 31, 1995.
This increase was primarily the result of an increase in rates paid on deposits.
PROVISION FOR CREDIT LOSSES
The provision for credit losses is charged to earnings to bring the total
allowance to a level deemed appropriate by management and is based upon
historical experience, the volume and type of lending conducted by the Bank,
industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Bank's market areas, and other
factors related to the collectibility of the Bank's loan portfolio. The
provision for loan losses increased from $184,000 for the year ended December
31, 1994 to $705,000 during 1995. The allowance for loan losses increased from
$1.6 million at December 31, 1994 to $1.7 million at December 31, 1995.
Nonperforming assets to total assets decreased to 1.10% at December 31, 1995
from 1.47% at December 31, 1994.
NONINTEREST EXPENSE
Total noninterest expense decreased $1.1 million for the year ended December 31,
1995 from the year ended December 31, 1994. Compensation decreased $389,000
primarily as a result of a severance package with an officer of Merchant during
1994 with no corresponding amount in 1995. Occupancy expense decreased $336,000
primarily due to a decrease in rent expense resulting from the purchase of the
Bank's headquarters as well as a general decrease in operating expenses. Other
expenses decreased $334,000 due in part to the acquisition costs of Merchant
incurred during 1994 with no corresponding amounts in 1995.
INCOME TAX PROVISION
The income tax provision increased from $412,000 for the year ended December 31,
1994 to $1.1 million for 1995 due to increased earnings before income taxes.
18
<PAGE> 22
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have been prepared in
accordance with GAAP, which requires the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of the assets and liabilities of Fort
Brooke are monetary in nature. As a result, interest rates have a more
significant impact on the Bank's performance than the effects of general levels
of inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services, since such prices are
affected by inflation to a larger extent than interest rates.
FUTURE ACCOUNTING REQUIREMENTS
The FASB has issued Statement of Financial Accounting Standards No. 125 ("SFAS
125"). This Statement provides accounting and reporting standards for transfers
and servicing of financial assets as well as extinguishments of liabilities.
This Statement also provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured borrowings.
SFAS 125 is effective for transfers and servicing of financial assets as well as
extinguishments of liabilities occurring in 1997. Management does not anticipate
SFAS 125 will have a material impact on the Bank.
19
<PAGE> 23
The following tables present summarized (unaudited) quarterly data (dollars in
thousands, except per share amounts):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Interest income ................................. $3,568 3,701 3,728 3,884 14,881
Interest expense ................................ 1,455 1,411 1,458 1,566 5,890
------ ------ ----- ------ ------
Net interest income ............................. 2,113 2,290 2,270 2,318 8,991
Provision for credit losses ..................... 22 (61) 9 792 762
------ ------ ----- ------ ------
Net interest income after provision
for credit losses ........................... 2,091 2,351 2,261 1,526 8,229
------ ------ ----- ------ ------
Other income .................................... 389 351 391 433 1,564
Other expense ................................... 1,721 1,896 2,392 2,485 8,494
------ ------ ----- ------ ------
Earnings before income tax provision ............ 759 806 260 (526) 1,299
Income tax provision ............................ 258 274 92 (155) 469
------ ------ ----- ------ ------
Net earnings .................................... $ 501 532 168 (371) 830
====== ====== ===== ====== ======
Earnings per share .............................. $ .50 .53 .17 (.37) .83
====== ====== ===== ====== ======
YEAR ENDED DECEMBER 31, 1995:
Interest income ................................. $3,301 3,502 3,528 3,598 13,929
Interest expense ................................ 1,236 1,383 1,486 1,483 5,588
------ ------ ----- ------ ------
Net interest income ............................. 2,065 2,119 2,042 2,115 8,341
Provision for credit losses ..................... 19 155 304 227 705
------ ------ ----- ------ ------
Net interest income after provision
for credit losses ........................... 2,046 1,964 1,738 1,888 7,636
------ ------ ----- ------ ------
Other income .................................... 318 315 343 290 1,266
Other expense ................................... 1,641 1,545 1,570 1,373 6,129
------ ------ ----- ------ ------
Earnings before income tax provision ............ 723 734 511 805 2,773
Income tax provision ............................ 289 294 204 322 1,109
------ ------ ----- ------ ------
Net earnings .................................... $ 434 440 307 483 1,664
====== ====== ===== ====== ======
Earnings per share .............................. $ .43 .44 .31 .48 1.65
====== ====== ===== ====== ======
</TABLE>
20
<PAGE> 24
FORT BROOKE BANCORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
ASSETS 1996 1995
---- ----
<S> <C> <C>
Cash and due from banks ......................................................... $ 17,722 11,997
Securities available for sale ................................................... 21,389 24,077
Securities held to maturity ..................................................... 18,011 19,642
Loans receivable, net of allowance for loan losses of $2,682 in 1996
and $1,702 in 1995 ........................................................ 138,487 122,511
Other real estate owned ......................................................... 959 1,147
Premises and equipment .......................................................... 5,495 4,723
Restricted securities, Federal Home Loan Bank stock ............................. 809 809
Accrued interest receivable ..................................................... 1,308 1,266
Deferred tax asset .............................................................. 392 211
Refundable income taxes ......................................................... 120 --
Other assets .................................................................... 994 733
--------- --------
Total ........................................................... $ 205,686 187,116
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits ........................................................... 39,141 35,181
Savings and NOW deposits .................................................. 35,571 31,334
Money-market deposits ..................................................... 16,653 21,551
Other time deposits ....................................................... 94,522 80,231
--------- --------
Total deposits .................................................. 185,887 168,297
Advances by borrowers for taxes and insurance ............................. 85 128
Short-term borrowings ..................................................... 2,867 1,965
Accrued interest payable .................................................. 515 490
Current income taxes ...................................................... -- 158
Other liabilities ......................................................... 619 278
--------- --------
Total liabilities ............................................... 189,973 171,316
--------- --------
Commitments and contingencies (Notes 4, 8 and 12)
Stockholders' equity:
Common stock, $.001 par value; 10,000,000 shares authorized,
990,553 and 1,005,920 issued and outstanding ......................... 1 1
Additional paid-in capital ................................................ 12,424 12,617
Retained earnings ......................................................... 3,433 3,298
Net unrealized loss on available-for-sale securities net of
tax of $73 in 1996 and $77 in 1995 ................................... (145) (116)
--------- --------
Total stockholders' equity ...................................... 15,713 15,800
--------- --------
Total ........................................................... $ 205,686 187,116
========= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
21
<PAGE> 25
FORT BROOKE BANCORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Interest income:
Loans receivable .................................................... $ 12,000 10,883 8,824
Securities .......................................................... 2,524 2,567 2,397
Other interest-earning assets ....................................... 357 479 392
--------- ---------- --------
