As filed with the Securities and Exchange Commission on January , 1996
Registration File No. ___________
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SECURITIES AND EXCHANGE COMMISSION
------------------------------
WASHINGTON, D.C. 20549
Pre-Effective Amendment No. 1 to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THE COMMERCIAL BANCORP, INC.
(Name of small business issuer in its charter)
Florida 6712 59-3396236
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
258 N. Nova Road
Ormond Beach, Florida 32174
(904) 672-3003
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(Address and telephone number
of principal executive offices)
Gary G. Campbell
President and Chief Financial Officer
258 N. Nova Road
Ormond Beach, Florida 32174
(904) 672-3003
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(Name, address and telephone number of agent for service)
Copies Requested to:
Herbert D. Haughton, Esq. or A. George Igler, Esq
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
(904) 878-2411
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an Offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Proposed Proposed Amount
each class Amount maximum maximum of
of securities to be offering aggregate registration
to be registered registered price per share(2) offering price(2) fee
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<S> <C> <C> <C> <C>
Units; each consisting of 1
share of Common Stock
and 1 Common Stock
Purchase Warrant. (1) 450,000 $10.00 $ 4,500,000 $1,363.64
Shares Underlying
Purchase Warrants 450,000 $10.00 $ 4,500,000 $1,363.64
Common Stock (3) 300,000 $10.00 $ 3,000,000 $ 909.09
Purchase Warrants (4) 450,000 $ 0.00 $ 0 $ 0.00
Total $ 12,000,000 $3,636.37
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(1) Common Stock ("Shares") and Warrants are to be issued during the
Initial Offering Period in Units composed of one Share and one Warrant
to purchase one share of Common Stock. Units will not be issued or
certificated and the minimum number of Units which may be purchased is
250 Units. Shares and Warrants will be detachable upon issuance and
will be issued and certificated separately. Shares issued after the
Initial Offering Period will not have warrants attached.
(2) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum offering price per Unit, or Share.
(3) Common stock, in addition to the shares attached to the Units, to be
offered without Warrants.
(4) Included in the 450,000 Units. Accordingly, no separate filing fee is
payable for the registration of such Purchase Warrants.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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450,000 UNITS, EACH CONSISTING OF
ONE SHARE OF COMMON STOCK AND ONE
PURCHASE WARRANT FOR ONE SHARE OF COMMON STOCK
and
300,000 SHARES OF COMMON STOCK WITHOUT PURCHASE WARRANTS
Minimum: 450,000 Shares and Purchase Warrants ----- Maximum: 1,200,000 Shares
[LOGO] THE COMMERCIAL BANCORP, INC.
A Proposed Bank Holding Company
for
THE COMMERCIAL BANK OF VOLUSIA COUNTY
ORMOND BEACH, FLORIDA
A Proposed State-Chartered Bank
The Commercial Bancorp, Inc., a Florida corporation ("Company"), hereby
offers for sale 1,200,000 shares of common stock at a price of $10.00 per share
(the "Offering"). During the Initial Offering Period only, which is defined as
the 90 day period following the effective date of the Registration Statement
filed under the Securities Act of 1933 ("33 Act"), as amended ("Effective Date")
and any extension by the Company in its sole discretion not to exceed 60 days,
450,000 shares will be offered in "Units". Each Unit consists of one share of
Common Stock, par value $0.01, of the Company ("Common Stock") and one purchase
warrant ("Warrant") to purchase one share of Common Stock at $10.00 per share.
The minimum number of Units or shares that may be purchased is 250. Units will
not be certificated. Only certificates for Common Stock and Warrants will be
issued in connection with the Offering. The minimum number of Units offered is
450,000 and the Organizers intend to purchase, in the aggregate, at least
108,500 Units or 24.1 % of the total minimum Offering.
Immediately following the closing of the Initial Offering Period, and for a
period of 12 months thereafter, unless terminated sooner in the Company's sole
discretion, the Company will offer up to 300,000 shares of Common Stock at
$10.00 per share. Warrants will not be included with shares offered after the
Initial Offering Period.
The Company has reserved 450,000 shares of this Offering to be issued upon
the execution of Warrants by the holders of the Warrants. Warrants may be
exercised immediately after issuance and will expire 36 months from the
Effective Date.
Actual sales of Units and shares to the public are expected to be made
beginning on or about March , 1997, and ending on or about June ,1998, but the
Offering may be terminated earlier by the Company in its sole discretion. Sales
of shares pursuant to the Warrants will be made immediately following the
Initial Offering Period and will end 36 months from the effective date. The
Offering of Units and shares will be made on a continuous basis under Securities
and Exchange Commission ("SEC") Rule 415. The Units and shares are offered on a
best-efforts basis by certain directors and executive officers of the Company,
who will receive no commissions for such sales. All subscription funds tendered
during the Initial Offering Period will be deposited in an interest-bearing
escrow account with the Independent Banker's Bank of Florida ("Escrow Agent").
The Offering will be terminated and all subscription funds, together with any
interest earned thereon, will be promptly returned if all required conditional
regulatory approvals have not been obtained or the minimum number of Units have
not been subscribed to by the end of the Initial Offering Period. The latest
date to which the subscription funds might be held in escrow prior to their
return in the event the minimum is not reached or the Company has not satisfied
the conditional regulatory approvals is September 1, 1997. Subscriptions
obtained in the Offering may be accepted or rejected in whole or in part by the
Company for any reason. Once a subscription is accepted by the Company, however,
it cannot be withdrawn. See "TERMS OF THE OFFERING."
Once subscription funds have been released by the Escrow Agent and shares
of the Company's Common Stock are issued, in the event the Offering is
terminated because of the Company's failure to satisfy the conditional
regulatory approvals, subscribers will not receive a full refund of their
subscription payment. See "TERMS OF THE OFFERING - Failure of Bank to Commence
Operations."
The Company is a "development stage company" with no prior operating
history. See "Risk Factors - Start-up Enterprise". Prior to this Offering, there
has been no public market for the Common Stock and it is not anticipated that
there will be an active trading market for the shares. There can be no assurance
that an active trading market for such stock will develop since the Company
presently does not intend to seek to list the Common Stock on a national
securities exchange or to qualify such Common Stock for quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ").
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD
NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF
THOSE RISKS THAT MANAGEMENT BELIEVES PRESENT THE SUBSTANTIAL RISKS TO AN
INVESTOR IN THIS OFFERING.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SEC PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO CONTRARY IS A CRIMINAL
OFFENSE.
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THIS OFFERING IS BEING MADE ON A 450,000 UNIT MINIMUM BASIS.
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Price Underwriting
to Discounts and Proceeds to
Public(1) Commissions(2) the Company(3)
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<S> <C> <C> <C>
Per Unit or share. . . . . . . . . . . . . $10.00 $0 $10.00
Minimum(4) . . . . . . . . . . . . . . . . $4,500,000 $0 $4,500,000
Maximum . . . . . . . . . . . . . . . . . $12,000,000 $0 $12,000,000
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</TABLE>
(See footnotes on inside Front Cover)
<PAGE>
(Continuation of front cover)
(1) Prior to this Offering, there has been no established market for the shares
of the Company's Common Stock. The Offering price was arbitrarily
determined by the Board of Directors of the Company and does not bear any
relationship to the Company's assets, book value, net worth or any other
recognized criteria of value. In the event a market should develop for the
Common Stock after completion of this Offering, there can be no assurance
that the market price will equal or exceed the Offering price herein.
(2) The securities offered hereby will be sold on a best-efforts, minimum
450,000 Unit basis by certain directors and executive officers of the
Company and no commissions will be paid on such sales. See "TERMS OF THE
OFFERING."
(3) Before deducting Offering expenses, estimated to be approximately $26,000
including registration fees, legal and accounting fees, printing and other
expenses. See "USE OF PROCEEDS" for an itemized statement of expenses.
(4) These securities are offered on a best-efforts, 450,000 Unit minimum basis.
If payment in cash for 450,000 Units is not received prior to the end of
the Initial Offering Period the Offering will terminate and all
subscription funds, together with any interest earned thereon, will be
promptly returned to subscribers. The Organizers of the Company have
indicated that they may be willing to subscribe for additional Units in
this Offering, not to exceed an aggregate of 20,000 Units or 4.4% of the
minimum Offering, if necessary to help the Company sell the 450,000 Units
necessary to release subscription proceeds from the Subscription Escrow
Account, as defined herein and to continue the Offering. All purchases of
Units by the Company's Organizers will be subject to affiliate resale
limitations under the 33 Act, as amended, and will be made on the same
terms, including Warrant provisions, as those made by other investors. The
Organizers of the Company have represented to the Company that all
purchases of Common Stock will be made for investment purposes only and not
with a view to resell such shares. The maximum number of shares that will
be sold in the Offering will be 1,200,000 shares. See "RISK FACTORS,"
"TERMS OF THE OFFERING," and "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
The Company reserves the absolute right to cancel all subscriptions and
return all subscription funds, together with any income realized from the
investment of such funds, for any reason whatsoever, at any time prior to the
time that the Company withdraws subscription funds from the Subscription Escrow
Account. See "TERMS OF THE OFFERING."
The date of this Prospectus is March , 1997.
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<PAGE>
AVAILABLE INFORMATION
Prior to the Offering, the Company has not been required to file
reports under the Securities Exchange Act of 1934 ("Exchange Act").
The Company has filed with the Securities and Exchange Commission
("Commission") a Registration Statement on Form SB-2, as amended, (together will
all exhibits and schedules thereto, the "Registration Statement") under the
Securities Act of 1933, as amended with respect to the registration of the Units
and shares offered by this Prospectus. This Prospectus does not contain all of
the information set forth in such Registration Statement and the exhibits
thereto, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information pertaining to the Units
and Shares offered by this Prospectus and related matters, reference is made to
such Registration Statement, including the exhibits filed as a part thereof.
Each statement in this Prospectus referring to a document filed as an exhibit to
such Registration Statement is qualified by reference to the exhibit for a
complete statement of its terms and conditions.
The Registration Statement filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at its
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a web site that contains registration statements reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web Site is
http://www.sec.gov. Copies of exhibits may also be obtained by written request
addressed to: Gary G. Campbell, 258 N. Nova Road, Ormond Beach, Florida 32174.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish annual reports to its shareholders which
will contain audited financial statements and quarterly reports which contain
unaudited financial statements. In addition, the Company will be required, under
section 15(d) of the Exchange Act, to file annual and quarterly reports with the
Commission. Copies of such reports will be available to the Company's
shareholders.
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<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information and
financial statements appearing elsewhere in this Prospectus. Prospective
Investors are urged to read the entire Prospectus carefully.
Risk Factors
The securities offered hereby may be deemed to be speculative and involve
certain risks such as:
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<CAPTION>
<S> <C>
Start-up Enterprise Intended Purchases by Organizers
Dependency on Key Management Anti-takeover Provision in Company's
Financial Position of the Company and Expected Articles of Incorporation
Lack of Initial Profitability No Established Market for Shares
Highly Competitive Banking Market Arbitrary Determination of Offering Price
Unpredictable Economic Conditions Absence of Preemptive Rights
Extensive Governmental Regulation Future Capital Needs of the Bank
No Plans to Pay Dividends in the No Underwriting of this Offering
Foreseeable Future Possible Dilution Resulting from Shares
Possible Return of Less Than Issued Under Warrant Plan
the Subscription Amount
</TABLE>
For these and other reasons, the purchase of the Units and shares is highly
speculative and involves significant investment risks. A prospective investor
should be prepared to lose his or her entire investment. Prospective investors
should carefully consider the matters set forth under "RISK FACTORS."
The Company
The Commercial Bancorp, Inc. ("Company") was organized under the laws
of the State of Florida on August 15, 1996, for the purpose of operating as a
bank holding company pursuant to the Federal Bank Holding Company Act of 1956,
as amended ("BHC Act"). The Company intends to use the minimum net proceeds of
this Offering to purchase 100% of the common stock to be issued by The
Commercial Bank of Volusia County ("Bank"), to repay organizational expenses and
for other general corporate purposes. Neither the Company nor the Bank has
commenced business operations, and neither will do so until the Initial Offering
Period is completed and the requisite approvals of the Florida Department of
Banking and Finance ("Department"), the Federal Deposit Insurance Corporation
("FDIC") and the Board of Governors of the Federal Reserve System ("Federal
Reserve") are obtained. The main office of the Company and the Bank will be
located in Ormond Beach, Volusia County, Florida. It is anticipated that the
Bank will commence business operations sometime during the second quarter of
1997, or as soon thereafter a practicable. With the exception that it will have
no trust powers, the Bank will operate as a full service commercial bank with
primary emphasis upon high quality service to meet the financial needs of the
individuals and businesses residing and located in and around Ormond Beach,
Florida. The Company's mailing address is, 258 N. Nova Road, Ormond Beach,
Florida 32174 and the telephone number is (904) 672-3003. See "THE COMPANY".
Terms and Conditions of the Offering
Shares offered................................. Up to 1,200,000 shares are
being offered. A minimum of
450,000 shares are required
to be sold in this Offering.
See "TERMS OF THE OFFERING."
4
<PAGE>
Warrants....................................... During the Initial Offering
Period shares will be offered
in Units with a Unit
consisting of one share of
Common Stock and one Warrant.
Each Warrant will entitle the
holder thereof to purchase
one share of additional
Common Stock for $10.00 per
share during the 36 month
period following the
Effective Date of
Registration of the shares.
Warrants subscribed to in the
Initial Offering Period and
subsequently issued will
expire 36 months from the
Effective Date of
Registration. The Warrants
are transferrable in
accordance with the Warrant
Plan. See "TERMS OF THE
OFFERING-Warrants."
Common Stock
Outstanding After the
Offering....................................... Minimum - 450,000 shares
Maximum - 1,200,000 shares
Price.......................................... $10.00 per Unit or per share,
if applicable
Use of Proceeds................................ To purchase 100% of the
issued and outstanding
capital stock of the Bank; to
provide working capital for
the Bank to commence its
business operations
(including officers' and
employees' salaries); to pay
expenses in connection with
the formation of the Company,
the organization of the Bank,
and this Offering; and for
other corporate purposes of
the Company. Proceeds not
used to purchase Bank stock
will be retained by the
Company and will be used to
fund future capital
requirements of the Bank, as
well as for other permissible
investments for bank holding
companies, including the
possible acquisition of other
financial institutions. See
"USE OF PROCEEDS."
Conditions of the Offering..................... The Offering will be made on
a continuous basis under SEC
Rule 415. The Offering will
expire 36 months from the
Effective Date of
Registration. Funds received
by the Company during the
Initial Offering Period will
be deposited with the Escrow
Agent. Funds so deposited may
be released to the Company
only in accordance with the
terms of the Escrow Agreement
between the Company and the
Escrow Agent. The Offering
will be terminated by the
Company at the end of the
Initial Offering Period if
subscriptions for 450,000
Units have not been received
and deposited with the Escrow
Agent or if final regulatory
approvals have not been
received by the Company and
the Bank, or the Company has
canceled the Offering prior
to withdrawing funds from the
Subscription Account.
5
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RISK FACTORS
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD GIVE CAREFUL ATTENTION TO
THE FOLLOWING STATEMENTS RESPECTING CERTAIN RISKS APPLICABLE TO THE OFFERING,
WHICH RISKS INCLUDE BUT ARE NOT LIMITED TO THOSE NOTED BELOW. OTHER FACTORS OF
IMPORTANCE ARE SET OUT ELSEWHERE IN THIS PROSPECTUS.
Start-up Enterprise
Neither the Company nor the Bank has commenced business operations, and
both are newly organized entities with no operating history. Thus, investors in
the Common Stock are subject to the risk of loss of all or a part of their
investment. Furthermore, final regulatory approval to commence banking
operations will not be obtained until the Company has expended a portion of the
proceeds of this Offering to employ personnel, rent temporary office space and
pay other pre-opening expenses. The Company received the Department's
conditional approval of the proposed Bank's charter application on march 10,
1997. The Company anticipates conditional approval of its application for
deposit insurance from the FDIC on approximately April 10, 1997. Finally, the
Company is awaiting approvals to become a one-bank holding company from the
Federal Reserve. The conditional charter approval from the Department will
require that final approval to commence banking operations be obtained within
twelve months after receipt of conditional approval. While management of the
Company is confident that all of the necessary regulatory approvals will be
obtained there can be no assurance that the foregoing approvals will be
obtained. In the event that the Company issues the shares of Common Stock and
final approval to commence banking operations is not granted within twelve
months after receipt of preliminary regulatory approvals, the Company will
solicit shareholder approval for its dissolution and liquidation. In such event,
the Company will promptly return to subscribers all subscription funds and
interest earned thereon, less all expenses incurred by the Company, including
the expenses of the Offering, the organizational and pre-opening expenses of the
Company and the Bank. In the event of dissolution and liquidation, it is likely
that subscribers will receive only a portion of their initial investment due to
the foregoing expenses. See "TERMS OF THE OFFERING - Failure of Bank to Commence
Operations."