Total interest income .......................................... 14,881 13,929 11,613
--------- ---------- --------
Interest expense:
Deposits ............................................................ 5,804 5,487 4,448
Other borrowed funds ................................................ 86 101 56
--------- ---------- --------
Total interest expense ......................................... 5,890 5,588 4,504
--------- ---------- --------
Net interest income ............................................ 8,991 8,341 7,109
Provision for loan losses ................................................. 762 705 184
--------- ---------- --------
Net interest income after provision for loan losses ............ 8,229 7,636 6,925
--------- ---------- --------
Noninterest income:
Fees and service charges ............................................ 1,389 1,206 1,173
Loss on sale of securities available for sale ....................... (22) (24) (16)
Other ............................................................... 197 84 162
--------- ---------- --------
Total noninterest income ....................................... 1,564 1,266 1,319
--------- ---------- --------
Noninterest expenses:
Salaries and employee benefits ...................................... 3,592 2,960 3,349
Occupancy and equipment ............................................. 1,332 1,123 1,459
Data processing ..................................................... 477 330 306
Deposit insurance premium ........................................... 238 329 400
SAIF recapitalization assessment .................................... 648 -- --
Advertising ......................................................... 144 100 94
Real estate expense ................................................. 312 137 141
Write-down on other estate owned .................................... 225 55 81
Professional fees ................................................... 269 165 145
Other ............................................................... 1,257 930 1,238
--------- ---------- --------
Total noninterest expenses ..................................... 8,494 6,129 7,213
--------- ---------- --------
Earnings before income taxes .............................................. 1,299 2,773 1,031
Income taxes ................................................... 469 1,109 412
--------- ---------- --------
Net earnings .............................................................. $ 830 1,664 619
========= ========== ========
Earnings per share ........................................................ $ .83 1.65 .63
========= ========== ========
Weighted-average number of shares outstanding ............................. 998,595 1,005,920 984,711
========= ========== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
22
<PAGE> 26
FORT BROOKE BANCORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ON
ADDITIONAL AVAILABLE- TOTAL
NUMBER OF COMMON PAID-IN RETAINED FOR-SALE STOCKHOLDERS'
SHARES STOCK CAPITAL EARNINGS SECURITIES EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1993 .............................. 878,967 $1 10,967 2,375 128 13,471
Net earnings .............................. -- - -- 619 -- 619
Issuance of common stock .................. 35,677 - 293 -- -- 293
Unrealized loss on
available-for-sale
securities ............................ -- - -- -- (626) (626)
---------- -- ------- ------ ---- -------
Balance at December
31, 1994 .............................. 914,644 1 11,260 2,994 (498) 13,757
Net earnings .............................. -- - -- 1,664 -- 1,664
Stock dividend ............................ 91,276 - 1,357 (1,357) -- --
Payment fractional shares ................. -- - -- (3) -- (3)
Unrealized gain on
available-for-sale
securities ............................ -- - -- -- 382 382
---------- -- ------- ------ ---- -------
Balance at December
31, 1995 .............................. 1,005,920 1 12,617 3,298 (116) 15,800
Purchase and retirement of
shares from dissenting
stockholders upon
formation of Holding
Company ............................... (15,367) - (193) (207) (400)
Net earnings .............................. -- - -- 830 -- 830
Cash dividends ............................ -- - -- (488) (488)
Unrealized loss on available-
for-sale securities ................... -- - -- -- (29) (29)
---------- -- ------- ------ ---- -------
Balance at December
31, 1996 .............................. 990,553 $1 12,424 3,433 (145) 15,713
========== == ======= ====== ==== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
23
<PAGE> 27
FORT BROOKE BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings ....................................................... $ 830 1,664 619
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation .................................................. 611 482 594
Provision for loan losses ..................................... 762 705 184
Loss from sale of available-for-sale securities ............... 22 24 16
Net amortization of fees, premiums and discounts .............. (175) (115) (148)
Write-down on other real estate owned ......................... 225 55 81
Loss (gain) on sale of other real estate owned ................ 3 38 (34)
(Increase) decrease in other assets ........................... (261) 10 (55)
Increase in accrued interest receivable ....................... (42) (162) (191)
Increase (decrease) in accrued interest payable ............... 25 165 (49)
Deferred income tax provision (credit) ........................ (163) 64 (263)
Increase in refundable income taxes ........................... (120) -- --
Increase in current income taxes .............................. (158) 32 41
Increase (decrease) increase in other liabilities ............. 341 (27) 14
-------- ------- -------
Net cash flow provided by operating activities ........... 1,900 2,935 809
------- -------
Cash flows from investing activities:
Purchase of securities ............................................. (14,218) (25,672) (23,133)
Proceeds from sales of available-for-sale securities ............... 6,347 11,936 11,526
Proceeds from the maturities of securities ......................... 8,679 13,120 3,500
Proceeds from sale of Federal Reserve Bank stock ................... -- -- 110
Principal repayments on investment securities ...................... 3,442 2,541 6,076
Net increase in loans .............................................. (16,689) (10,458) (10,741)
Proceeds from sales of other real estate owned ..................... 86 343 858
Net additions of premises and equipment ............................ (1,383) (774) (801)
-------- ------- -------
Net cash used in investing activities .................... (13,736) (8,964) (12,605)
-------- ------- -------
Cash flows from financing activities:
Net increase (decrease) in demand, savings, NOW and
money-market deposits ......................................... 3,299 (1,504) 8,865
Net increase (decrease) in time deposits ........................... 14,291 11,924 (9,200)
Net (decrease) increase in advance payments by
borrowers for taxes and insurance ............................. (43) (74) 119
Increase (decrease) in short-term borrowings ....................... 902 (753) 2,505
Sale of common stock ............................................... -- -- 293
Cash dividend paid ................................................. (488) (3) --
Retirement of common shares from dissenting shareholders ........... (400) -- --
-------- ------- -------
Net cash provided by financing activities ................ 17,561 9,590 2,582
-------- ------- -------
Net increase (decrease) in cash and cash equivalents ..... 5,725 3,561 (9,214)
Cash and cash equivalents at beginning of year ........................... 11,997 8,436 17,650
-------- ------- -------
Cash and cash equivalents at end of year ................................. $ 17,722 11,997 8,436
======== ======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
24
<PAGE> 28
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, BACKGROUND AND BUSINESS
COMBINATION
GENERAL. Fort Brooke Bancorporation (the "Holding Company") is a
one-bank holding company and its only current business is the ownership
and operation of Fort Brooke Bank (the "Bank"). The Holding Company and
the Bank are collectively referred to as the "Company." On July 10,
1996, the common stockholders of the Bank exchanged their common shares
for common shares of the Holding Company, and at that time the Bank
became a wholly-owned subsidiary of the Holding Company. The formation
of the Holding Company and exchange of shares has been accounted for as
a pooling of interests. Shares held by dissenting shareholders were
purchased and retired prior to the exchange.