Dependency on Key Management
Regulatory approval to establish and operate a state-chartered bank is,
among other things, dependent upon the Department's approval of such bank's
proposed chief executive officer. Generally, the chief executive officer of a
start-up financial institution is deemed to be vital to the potential success of
the new institution. The Bank's application for a charter filed with the
Department proposed Gary G. Campbell as the Bank's Chief Executive Officer. In
the event of death, disability, resignation or other event causing the
unavailability of Mr. Campbell, final regulatory approval to commence banking
operations would be delayed until such time as a suitable replacement is
approved by the Department. The Company has obtained "key-man" life insurance
for Mr. Campbell in the amount of $500,000 which will defray the expenses that
the Company and the Bank might incur if the opening of the Bank was delayed as a
result of his death. The Company is the beneficiary of the key man policy.
See "MANAGEMENT - Key Man Insurance".
Financial Position of the Company and Expected Lack of Initial Profitability
The initial activity of the Company will be to act as the sole shareholder
of the Bank. Thus, the profitability of the Company will be dependant upon the
successful operation of the Bank. Typically, new banks are not profitable in the
first year of operation and sometimes are not profitable for several years. The
Bank will incur significant expenses in establishing itself as a going concern
and there can be no assurance that the Bank will be operated profitably or that
future earnings, if any, will meet the levels of earnings prevailing in the
banking industry.
Highly Competitive Banking Market
With the exception that it will have no trust powers, the Bank will be a
full service commercial bank operating in Ormond Beach, Volusia County, Florida.
Competition among financial institutions in the Bank's primary market area is
intense. The Bank will compete with other state banks, consumer finance
companies, money market mutual funds, and other financial institutions which
have far greater financial resources than those available to the Bank.
Additionally, the Bank will compete with banks, savings institutions and credit
unions located in nearby markets who solicit business from the Bank's Primary
Service Area. For example, as a start-up financial institution, the Bank's
relatively small capital base may affect its ability to compete for certain
types of loans due to regulatory lending limitations. The Bank's size may also
impact its ability to compete effectively with larger institutions in offering
other services. If the Bank is unable to compete for deposits effectively in its
primary service area, such inability would likely have an adverse effect on the
Bank's potential for growth and profitability. See "BUSINESS OF THE BANK -
Market Area and Competition."
6
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Unpredictable Economic Conditions
Commercial banks and other financial institutions are affected by economic
and political conditions, both domestic and international, and by governmental
monetary policies. Conditions such as inflation, recession, unemployment, high
interest rates, short money supply, international disorders and other factors
beyond the control of the Company and the Bank may adversely affect their
profitability. See "BUSINESS OF THE BANK - Monetary Policies."
Extensive Governmental Regulation
The Company and the Bank will operate in a highly regulated environment and
will be subject to supervision by several governmental regulatory agencies,
including the Federal Reserve, the Department, the FDIC and the SEC. The Company
and the Bank will be vulnerable to future legislation and government policy,
including bank deregulation and interstate expansion, which could adversely
affect the banking industry as a whole, including the operations of the Company
and the Bank. See "SUPERVISION AND REGULATION."
No Plans to Pay Dividends in the Foreseeable Future
It is not anticipated that the Company will distribute any dividends to
shareholders in the foreseeable future. Earnings of the Bank, if any, are
expected to be retained by the Bank to enhance its capital structure or
distributed to the Company to defray its operating costs. Dividend distributions
of state banks are restricted by statute and regulation. See "DIVIDEND POLICY."
Intended Purchases by Organizers
The Organizers presently intend to purchase 108,500 Units in the Offering,
which will equal 24.1% of the minimum of 450,000 Units required in order to
release subscription proceeds from the Subscription Escrow Account. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS." However, the Organizers have indicated
that they may be willing to subscribe for additional Units in the Offering if
necessary to help the Company complete the Offering and release proceeds from
the Subscription Escrow Account. Total purchases by the Organizers will not
exceed 128,500 Units in the aggregate, which will equal 28.6% of the 450,000
Units. The Organizers have represented to the Company that all purchases of
Common Stock will be made for investment purposes only and not with a view to
resell such shares.
Failure of the Bank to Commence Operations; Return of Subscription Funds
Before the Bank can open for business it must obtain final approval from
both the Department and the FDIC. In the event that the Company issues shares of
Common Stock and such approvals are not obtained, the Company will return to
subscribers only those funds remaining after deduction for expenses incurred by
the Company for this Offering and the organizational and preopening expenses of
the Company and the Bank. In the event final regulatory approvals are not
obtained, subscribers will be entitled to a return of only a portion of their
subscription funds. See, "TERMS OF THE OFFERING - Failure of Bank to Commence
Operations."
Possible Creditors Claims against the Company
Once the Company issues the shares of Common Stock offered hereby, the
Offering proceeds may be considered part of general corporate funds and thus may
be subject to the claims of creditors of the Company, including claims against
the Company that may arise out of actions of the Company's officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to refund the
subscription proceeds to shareholders because of the failure to obtain the
required regulatory approvals, the refund process might be delayed and the
payment to shareholders might be further reduced.
Anti-Takeover Provisions
The Company's Articles of Incorporation ("Articles") contain provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions which are not approved by the Board of Directors. The
effect of these provisions is to make it more difficult to effect a merger, sale
of control or similar transaction involving the Company even though a majority
of the Company's shareholders may vote in favor of such a transaction. In
addition, the Company's Articles provide for classes of Directors, whereby
one-third of the members of the Board of Directors shall be elected each year
and each director of the Company will serve for a term of three years. Finally,
the Company's Articles provide that Florida's Control- Share Acquisition Statute
shall apply to acquisitions of control shares, as defined therein, of the
Company's Common Stock. The
7
<PAGE>
effect of these provisions is to make it more difficult to effect a change in
control of the Company through the acquisition of a large block of the Company's
Common Stock. See "DESCRIPTION OF COMMON STOCK" and "Appendix A."
No Established Market for Shares
Presently there is no established market for the Common Stock. There can be
no assurance that an established public market will develop for such securities
upon completion of this Offering or whether substantial trading activity in the
Shares will occur for several years, if at all. Moreover, in the event that the
Organizers subscribe for additional Units in this Offering in order to achieve
the minimum subscription level necessary to release subscription proceeds from
the Subscription Escrow Account, an established public market of the Common
Stock will be less likely to develop. As a result, investors who may need or
wish to dispose of all or a part of their investment in the Common Stock may not
be able to do so except by private, direct negotiations with third parties. The
Company does not presently intend to seek to list the Common Stock on a national
securities exchange or to qualify such Common Stock for quotation on NASDAQ. At
such time as the Company's stock qualifies for registration on NASDAQ, the
Company may seek to register the Shares for quotation.
Arbitrary Determination of Offering Price
Prior to this Offering there has been no established market for the shares
of the Company's Common Stock. The Offering price was arbitrarily determined by
the Board of Directors of the Company, and does not bear any relationship to the
Company's assets, book value, net worth or any other recognized criteria of
value. In determining the Offering price of the shares, the Department's capital
requirements for the Bank and general market conditions for the sale of such
securities were considered. In the event a market should develop for the Common
Stock after completion of this Offering, there can be no assurance that the
market price will equal or exceed the Offering price herein.
Absence of Shareholder Preemptive Rights
No holder of the Common Stock of the Company will have preemptive rights
with respect to the issuance of shares of any class of stock. The total number
of shares of all classes of capital stock which the Company shall have the
authority to issue is 10,000,000 shares, consisting of shares of Common Stock,
par value $0.01 per share. Each share of Common Stock is entitled to one vote
per share in all matters requiring a vote of shareholders. The Board of
Directors of the Company could from time to time determine to issue additional
shares of the authorized Common Stock in addition to the shares offered hereby
and in such event the ownership interest of the subscribers in this Offering may
be diluted. The Company's Articles of incorporation do not contain a provision
authorizing any class of preferred stock.
Future Capital Needs of the Bank
The Board of Directors of the Company may determine from time to time to
obtain additional capital through the issuance of additional shares of the
authorized Common Stock of the Company. There can be no assurance that such
shares will be issued at prices or on terms equal to the initial Offering price
and terms of this Offering.
No Underwriter of This Offering
This Offering is being made without the services of an underwriter. Sales
will be solicited only by certain executive officers and directors of the
Company. Accordingly, there can be no assurance that all of the Units or shares
offered hereby will be sold at the expiration of the Offering period. See "TERMS
OF THE OFFERING."
Possible Dilution Resulting from Warrants
Warrants issued in this Offering are generally transferable. Shareholders
who do not, or are not able to, exercise warrants received in this Offering may
suffer a dilution of their investments in terms of book value and in the
percentage of total outstanding shares with respect to the shares received in
this Offering if other warrant holders exercise their Warrants and the book
value of the shares is greater than $10.00 at the time of such exercise. In
addition, an individual shareholder's percentage of ownership may also be
affected.
Possible Return of Less Than the Subscription Amount
The Company expects to issue the shares of Common Stock before it has
obtained all final regulatory approvals for the Bank. In the event that the
Company issues the shares of Common Stock and the Department does not grant the
Bank final regulatory approval to commence banking operations within 12 months
after the Bank's receipt of preliminary approval from the Department, the
Company will promptly return to subscribers all subscription funds and interest
earned thereon, less all expenses incurred by the Company, including the
expenses of the Offering and the organizational and pre-opening expenses of the
Company and the Bank.
Once the Company issues the shares of Common Stock offered hereby, the
Offering proceeds may be considered part of general corporate funds and thus may
be subject to the claims of creditors of the Company, including claims against
the Company that may arise out of actions of the Company's officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might be delayed; and if it becomes
necessary to pay creditors from the subscription funds, the payment to
shareholders might be further reduced.
Minimum and Maximum Lending Limits
Florida Law allows a state bank to extend credit to any one borrower in
an amount up to 25% of its capital accounts, provided that the unsecured portion
of any such loan may not exceed 15% of the capital accounts of the bank. Based
upon the proposed investment of $4,150,000 in capital stock of the Bank, the
maximum loan the Bank will be permitted to make is $1,037,500, provided that the
unsecured portion may not exceed $622,500. Assuming the maximum proceeds of the
Offering were invested in the Bank, the maximum loan the Bank would be permitted
to make would be $3,000,000 provided that the unsecured portion could not exceed
$1,800,000.
THE COMPANY
The Commercial Bancorp, Inc. ("Company") was incorporated under the laws of
the State of Florida on August 15, 1996, to operate as a bank holding company
pursuant to the BHC Act, and to purchase 100% of the issued and outstanding
capital stock
8
<PAGE>
of The Commercial Bank of Volusia County, a state-chartered commercial bank to
be organized under the laws of Florida ("Bank"), which will conduct a general
banking business in Ormond Beach, Florida. The Organizers filed an Application
for Authority to Organize with the Department on October 21, 1996. The Company
also filed its application for deposit insurance with the FDIC on November 27,
1996, and an application to become a one-bank holding company with the Federal
Reserve on _______________________, 1996. Upon obtaining regulatory approval,
the Company will be a registered bank holding company subject to regulation by
the Federal Reserve.
The Bank expects to commence operations sometime in the second quarter of
1997. See "BUSINESS OF THE BANK." The Organizers of the Company are five
individuals, all of whom reside in Volusia County, Florida. There are five (5)
additional persons who will serve as organizers of the Bank and who will serve
on the Board of Directors of the Bank, but not the Company, (hereinafter
collectively the "Organizers" and if individually "Organizer"). See "ORGANIZERS
AND PRINCIPAL SHAREHOLDERS." All of the Organizers of the Company will serve on
the initial Board of Directors of the Company and all but one of the Organizers
will serve on the initial Board of Directors of the Bank. See "MANAGEMENT."
The main offices of the Company and the Bank will be located at 258 North
Nova Road, Ormond Beach, Florida 32174. See "BUSINESS OF THE COMPANY -
Premises." The mailing address of the Company's present office, which it will
occupy until the Bank opens for business, is 258 N. Nova Road, Ormond Beach,
Florida 32174 and its telephone number is (904) 672- 3003.
TERMS OF THE OFFERING
General
The Company is Offering hereunder up to 1,200,000 Shares of its Common
Stock for cash at a price of $10.00 per share. During the Initial Offering
Period, the Company will offer 450,000 Units at a price of $10.00 per Unit.
Immediately following the Initial Offering Period and for a period of 12 months
thereafter, unless terminated sooner in the Company's sole discretion, the
Company will offer up to 300,000 shares of Common Stock without warrants at
$10.00 per share. For a 36 month period following the effective date of
Registration the Company will issue up to 450,000 shares pursuant to the
Company's Warrant Plan and the Warrants issued thereunder. A minimum
subscription of 250 Units or shares is required for each subscription hereunder.
Individual investors, other than the Organizers, may subscribe for up to a
maximum of 44,500 Units in the Initial Offering Period and up to a maximum of
9.9% of the total number of shares issued or subscribed for at the time a
subscription is received by the Company thereafter. The purchase price of $10.00
per Unit or share shall be paid in full upon execution and delivery of the
Subscription Agreement. All subscriptions tendered by investors are subject to
acceptance by the Board of Directors of the Company through its duly authorized
Subscription Committee, and the Company reserves the absolute and unqualified
right to reject or reduce any subscription for any reason prior to acceptance.
Furthermore, the Company reserves the right to cancel this Offering at any time
prior to the time the Company withdraws funds from the Subscription Escrow
Account, for any reason whatsoever.
Warrants
Each investor who subscribes during the Initial Offering Period will
receive a Warrant entitling the subscriber to purchase one share of Common Stock
for each Unit purchased. Warrants subscribed to during this 90 day period (or
150 day period if extended) will expire 36 months from the Effective Date of
Registration. Unexpired Warrants may be exchanged for shares upon the payment of
$10.00 per share to the Company, subject to the requirement that the minimum
number of shares which will be issued upon any single presentment will be 100
shares unless the Warrant presented is for less than 100 shares, at which time
all shares must be purchased. Certificated Warrants may be transferred by a
holder in accordance with the Warrant Plan.
No Established Market
Prior to this Offering there has been no established public market for the
shares of the Common Stock and/or Warrants and there can be no assurance that an
established market for such stock or Warrants will develop. The Offering price
has been arbitrarily determined and is not a reflection of the Company's book
value, net worth or any other such recognized criteria of value. In determining
the Offering price of the Common Stock, the capital requirements of the
Department for the Bank and general market conditions for the sale of such
securities were considered. There can be no assurance that, if a market should
develop for the Common Stock or Warrants, the post-Offering market price will
equal or exceed the initial Offering price.
Plan of Distribution
Pursuant to SEC Rule 415, (17 C.F.R. Section 230.415), the Company intends
to offer the Units and shares on a continuous basis for a period of up to three
years from the Effective Date. The Units and shares offered will be sold by
certain directors and executive officers of the Company pursuant to Rule 3a 4-1
of the Securities Exchange Act of 1934 ("34 Act"). None of the directors or
officers who intend to offer the Units and shares is subject to statutory
9
<PAGE>
disqualification within the meaning of Section 3(a)(39) of the 34 Act, nor are
any such persons now or have they been during the preceding 12 months, an
associated person of a broker or dealer or a registered broker-dealer. No such
person has sold securities for an issuer within the preceding year. Each person
offering the Units and shares will be registered with the Florida Department of
Banking and Finance, Division of Securities and Investor Protection as an
associated person of the Company prior to commencing the Offering.
Beginning on the Effective Date the Company will offer the shares in Units
to the public for a period of 90 days, unless extended by the Company for up to
60 days in its sole discretion (the Initial Offering Period). During this period
the Company will offer 450,000 shares of the total 1,200,000 shares offered.