The Bank is a state-chartered SAIF-insured commercial bank
headquartered in Brandon, Florida. The Bank, through eight banking
offices, provides a wide-range of banking services to individuals and
businesses located primarily in Hillsborough County, Florida. The Bank
also owned all of the common shares of BDW Holdings Inc. (Subsidiary).
The subsidiary's only business activity was the ownership of a parcel
of other real estate. BDW Holdings, Inc., was dissolved in December,
1996.
BUSINESS COMBINATION. On July 13, 1994, the Bank merged with the
Merchant Bancorporation of Florida ("Merchant"). Merchant was a
one-bank holding company. Merchant was merged with and into the Bank
and 397,904 shares of the Bank's common stock were issued in exchange
for all of the outstanding common stock of Merchant. The merger was
accounted for as a pooling of interests, and accordingly, the
accompanying consolidated financial statements have been restated for
all periods prior to the acquisition to include the results of
earnings, financial positions, and cash flows of Merchant. Expenses of
$192,000 relating to the acquisition of Merchant were charged to
expense during 1994.
Net interest income and net earnings for the individual entities were
as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY
1, 1994
THROUGH
JUNE 30,
--------
1994
----
<S> <C>
Net interest income after provision for
credit losses and other income:
Fort Brooke Bank ................................................ $ 2,551
Merchant ........................................................ 1,378
-------
Combined ................................................... $ 3,929
=======
Net earnings:
Fort Brooke Bank ................................................ 115
Merchant ........................................................ 89
-------
Combined ................................................... $ 204
=======
</TABLE>
(continued)
25
<PAGE> 29
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, BACKGROUND AND BUSINESS
COMBINATION
BASIS OF PRESENTATION. The accompanying consolidated financial statements
of the Company include the accounts of the Holding Company and the
Bank. All significant intercompany accounts and transactions have
been eliminated in consolidation. The accounting and reporting
policies of the Company conform to generally accepted accounting
principles and to general practices within the banking industry.
The following summarizes the more significant of these policies and
practices.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS. For purposes of presentation in the
consolidated statements of cash flows, cash and cash equivalents
are defined as those amounts included in the balance-sheet captions
as "cash and due from banks."
SECURITIES AVAILABLE FOR SALE. Available-for-sale securities consist of
United States government and agency obligations, municipal bonds
and mortgage-backed securities not classified as trading securities
nor as held-to-maturity securities. Unrealized holding gains and
losses, net of tax, on securities available for sale are reported
as a net amount in a separate component of stockholders' equity
until realized.
Gains and losses on the sale of available-for-sale securities are
determined using the specific- identification method.
Premiums and discounts are recognized in interest income using the
interest method over the period to maturity.
Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than
temporary would be included in earnings as realized loss.
SECURITIES HELD TO MATURITY. United States government and agency
obligations, municipal bonds and mortgage-backed securities for
which the Company has the positive intent and ability to hold to
maturity are reported at cost, adjusted for amortization of
premiums and accretion of discounts which are recognized in
interest income using the interest method over the period to
maturity.
(continued)
26
<PAGE> 30
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, BACKGROUND AND BUSINESS
COMBINATION, CONTINUED
LOANS RECEIVABLE. Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or
pay-off are reported at their outstanding principal adjusted for
any charge-offs, the allowance for loan losses, and any deferred
fees or costs on originated loans.
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield of the
related loan.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay,
the estimated value of any underlying collateral, and current
economic conditions.
For impairment recognized in accordance with these Statements, the
entire change in the present value of expected cash flows, or the
entire change in estimated fair value of collateral for collateral
dependent loans is reported as a provision for credit losses in the
same manner in which impairment initially was recognized or as a
reduction in the amount of the provision that otherwise would be
reported.
OTHER REAL ESTATE OWNED. Real estate properties acquired through, or in
lieu of, loan foreclosure are to be sold and are initially recorded
at fair value at the date of foreclosure establishing a new cost
basis. After foreclosure, valuations are periodically performed by
management and the real estate is carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from
operations and changes in the valuation allowance are included in
the statements of earnings.
INCOME TAXES. Deferred tax assets and liabilities are reflected at
currently enacted income tax rates applicable to the period in
which the deferred tax assets or liabilities are expected to be
realized or settled. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the
provision for income taxes.
PREMISES AND EQUIPMENT. Land is carried at cost. Premises, furniture and
equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. Depreciation and
amortization are computed on the straight-line method over the
estimated useful lives of the assets.
OFF-BALANCE-SHEET INSTRUMENTS. In the ordinary course of business the
Company has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit. Such financial
instruments are recorded in the financial statements when they are
funded.
(continued)
27
<PAGE> 31
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, BACKGROUND AND BUSINESS
COMBINATION, CONTINUED FAIR VALUES OF FINANCIAL INSTRUMENTS. The following
methods and assumptions were used by the Company in estimating fair values
of financial instruments disclosed herein:
CASH AND CASH EQUIVALENTS. The carrying amounts of cash and due
from banks approximate their fair value.
SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY. Fair values for
securities are based on quoted market prices, where available. If
quoted market prices are not available, fair values are based on
quoted market prices of comparable instruments.
LOANS. For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying
values. Fair values for certain fixed-rate mortgage (e.g. one-to-four
family residential), commercial real estate and commercial loans are
estimated using discounted cash flow analyses, using interest rates
currently being offered for loans with similar terms to borrowers of
similar credit quality.
DEPOSIT LIABILITIES. The fair values disclosed for demand, NOW,
money-market and savings deposits are, by definition, equal to the
amount payable on demand at the reporting date (that is, their
carrying amounts). Fair values for fixed-rate certificates of deposit
are estimated using a discounted cash flow calculation that applies
interest rates currently being offered on certificates to a schedule
of aggregated expected monthly maturities on time deposits.
SHORT-TERM BORROWINGS. Rates currently available to the Company for
debt with similar terms and remaining maturities are used to estimate
fair value of existing debt.
ACCRUED INTEREST. The carrying amounts of accrued interest
approximate their fair values.
OFF-BALANCE-SHEET INSTRUMENTS. Fair values for off-balance-sheet
lending commitments are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.
ADVERTISING. The Company expenses all media advertising as incurred.
PER SHARE AMOUNTS. Per share amounts are computed by dividing net
earnings by the weighted-average number of common shares
outstanding during the period. Because there is no active market
for the Company's common shares, the outstanding stock options were
not considered in the calculation of the weighted-average number of
shares outstanding. All per share amounts have been presented to
show the effect of the ten percent stock dividend declared in 1995.
FUTURE ACCOUNTING REQUIREMENTS. The FASB has issued Statement of
Financial Accounting Standards No. 125 ("SFAS 125"). This Statement
provides accounting and reporting standards for transfers and
servicing of financial assets as well as extinguishments of
liabilities. This Statement also provides consistent standards for
distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS 125 is effective for
transfers and servicing of financial assets as well as
extinguishments of liabilities occurring in 1997. Management does
not anticipate SFAS 125 will have a material impact on the Bank.
RECLASSIFICATION. Certain amounts in the 1994 and 1995 financial
statements have been reclassified to conform with the 1996
presentation.
(continued)
28
<PAGE> 32
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY
Debt securities have been classified in the consolidated balance sheets
according to management's intent. The carrying amount of securities
and their approximate fair values are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
AT DECEMBER 31, 1996:
U S Government and agency obligations .. $ 9,550 8 103 9,455
Municipal bonds ......................... 3,291 82 42 3,331
Mortgage-backed securities .............. 8,766 9 172 8,603
------- --- --- ------
Total ................................ $21,607 99 317 21,389
======= === === ======
AT DECEMBER 31, 1995:
U S Government and agency obligations .. 11,832 39 15 11,856
Municipal bonds ......................... 250 2 -- 252
Mortgage-backed securities .............. 12,151 23 205 11,969
------- --- --- ------
Total ................................ $24,233 64 220 24,077
======= === === ======
HELD TO MATURITY:
AT DECEMBER 31, 1996:
U S Government and agency obligations .. 7,459 5 22 7,442
Municipal bonds ......................... 4,933 96 6 5,023
Mortgage-backed securities .............. 5,619 59 12 5,666
------- --- --- ------
Total ................................ $18,011 160 40 18,131
======= === === ======
AT DECEMBER 31, 1995:
U S Government and agency obligations .. 9,942 10 34 9,918
Municipal bonds ......................... 2,228 77 -- 2,305
Mortgage-backed securities .............. 7,472 52 21 7,503
------- --- --- ------
Total ................................ $19,642 139 55 19,726
======= === === ======
</TABLE>
On December 31, 1993, the Bank adopted Statement of Financial
Accounting Standards No. 115 and classified investment securities
as available for sale and held to maturity. On April 30, 1994 the
Bank reclassified certain investment securities from available for
sale to held to maturity. In accordance with Statement of Financial
Accounting Standards No. 115 the unrealized holding loss at the
date of transfer was included as a separate component of
stockholders' equity and is being amortized over the remaining term
of the associated securities as an adjustment of yield. Unrealized
loss on investment securities is summarized below (in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
Unrealized loss on investment securities available
for sale, net of tax effect of $73 and $62 in 1996 and 1995 ......... $ (145) (94)
Net unamortized unrealized loss on investment securities
transferred from available for sale to held to maturity,
net of tax effect of $15 in 1995 .................................... -- (22)
------------- -------------
$ (145) (116)
============= =============
</TABLE>
(continued)
29
<PAGE> 33
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(2) SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY, CONTINUED The following
summarizes sales of securities (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Proceeds from sale of securities available for sale ............. $ 6,347 11,936 11,526
======= ======= =======
Gross gains from sale of securities available for sale .......... 4 9 22
Gross losses from sale of securities available for sale ......... (26) (33) (38)
------- ------- -------
Net (loss) gain ................................................. $ (22) (24) (16)
======= ======= =======
</TABLE>
The scheduled maturities of debt securities at December 31, 1996 are as
follows (in thousands):
<TABLE>
<CAPTION>
AVAILABLE-FOR- HELD-TO-
SALE SECURITIES MATURITY SECURITIES
------------------ --------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
------- ------ ------- ------
<S> <C> <C> <C> <C>
Due one year or less ........................ $ 248 243 104 103
Due from one to five years .................. 7,068 6,926 8,815 8,726
Due from five to ten years .................. 3,100 3,253 5,035 4,984
Due from ten years and thereafter ........... 11,191 10,967 4,057 4,318
------- ------ ------ ------
$21,607 21,389 18,011 18,131
======= ====== ====== ======
</TABLE>
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without prepayment penalties.
For purposes of the maturity table, mortgage-backed securities, which
are not due at a single maturity date, have been allocated over
maturity groupings based on the weighted-average contractual
maturities of underlying collateral. The mortgage-backed securities
may mature earlier than their weighted-average contractual
maturities because of principal prepayments.
At December 31, 1996, securities with an amortized cost of approximately
$3,460,000 and a market value of $3,448,000, were pledged to secure
public deposits and for other purposes required or permitted by
law.