Units will be offered by officers and directors of the Company primarily to
persons who work or reside in Volusia County, Florida. To a limited extent,
Units will be offered to friends, acquaintances and family members living
outside the Volusia County community some of whom may live outside of the State
of Florida. Persons indicating an interest in acquiring Units will be provided
with a copy of this Prospectus prior to the Company accepting subscription
funds. Subscriptions will be accepted only if accompanied by a proper
Subscription Agreement. During this Initial Offering Period the Company will
conduct its first Closing if the conditions required to Close have been met.
Units subscribed to during this period will consist of one share of Common Stock
and one Warrant to purchase one share of Common Stock.
Once the Initial Offering Period closes and for a 12 month period
thereafter the Company will offer up to 300,000 shares of Common Stock without
Warrants to the public. The price of these shares is $10.00 per share. A
Prospectus, as amended or supplemented will be provided by an executive officer
or director of the Company or the Bank to interested persons. Such persons will
be permitted to subscribe for up to 22,500 shares of the Common Stock by
executing and delivering to the Company a Stock Subscription Agreement, along
with the subscription price. A copy of the Stock Subscription Agreement is
attached to this Prospectus as Appendix C. During the period following the
Initial Offering Period in order to minimize the administrative costs of issuing
shares, the Company will conduct multiple Closings, in 30 day intervals, wherein
shares will be issued to subscribers. During these 30 day periods, subscription
funds received by the Company will be held in the Subscription Escrow Account
maintained at the Bank. Subscription funds will be transferred to the Company by
the Bank following receipt of a certification from the Company that shares
specifically subscribed for have been issued.
Warrant holders may acquire shares, subject to the minimum share purchase
limit, by executing a Warrant Certificate any time during the 36 months
following the Effective Date of Registration and delivering such Certificate,
along with the Warrant price of $10.00 per share, to the Company's Secretary at
its corporate office.
See "TERMS OF THE OFFERING - Conditions of the Offering."
Conditions of the Offering
The Offering will expire at 5:00 p.m. Eastern Time, on ______________, 1999
(the "Expiration Date"). The Offering is expressly conditioned upon fulfillment
of the following conditions ("Offering Conditions") within the Initial Offering
Period.
The Offering Conditions, which may not be waived, are as follows:
(a) Not less than $4,500,000 shall have been deposited with the Escrow
Agent in the Subscription Escrow Account within 90 days from the Effective Date
of Registration, unless extended by the Company for up to 60 days or not later
than ________________, 1997;
(b) The Company shall have received conditional approval from the Federal
Reserve of its application to become a one-bank holding company, the Organizers
shall have received conditional approval from the Department to charter the Bank
and the proposed Bank shall have received conditional approval of its
application for deposit insurance from the FDIC; and
(c) The Company shall not have canceled this Offering prior to the time
funds are withdrawn from the Subscription Escrow Account.
Escrow of Subscription Funds
All subscription funds and documents tendered by investors will be placed
in the Subscription Escrow Account with the Independent Bankers' Bank of
Florida, Orlando, Florida ("Escrow Agent"), pursuant to the terms of the Escrow
Agreement, the form of which is attached to this Prospectus as Appendix "B".
Upon receipt of a certification from the Company during the Initial Offering
Period that: (i) the required conditional regulatory approvals have been
received; and (ii) subscriptions totaling not less than $4,500,000 have been
received, the Escrow Agent will release all subscription funds, and any income
received thereon, to the Company.
10
<PAGE>
Pending disposition of the Subscription Escrow Account under the Escrow
Agreement, the Escrow Agent is authorized, upon instructions to be given by
either Gary G. Campbell or James R. Peacock to invest subscription funds in
direct obligations of the United States Government, in short-term insured
certificates of deposit and/or money market management trusts for short-term
obligations of the United States Government, with maturities not to exceed 90
days. The Company will invest the subscription funds in a similar manner after
breaking escrow and prior to the time that the Company infuses capital into the
Bank. The Offering proceeds will be used to purchase capital stock of the Bank
and to repay expenses incurred in the organization of the Company and the Bank.
See "USE OF PROCEEDS."
In the event the Offering Conditions are not met within the Initial
Offering Period or the Offering is terminated by the Company prior to
withdrawing the Subscription Funds, the Escrow Agent shall promptly return to
the subscribers their subscription funds, together with their allocated share of
income, if any, earned on the investment of the Subscription Escrow Account.
Each Subscriber's proportionate share of Subscription Escrow Account earnings
shall be that fraction (i) the numerator of which is the dollar amount of such
subscriber's tendered subscription multiplied by the number of days between the
date of acceptance of the investor's subscription and the date of the
termination of the Offering, inclusive (the subscriber's "Time Subscription
Factor"), and (ii) the denominator of which is the aggregate Time Subscription
Factor of all investors depositing subscription funds in the Subscription Escrow
Account. The latest date to which the subscription funds might be held in escrow
prior to their return in the event the minimum is not reached or the required
regulatory approvals are not received is September 1, 1997.
In the event that the Company issues the shares of Common Stock and the
Department does not authorize the Bank to commence banking operations within 12
months after the Bank's receipt of preliminary conditional approval from the
Department, the Company will promptly return to subscribers all subscription
funds and interest earned thereon, less all expenses incurred by the Company,
including the expenses of the Offering and the organizational and pre-opening
expenses of the Company and the Bank. See "TERMS OF THE OFFERING - Failure of
Bank to Commence Operations."
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE INVESTED
AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY INCOME WILL BE REALIZED FROM
THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all Offering Conditions are satisfied, and the Company withdraws the
subscription funds from the Subscription Escrow Account, all earnings on such
account shall belong to the Company.
The Independent Bankers Bank of Florida, by accepting appointments as
Escrow Agent under the Escrow Agreement, in no way endorses the purchase of the
Company's securities by any person.
Failure of Bank to Commence Operations
The Department requires that a new state bank open for business (i.e.,
obtain a certificate of authorization) within 12 months after receipt of
preliminary approval from the Department. The Organizers anticipate that the
Bank will open for business sometime in the second quarter of 1997. Because
final approval of the Bank's charter is conditioned on the Company's raising
funds to capitalize the Bank at $4,028,000, the Company expects to issue the
shares of Common Stock before it has obtained all final regulatory approvals for
the Bank. In the event that the Company issues the shares of Common Stock and
the Department does not grant the Bank final regulatory approval to commence
banking operations within 12 months after the Bank's receipt of preliminary
approval from the Department, the Company will promptly return to subscribers
all subscription funds and interest earned thereon, less all expenses incurred
by the Company, including the expenses of the Offering and the organizational
and pre-opening expenses of the Company and the Bank. It is probable that this
return will be further reduced by amounts paid to satisfy claims of creditors,
as discussed in the following paragraph.
Once the Company issues the shares of Common Stock offered hereby, the
Offering proceeds may be considered part of general corporate funds and thus may
be subject to the claims of creditors of the Company, including claims against
the Company that may arise out of actions of the Company's officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might by delayed; and if it becomes
necessary to pay creditors from the subscription funds, the payment to
shareholders might be further reduced.
Purchases by Organizers of the Company
The Organizers have indicated that they may be willing to subscribe for
additional Units in this Offering, if necessary, to help the Company complete
the Offering in order to release subscription proceeds from the Subscription
Escrow Account. The maximum aggregate number of Units which may be subscribed by
the Organizers in this Offering is 128,500 Units. Any such purchases of
additional shares by the Organizers will be subject to affiliate resale
limitations of the 33 Act, until such time as the Company is no longer subject
to the requirements of the Exchange Act and will be made on the same terms as
those made by other investors. The Organizers have represented to the Company
that any such purchases will be made for investment purposes only and not with a
view to resell such shares. If additional purchases, as described above, are not
necessary, the Organizers intend to purchase a minimum of 108,500 Units pursuant
11
<PAGE>
to this Offering, or 24.1% of the 450,000 minimum Units to be issued in this
Offering. If additional purchases as described above are necessary, the
Organizers will purchase additional Units and will then own, more than 24.1% of
the outstanding Common Stock of the Company, but no more than 28.6%. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
Other Terms and Conditions/How to Subscribe
The Company may cancel this Offering for any reason at any time prior to
the release of subscription funds from the Subscription Escrow Account, and
accepted subscriptions are subject to cancellation in the event that the Company
elects to cancel the Offering in its entirety.
Units and shares will be marketed on a best-efforts basis exclusively
through certain directors and executive officers of the Company, none of whom
will receive any commissions or other form of remuneration based on the sale of
the Units or shares. However, in the event that the Offering Conditions have not
been satisfied by __________, 1997, the Company may engage an underwriter to
sell the Units on a best-efforts basis and such underwriter would receive a
commission based upon such sales. It is anticipated that commissions paid to
such underwriter, if retained, will not exceed 7% of the $10.00 per Unit sales
price and that other expenses of such underwriting will not exceed an aggregate
of $5,000. In the event the Company engages an underwriter to sell Units prior
to the expiration of the Initial Offering Period, a post-effective amendment to
the Registration Statement will be filed with the SEC containing the terms of
any agreements entered into with such underwriters and discussing any fees or
expenses associated with such agreements. In the event that the Offering
Conditions have not been satisfied by the end of the Initial Offering Period,
this Offering will be terminated and the subscription funds promptly returned to
the subscribers, together with their allocated share of earnings, if any, earned
on the investment of the Subscription Escrow Account as described herein. See
"TERMS OF THE Offering - Escrow of Subscription Funds."
As soon as practicable, but no more than ten-business days after receipt of
a subscription, the Company will accept or reject such subscription.
Subscriptions not rejected by the Company within this ten-day period shall be
deemed accepted. Once a subscription is accepted by the Company, it cannot be
withdrawn by the subscriber. Payment from any subscriber for Units in excess of
the number of Units allocated to such subscriber, if any, will be refunded by
mail, without interest within ten days of the date of rejection.
Certificates representing shares of Common Stock of the Company, duly
authorized and fully paid, will be issued as soon as practicable after
subscription funds are released to the Company from the Subscription Escrow
Account.
Subscriptions to purchase shares of Common Stock can be made by completing
the Stock Subscription Agreement attached to this Prospectus (Appendix C) and
delivering the same to the Company at its offices, 258 N. Nova Road, Ormond
Beach, Florida 32174, or mailing the same in the enclosed self-addressed
envelope. Full payment of the purchase price must accompany the subscription.
Failure to pay the full subscription price shall entitle the Company to
disregard the subscription. No Subscription Agreement is binding until accepted
by the Company, which may, in its sole discretion, refuse to accept any
subscription for Units, in whole or in part, for any reason whatsoever. After a
subscription is accepted and proper payment received, the Company shall not
cancel such subscription unless all accepted subscriptions are canceled. Unless
otherwise agreed by the Company, all subscription amounts must be paid in Unites
States currency by check, bank draft or money order payable to "IBBF, for TCB,
Inc. " A subscription will be accepted in writing by the Company only in the
Form of Acceptance attached to this Prospectus.
USE OF PROCEEDS
The gross proceeds from the sale of Units offered by the Company are
estimated to be a minimum of $4,500,000. This estimate is based upon the
assumption that the sale of 450,000 Units for cash occurs prior to the
expiration of the Initial Offering Period. However, if 450,000 Units are not
sold for cash, prior to the expiration of the Initial Offering Period, then the
Offering will terminate and all funds received from subscribers, adjusted for
any income thereon, will be promptly refunded. See "TERMS OF THE OFFERING."
12
<PAGE>
The estimated Organizational and Offering expenses of the Company are as
follows:
<TABLE>
<CAPTION>
Offering Organizational
-------- --------------
<S> <C> <C>
Registration fees, including blue
sky fees and expenses........................................... $ 5,000 None
Salaries and expenses............................................. None 2,000
Legal fees and expenses........................................... 15,000 5,000
Accounting fees ................................................. 1,000 None
Printing and mailing expenses..................................... 2,700 None
Advertising....................................................... 2,000 None
Interest.......................................................... None 7,000
Miscellaneous..................................................... None 1,000
------- --------
TOTAL............................................................. $25,700 $ 15,000
======= ========
</TABLE>
All of the above expenses will be incurred whether or not the Bank conducts
operations. If, however, the Offering is terminated prior to the release of
subscription funds by the Escrow Agent, none of these expenses will be deducted
from the funds to be returned to subscribers. If, however, subscription funds
are released by the Escrow Agent and the Bank does not commence business
operations all of the above expenses will be deducted from the subscription
funds. Expenses related to a successful Offering will be deducted from the
Offering proceeds and expenses related to organization of the Company will be
amortized over five years.
A substantial portion of the proceeds of this Offering ($4,500,000)
assuming the minimum number of Units is sold will be used by the Company for the
purchase of 100% of the issued and outstanding capital stock of the Bank and to
repay the expenses of this Offering and the expenses incurred in the
organization of the Company and the Bank.
The portion of the proceeds of this Offering in excess of the above amounts
will be retained by the Company for the purpose of funding any required
additions to the capital of the Bank. Since state banks are regulated with
respect to the ratio that their total assets may bear to their total capital, if
the Bank experiences greater growth than anticipated, it may require the
infusion of additional capital to support that growth. Management of the Company
anticipates that the proceeds of the Offering will be sufficient to support the
Bank's immediate capital needs and will seek, if necessary, long and short-term
debt financing to support any additional needs; however, management can give no
assurance that such financing, if needed, will be available or if available will
be on terms acceptable to management.
13
<PAGE>
<TABLE>
<CAPTION>
Net proceeds from the Offering will be applied as follows:
Minimum Maximum
Proceeds Proceeds
Assuming Sale Assuming Sale
of 450,000 of 1,200,000
Shares Shares
------ ------
<S> <C> <C>
Purchase of capital stock of the Bank..................... $4,150,000 $4,150,000
Organizational and Offering
expenses of the Company(2)........................... 40,700 45,700(1)
Working capital and funds available
for expansion of banking and
banking-related services(2)(3)....................... 309,300 7,804,300
-- -- ------- ---------
Net Proceeds $4,500,000 $12,000,000
========== ===========
</TABLE>
The following is a schedule of estimated expenditures to be made by the
Bank out of the proceeds from the sale of its capital stock to the Company,
including the Bank's operating expenses for its first twelve months of
operation.
Organizational expenses of Bank including Application,
legal and consulting fees(2)............................ $ 150,000
Pre-opening expenses of Bank including salaries,
occupancy and other expenses,........................... 49,500
Purchase of leasehold improvements necessary for
banking office.......................................... 45,000
Bank premises - net occupancy expense..................... 35,000
Salaries and benefits for officers......................... 175,000
Salaries and benefits for other employees.................. 200,000
General and administrative expense
comprised primarily of data processing,
provision for loan losses, marketing and
advertising, telephone and casualty and deposit insurance 360,000
Furniture, fixtures and equipment.......................... 175,000
Working capital............................................. 2,960,500
---------
$4,150,000
==========
- --------
(1) The Company expects to incur additional expenses in connection
with the maximum offering of approximately $5,000. These
additional expenses will be incurred because the Offering is
projected to extend over a 36 month period and will necessitate
the filing of post-effective amendments to the Registration
Statement, printing costs in connection with prospectus
supplements and additional mailing costs.
(2) Amounts indicated do not include interest earned on investment of
net proceeds from this Offering during the Company's
organizational stage estimated to be approximately $35,000, nor
the capitalization of certain organizational costs under generally
accepted accounting procedures estimated to be approximately
$150,000.
(3) These funds will be retained by the Company to be used for
permissible investments for one-bank holding companies, as well as
possible future capital needs of the Bank. See "REGULATION AND
SUPERVISION - General."
14
<PAGE>
The above described expenses are estimates only and assume the Bank will
commence operations sometime during the second quarter of 1997, or as soon
thereafter as practicable. Actual expenses may exceed these amounts. Total
organizational expenses and deferred registration costs for both the Bank and
the Company as of November 30, 1996, amounted to approximately $120,700
Organizational expenses of the Bank will be capitalized and amortized over five
years while pre-opening expenses will be charged to expense when incurred.
DIVIDEND POLICY
As the Company and the Bank are both start-up operations, it will be the
policy of the Board of Directors of the Company to reinvest earnings for such
period of time as is necessary to ensure the successful operations of the
Company and of the Bank. There are no current plans to initiate payment of cash
dividends, and future dividend policy will depend on the Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of the Company.