(continued)
30
<PAGE> 34
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(3) LOANS RECEIVABLE
The components of loans in the consolidated balance sheets are as follows
(in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Real estate loans:
Residential...................................................... $ 34,700 34,539
Commercial ...................................................... 63,546 52,269
------------- -------------
Total real estate loans ................................... 98,246 86,808
Commercial loans .................................................... 28,594 25,247
Consumer loans ...................................................... 14,293 12,109
------------- -------------
Total loans ............................................... 141,133 124,164
Add (deduct):
Allowance for credit losses .................................. (2,682) (1,702)
Deferred loan costs, net ..................................... 36 26
Other, net ................................................... -- 23
------------- -------------
Loans receivable, net ..................................... $ 138,487 122,511
============= =============
</TABLE>
An analysis of the change in the allowance for loan losses is as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Balance at beginning of year ................................ $ 1,702 1,562 1,426
------- ------ ------
Loans charge-offs ........................................... (345) (655) (151)
Recoveries .................................................. 563 90 103
------- ------ ------
Net loans charged-off .................................... 218 (565) (48)
------- ------ ------
Provision for loan losses ................................... 762 705 184
------- ------ ------
Balance at end of year ...................................... $ 2,682 1,702 1,562
======= ====== ======
</TABLE>
(continued)
31
<PAGE> 35
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(3) LOANS RECEIVABLE, CONTINUED
The following summarizes the amounts of impaired loans (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1995
-------- -------
<S> <C>
Loans identified as impaired:
Gross loans with no related allowance for losses $ -- --
Gross loans with related allowance for losses recorded -- 263
Less: Allowances on these loans -- (53)
-------- --------
Net investment in impaired loans $ -- 210
======== ========
</TABLE>
The average net investment in impaired loans and interest income recognized
and received on impaired loans is as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Average investment in impaired loans ........................ $ 46 238 139
======= ====== ======
Interest income recognized on impaired loans ................ $ -- -- --
======= ====== ======
Interest income received on impaired loans .................. $ -- -- --
======= ====== ======
</TABLE>
At December 31, 1996 and 1995, loans in the approximate amount of $711,000
and $879,000, respectively, were pledged as collateral for the Company's
line of credit with the Federal Home Loan Bank of Atlanta.
(4) PREMISES AND EQUIPMENT
Components of premises and equipment included in the consolidated balance
sheets is as follows (in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Land ................................................................... $ 1,792 1,181
Building and leasehold improvements .................................... 3,662 3,271
Furniture, fixtures and equipment ...................................... 3,675 3,405
-------- --------
Total cost ....................................................... 9,129 7,857
Less accumulated depreciation .......................................... 3,634 3,134
-------- --------
Net book value ................................................... $ 5,495 4,723
======== ========
</TABLE>
(continued)
32
<PAGE> 36
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(4) PREMISES AND EQUIPMENT, CONTINUED
The Company leases certain facilities under operating leases with
noncancellable terms. Rental expense amounted to $241,000, $286,000
and $420,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. Rental income amounted to $141,000 and $89,000 for
the years ended December 31, 1996 and 1995, respectively. The
operating lease agreements contain escalation clauses based upon
the consumer price index and increases in proportionate operating
costs of the facilities and provide for annual adjustments to the
previous year's rental. A summary of the future minimum operating
lease commitments are as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING OPERATING
LEASE LEASE
YEAR ENDING DECEMBER 31, EXPENSE INCOME
------------------------ ------- ------
<S> <C> <C>
1997....................................................... $204 165
1998....................................................... 173 161
1999....................................................... 165 99
2000....................................................... 170 113
2001....................................................... 92 -
---- ---
$804 538
==== ===
</TABLE>
(5) LOAN SERVICING
At December 31, 1996, 1995 and 1994 the Company was servicing loans
for others amounting to approximately $9,647,000, $11,336,000 and
$13,135,000, respectively. Servicing loans for others generally
consists of collecting mortgage payments, maintaining escrow
accounts, disbursing payments to investors and processing of
foreclosures. Loan servicing income includes servicing fees from
investors and certain charges collected from borrowers, such as
late payment fees.
(6) DEPOSITS
The aggregate amount of short-term certificates of deposit with a
minimum denomination of $100,000 was approximately $19,863,000 and
$15,836,000 at December 31, 1996 and 1995, respectively.
At December 31, 1996, the schedule of maturities for certificate of
deposit accounts were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997............................................................................. $62,216
1998............................................................................. 21,004
1999............................................................................. 5,622
2000............................................................................. 4,008
2001 and thereafter.............................................................. 1,672
-------
$94,522
=======
</TABLE>
(continued)
33
<PAGE> 37
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(7) SHORT-TERM BORROWINGS
At December 31, 1996, the Company has agreements to sell investment
securities to its customers under revolving sales/repurchase
agreements aggregating $4,900,000, and the Company has a
$10,000,000 revolving reverse repurchase agreement with another
bank. The following table provides information on these agreements
(dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Maximum borrowing at any month-end
within the year .......................................... $ 7,167 5,449 4,250
Average borrowing during the year ........................... 2,325 2,091 1,322
Average interest cost during the year ....................... 3.70% 4.85% 4.24%
Average interest cost at end of the year .................... 4.25% 3.90% 4.84%
</TABLE>
Securities sold under agreements to repurchase are summarized below (in
thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
1996 1995
---- ----
<S> <C> <C>
Customer repurchase agreements ................................... $ 2,867 1,965
======= ======
Securities pledged as collateral for the agreements,
at amortized cost which approximate market ................... $15,503 15,323
======= ======
</TABLE>
The Company has an available line of credit with the Federal Home Loan
Bank of Atlanta in the amount of $16,000,000, which has no
scheduled expiration. As of December 31, 1996 and 1995, no amounts
had been drawn on this line. The Company also has an available line
of credit with SunTrust Bank, Atlanta in the amount of $2,000,000,
which expires in April 1997. As of December 31, 1996 and 1995, no
amounts had been drawn on this line. In addition, the Company has
negotiated an unsecured overnight Federal Funds line of credit of
up to $1,500,000 with the Independent Bankers' Bank of Florida and
$1,000,000 with another bank. As of December 31, 1996 and 1995 no
funds had been drawn against these lines.
(continued)
34
<PAGE> 38
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(8) FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs
of its customers. These financial instruments are commitments to
extend credit and standby letters of credit and may involve, to
varying degrees, elements of credit and interest-rate risk in
excess of the amount recognized in the balance sheet. The contract
amounts of these instruments reflect the extent of involvement the
Company has in these financial instruments.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to
extend credit and standby letters of credit is represented by the
contractual amount of those instruments. The Company uses the same
credit policies in making commitments as it does for
on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the
contract. Commitments generally have fixed-expiration dates or
other termination clauses and may require payment of a fee. Since
some of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's
credit worthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by the Company upon extension of
credit is based on management's credit evaluation of the
counterparty. Standby letters of credit and conditional commitments
are issued by the Company to guarantee the performance of a
customer to a third party. The credit risk involved in issuing
letters of credit is essentially the same as that included in
extending loans to customers.