The Bank will be restricted in its ability to pay dividends under Florida
banking laws and by regulations of the Department. Pursuant to Section 658.37,
Florida Statutes, a state bank may not pay dividends from its capital. All
dividends must be paid out of current net profits then on hand plus retained net
profits of the preceding two years, after deducting bad debts, depreciation and
other worthless assets, and after making provision for reasonably anticipated
future losses on loans and other assets. Payments of dividends out of net
profits is further limited by Section 658.37, which prohibits a bank from
declaring a dividend on its shares of common stock until its surplus equals its
stated capital, unless there has been transferred to surplus not less than 20 %
of a bank's net profits for the preceding year (in the case of an annual
dividend). Finally, a state bank may not declare a dividend which would cause
the capital accounts of a bank to fall below the minimum amount required by law,
regulation, order or any written agreement with the Department or any Federal
regulatory agency.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is still in the development stage, and will remain in that
state until the Offering of the Company's Common Stock is complete. The Company
has funded its organizational costs and pre-opening expenses through a line of
credit in the amount of $250,000 from its Organizers and the sale of initial
stock in the Company to the Organizers in the amount of $65,000. At November 30,
1996, $140,875 has been advanced on the line and $109,125 remains available.
Through November 30, 1996, the Company has expended $88,656 for organizational
expenses including attorney fees, employee compensation and filing fees. The
remaining funds will be used to fund costs and expenses during the Offering
Period. Subscription funds during the Initial Offering Period contemplated
herein will be placed in the Subscription Escrow Account and invested in direct
obligations of the United States Government, in short-term insured certificates
of deposits and/or money market Management trusts for short-term obligations of
the United States Government, with maturities not to exceed 90 days.
Management of the Company believes that the net proceeds of $4,500,000 from
the Offering will satisfy the cash requirements of the Company and the Bank for
their respective first years of operation. It is not anticipated that the
Company will find it necessary to raise additional funds to meet expenditures
required to operate the business of the Company and the Bank over the next 12
months. All anticipated material expenditures for such period have been
identified and provided for out of the proceeds of this Offering. See "USE OF
PROCEEDS."
Once approval is received from the FRB to act as a one-bank holding company
the Company will be the parent company of the Bank. The Company has no current
plans to acquire or form any other subsidiary companies at this time nor does it
intend to engage in any other activities specifically permitted by Federal law
at this time. Neither the Company nor the Bank expects to purchase real property
or equipment not already disclosed herein. The Company does not expect to have
any paid employees for the foreseeable future. Any Company employees will be
simultaneously employed by the Bank.
BUSINESS OF THE COMPANY
General
The Company was incorporated under the laws of the State of Florida on
August 15, 1996, for the purpose of organizing the Bank and purchasing 100% of
the outstanding capital stock of the Bank. The Company has been organized as a
mechanism to enhance the Bank's ability to serve its future customers'
requirements for financial services. The holding company structure will also
provide flexibility for expansion of the Company's banking business through
acquisition of other financial institutions and provision of additional
banking-related services which the traditional commercial bank may not provide
under present laws. Finally, banking regulations require that the Bank maintain
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a minimum ratio of capital to assets. In the event that the Bank's growth is
such that this minimum ratio is not maintained, the Company may borrow funds,
subject to the capital adequacy guidelines of the Federal Reserve, and
contribute them to the capital of the Bank and otherwise raise capital in a
manner which is unavailable to the Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, it is expected that the Company may make
additional acquisitions in the event that the Bank becomes profitable and such
acquisitions are deemed to be in the best interest of the Company and its
shareholders. Such acquisitions, if any, will be subject to certain regulatory
approvals and requirements. See " SUPERVISION AND REGULATION."
Premises
The Company has entered into a lease agreement dated October 18, 1996, to
lease property located at 258 North Nova Road, Ormond Beach, Florida for an
approximate total annual cost of $47,000 from a party unaffiliated with the
Organizers or the Company. The lease is contingent upon obtaining final charter
approval for the Bank. The Bank intends to locate its permanent headquarters
building at this location. The building will contain a vault, six offices, three
teller stations, a boardroom/conference facility, a loan operations area, and an
area for the Bank's bookkeeping operations all consisting of approximately 3,350
square feet located in the Trails Shopping Center, which contains an established
Publix Store as the Anchor Tenant.
BUSINESS OF THE BANK
General
The Bank anticipates that it will commence business operations sometime in
the second quarter of 1997 in a leased facility located at 258 North Nova Road
in Ormond Beach, Florida. The Bank plans to offer community banking services
without trust powers. The Bank will offer a full range of interest-bearing and
noninterest-bearing accounts, including commercial and retail checking accounts,
money market accounts, individual retirement accounts, regular interest-bearing
statement savings accounts, certificates of deposit, commercial loans, real
estate loans, home equity loans and consumer installment loans. In addition, the
Bank will provide such consumer products and services as U.S. Savings Bonds,
travelers checks, cashiers checks, safe deposit boxes, bank by mail services,
direct deposit and ATM cards.
The philosophy of Management of the Bank with respect to its initial
operations will emphasize prompt and responsive personal service to members of
the business and professional communities of Ormond Beach, Ormond-by-the-Sea and
Holly Hill, Florida, in order to attract customers and acquire market share now
controlled by other financial institutions in the Bank's market area. The Bank's
prime location and range of banking services, as well as its emphasis on
personal attention and service, prompt decision making and consistency in
banking personnel, will be major tools in the Bank's efforts to capture such
market share. In addition, the Bank's proposed Officers have substantial banking
experience, which will be an asset in providing both products and services
designed to meet the needs of the Bank's customer base. The Organizers are
active members of the business community in Ormond Beach and continued active
community involvement will provide an opportunity to promote the Bank and its
products and services. The Organizers intend to utilize effective advertising
and superior selling efforts in order to build a distinct institutional image
for the Bank and to capture a customer base.
Market Area and Competition
The primary service area ("PSA") of the proposed Bank has been experiencing
steady growth in both jobs and banking deposits in recent years. Ormond Beach is
the primary commercial and residential center located in the Northeast part of
Volusia County, Florida. Volusia County maintains a steady tourist, industrial
and agricultural base, which has been expanding in recent years. The largest
employers in the County include: Volusia County School Board, Daytona Beach
Community College, West Volusia Memorial Hospital, Inc., Publix Super Markets,
Inc., Winn Dixie Stores, Inc., Volusia County Board of County Commissioners,
Boston Whaler, Inc., Homac Manufacturing Company, Sherwood Medical Company, and
the News-Journal Corporation. Agricultural activities in Volusia County center
around the cattle, fern, produce and saltwater fishing industries. Numerous
resorts, hotels and other tourist facilities are located in the PSA, as well as
a number of winter residences.
Competition among financial institutions in the Bank's primary service area
is intense. There are seven commercial banks with a total of 23 branches in
Ormond Beach. Of these seven banks are five affiliated with major bank holding
companies. There are no savings associations or credit unions headquartered in
Ormond Beach, however, two savings associations operate branches in Ormond Beach
and credit unions are located in nearby communities. The Organizers believe that
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the Bank will be able to effectively compete in its market, based upon the
Bank's philosophy which will be reflected in customer service, employee
attitudes and the products offered by the Bank.
Financial institutions primarily compete with one another for deposits. In
turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the availability of
unique financial services products. The Bank will be competing with financial
institutions which have much greater financial resources than the Bank, and
which may be able to offer more services and unique services and possibly better
terms to their customers. The Organizers, however, believe that the Bank will be
able to attract sufficient deposits to enable the Bank to compete effectively
with other area financial institutions.
The Bank will be in competition with existing area financial institutions
other than commercial banks and thrift institutions, including insurance
companies, consumer finance companies, brokerage houses, credit unions and other
business entities which have recently been targeting traditional banking
markets. Due to the growth of the Ormond Beach area, it can be anticipated that
additional competition will continue from new entrants to the market.
Deposits
The Bank will offer a wide range of interest-bearing and
noninterest-bearing deposit accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of business within the
Bank's market area, obtained through the personal solicitation of the Bank's
officers and directors, direct mail solicitation and advertisements published in
the local media. The Bank intends to pay competitive interest rates on time and
savings deposits up to the maximum permitted by law or regulation. In addition,
the Bank will implement a service charge fee schedule competitive with other
financial institutions in the Bank's market area covering such matters as
maintenance fees on checking accounts, per item processing fees on checking
accounts and returned check charges.
Loan Portfolio
The Bank will offer a full complement of loans, including commercial,
consumer/installment and real estate loans. Initially, the Bank will have a
legal lending limit for unsecured loans of up to $600,000 and for secured loans
of up to $1,000,000.
Commercial loans, including construction loans secured by real estate, are
projected to be the primary component of the Bank's loan portfolio. Commercial
lending will be directed principally towards small businesses whose demands for
funds fall within the Bank's legal lending limits and which are potential
deposit customers of the Bank. This category of borrowers includes individual,
partnership or corporate borrowers, and will result in loans to such borrowers
for a variety of business purposes. Particular emphasis will be placed on loans
to small and medium sized businesses and professionals. Commercial loans will be
underwritten on the basis of cash flow, ability to service debt from earnings
and collateral offered. Terms are projected to be from 90 days to five years
with interest rates indexed to Wall Street Journal prime rate. Because of the
nature of these types of loans, i.e. dependancy on successful business
operations and generally on non-real estate collateral, there exists a higher
risk of loss in this category of loan. The Organizers expect that commercial
loans will account for approximately two-thirds of the Bank's estimated total
loan portfolio.
To a lesser extent the focus will be on the origination of 1-4 family
first, and to a limited extent, second real estate mortgage loans, typically
structured with fixed or adjustable interest rates based upon market conditions.
Generally the loan amount, as a percent of appraised value of the real property,
will not exceed 80%. In most cases where the loan to value ratio exceeds 80% the
amount in excess of 80% will be insured against loss by private mortgage
insurance ("PMI"). Fixed rate loans will usually have terms of five years or
less, with payments through the date of maturity generally based upon a 15 to 30
year amortization schedule. Adjustable rate loans will generally have a term of
between 15 to 30 years, with rates indexed to the one-year treasury bond. The
Bank intends to charge both discount points and an origination fee depending
upon market conditions. Because of the nature of the collateral, residential
real estate loans tend to have the lowest risk of loss when compared to other
types of loans such as commercial loans. In addition, to origination of loans
for the Bank's portfolio, the Bank will also originate real estate mortgage
loans for sale in the secondary market.
Based upon demand in the Bank's primary service area the Bank will make a
variety of consumer loans. The Bank's consumer loans will consist primarily of
installment loans to individuals for personal, family and household purposes,
including automobile loans, boat loans, recreational vehicle loans, and personal
lines of credit. Consumer loans will generally have terms ranging from six
months to ten years and will be made at market interest rates generally ranging
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from 10 to 18 % A.P.R. For the most part, consumer loans will be secured by such
collateral as automobiles, boats, recreational vehicles and so forth. It is not
expected that total consumer loans will exceed 15 % of the Bank's estimated
total loan portfolio. In the aggregate, the risk of loss on such loans tends to
be lower than that of commercial loans, but greater than that of loans secured
by residential real estate based upon the nature of the collateral for such
loans, as well as, the make-up of the borrowers and the source of repayment.
This category of loans will also include lines of credit and term loans secured
by second mortgages on the residences of borrowers for a variety of purposes
including home improvements, education and other personal expenditures.
While risk of loss in the Bank's loan portfolio is primarily tied to the
credit quality of the various borrowers, risk of loss may also increase due to
factors beyond the Bank's control, such as local, regional and/or national
economic downturns. General conditions in the real estate market may also impact
the relative risk in the Bank's real estate portfolio. Of the Bank's target
areas of lending activities, commercial loans are generally considered to have
greater risk than real estate loans or consumer installment loans.
Management of the Bank intends to originate loans and to participate
portions of loans to other banks with respect to loans which exceed the Bank's
lending limits. Management of the Bank does not believe that loan participation
will necessarily pose any greater risk of loss than loans which the Bank
originates.
Investments
At the close of its first year of operation, Management of the Bank
anticipates that investment securities will comprise approximately 35% of the
Bank's assets, other investments will comprise approximately 5% of the Bank's
assets and loans will comprise approximately 60% of the Bank's assets.
Initially, the Bank intends to invest primarily in direct obligations of the
United States, obligations guaranteed as to principal and interest by the United
States, obligations of agencies of the United States and certificates of deposit
issued by commercial banks. In addition, the Bank will enter into Federal Funds
transactions with its principal correspondent bank, and anticipates that it will
primarily act as a net seller of such funds. The sale of Federal Funds amounts
to a short-term loan from the Bank to another bank, usually overnight.
Asset/Liability Management
It will be the objective of the Bank to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash management, loan, investment, borrowing and capital
policies. Designated Officers of the Bank will be responsible for monitoring
policies and procedures that are designed to ensure acceptable composition of
the asset/liability mix, stability and leverage of all sources of funds while
adhering to prudent banking practices. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management of the Bank will seek to invest the largest portion of
the Bank's assets in commercial, consumer and real estate loans.
The Bank's asset/liability mix will likely be monitored on a daily basis
with a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to the Bank's Board
of Directors. The objective of this policy is to control interest-sensitive
assets and liabilities so as to minimize the impact of substantial movements in
interest rates on the Bank's earnings.
Correspondent Banking
Correspondent banking involves the providing of services by one bank to
another bank which cannot provide that service for itself from an economic or
practical standpoint. Such services are available on a statewide or regional
basis from commercial banks, banker's banks, the Federal Reserve Bank of Atlanta
and the Atlanta Federal Home Loan Bank. The Bank will determine the availability
of such services and evaluate the quality and pricing of the services available
and based upon the above will select one or more providers for the services the
Bank will require. The Bank will then purchase from time to time, correspondent
services offered by such banks, including some of the following: check
collections, purchase or sale of Federal Funds, security safekeeping, investment
services, coin and currency supplies, overline and liquidity loan participations
and sales of loans to or participations with correspondent banks. Fees for such
services are generally transactional based and range from a low of $0.05 each
for processing an account debit or credit, to a high of $30.00 each for an
International Funds transfer. Other fees are assessed monthly and generally
range from $2.00 per month for certain investment services to $100 per month for
funds management.
The Bank anticipates that it will sell loan participations to correspondent
banks with respect to loans which exceed the Bank's lending limit. As
compensation for services provided by a correspondent, the Bank may maintain
certain balances with such correspondents in non-interest bearing accounts.
Data Processing
The Bank plans to sign a data processing servicing agreement with an
outside service bureau. It is expected that this servicing agreement will
provide for the Bank to receive a full range of data processing services,
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including an automated general ledger, deposit accounting, commercial, real
estate and installment loan processing, payroll, central information file and
ATM processing and investment portfolio accounting.
Employees
In its first year of operation, the Bank anticipates that it will employ
nine persons on a full-time basis, including four officers, and one person on a
part-time basis. The Bank will hire additional persons as needed, including
additional tellers and financial service representatives.
Monetary Policies
The results of operations of the Bank will be affected by credit policies
of monetary authorities, particularly the Federal Reserve. The instruments of
monetary policy employed by the Federal Reserve include open market operations
in U.S. Government securities, changes in the discount rate on member bank
borrowings, changes in reserve requirements against member bank deposits and
limitations on interest rates which member banks may pay on time and savings
deposits. In the view of changing conditions in the national economy and in the
money markets, as well as the effect of action by monetary and fiscal
authorities, including the Federal Reserve, no accurate prediction can be made
as to possible future changes in interest rates, deposit levels, loan demand or
the business and earnings of the Bank.
REGULATION AND SUPERVISION
General
As a one-bank holding company registered under the BHC Act, the Company
will be subject to regulation and supervision by the Federal Reserve. Under the
BHC Act, the Company's activities and those of its Bank subsidiary are limited
to banking, managing or controlling banks, furnishing services to or performing
services for its subsidiaries or engaging in any other activity that the Federal
Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. As a state-chartered
commercial bank, the Bank will be subject to extensive regulation by the
Department and the FDIC.
The Company and the Bank will be required to file reports with the Federal
Reserve, the Department and the FDIC concerning their activities and financial
condition, in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Federal Reserve, the
Department and the FDIC to monitor the Company's and the Bank's compliance with
the various regulatory requirements. The Bank's deposits will be insured up to
the applicable limits by the FDIC under the Bank Insurance Fund ("BIF"). The
Bank will be subject to regulation of the Federal Reserve and the Department
with respect to reserves required to be maintained against transaction deposit
accounts and certain other matters.
Regulation of the Company
General. The BHC Act prohibits the Company from acquiring direct or
indirect control of more than 5% of any class of outstanding voting stock or
acquiring substantially all of the assets of any bank or merging or
consolidating with another bank holding company without prior approval of the
Federal Reserve. The BHC Act also prohibits the Company from acquiring control
of any bank operating outside the State of Florida, unless such action is
specifically authorized by the statutes of the state where the bank to be
acquired is located. Additionally, the BHC Act prohibits the Company from
engaging in or from acquiring ownership or control of more than 5% of the
outstanding voting stock of any company engaged in a non-banking business,
unless such business is determined by the Federal Reserve to be so closely
related to banking or managing or controlling banks as to be properly incident
thereto. The BHC Act generally does not place territorial restrictions on the
activities of such non-banking related activities.
Transactions between the Company and the Bank. The Company's authority to
engage in transactions with related parties or "affiliates," or to make loans to
certain insiders, is limited by certain provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Specifically, Sections
23A and 23B of the Federal Reserve Act apply to all transactions by an
insured-state nonmember bank or a holding company with any affiliate. Sections
23A and 23B generally define an "affiliate" as any company that controls or is
under common control with an institution. Subsidiaries of a financial
institution, however, are generally exempted from the definition of "affiliate."
Section 23A limits the aggregate amount of transactions with any individual
affiliate to 10% of the capital and surplus of the Company and also limits the
aggregate amount of transactions with all affiliates to 24.1% of the Company's
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capital and surplus. Certain transactions with affiliates, such as loans to
affiliates or guarantees, acceptances and letters of credit issued on behalf of
affiliates, are required to be collateralized by collateral in an amount and of
a type described in the statute. The purchase of low quality assets from
affiliates is generally prohibited. Section 23B provides that certain
transactions with affiliates, including loans and asset purchases, must be on
terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with nonaffiliated companies.
In the absence of comparable transactions, such transactions may only occur
under terms and circumstances, including credit standards, that in good faith
would be offered to or would apply to nonaffiliated companies. The Company does
not expect these provisions will have any effect on its proposed operations.
Support of Subsidiary Depository Institutions. The Company is expected to
act as a source of financial strength and to commit resources to support the
Bank. This support may be required at times when the Company might not be
inclined to provide such support. In addition, any capital loans by a bank
holding company to any of its subsidiary banks must be subordinate in right of
payment to deposits and to certain other indebtedness of such subsidiary banks.
In the event of bankruptcy, any commitment by a bank holding company to a
federal bank regulatory agency to maintain the capital of its subsidiary bank
will be assumed by the bankruptcy trustee and will be entitled to a priority of
payment.
Under the Federal Deposit Insurance Act ("FDIA") a subsidiary bank of a
bank holding company, can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC insured depository
institution "in danger of default". "Default" is defined generally as the
appointment of a conservator or a receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
Control of a Bank Holding Company. FRB Regulation Y, adopted pursuant to
Section 225.41 of 12 U.S.C. Section 1817(j), requires persons acting directly or
indirectly or in concert with one or more persons to give the Board of Governors
of the Federal Reserve 60 days advanced written notice before acquiring control
of a bank holding company. Under the Regulation, control is defined as the
ownership or control with the power to vote 25 % or more of any class of voting
securities of the Holding Company. The Regulation also provides for a
presumption of control if a person owns, controls, or holds with the power to
vote 10 % or more (but less than 25 %) of any class of voting securities, and
if: (i) the Holding Company's securities are registered securities under Section
12 of the Securities and Exchange Act of 1934; or (ii) no other person owns a
greater percentage of that class of voting securities. It is not anticipated
that any purchaser of the securities offered herein, including any of the
Organizers, will acquire 10% of more of the Company's Common Stock.
Legislation and Regulations of the Bank
General. From time to time, various bills are introduced in the United
States Congress with respect to the regulation of financial institutions. Recent
banking legislation, particularly the FIRREA and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory
powers of the federal bank regulatory agencies and restructured the nation's
banking system. The following is a brief discussion of certain portions of these
laws and how they would effect the Company or the Bank.
The FDICIA revised sections of the FDIA affecting bank regulation, deposit
insurance and provisions for funding of the BIF administered by the FDIC. The
FDICIA also revised bank regulatory structures embodied in several other federal
banking statutes, strengthened the bank regulators' authority to intervene in
cases of deterioration of a bank's capital level, placed limits on real estate
lending and imposes detailed audit requirements.
Deposit Insurance Funds Act of 1996
On September 30, 1996, Congress passed and the President signed in to law
the Deposit Insurance Funds Act of 1996 ("DIFA"). Among other things, the DIFA,
and rules promulgated thereunder by the FDIC, provide for banks and thrifts to
share the annual interest expense for the Finance Corp. Bonds which were issued
in the late 1980s to help pay the costs of the savings and loan industry
restructuring. The approximate annual interest expense is $780 million of which
BIF insured banks are expected to pay approximately $322 million or 41%, while
SAIF insured thrifts will pay approximately $458 million or 59% of the interest
expense. It is estimated that the annual assessment for BIF insured institutions
will be approximately 1.2 cents per $100 of deposits, while SAIF insured
institutions will pay 6.5 cents per $100 of deposits. These payments are to
begin in 1997 and run through 1999. Beginning in the year 2000 and continuing
through the year 2017, banks and thrifts will each pay 2.43 cents per $100 of
deposits. These assessments will be in addition to any regular deposit insurance
assessments imposed by the FDIC under FDICIA. See REGULATION AND SUPERVISION -
Insurance on Deposit Accounts.
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Prompt and Corrective Action. The FDICIA required the federal banking
regulatory agencies to set certain capital and other criteria which would define
the category under which a particular financial institution would be classified.
The FDICIA imposes progressively more restrictive constraints on operations,
management, and capital distributions depending on the category in which an
institution is classified. Pursuant to the FDICIA, undercapitalized institutions
must submit recapitalization plans to their respective federal banking
regulatory agencies, and a company controlling a failing institution must
guarantee such institution's compliance with its plan in order for the plan to
be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories. For
example, a bank is deemed to be "well-capitalized" if it has a total risk-based
capital ratio (total capital to risk-weighted assets) of 10% or greater, a Tier
1 risk-based capital ratio (Tier 1 capital to risk-weighted assets) of 6% or
greater, and a Tier 1 leverage capital ratio (Tier 1 capital to adjusted total
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A bank is deemed to be "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, and (generally) a Tier 1 leverage capital ratio
of 4% or greater, and the bank does not meet the definition of a
"well-capitalized" institution. A bank is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%. In addition, the
FDIC is authorized effectively to downgrade a bank to a lower capital category
than the bank's capital ratios would otherwise indicate, based upon safety and
soundness considerations (such as when the bank has received a less than
satisfactory examination rating for any of the CAMEL rating categories other
than capital: i.e. Asset Quality, Management, Earnings or Liquidity). As a bank
drops to lower capital levels, the extent of action to be taken by the
appropriate regulator increases, restricting the types of transactions in which
the bank may engage. The new capital standards are designed to bolster and
protect the deposit insurance fund. Based upon its proposed capital, the Bank
would be considered to be well capitalized.
Insurance on Deposit Accounts. In response to the requirements of the
FDICIA, the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The FDIC
assigns a financial institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period. These categories consist of well
capitalized, adequately capitalized or undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the financial institution's primary regulator, in the Bank's case
the Department, and information which the FDIC determines to be relevant to the
institution's primary federal regulator and information which the FDIC
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds. A financial institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned. There are nine assessment risk classifications (i.e., combinations of
capital groups and supervisory subgroups) to which different assessment rates
are applied. BIF assessment rates range from 0 basis points on deposits for a
financial institution in the highest category (i.e.. well-capitalized and
financially sound with only a few minor weaknesses) to 31 basis points on
deposits for an institution in the lowest category (i.e., undercapitalized and
posing a substantial probability of loss to the BIF, unless effective corrective
action is taken). The Bank's initial assessment is expected to be no more than
the minimum for its first year of operation.
Standards for Safety and Soundness. The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and their
holding companies standards relating to internal controls, information systems
and audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate. In
addition, the federal banking regulatory agencies are required to prescribe by
regulation standards specifying: (i) maximum classified assets to capital
ratios; (ii) minimum earnings sufficient to absorb losses without impairing
capital; (iii) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of depository institutions or the depository
institution holding companies; and (iv) such other standards relating to asset
quality, earnings and valuation as the agency deems appropriate. Finally, each
federal banking agency is required to prescribe standards for employment
contracts and other compensation arrangements of executive officers, employees,
directors and principal shareholders of insured depository institutions that
would prohibit compensation and benefits and other arrangements that are
excessive or that could lead to a material financial loss for the institution.
If an insured depository institution or its holding company fails to meet any of
its standards described above, it will be required to submit to the appropriate
federal banking agency a plan specifying the steps that will be taken to cure
the deficiency. If an institution fails to submit an acceptable plan or fails to
implement the plan, the appropriate federal banking agency will require the
institution or holding company, to correct the deficiency and until corrected,
may impose restrictions on the institution or the holding company including any
of the restrictions applicable under the prompt corrective action provisions of
the FDICIA.
The FDICIA also requires each appropriate federal banking agency to adopt
uniform regulations prescribing standards for extensions of credit secured by
real estate or made for the purpose of financing the construction of
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improvements on real estate. In prescribing these standards, the banking
agencies must consider the risk posed to the deposit insurance funds by real
estate loans, the need for safe and sound operation of insured depository
institutions and the availability of credit.
Capital Requirements. The Federal Reserve and the FDIC have adopted capital
regulations which establishes a Tier 1 core capital definition and a minimum 3%
leverage capital ratio requirement for the most highly-rated banks and holding
companies (i.e., those banks and holding companies with a composite CAMEL rating
of 1 under the Uniform Financial Institutions Rating System established by the
Federal Financial Institutions Examination Council) that are not anticipating or
experiencing significant growth. All other state nonmember banks are required to
meet a minimum leverage ratio that is at least 100 to 200 basis points above 3%.
A holding company or bank that is not in the highest-rated category or that is
anticipating or experiencing significant growth will have to meet a minimum
leverage ratio of at least 4%. The minimum capital with which the Bank will be
permitted to open is $4 million.
Under the Federal Reserve's and the FDIC's risk-based regulations, a
holding company or bank must classify its assets and certain off-balance sheet
activities into categories and maintain specified levels of capital for each
category. The least capital is required for the category deemed by the Federal
Reserve and the FDIC to have the least risk, and the most capital is required
for the category deemed by the Federal Reserve and the FDIC to have the greatest
risk. The regulations require a holding company or bank to have a total risk
based capital ratio of 8% and a Tier 1 risk based capital ratio of 4%. Under the
statement of policy, certain assets are required to be deducted from risk-based
capital. Such assets include intangible assets, unconsolidated banking and
finance subsidiaries, investments in securities subsidiaries, ineligible equity
investments and reciprocal holding of capital instruments with other banks. In
addition, the Federal Reserve or the FDIC may consider deducting other assets on
a case-by-case basis or investments in other subsidiaries on a case-by-case
basis or based on the general characteristics or functional nature of the
subsidiaries.
Loans to One Borrower. Florida law allows a state bank to extend credit to
any one borrower in an amount up to 25% of its capital accounts, which are
defined as unimpaired capital, surplus and undivided profits, provided that the
unsecured portion may not exceed 15% of the capital accounts of the bank. The
law permits exemptions for loans collateralized by accounts maintained with the
Bank and for loans guaranteed by the Small Business Administration, the Federal
Housing Administration and the Veterans Administration. The Bank will be subject
to these limits.
Payment of Dividends. While not the only source of income, the primary
source of income to the Company will be dividends from the Bank. A Florida
chartered commercial bank may not pay cash dividends that would cause the bank's
capital to fall below the minimum amount required by federal or Florida law.
Otherwise, a commercial bank may pay a dividend out of the total of current net
profits plus retained net profits of the preceding two years to the extent it
deems expedient, except as described below. Twenty percent of the net profits in
the preceding two year period may not be paid in dividends, but must be retained
to increase capital surplus until such surplus equals the amount of common and
preferred stock issued and outstanding. In addition, no bank may pay a dividend
at any time that net income in the current year when combined with retained net
income from the preceding two years produces a loss. The ability of the Bank to
pay dividends to the Company will depend in part on the FDIC capital
requirements in effect at such time and the ability of the Bank to comply with
such requirements.
Brokered Deposits. In accordance with the FDICIA, the FDIC has implemented
restrictions on the acceptance of brokered deposits. In general, an
"undercapitalized" institution may not accept, renew or roll over any brokered
deposits. "Adequately capitalized" institutions may request a waiver from the
FDIC to do so, while "well-capitalized" institutions may accept, renew or roll
over such deposits without restriction. The rule requires registration of
deposit brokers and imposes certain recordkeeping requirements. Institutions
that are not "well-capitalized" (even if meeting minimum capital requirements)
are subject to limits on rates of interest they may pay on brokered and other
deposits. The Bank does not expect to acquire any brokered deposits.
Liquidity. A state-chartered commercial bank is required under Florida law
to maintain a liquidity reserve of at least 15% of its total transaction
accounts and 8% of its total nontransaction accounts subject to certain
restrictions. This reserve may consist of cash-on-hand, demand deposits due from
correspondent banks, and other investments and short-term marketable securities.
The Bank will be subject to these requirements.
Community Reinvestment. Under the Community Reinvestment Act ("CRA"), as
implemented by Federal Reserve and FDIC regulations, holding companies and state
nonmember banks have a continuing and affirmative obligation consistent with
their safe and sound operation to help meet the credit needs of their entire
community, including low- and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires the Federal Reserve and the FDIC, in
connection with their examination of holding companies or state nonmember banks,
to assess the Company's record of meeting the credit needs of their communities
22
<PAGE>
and to take such record into account in its evaluation of certain applications
by such institution. The FIRREA amended the CRA to require public disclosure of
an institution's CRA rating and to require that the Federal Reserve and the FDIC
provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system in lieu of the then existing five-tiered
numerical rating system. The Company and the Bank will be subject to these
regulations.
Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, existing restrictions on interstate acquisitions of
banks by bank holding companies were repealed on September 29, 1995, such that
the Company and any other bank holding company would be able to acquire any
Florida-based bank, subject to certain deposit percentage and other
restrictions. The legislation also provides that, unless an individual state
elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to be subject to applicable state
branching laws. Florida has adopted legislation which will permit interstate
acquisitions and interstate branching effective June 1, 1997.
Department Assessment. State-chartered commercial banks are required by
Department regulation to pay assessments to the Department to fund the
operations of the Department. The general assessment, to be paid semiannually,
is computed upon a bank's total assets, including consolidated subsidiaries, as
reported in the bank's latest quarterly call report. The Bank will be required
to pay such assessments semi-annually.
The Federal Reserve System
The Federal Reserve regulations require banks to maintain non
interest-earning reserves against their transaction accounts (primarily NOW and
regular checking accounts). The Federal Reserve regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts of
$49.3 million or less (subject to adjustment by the Federal Reserve) and an
initial reserve of $1.5 million plus 10% (subject to adjustment by the Federal
Reserve between 8% and 14%) against that portion of total transaction accounts
in excess of $49.3 million. The first $4.4 million of otherwise reservable
balances (subject to adjustments by the Federal Reserve) are exempted from the
reserve requirements. The balances maintained to meet the reserve requirements
imposed by the Federal Reserve may be used to satisfy liquidity requirements.
Because required reserves must be maintained in the form of either vault cash, a
noninterest-bearing account at a Federal Reserve Bank or a pass-through account
as defined by the Federal Reserve, interest-earning assets of the Bank are
reduced. The Company and the Bank will be subject to these requirements.
Federal Securities Laws
The Company, in connection with this Offering, filed with the SEC a
registration statement under the Securities Act for the registration of the
Company's Common Stock. The registration under the Securities Act of shares of
the Common Stock issued in this Offering does not cover the resale of such
shares. Shares of the Common Stock purchased by persons who are not affiliates
of the Company may be resold without further registration. Shares purchased by
an affiliate of the Company will be subject to the resale restrictions of Rule
144 under the Securities Act. If the Company meets the current public
information requirements of Rule 144 under the Securities Act, each affiliate of
the Company who complies with the other conditions of Rule 144 (including the
holding period and those that require the affiliate's sale to be aggregated with
those of certain other persons) may be able to sell in the public market,
without registration, a number of shares not to exceed, in any three-month
period, the greater of (i) 1% of the outstanding shares of the Company, or (ii)
the average weekly volume of trading in such shares during the preceding four
calendar weeks. Provision may be made in the future by the Company to permit
affiliates to have their shares registered for sale under the Securities Act
under certain circumstances.