The estimated fair values of the Company's financial instruments were as
follows (in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 AT DECEMBER 31, 1995
-------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ----- -------- -------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks ........... $ 17,722 17,722 11,997 11,997
Securities available for sale ..... 21,389 21,389 24,077 24,077
Securities held to maturity ....... 18,011 18,131 19,642 19,726
Loans receivable .................. 138,487 138,509 122,511 122,560
Accrued interest receivable ....... 1,308 1,308 1,266 1,266
FHLB stock ........................ 809 809 809 809
Financial liabilities:
Deposit liabilities ............... 185,887 186,266 168,297 169,112
Short-term borrowings ............. 2,867 2,867 1,965 1,965
</TABLE>
(continued)
35
<PAGE> 39
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(8) FINANCIAL INSTRUMENTS, CONTINUED
A summary of the notional amounts of the Company's financial
instruments, which approximate fair value, with off balance sheet
risk at December 31, 1996, follows (in thousands):
<TABLE>
<S> <C>
Unfunded loan commitments at variable rates.................................. $ 7,546
=======
Available lines of credit.................................................... $22,148
=======
Standby letters of credit.................................................... $ 1,365
=======
</TABLE>
(9) CREDIT RISK
The Company grants loans to borrowers throughout the State of Florida
with a majority of the loans in the west coast area. Although the
Company has a diversified loan portfolio, a significant portion of
its borrowers' ability to honor their contracts is dependent upon
the economy of the west coast area of Florida.
(10) INCOME TAXES
The provision for income taxes consisted of the following (in
thousands):
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Federal ....................................................... $ 559 (139) 420
State ......................................................... 73 (24) 49
------ ------ ------
Total ...................................................... $ 632 (163) 469
====== ====== ======
YEAR ENDED DECEMBER 31, 1995:
Federal ....................................................... 933 55 988
State ......................................................... 112 9 121
------ ------ ------
Total ...................................................... $1,045 64 1,109
====== ====== ======
YEAR ENDED DECEMBER 31, 1994:
Federal ....................................................... 596 (225) 371
State ......................................................... 79 (38) 41
------ ------ ------
Total ...................................................... $ 675 (263) 412
====== ====== ======
</TABLE>
(continued)
36
<PAGE> 40
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(10) INCOME TAXES, CONTINUED
The reasons for the differences between the federal income tax rate and
the effective tax rate are summarized as follows (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994
---------------- ----------------- --------------------
% OF PRETAX% OF PRETAX% OF PRETAX
AMOUNT EARNINGS AMOUNT EARNINGS AMOUNT EARNINGS
<S> <C> <C> <C> <C> <C> <C>
Tax provision at statutory
rate .................................... $ 442 34.0% $ 943 34.0% $ 350 34.0%
Increase (decrease) resulting from:
State taxes, net of federal
income tax benefit ...................... 32 2.5 80 2.9 27 2.6
Nondeductible merger expenses ............... -- -- -- -- 50 4.9
Other, net .................................. (5) (.4) 86 3.1 (15) (1.5)
------ ------ ------ ------ ------ ------
Income tax provision .................... $ 469 36.1% $1,109 40.0% $ 412 40.0%
====== ====== ====== ====== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities relate to the
following (in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses ................................. $ 353 364
Real estate writedowns .................................... 134 83
Unrealized loss on securities ............................. 96 78
Other ..................................................... 21 12
------- ------
Total gross deferred tax assets ..................... 604 537
------- ------
Deferred tax liabilities:
Federal Home Loan Bank stock basis ........................ (109) (109)
Deferred loan fees ........................................ (8) (98)
Accumulated depreciation on property and equipment ........ (66) (77)
Section 481 change in accounting method adjustment ........ - (16)
Core deposit amortization ................................. (23) (20)
Other ..................................................... (6) (6)
------- ------
Total gross deferred tax liabilities ................ (212) (326)
------- ------
Net deferred tax asset .............................. $ 392 211
======= ======
</TABLE>
(continued)
37
<PAGE> 41
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(11) LOANS TO RELATED PARTIES
The aggregate amount of loans owed to the Company by its executive and
senior officers, directors, and their related entities at December
31, 1996 and 1995, were approximately $2,642,000 and $3,371,000,
respectively. The activity for the year follows (in thousands):
<TABLE>
<S> <C>
Balance at beginning of year ......................................... $ 3,371
Additions ............................................................ 166
Repayments ........................................................... 895
-------
Balance at end of year ............................................... $ 2,642
=======
</TABLE>
(12) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company has various
outstanding commitments and contingent liabilities that are not
reflected in the accompanying financial statements.
(13) STOCK OPTIONS
The Company has a nonqualified stock option plan (the "Plan") for its
officers and employees. Under the Plan, the option price shall not
be less than the estimated fair market value of the shares on the
date of grant. An individual option granted under the Plan may not
exceed 33,000 shares, is exercisable as of the date of grant, and
may have a term of up to ten years. The maximum number of shares
which may be subject to options issued and outstanding pursuant to
the Plan is initially 76,319 shares, which may be increased by the
Board of Directors to the lesser of 110,000 shares or an amount
equal to 20% of the shares which shall be issued and outstanding at
any time during the term of the Plan. A summary of transactions
follows:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
PER SHARE NUMBER OF OPTION
PRICE SHARES PRICE
------- --------- ----------
(IN
THOUSANDS)
<S> <C> <C> <C>
Outstanding at December 31, 1993 and 1992 ................... $ 8.91 43,545 388
Options granted ............................................. 13.22 30,855 408
Options exercised ........................................... 8.37 (22,110) (185)
Options from terminated employees ........................... 9.09 (110) (1)
------ ------
Outstanding at December 31, 1994 ............................ 11.69 52,180 610
Options granted ............................................. 15.07 9,050 136
Options from terminated employees ........................... 12.98 (770) (10)
------ ------
Outstanding at December 31, 1995 ............................ 12.17 60,460 736
Options from terminated employees ........................... 11.96 (585) (7)
------ ------
Outstanding at December 31, 1996 ............................ $ 12.18 59,875 $ 729
======= ====== ======
</TABLE>
(continued)
38
<PAGE> 42
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(13) STOCK OPTIONS, CONTINUED
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation,"
which establishes financial accounting and reporting standards for
stock-based employee compensation plans. As permitted by this
Statement, the Company has elected to continue utilizing the
intrinsic value method of accounting defined in APB Opinion No. 25.
Due to the exercise price of the options approximating the market
value of the common stock at the date of grant, no compensation
expense has been recognized in the consolidated statements of
earnings.
In order to calculate the fair value of the options, it was assumed that the
risk-free interest rate was 6.0%, there would be no dividends
paid by the Company over the exercise period, the expected life of
the options would be the entire exercise period and stock volatility
would be zero due to the lack of an active market for the stock. The
following information pertains to the fair value of the 9,050 options
granted to purchase common stock in 1995 (in thousands, except per
share amounts):
<TABLE>
<S> <C>
Weighted-average grant-date fair value of options
issued during the year ........................................... $ 74
=======
Proforma net earnings for 1995 ....................................... $ 1,618
=======
Proforma earnings per share for 1995 ................................. $ 1.61
=======
</TABLE>
(14) STOCK DIVIDEND
The Board of Directors declared a 10% stock dividend payable on August
1, 1995 to stockholders of record on June 30, 1995. All per share
amounts have been presented to reflect this stock dividend.
(15) PROFIT SHARING PLAN
The Company maintains a qualified Section 401(k) profit sharing plan
and trust (the "Plan"). Under the Plan, a participating employee
may make an elective contribution under a salary reduction
arrangement of up to 15% of his or her compensation. In addition,
the Company may make a separate discretionary matching
contribution. The Company's contribution in 1996, 1995 and 1994 was
$49,900, $22,300 and $17,300, respectively.
(16) STOCKHOLDERS' EQUITY
The Bank, as a state-chartered bank, is limited in the amount of cash
dividends that may be paid. The amount of cash dividends that may
be paid is based on the Bank's net earnings of the current year
combined with the Bank's retained net earnings of the preceding two
years, as defined by banking regulations. However, for any dividend
declaration, the Bank must consider additional factors such as the
amount of current period net earnings, liquidity, asset quality,
capital adequacy and economic conditions. It is likely that these
factors would further limit the amount of dividend which the Bank
could declare. In addition, bank regulators have the authority to
prohibit banks from paying dividends if they deem such payment to
be an unsafe or unsound practice.
(17) SAIF RECAPITALIZATION ASSESSMENT
On September 30, 1996, a law was enacted which imposed a one-time
assessment on all SAIF insured deposits as of March 31, 1995. The
effect on the Bank was a pretax charge in 1996 of $648,000.
(continued)
39
<PAGE> 43
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(18) REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administered by the various banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Company's
financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative measures
of the Bank's assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The
Bank's capital amounts and classification are also subject to
qualitative judgements by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier I capital (as
defined in the regulations) to risk-weighted assets (as defined),
and of Tier I capital (as defined) to average assets (as defined).
Management believes, as of December 31, 1996, that the Bank meets
all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the State
and Federal regulators categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
categorized as well capitalized the Bank must maintain minimum
total risk-based, Tier I risk-based, and Tier I leverage ratios as
set forth in the table. There are no conditions or events since
that notification that management believes have changed the Bank's
category.
The Bank's actual capital amounts and ratios are also presented in the
table.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES: ACTION PROVISIONS:
--------------------- -------------------- ------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996:
Total capital (to Risk
Weighted Assets) ....... $17,900 12.09% $11,844 8.00% $14,805 10.00%
Tier I Capital (to Risk
Weighted Assets) ....... 16,049 10.84 5,922 4.00 8,883 6.00
Tier I Capital
(to Average Assets) .... 16,049 8.08 7,945 4.00 9,932 5.00
AS OF DECEMBER 31, 1995:
Total capital (to Risk
Weighted Assets) ....... 17,447 13.64 10,233 8.00 12,791 10.00
Tier I Capital (to Risk
Weighted Assets) ....... 15,848 12.39 5,117 4.00 7,675 6.00
Tier I Capital
(to Average Assets) .... 15,848 8.55 7,413 4.00 9,266 5.00
</TABLE>
(continued)
40
<PAGE> 44
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(19) SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995 1994
---- ------ ------
<S> <C> <C> <C>
Cash paid during the period for:
Interest ............................................... $ 5,865 5,423 4,497
======= ====== ======
Income taxes ........................................... $ 1,134 1,027 448
======= ====== ======
Noncash transactions:
Reclassification of other real estate owned to loans ... $ 460 374 --
======= ====== ======
Reclassification of loans to other real estate ......... $ 586 -- --
======= ====== ======
Unrealized gain (loss) on securities
available-for-sale ................................ $ (29) 382 (626)
======= ====== ======
Stock dividends ........................................ $ -- 1,357 --
======= ====== ======
</TABLE>
(20) PENDING ACQUISITION OF COMPANY
On November 18, 1996, the Company entered into an agreement to merge
the Company into Colonial Bancgroup ("Colonial"). Colonial will
exchange sufficient common stock to equal $31.50 per share for all
the outstanding shares of the Company. This transaction is subject
to the approval of stockholders and various regulatory authorities.
(21) PARENT COMPANY ONLY FINANCIAL STATEMENTS
Condensed financial statements of the Holding Company are presented
below. The Holding Company commenced business in July 1996.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------
1996
<S> <C>
ASSETS
Cash and cash equivalents ............................................ $ 5
Investment in wholly-owned subsidiaries .............................. 15,953
Organizational costs ................................................. 42
-------
Total ............................................................ $16,000
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities .................................................... 287
Stockholders' equity ................................................. 15,713
-------
Total ............................................................ $16,000
=======
</TABLE>
(continued)
41
<PAGE> 45
FORT BROOKE BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(21) PARENT COMPANY ONLY FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------
1996
<S> <C>
CONDENSED STATEMENT OF EARNINGS
(IN THOUSANDS)
Revenues ............................................................. $ --
Expenses ............................................................. (3)
-------
Loss before earnings of subsidiary ............................... (3)
Earnings of subsidiaries ......................................... 833
-------
Net earnings ..................................................... $ 830
=======
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------
1996
----
<S> <C>
CONDENSED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
Cash flows from operation activities:
Net earnings ..................................................... $ 830
Adjustments to reconcile net earnings to net cash used in
operating activities:
Equity in undistributed earnings of subsidiaries ............. (833)
Net increase in organizational costs ......................... (42)
Increase in other liabilities ................................ 287
-------
Net cash provided by operating activities ................ 242
-------
Cash flows from financing activity-
Cash dividends ................................................... (237)
-------
Net cash from financing activities ....................... (237)
-------
Net increase (decrease) in cash and cash equivalents ................. 5
Cash and cash equivalents at beginning of the year ................... --
-------
Cash and cash equivalents at end of year ............................. $ 5
=======
</TABLE>
42
<PAGE> 46
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Fort Brooke Bancorporation
Brandon, Florida:
We have audited the consolidated balance sheets of Fort Brooke
Bancorporation and Subsidiary (the "Company") at December 31, 1996 and 1995 and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the years in the three-year period ended December 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
at December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
January 16, 1997
43
<PAGE> 47
DIRECTORS
THOMAS H. MILLER CHARLES W. POE
Chairman of the Board President
Fort Brooke Bank Poe Industries, Inc.