The scope of regulation, supervision and permissible activities of the
Company and the Bank is subject to change by future federal and state
legislation.
ORGANIZERS AND PRINCIPAL SHAREHOLDERS
Mr. Kirk T. Bauer is an Organizer of the Company only. The following
persons are Organizers of both the Company and the Bank: James R. Peacock; Larry
A. Kent; Christopher K. Likes and Gary G. Campbell. The following persons are
the Organizers of the Bank only: Stanley S. Bronski; Richard R. Dwyer; Thomas R.
Horton; Susan A. Nicholson and Charles W. Singletary. The Organizers, as a
group, intend to subscribe for 108,500 shares in the Offering which will equal
24.1% of the 450,000 minimum shares required to be sold in order to release
funds from the Subscription Escrow Agreement. In addition to the subscriptions
committed to by the Organizers, the Organizers have indicated that they may be
23
<PAGE>
willing to subscribe for additional shares in the Offering if necessary to help
the Company complete the Offering and release the proceeds from the Subscription
Escrow Account. In any event, total purchases by the Organizers will not exceed
128,500 Units in the aggregate, which would equal 28.6% of the 450,000 minimum
shares required to be sold in order to release funds from the Subscription
Escrow Account.
Upon commencement of the business of the Bank, Mr. Campbell will receive
options to purchase 10,000 shares of the Company's common stock at an option
price of $10.00 per share, exercisable at any time after the vesting period, for
ten years from the date of grant. See "MANAGEMENT - Executive Compensation."
All organizational expenses of the Company and the Bank have been financed
by loans from the Organizers to the Company or from the proceeds of the sale of
stock to the Company Organizers in a private Offering. The Organizers have
purchased a total of 1,500 shares of common stock at a price of $10.00 per share
in a private sale transaction in order to meet the net worth requirements of the
Florida Division of Securities imposed upon issuer's who sell common stock as
associated persons. This stock will be canceled and exchanged for Units issued
by the Company in the Offering. In the event that the requisite approvals are
obtained, a portion of the proceeds of the Offering will be used to repay these
loans to the extent such repayment is reasonable and not detrimental to the
operations of the Bank, and to the extent such repayment is allowed by the
Department and other appropriate bank regulatory authorities. See "USE OF
PROCEEDS."
Each of the Organizers intends to purchase the number of Units set forth in
the following Table, which also specifies the percentage of Common Stock to be
owned by the Organizers after completion of the Initial Offering Period.
<TABLE>
<CAPTION>
Actual Number of
Name of Number of Percent of Beneficial Percent of Percent of
Beneficial Owner Shares Minimum Shares(1) Minimum(2) Maximum(3)
---------------- ------ ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Kirk T. Bauer 2,500 0.56 5,000 1.10 0.41
Stanley S. Bronski 5,000 1.20 10,000 2.20 0.83
Gary G. Campbell 1,000 0.22 12,000 2.67 0.99
Richard R. Dwyer 10,000 2.22 20,000 4.35 1.65
Thomas R. Horton 5,000 1.11 10,000 2.20 0.83
Larry A. Kent 30,000 6.67 60,000 12.50 4.96
Chris Likes 5,000 1.11 10,000 2.20 0.83
Susan A. Nicholson 5,000 1.11 10,000 2.20 0.83
James R. Peacock 40,000 8.89 80,000 16.33 6.61
Charles W. Singletary 5,000 1.11 10,000 2.20 0.83
----- ---- ------ ---- ----
TOTAL 108,500 24.10% 227,000 47.95% 18.77%
======= ===== ======= ===== =====
</TABLE>
- ------------------------------------
(1) Based upon Warrants for the Shares to be issued in connection with the
proposed purchase, as well as the proposed options for Mr. Campbell.
(2) Percentage based upon 450,000 shares outstanding, plus Warrants to be
acquired by the individual Organizers equal to the actual number of shares
proposed to be acquired by such Organizer and 10,000 shares to be issued to
Mr. Campbell under the proposed stock option plan.
(3) Percentage based upon 1,210,000 Shares which is the sum of 1,200,000
shares, the maximum number of Shares which can be issued in the Offering,
and 10,000 shares to be issued to Mr. Campbell under the proposed stock
option plan.
Each of the Organizers will acquire their Units during the Initial Offering
Period and, therefore, will acquire both Common Stock and Warrants exercisable
in accordance with the terms set forth herein While there can be no assurance
that the Organizers will exercise their Warrant rights, it can be assumed that
most or all will exercise such rights and will therefore acquire additional
Common Stock during the 36 month period following the Effective Date of
registration.
24
<PAGE>
MANAGEMENT
Directors and Executive Officers of the Company and the Bank
The proposed directors and executive officers for the Company and the Bank
are as follows:
<TABLE>
<CAPTION>
Position with Position with
Name Company Bank
---- ------- ----
<S> <C> <C>
Kirk T. Bauer Director and Secretary None
Stanley S. Bronski None Director
Gary G. Campbell Director, President and Director, President
Chief Financial Officer and Chief Executive
Officer
Richard R. Dwyer None Director
Thomas R. Horton None Director
Larry A. Kent Director and Director
Chairman of the Board
Christopher K. Likes Director Director
Susan A. Nicholson None Director
James R. Peacock Director and Vice Director and
Chairman of the Board Chairman of the Board
Charles W. Singletary None Director
Harvey E. Buckmaster None Senior Vice President
and Cashier
</TABLE>
Company. Each of the above persons has been a director of the Company
or a proposed director of the Bank since at least September, 1996. The initial
Board of Directors of the Company consists of five directors. The directors will
be divided into three classes, designated Class I, Class II and Class III. Each
class will consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
Company's initial directors will expire at the first meeting of shareholders at
which directors are elected. It is expected that the Company will hold an
organizational meeting of the shareholders shortly after the Bank commences
operations at which time the shareholders will be asked to elect Directors. The
Company intends to recommend that the shareholders elect the initial directors
to their respective terms set forth in the above Schedule. Following the
subsequent election of the Company's directors, the term of the Company's Class
I directors will expire at the Company's next annual meeting of shareholders;
the term of the Company's Class II directors will expire at the Company's second
annual meeting of shareholders; and the term of the Company's Class III
directors will expire at the Company's third annual meeting of shareholders. At
each annual meeting of shareholders, successors to the class of directors whose
term expires at the annual meeting will be elected for a three-year term. If the
number of directors is changed, an increase or decrease will be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class will hold office for a
term that will coincide with the remaining term of that class, but in no event
will a decrease in the number of directors shorten the term of any incumbent
director. Any director elected to fill a vacancy not resulting in an increase in
the number of directors will have the same remaining term as that of his
predecessor. Except in the case of removal from office, any vacancy on the Board
of Directors will be filled by a majority vote of the remaining directors then
in office. The effect of the classified Board of Directors is to make it more
difficult for a person, entity or group to effect a change in control of the
Company through the acquisition of a large block of the Company's voting stock.
25
<PAGE>
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and the position filled
by another person nominated and elected for that purpose by the affirmative vote
of the holders of at least 60% of the outstanding shares of the Company's Common
Stock. The Company's officers are appointed by the Board of Directors and hold
office at the will of the Board.
Bank. Each of the Bank's proposed directors will, upon approval of the
Department, serve until the Bank's first shareholders meeting, which meeting
will be held shortly after the Bank commences operations. It is anticipated that
each interim director will be nominated to serve as director of the Bank at that
meeting. After the first shareholders meeting, directors of the Bank will serve
for a term of one year and will be elected each year at the Bank's annual
meeting. The Bank's officers will be appointed by its Board of Directors and
will hold office at the will of the Board.
Initial Directors and Officers. The following is a brief description of the
business, civic and educational experience of the initial Directors and
Officers:
Company:
Kirk T. Bauer(1), age 36, is a licensed attorney in DeLand, Florida and
President of his firm, Biernacki & Bauer, P.A. Mr. Bauer graduated from Stetson
University in DeLand in 1982 with a degree in Political Science and from Stetson
University College of Law in 1984. He practiced with James, Zimmerman, & Paul
prior to beginning his own firm in 1992. Mr. Bauer is a member of the Florida
Bar and the American Bar Association. He served as President of the Volusia
County Bar Association from 1993-1994. He also served as Chairman of the Florida
Bar Grievance Committee (1992) and is currently a member of the Statewide
Nominating Commission for Worker's Compensation Judges. He is currently serving
as a member of the Volusia County Law Library Board of Directors. Outside of his
professional involvements, Mr. Bauer currently serves as Vice President of his
neighborhood's homeowners' association, Trails West. Mr. Bauer has lived in
DeLand since 1984.
Gary G. Campbell(3), age 43, has 20 years of banking experience. His
work experience began with Compass Bank (then Central Bank) in Birmingham,
Alabama, in 1976. After working with Compass as a commercial lender for five
years, he relocated to Bank of New Orleans in New Orleans, Louisiana, ("BNO")
and served there for two years from 1981-1983. His primary responsibility at BNO
was servicing national and regional accounts. In 1983, he returned to Alabama to
work for First State Bank of Decatur in Decatur where he was employed as a Vice
President, Commercial Loans. In 1986 he moved to DeLand, Florida to join Florida
National Bank and remained with that company until 1991. During his employment
with Florida National he worked as a Vice President, Commercial Loans in DeLand
for 15 months and was then promoted to President of FNB's $100 Million bank in
Sebring, Florida. Mr. Campbell served as President of that bank for four years
form 1987 until 1991. In 1992 he returned to Volusia County to work with First
State Bank of Florida and open their Ormond Beach office in July of that year.
He worked with First State Bank of Florida, first as a Senior Vice President and
then as Executive Vice President and Senior Loan Officer until 1996 when the
bank was sold to SouthTrust Bank of Volusia County. Mr. Campbell was responsible
for the growth and development of the Ormond Beach Branch. The Branch loans grew
to a total of $12.0 Million with total deposits of $11.5 million. Mr. Campbell
is a graduate of the University of Alabama (1976) where he was involved in an
international exchange program and worked with Wermlandsbanken in Stockholm,
Sweden, for six months. Mr. Campbell and his family have lived in Ormond Beach
since 1992 were he is active and well-known in the community. His civic and
social activities include the Lions Club (Past President), member of the Halifax
Club, the Florida Cracker Trail Association (Past President), the Ormond Beach
Chamber of Commerce (various committees), and the American Heart Association
(serving as local chairman and on the Statewide Finance committee).
Larry A. Kent(3), age 44, graduated from the University of Florida,
Gainesville in 1974 and moved to Deltona, Florida to begin business known as
Larry Kent Homes, Inc. Larry Kent Homes became one of the most successful home
building operations in the City of Deltona during the primary years of that
City's growth. Mr. Kent is currently the owner/operator of Burger King
franchises located in Deltona and Edgewater, Florida. In 1993, he "retired" from
the building business. Mr. Kent and a partner, Charles Ruttenberg, were the
majority shareholders and organizing Directors of Southland Bank which became
First State Bank. Mr. Kent served as Chairman of the Board for that Bank for
four years and served as a member of the board until the bank's sale to
SouthTrust. In addition to his Burger King franchises, Mr. Kent owns and manages
four parcels of commercial real estate (including the Deltona SouthTrust bank
building and a shopping center in Deltona).
Christopher K. Likes(3), age 46, a Certified Public Accountant owns and
operates his own firm in DeLand, Florida. Mr. Likes was born and raised in
Akron, Ohio and moved to DeLand where he attended Stetson University. His degree
in accounting was earned at Stetson in 1973 and he began his accounting career
with Coopers and Lybrand in New York City. Along with his commercial accounts,
Mr. Likes acted as a staff accountant and, later, supervising auditor for
Combank Corporation, a holding company with 7 banks and other subsidiaries. In
26
<PAGE>
1978 he left Coopers and Lybrand and returned to DeLand, Florida to open his own
firm. He has been practicing in DeLand since that time. Mr. Likes is a member of
the DeLand Kiwanis Club.
James R. Peacock(3), age 45. is a Chrysler Plymouth dealer in New
Smyrna Beach, Florida. Previous to his purchase of this dealership. Mr. Peacock
was the owner/operator of Jim Peacock Dodge, Inc. in Daytona Beach, Florida for
14 years which is located across the street from the Daytona International
Speedway. Mr. Peacock has lived in the east Volusia County area for the last 20
years. He started his first car dealership, Jim Peacock Dodge, Inc., in 1980 and
has successfully owned and operated numerous auto dealerships since that time.
Mr. Peacock is seeking to reduce his involvement in the day-to-day management of
the dealerships and has sold all but a minority interest in the Daytona Dodge
dealership and the Chrysler/Plymouth dealership. He owns numerous parcels of
undeveloped properties throughout the county. Mr. Peacock is expected to serve
as the Bank's first Chairman of the Board and as Vice Chairman of the Company.
Bank:
Stanley S. Bronski(2), age 74, has extensive business and banking
experience. Mr. Bronski graduated from Yale University in 1947 while he served a
concurrent 4-year term of service with the U.S. Navy from 1942-1946. He began
his employment with New England Electric System and later joined Lutz
Engineering in Rhode Island and then the George Ellis Company where he served as
president of their Hartford and New Haven offices until 1961. He also served as
President and owner of the Connecticut Air Conditioning Company from 1956 until
1979. While in Connecticut, he served as a Director of the Orange National Bank
and chaired the loan review committee. Orange National Bank was purchased by
Connecticut Bank and Trust Company in 1981 and he was appointed to the Bank's
Advisory board where he served until 1985, concurrent with his operation of the
air conditioning business and his Board membership with the Bank. He also served
as the Chairman of the Board of Finance - Town of Orange from 1972 until 1979.
Mr. Bronski currently resides in Deerfield Beach, Florida but owns commercial
property in the Company's PSA. He is very familiar with the commercial
marketplace in the Banks area. He is active in numerous civic and county clubs
including Rotary International, the Yale Class of '47 Executive Committee and
the Deer Creek Golf Club in Deerfield Beach.
Richard Dwyer(2), age 42, was born in the Bronx, N.Y. and raised in New
Jersey. He worked for Union Carbide Corporation after graduating from high
school from 1973 until 1981. In 1978 he attended college at Ocean County College
and joined M.J. Meehan & Company in 1981. M.J. Meehan has been a specialist
trading firm on the New York Stock Exchange since 1925. Mr. Dwyer worked as a
trader's assistant until 1985 when he became a member of the NYSE and a partner
in the company. For the past 11 years he traded specialty stocks including
General Motors, Citicorp, WalMart Stores, Caterpillar, John Deere, Stratus
Computers and Georgia Pacific. In June of 1996, Mr. Dwyer retired from M.J.
Meehan and moved from New Jersey to DeBary, Florida where he now lives. He is
attending Daytona Beach Community College with intentions of continuing at the
University of Central Florida and obtaining a degree in Education. He plans to
teach at the high school level.
Thomas R. Horton(2), age 70, is a Florida native and the former
Chairman and CEO of the American Management Association. Dr. Horton was born in
Fort Pierce, Florida and earned his Ph.D. in mathematics at the University of
Florida. Dr. Horton began his career in education in 1950 when he served as
assistant headmaster at the Bolles School in Jacksonville, Florida, and has
maintained an active interest in education throughout his life, having served as
a Trustee of the American Graduate School of International Management, Bethune
Cookman College, Pace University, and Stetson University. He is currently a
Fellow of the Academy of Management and of the International Academy of
Management. He is a member of the National Association of Corporate Directors'
Blue Ribbon Commission on Director Professionalism and of the NACD faculty.
Continuing his career, he left the Bolles School to spend 28 years with IBM
Corporation where, in his early years, he pioneered the application of computers
to the vehicular and air traffic control and to space computation, and later
became a Divisional General Manager and Vice President. After leaving IBM, Tom
joined the American Management Association in 1982 as President and CEO. He
retired from the AMA in 1992 as Chairman. Dr. Horton has served as a Director of
several public and private corporations and has advised numerous others. He is a
director of Stanhome, Inc. and chair of its organizing committee, and a former
director of American Precision Industries, Charlesbridge Publishing Company,
Med-Tech Corporation, and Perrigo Corporation. He currently serves on the
advisory boards to the Kirchman Corporation, and Who's Who in Finance and
Industry. He resigned his position on the advisory board of SunBank in Volusia
County on October 31, 1996, in order to serve as a director of the bank.
Susan A. Nicholson(2), age 46, holds degrees in Education, Mathematics,
and Interior Design. She has also taken post graduate courses in Financial
Analysis from the New York School of Credit and Finance, the University of
Oklahoma's Bank Management Program and numerous American Institute of Banking
courses. After graduation from college, Ms. Nicholson began a career in banking
as a credit analyst for the First National Bank of Atlanta (Atlanta, Georgia).
She later moved to Florida to work with Sun Bank and First Federal Savings and
27
<PAGE>
Loan Association of Orlando in Orlando, Florida in various capacities including
Commercial Lender, Branch Manager and Assistant Vice President. She currently
owns her own Interior Design firm in Ponce Inlet, Florida that specializes in
commercial interiors. She serves as Vice President of Professional Development
for the International Design Association in the State of Florida. She has taught
Business Practices classes at Daytona Beach Community College and has chaired a
large number of civic and charitable events of organizations including the
American Heart Association, Peso Council of the Arts, Ponce Inlet Community
Center, Ponce Inlet Women's Club, and the American Cancer Society.
Clarence W. Singletary(2), age 62, is a Florida native who obtained his
bachelor's degree from the University of Texas and returned to Florida State
University to obtain his masters degree in 1960. He began his career as a
management trainee with Sarasota Federal Savings & Loan in 1961. He moved to
Daytona Beach in 1963 to become an Assistant Vice President with First Federal
Savings and Loan of Daytona Beach, Florida. He remained with that institution,
working his way up to Executive Vice President and a member of their Board of
Directors until 1987. From 1980 to 1987 he served as President of Trails, Inc.,
a wholly-owned subsidiary of First Federal, that developed over 4,000 building
lots in 26 different subdivisions. This company also served as the Managing
Partner of 21 Joint Ventures with other developers. Trails, Inc. also developed,
leased and sold shopping centers, offices, and three golf country clubs. Mr.
Singletary retired from his position with First Federal and became a full-time
developer in 1987. He and his partner, Dr. Robert Merrell, have successfully
completed seven subdivisions and currently have three new subdivisions in
development. They also own and operate a Bono's Bar-B-Q franchise in Holly Hill,
Florida, located within our PSA. Mr. Singletary has been a member of the Ormond
Beach Rotary Club for 23 years (serving two board terms), the Daytona Beach
Chamber of Commerce for 26 years (serving three board terms), and a member of
the Committee of 100, Daytona Beach, for the past 15 years.
Harvey E. Buckmaster(4) age 49, will serve as the Bank's Senior Vice
President and Cashier. Mr. Buckmaster is a Florida native with a degree in
Accounting from the University of South Florida, Tampa. In 1975, he began his
career in operations and accounting in the financial industry working for
Southeast Banking Corporation in Sarasota and Naples. He subsequently spent six
years in the Savings and Loan industry working successively for: Naples Federal
Savings and Loan (1978 - 1981) in Naples, and First Family Federal Savings and
Loan (1981 - 1987) in Eustis. He then moved from Eustis to Deltona, Florida to
join First State Bank of Florida where he served as Senior Vice President of
Operations and Cashier until October 1996. At First State Bank, Mr. Buckmaster
was responsible for all accounting functions, purchasing, accounts payable,
payroll, data processing, and regulatory reporting. As part of the management
team at First State Bank, he also participated in Asset/Liability management and
management of the bank's investment portfolio.
- ------------------------------------
(1) Will serve as a Director of the Company, only.
(2) Will serve as a Director of the Bank, only.
(3) Will serve as a Director of both the Company and the Bank.
(4) Will serve as an Executive Officer of the Bank.
Executive Compensation
The Organizers entered into an at will employment agreement with Gary
G. Campbell in April of 1996, to assist the Organizers with the formation of the
Company and the Bank. Under the terms of the non-written Agreement, Mr. Campbell
will serve as a director and Chief Financial Officer of the Company and is being
paid a salary of $6,250 per month, plus an automobile allowance of $500 per
month, during the Bank's organizational phase. The understanding between the
Organizers and Mr. Campbell is that Mr. Campbell will be employed by the Company
as its President and Chief Financial Officer, and by the Bank as its President
and Chief Executive Officer at an annual base salary of $75,000, plus a
performance bonus based upon the achievement of certain goals and objectives
that will be established by the Board of Directors relating to the levels of
profitability and asset growth of the Bank. It is not expected that such bonus
would exceed 25% of Mr. Campbell's base salary. The Agreement which initially
will be for a term of two years, also contains a commitment to grant him an
option to purchase 10,000 shares of Company Common Stock at $10.00 per share.
Such option would vest at the rate of 20% per year over five years, would expire
10 years from the grant date and would be subject to the terms of a qualified
stock option plan adopted by the Company's Board of Directors and approved by
its shareholders. Mr. Campbell will be provided with an automobile, as well as
participation in such other benefit plans which the Bank makes available
generally to all employees. Mr. Campbell's employment will be at the will of the
Board and the Bank may terminate Mr. Campbell for any reason upon majority vote
of the Board of Directors. If, however, the termination is without cause, Mr.
Campbell will be entitled to severance pay in an amount not to exceed the
remainder due on his contract or three months which ever is greater. The
Agreement provides that upon termination, Mr. Campbell will not compete with the
Company or the Bank for a period of 3 months following termination.
28
<PAGE>
Transactions with Affiliates
The Agreement provides that upon termination Mr. Campbell will not
compete with the Company or the Bank for a period of 3 months following
termination. Messers Campbell, Bauer, and Likes are the only Organizers or
proposed directors of the Company that have received any cash compensation for
services rendered on behalf of the Company. See "MANAGEMENT - Executive
Compensation." Mr. Bauer has provided certain legal services to the Company and
the Organizers for which he has been paid $ 400 to date. It is not expected that
Mr. Bauer will receive more than $2,500 in total for such services. Mr. Likes
has provided certain accounting services to the Company and the Organizers for
which he has been paid nothing to date. It is not expected that Mr. Likes will
receive more than $2,500 in total for such services.
Once the Bank opens for business, it is anticipated that it will extend
loans to the Bank's and/or the Company's Directors, their associates or members
of the immediate families of the Directors of the Bank or the Company. Such
loans will be made on substantially the same terms and conditions, including
interest rates, collateral and credit underwriting procedures as those
prevailing at the time for comparable transactions by the Bank with other
persons.
Stock Option Plans
Incentive Stock Option Plan. The Company's Board of Directors has
adopted an Incentive Stock Option Plan ("Plan") for employees who are
contributing significantly to the management or operation of the business of the
Company or its subsidiaries as determined by the committee administering the
Plan. The Plan is contingent upon approval by the Company's shareholders. The
Plan provides for the grant of options at the discretion of a committee
designated by the Board of Directors to administer the Plan. No person may serve
as a member of the committee who is then eligible for a grant of options under
the Plan or has been so eligible for a period of one year prior to his service
on the committee. The option exercise price must be at least 100% (110% in the
case of a holder of 10% or more of the Common Stock) of the fair market value of
the stock on the date the option is granted, but in no case will the exercise
price be less than the offering price contained herein. The options are
exercisable by the holder thereof in full at any time following a vesting period
and prior to their expiration in accordance with the terms of the Plan. Stock
options granted pursuant to the Plan will expire on or before (i) the date which
is the tenth anniversary of the date the option is granted, or (ii) the date
which is the fifth anniversary of the date the option is granted in the event
that the option is granted to a key employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
of the Company. Mr. Campbell's proposed Employment Contract contains a provision
whereby he will be granted an option to purchase 10,000 shares of the Company's
common stock. See "MANAGEMENT Executive Compensation."
The Committee may grant a Limited Right simultaneously with respect to
the grant of any stock option, with respect to all or some of the shares covered
under the stock option. A Limited Right may not be exercised before six months
from the date of the grant and may be exercised only if: (i) there is a change
in control of the Company; (ii) the underlying option is eligible to be
exercised; and (iii) the fair market value of the underlying shares on the day
of the exercise is greater than the exercise price of the related option. The
Limited Right may be for no more than 100% of the difference between the
exercise price and the fair market value of the common stock of the Company.
Directors Stock Option Plan. The Board of Directors may, at the
Company's first annual meeting of shareholders after the Bank opens for
business, propose for shareholder approval a directors' stock option plan, which
will be designed to provide incentive compensation to directors in the event
that the Company's common stock increases in value during the term of such
options. The detail of this directors' option plan have not yet been determined,
but such details would be disclosed to shareholders in the Company's Proxy
Statement issued in connection with solicitation of shareholder approval of such
a plan.
Key Man Insurance
The Company has purchased a key man life insurance policy ("Policy")
insuring the life of Mr. Campbell. The Company is both the owner and the
beneficiary of the Policy. The amount of the Policy is $500,000 and the proceeds
of the Policy would be used to defray the costs of any delay in the Application
and organization process caused by Mr. Campbell's death. Should Mr. Campbell die
during the organizational process the Company may elect to terminate the
Offering and refund all subscription proceeds to the Subscribers.
29
<PAGE>
ARTICLES OF INCORPORATION - SUMMARY
The authorized capital stock of the Company is 10,000,000 shares
consisting of 10,000,000 shares of Common Stock, par value, $0.01 per share, of
which 1,500 shares are presently issued and outstanding. See "ORGANIZERS AND
PRINCIPAL SHAREHOLDERS." No preferred stock has been authorized.
Common Stock
The holders of Common Stock are entitled to elect the members of the
Board of Directors of the Company and such holders are entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of the Company. No holder of any class of stock of the Company has preemptive
rights with respect to the issuance of shares of that or any other class of
stock and the Common Stock is not entitled to cumulative voting rights with
respect to the election of directors.
The holders of Common Stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefore. Upon the liquidation, dissolution or winding up of
the Company, the holder of each share of Common Stock will be entitled to share
equally in the distribution of the Company's assets. The holders of Common Stock
are not entitled to the benefit of any sinking fund provision. The shares of
Common Stock of the Company are not subject to any redemption provisions, nor
are they convertible into any other security or property of the Company. All
shares of Common Stock outstanding upon completion of this Offering will be,
fully paid and nonassessable.
The Company will require the payment of a $10.00 transfer fee with
regard to all requests for cancellation and re-issue of the Company's shares
after the initial issue of share certificates. No such fee will be required for
shares originally issued, or issued in exchange for Warrants.
Requirements for Super Majority Approval of Transactions
The Company's Articles contain provisions requiring super majority
shareholder approval to effect certain extraordinary corporate transactions
which are not approved by the Board of Directors. The Articles require the
affirmative vote or consent of the holders of at least two-thirds (66-2/3%) of
the shares of each class of Common Stock of the Company entitled to vote in
elections of directors to approve any merger, consolidation, disposition of all
or a substantial part of the assets of the Company or a subsidiary of the
Company, exchange of securities requiring shareholder approval or liquidation of
the Company ("Affiliated Transaction"), if any person who together with his
affiliates and associates owns beneficially 5% or more of any voting stock of
the Company ("Interested Shareholder") is a party to the transaction; provided
that a majority of the disinterested Directors of the Company has not approved
the transaction. In addition, the Articles require the separate approval by the
holders of a majority of the shares of each class of stock of the Company
entitled to vote in elections of directors which are not beneficially owned,
directly or indirectly, by an Interested Shareholder, of any merger,
consolidation, disposition of all or a substantial part of the assets of the
Company or a subsidiary of the Company, or exchange of securities requiring
shareholder approval ("Business Combination"), if an Interested Shareholder is a
party to such transaction; provided, that such approval is not required if: (i)
the consideration to be received by the holders of the stock of the Company
meets certain minimal levels determined by a formula under the Articles
(generally the highest price paid by the Interested Shareholder for any shares
acquired); (ii) there has been no reduction in the average dividend rate from
that which was obtained prior to the time the Interested Shareholder became
such; and (iii) the consideration to be received by the shareholders who are not
Interested Shareholders shall be paid in cash or in the same form as the
Interested Shareholder previously paid for shares of such class of stock. This
Article, as well as the Article establishing a classified Board of Directors,
may be amended, altered, or repealed only by the affirmative vote or consent of
the holders of at least 66-2/3% of the shares of each class of stock of the
Company entitled to vote in elections of directors.
Acquisition Offers
The Board of Directors of the Company, when evaluating any offer of
another Person (as defined in the Articles) to: (i) make a tender or exchange
offer for any equity security of the Company; (ii) merge or consolidate the
Company with another corporation or entity; or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
shall, in connection with the exercise of its judgment in determining what is in
the best interest of the Company and its shareholders, give due consideration to
all relevant factors, including, without limitation: (i) the social and economic
effect of acceptance of such offer on the Company's present and future customers
and employees and those of its subsidiaries (as defined in the Articles); (ii)
on the communities in which the Company and its subsidiaries operate or are
located; (iii) on the ability of the Company to fulfill its corporate objectives
as a financial institution holding company; and (iv) on the ability of its
subsidiary financial institutions to fulfill the objectives of such institutions
under applicable statutes and regulations.
30
<PAGE>
Control Share Acquisitions
The Company's Articles provide that any person who acquires 20 % or
more of the Company's shares must comply with the Florida Statutes governing
control-share acquisitions. Generally a person intending to acquire such shares
must give the Company notice of such intent and request a meeting of the
shareholders at which shareholder's will be given an opportunity to vote on
whether such shares will be accorded full voting rights. Refusal by the
shareholders to accord full voting rights would result in the proposed acquiror
obtaining shares which could not be voted on any matters to come before the
shareholders. Certain acquisitions are exempt from the effects of the Article,
such as mergers or business combinations which have been approved by the
Company's Board of Directors as well as acquisitions of shares issued by the
Company in its Initial Offering or in subsequent Offerings approved by the
Board.
The effect of all of the above provisions is to make it more difficult
for a person, entity or group to effect a change in control of the Company
through the acquisition of a large block of the Company's voting stock.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
the proposed Bank is a party or of which any of their properties are subject;
nor are there material proceedings known to the Company contemplated by any
governmental authority; nor are there material proceedings known to the Company,
pending or contemplated, in which any director, officer or affiliate or any
proposed principal security holder of the Company, or any associate of any of
the foregoing is a party or has an interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby will be passed upon for the Company by Igler & Dougherty, P.A.,
1501 Park Avenue East, Tallahassee, Florida 32301, counsel to the Company.
EXPERTS
The financial statements of the Company as of November 30, 1996, and
for the period from August 15, 1996, (date of incorporation) to November 30,
1996, included elsewhere in the Registration Statement have been included in
reliance upon the reports of Hacker, Johnson, Cohen & Grieb, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing matters.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission, 450
Fifth Street Northwest, Washington, D.C. 20549, a Form SB-2 Registration
Statement (herein, together with all amendments thereto, called the
"Registration Statement") under the 33 Act, as amended, with respect to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information included in the Registration Statement. For further information
with respect to the Company and the Common Stock, reference is hereby made to
the Registration Statement and the exhibits and schedules thereto.
31
<PAGE>
FINANCIAL STATEMENTS
AND
NOTES THERETO
<PAGE>
<TABLE>
<CAPTION>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Index to Financial Statements
Page
<S> <C>
Independent Auditors' Report......................................................................................F-2
Balance Sheet at November 30, 1996................................................................................F-3
Statement of Operations for the Period from August 15, 1996
(Date of Incorporation) to November 30, 1996 ............................................................F-4
Statement of Changes in Stockholders' Deficit
for the period from August 15, 1996 (Date of Incorporation)
to November 30, 1996.....................................................................................F-5
Statement of Cash Flows for the Period from August 15, 1996
(Date of Incorporation) to November 30, 1996 ............................................................F-6
Notes to Financial Statements as of November 30, 1996 and for the Period from
August 15, 1996 (Date of Incorporation)
to November 30, 1996 ..............................................................................F-7 - F-8
</TABLE>
All schedules have been omitted because of the absence of the conditions under
which they are required or because the required information is included in the
financial statements and related notes.
F-1
<PAGE>
Independent Auditors' Report
Board of Directors
The Commercial Bancorp, Inc.:
We have audited the accompanying balance sheet of The Commercial Bancorp, Inc.