General Agent Tampa, Florida
State Farm Insurance Companies
Brandon, Florida WILLIAM F. POE
President
JOHN D. ADAMS, SR. Poe Investments, Inc.
Secretary to the Board Tampa, Florida
Fort Brooke Bank
President REESE T. POPPELL
Adams Air & Hydraulics Owner
Tampa, Florida Poppell Insurance
Plant City, Florida
M.R. "MEL" BELISLE
President SAM RAMPELLO
Fife Industrial Pipe Supervisor of School
Brandon, Florida Finance/Special Programs
Hillsborough County School
TOMMY W. BROWN System
Chief Executive Officer Tampa, Florida
Brown Automatic Sprinklers
Tampa, Florida DAVID C. WORTHINGTON
M.D.
RICHARD H. EATMAN Brandon, Florida
President and CEO
Fort Brooke Bank
Brandon, Florida
H. REX ETHEREDGE
Chief Executive Officer
Columbia South Bay Hospital
Columbia Brandon Regional
Medical Center
Brandon, Florida
JOSEPH GARCIA
Attorney
Garcia & Fields, P.A.
Tampa, Florida
RILEY L. HOGAN, JR.
General Manager
Tampa Independent Dairy
Farmers' Association, Inc.
Tampa, Florida
A.D. "SANDY" MacKINNON
President
Yale Industrial Trucks
Tampa, Florida
44
<PAGE> 48
<TABLE>
<CAPTION>
OFFICERS
<S> <C> <C>
RICHARD H. EATMAN DEBORAH R. RESNICK LINDA S. VOLLMER
President and Chief Executive Vice President Operations Officer
Officer Residential Mortgage Dept. Main Office - Brandon
EDMUND R. KOMLODI CHARLES C. WHITAKER III NANCY SOLETO
Senior Vice President Vice President/Commercial Loans Assistant to President
Chief Financial Officer Anderson Road Office
LOCATIONS
MARVIN F. CRABTREE, JR. TED A. HICKS
Senior Vice President/SLO Assistant Vice President MAIN OFFICE
Head, Commercial Loan Dept. Commercial Loans 510 Vonderburg Drive
Plant City Office Brandon, Florida 33511
JUDY C. SHERWOOD 685-2000
Senior Vice President BRIAN O. AIKEN
Operations Consumer Loan Officer PARK CENTRAL OFFICE
Seffner Office 410 Ware Boulevard
DAVID E. BROWN Tampa, Florida 33619
Senior Vice President SUSAN JONES 626-5884
Commercial Loans Construction Loan Officer
Westshore Office SEFFNER OFFICE
CAROLINE MAXWELL 1707 Parsons Avenue So.
ROBERT S. COVINGTON, JR. Department Manager Seffner, Florida 33584
Senior Vice President Deposit Services Operation 681-8176
Commercial Loans
Downtown Tampa Office PATRICIA F. PADILLA APOLLO BEACH OFFICE
Loan Operations Manager 205 Apollo Beach Boulevard
DANIEL L. DAIL Apollo Beach, Florida 33572
Senior Vice President SHEILA BURDICK 645-8441
Credit Administration Operations Officer
Commercial Loans Apollo Beach Office PLANT CITY OFFICE
2318 Jim Redman Parkway
RONALD D. DANIEL FAYE COOK Plant City, Florida 33566
Senior Vice President Operations Officer 759-1240
Area Executive Anderson Road Office
Plant City Office WESTSHORE OFFICE
CYNTHIA R. MANCHESI 4427 West Kennedy Boulevard
RANDY L. FRISKNEY Operations Officer Tampa, Florida 33609
Senior Audit Manager Seffner Office 286-7638
GARY L. BOOTHE PAIGE MOORE TAMPA OFFICE
Vice President Operations Officer 200 East Madison Street
Commercial Loans Plant City Office Tampa, Florida 33602
Plant City Office 223-2832
SANDRA NORMAN
JEFF S. CAMPBELL Operations Officer ANDERSON ROAD OFFICE
Vice President Park Central Office 12002 Anderson Road
Commercial Loans Tampa, Florida 33625
GAYLE A. ROBSON 265-4111
RICHARD H. JOHNSON Operations Officer
Vice President Downtown Tampa Office
Human Resources Director
LAURA K. SIENKIEWICZ
LOREN B. MacKENZIE Operations Officer
Vice President Westshore Office
Consumer Loan Dept.
</TABLE>
45
<PAGE> 1
The Colonial BancGroup,Inc.
- ---------------------------
Page
--------------
Exhibit 21
to the
Annual Report on Form 10-K
for
the year ended December 31, 1996
for
Fort Brooke Bancorporation
All subsidiaries of the Registrant:
1. Fort Brooke Bank, a Florida incorporated commercial banking corporation.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 17,722
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,389
<INVESTMENTS-CARRYING> 18,011
<INVESTMENTS-MARKET> 18,131
<LOANS> 141,169
<ALLOWANCE> 2,682
<TOTAL-ASSETS> 205,686
<DEPOSITS> 185,887
<SHORT-TERM> 2,867
<LIABILITIES-OTHER> 1,219
<LONG-TERM> 0
0
0
<COMMON> 1
<OTHER-SE> 15,712
<TOTAL-LIABILITIES-AND-EQUITY> 205,686
<INTEREST-LOAN> 12,000
<INTEREST-INVEST> 2,524
<INTEREST-OTHER> 357
<INTEREST-TOTAL> 14,881
<INTEREST-DEPOSIT> 5,804
<INTEREST-EXPENSE> 86
<INTEREST-INCOME-NET> 8,991
<LOAN-LOSSES> 762
<SECURITIES-GAINS> (22)
<EXPENSE-OTHER> 8,494
<INCOME-PRETAX> 1,299
<INCOME-PRE-EXTRAORDINARY> 1,299
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 830
<EPS-PRIMARY> .83
<EPS-DILUTED> .83
<YIELD-ACTUAL> 8.38
<LOANS-NON> 352
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<LOANS-PROBLEM> 0
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<CHARGE-OFFS> 345
<RECOVERIES> 563
<ALLOWANCE-CLOSE> 2,682
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