(a development stage company) (the "Company") at November 30, 1996, and the
related statements of operations, changes in stockholders' deficit, and cash
flows for the period from August 15, 1996 (Date of Incorporation) to November
30, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at November 30,
1996, and the results of its operations and its cash flows for the period from
August 15, 1996 (Date of Incorporation) to November 30, 1996, in conformity with
generally accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
December 12, 1996
F-2
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Balance Sheet
November 30, 1996
Assets
Cash $ 11,976
Organizational costs primarily of bank, in organization 88,656
Other assets 27,681
---------
Total $ 128,313
=========
Liabilities and Stockholders' Deficit
Unsecured demand note payable to organizers 140,875
---------
Commitments (Note 5)
Stockholders' deficit:
Common stock, $.01 par value, 10,000,000 shares
authorized, 1,500 shares issued and outstanding 15
Additional paid-in capital 14,985
Accumulated deficit (27,562)
---------
Total stockholders' deficit (12,562)
---------
Total $ 128,313
=========
See Accompanying Notes to Financial Statements.
F-3
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Statement of Operations
Period from August 15, 1996 (Date of Incorporation) to November 30, 1996
Income $ --
--------
Administrative expenses 26,657
Interest expense 905
--------
Total expenses 27,562
--------
Net loss $(27,562)
========
See Accompanying Notes to Financial Statements.
F-4
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
Period from August 15, 1996 (Date of Incorporation) to November 30, 1996
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Deficit
----- ------- ------- -------
Balance at August 15, 1996
(date of incorporation) $ -- -- -- --
Sale of common stock 15 14,985 -- 15,000
Net loss -- -- (27,562) (27,562)
------- ------- ------- -------
Balance at November 30, 1996 $ 15 14,985 (27,562) (12,562)
======= ======= ======= =======
See Accompanying Notes to Financial Statements.
F-5
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period from August 15, 1996
(Date of Incorporation) to November 30, 1996
Cash flows used in administrative activities during the development stage:
Net loss $ (27,562)
Adjustments to reconcile
net loss to net cash
used by administrative
activities during the
development stage
Increase in organizational costs (88,656)
Increase in other assets (27,681)
---------
Net cash used in
administrative activities
of the development stage (143,899)
---------
Cash flows from financing activities:
Advances on unsecured demand
note payable to organizers 140,875
Proceeds from issuance of common stock 15,000
Net cash provided by
financing activities 155,875
---------
Net increase in cash 11,976
Cash at beginning of period --
---------
Cash at end of period $ 11,976
=========
Supplemental disclosures of
cash flow information-
Cash paid during period for:
Interest $ 905
=========
Income taxes $ --
=========
See Accompanying Notes to Financial Statements.
F-6
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements
November 30, 1996
(1) Summary of Significant Accounting Policies
General. The Commercial Bancorp, Inc. (the "Company") was incorporated
on August 15, 1996 in the State of Florida. The Company plans to apply
for approval from the Board of Governors of the Federal Reserve System
("Board of Governors") to become a one-bank holding company and plans
to acquire 100% of the outstanding shares of The Commercial Bank of
Volusia County (the "Bank"), which is planned to be incorporated and
organized in Ormond Beach, Florida. The operations of the Company,
which are intended to consist solely of the ownership of the Bank, have
not commenced as of November 30, 1996. Therefore, with the exception of
organizational costs and certain prepaid expenses, accounting policies
have not been established. The Company has adopted a fiscal year end of
December 31.
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.
Common Stock Offering. As of November 30, 1996, the Company has sold 1,500
shares of common stock for an aggregate of $15,000.
Organizational Costs. The Company has incurred organizational costs
principally in connection with the preparation and filing of the Bank's
application to organize. At November 30, 1996, the Company had incurred
organizational cost of $88,656. It is intended that organizational
costs of the Bank will be transferred to the Bank and deferred and
amortized using the straight-line method over a period of not more than
five years, beginning in the period operations commence.
(2) Organization
On October 21, 1996, the Organizers of the Company filed an application
for authority to organize a state-chartered bank with the Comptroller
of the State of Florida, Department of Banking and Finance. The
approval of this application will be contingent upon certain conditions
being met. These conditions include, among other things, the
establishment of total capital accounts of not less than $4,028,000
with not less than $2,000,000 allocated to common capital, after all
organizational and preopening expenses, and the approval by the Board
of Governors of the Federal Reserve System of the Company's application
to acquire the stock of the Bank as a registered bank holding company.
(3) Related Parties
The Company has appointed one of its Organizers as the President and
Chief Executive Officer of the Company.
(continued)
F-7
<PAGE>
THE COMMERCIAL BANCORP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
(4) Unsecured Demand Note Payable to Organizers
The Company has obtained a demand note payable (line of credit) in the
amount of $250,000 from certain Organizers of the Company. This note
bears interest at prime plus 1%, currently 9 1/4%. At November 30,
1996, the Company had advances of $140,875 against this line. These
amounts were used to fund organizational and other costs incurred by
the Company and the planned Bank. It is intended that the advances will
be repaid to the Organizers from the proceeds of the Company's common
stock offering.
(5) Commitments
Bank facilities are leased under an operating lease. Rent expense was
$4,384 for the period ended November 30, 1996. The lease requires the
Company to pay utilities, insurance, taxes and other operating
expenses. Future minimum rental commitments under noncancelable leases
are as follows:
Year Ending December 31,
------------------------
1997........................................... $ 29,230
1998........................................... 36,246
1999........................................... 37,690
2000........................................... 39,202
2001........................................... 40,776
2002........................................... 6,840
-------
$ 189,984
(6) Sale of Common Shares and Warrants
The Company plans to offer a total of 1,200,000 shares of its common
stock to the public. (1) During the initial offering period shares will
be included in units with a unit consisting of one share of common
stock and one warrant. The price per unit is expected to be $10. A
total of 450,000 units will be offered for sale. Each warrant entitles
the holder thereof to purchase one share of additional common stock for
$10 per share during the 36 month period following the effective date
of the warrant certificate. (2) After the sale of 450,000 units has
been completed, 300,000 shares of common stock will be also offered for
sale. (3) Finally 450,000 shares will be available to holders of the
warrants. The Company expects to incur approximately $26,000 in
offering costs relating to this sale.
(7) Incentive Stock Option Plan
The Company's Board of Directors has adopted an Incentive Stock Option
Plan ("Plan"). The Plan is contingent upon approval by the Company's
shareholders. The Plan provides for the grant of options at the
discretion of a committee designated by the Board of Directors to
administer the Plan. The option exercise price must be at least 100%
(110% in the case of a holder of 10% or more of the Common Stock) of
the fair market value of the stock on the date the option is granted
and the options are exercisable by the holder thereof in full at any
time following a vesting period and prior to their expiration in
accordance with the terms of the Plan. The Company's president's
proposed Employment Contract contains a provision whereby he will be
granted an option to purchase 10,000 shares of the Company's common
stock under this Plan.
F-8
<PAGE>
32
<PAGE>
APPENDIX "A"
ARTICLES OF INCORPORATION
33
<PAGE>
ARTICLES OF INCORPORATION
OF
THE COMMERCIAL BANCORP, INC.
The undersigned incorporators, for the purpose of forming a corporation
under the Florida Business Corporation Act, hereby adopt the following Articles
of Incorporation.
ARTICLE I - NAME
The name of the Corporation is The Commercial Bancorp, Inc.
("Corporation"). The principal place of business of the Corporation shall be 533
N. Nova Road, Suite 213A, Ormond Beach, Florida 32174 or at such other place
within the State of Florida as the Board of Directors may designate. The names
of the registered agent is Igler & Dougherty, P.A., 1501 Park Avenue East,
Tallahassee, Florida 32301, which address is also the address of the Registered
Office of the Corporation.
ARTICLE II - NATURE OF BUSINESS
The Corporation may engage in or transact any or all lawful activities
or business permitted under the laws of the United States and the State of
Florida, or any other state, county, territory or nation.
ARTICLE III - CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is 10,000,000, consisting of 10,000,000 shares of common
stock, par value one cent ($0.01) per share ("Common Stock"). Each holder of
shares of Common Stock shall be entitled to one vote per share.
ARTICLE IV - TERM OF EXISTENCE
This Corporation is to exist perpetually.
ARTICLE V - OFFICERS AND DIRECTORS
The names and street addresses of the initial officers and directors
who shall hold office the first year of the
Corporation's existence or until their successors are elected are:
Name Address Title
- ---- ------- -----
Larry Kent 840-K Deltona Road Chairman of
Deltona, Florida 32725 The Board
James Peacock 1311 Turnbull St. Box 100 President and
New Smyrna Beach, FL 32168 Chief Executive
Officer
Gary G. Campbell 108 Oak Lane Chief Financial
Ormond Beach, Florida 32174 Officer
1
<PAGE>
Christopher Likes 228-B East New York Ave. Director
DeLand, Florida 32720
Kirk Bauer 223 S. Woodland Blvd. Director
DeLand, Florida 32721
ARTICLE VI - INCORPORATORS
The name and street address of the incorporator to these Articles of
Incorporation is Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee,
Florida 32301.
ARTICLE VII - MANAGEMENT OF THE BUSINESS OF THE COMPANY
Section 1 - Authority of the Board. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2 - Action by Shareholders. Any action required or permitted to
be taken by the shareholders of the Corporation must be effected at a duly
called Annual or Special Meeting of Shareholders of the Corporation and may not
be effected by any consent in writing by such shareholders.
Section 3 - Special Meetings of Shareholders. Special Meetings of
shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or the President of the Corporation, or by
shareholders holding at least 20% of the outstanding shares of the Corporation.
ARTICLE VIII - NUMBER OF DIRECTORS
Section 1 - Number of Directors: The Board of Directors of the
Corporation shall be comprised of not less than three (3) nor more than fifteen
(15) directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the Corporation. However, this paragraph
shall not be construed to limit the authority of the shareholders of the
Corporation to increase the number of directors in accordance with the Bylaws of
the Corporation.
2
<PAGE>
Section 2 - Election and Term: Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The term of the initial directors of the
Corporation expires at the first shareholders' meeting at which directors are
elected.
Section 3 - Classes: The directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the 1997 Annual Meeting of Shareholders, the
term of office of the second class (Class II) to expire at the 1998 Annual
Meeting of Shareholders and the term of office of the third class (Class III) to
expire at the 1999 Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Shareholders
after their election.
Section 4 - Vacancies: Newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum. Directors so chosen shall
hold office for a term expiring at the next Annual Meeting of Shareholders. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Section 5 - Notice: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
Section 6 - Removal by Shareholders: Any director, or the entire Board
of Directors, may be removed from office at any time by the affirmative vote of
the holders of at least 60% of the voting power of all of the then-outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
ARTICLE IX - SPECIAL VOTING PROVISIONS FOR AFFILIATED
TRANSACTIONS AND BUSINESS COMBINATIONS
Section 1 - Definitions: The terms defined below shall apply for
purposes of this Article IX:
A."Affiliated Transaction," when used in reference to the
Corporation and any Interested Shareholder (as hereinafter
defined), means any of the following situations:
l. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (I)
any Interested Shareholder or (ii) any other
corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or
consolidation would be, an Affiliate of an
Interested Shareholder.
3
<PAGE>
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) of assets of the
Corporation or any Subsidiary of the Corporation
to or with any Interested Shareholder, or any
Affiliate or Associate of any Interested
Shareholder:
a. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all assets, determined on a consolidated
basis, of the Corporation; or
b. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all outstanding shares of the
Corporation; or
c. Representing 5% or more of the earning
power or net income determined on a consolidated
basis, of the Corporation.
3. the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
transactions) of any shares of the Corporation or
any Subsidiary to any Interested Shareholder or
any Affiliate of any Interested Shareholder in
exchange for cash, securities or other property
(or a combination thereof) having an aggregate
Fair Market Value (as hereinafter defined)
equaling or exceeding 5% or more of all the
outstanding shares of the Corporation and its
Subsidiaries, except pursuant to the exercise of
warrants or rights to purchase stock offered, or
a dividend or distribution paid or made, pro rata
to all shareholders of the Corporation.
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested
Shareholder.
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of
the Corporation with any of its Subsidiaries or
any other transaction (whether or not with or
into or otherwise involving an Interested
Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share
of the outstanding shares of any class of equity
or convertible securities of the Corporation or
any Subsidiary which is directly or indirectly
owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder. 6. any
receipt by the Interested Shareholder or any
Affiliate or Associate of the Interested
Shareholder of the benefit, directly or
indirectly (except proportionately as a
shareholder of the Corporation), of any loans,
advances, guaranties, pledges, or other financial
assistance or any tax credits or other tax
advantages provided by or through the
Corporation.
B."Interested Shareholder" means any Person who is the
Beneficial Owner, directly or indirectly, of more than 10% of
the outstanding voting shares of the corporation. However,
the term "Interested Shareholder" shall not include the
Corporation or any Subsidiary; any savings, employee stock
ownership, or other employee benefit plan of the Corporation
or any Subsidiary; or any fiduciary of any such plan when
acting in such capacity. For the purpose of determining
whether a person is an Interested Shareholder pursuant to
this Section, the number of shares of Voting Stock deemed to
be outstanding shall include shares deemed owned through
application of Article III, Section 3,
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but shall not include any other shares of Voting Stock that
may be issuable pursuant to any contract, arrangement or
understanding, upon exercise of conversion rights, warrants,
options, or otherwise.
C."Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for
the purposes of the definition of Interested Shareholder set
forth in Paragraph B of this Section 1, the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by
the Corporation.
D."Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder
and was a member of the Board of Directors prior to the time
that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested Director
who is unaffiliated with the Interested Shareholder and is
recommended to succeed a Disinterested Director by a majority
of Disinterested Directors then on the Board of Directors.
E."Fair Market Value" means: (I) the Fair Market Value of a
share on the date in question shall be determined by a
majority of Disinterested Directors, appropriately adjusted
for any dividend or distribution in shares of such stock or
any combination or reclassification of outstanding shares of
such stock into a smaller number of shares of such stock; and
(ii) in the case of property other than cash or shares, the
Fair Market Value of such property on the date in question as
determined by a majority of the Disinterested Directors.
F.Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate
adjustment for any dividend or distribution in shares of such
stock or any stock split or reclassification of outstanding
share of such stock into a greater number of shares of such
stock or any combination or reclassification of outstanding
shares of such stock into a smaller number of shares of such
stock.
G."Affiliate" shall have the meaning set forth in Section
607.0901, Florida Statutes.
H."Person" shall mean any individual, a group acting in
concert, a corporation, a partnership, an association, a
joint venture, an investors' pool, a joint stock company, a
trust, an unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of
acquiring, holding or disposing of the equity securities of
the Corporation.
I."Beneficial Ownership" is defined herein to mean a Person
who, directly or indirectly, has the:
1. voting power, which includes the power to vote or
to direct the voting of the "Voting Stock" as
that term is defined herein;
2. investment power, which includes the power to
dispose of or to direct the disposition of the
Voting Stock; or
3. the right to acquire the voting power or
investment power, whether such right is
exercisable immediately or only after the passage
of time, pursuant to any agreement, arrangement
or understanding or upon the exercise of
conversion rights, warrants or options, or
otherwise.
J."Acting in Concert" means (I) knowing participation in a
joint activity or conscious parallel action towards a common
goal whether or not pursuant to an express agreement; or (ii)
a combination or pooling of voting or 5
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other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding,
relationship, agreement or other arrangements, whether
written or otherwise.
K."Voting Stock" means the outstanding shares of all classes
or series of the Corporation entitled to vote generally in
the election of directors.
Section 2 - Affiliated Transactions: In addition to any affirmative vote
required by law or these Articles of Incorporation, and except as otherwise
expressly provided in this Section, any Affiliated Transaction shall be approved
by the affirmative vote of the holders of two-thirds of the Voting Stock, voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law or in any agreement with any national
securities exchange or otherwise.
Section 3 - Exceptions: The voting provisions of Section 2 of this Article
IX shall not be applicable to a particular Affiliated Transaction if all of the
conditions specified in either of the following Paragraphs A and B are met:
A.The Affiliated Transaction has been approved by a majority
of the Disinterested Directors; or
B.In the Affiliated Transaction, consideration shall be paid
to the holders of each class of voting shares and all of the
following conditions shall be met:
1.The aggregate amount of the cash and the Fair Market
Value, as of the valuation date of consideration, other
than cash to be received per share by the holders of Common
Stock in such Affiliated Transaction are at least equal to
the higher of the following:
a.if applicable, the Highest Per Share Price (as
previously defined herein), including any brokerage
commissions, transfer taxes and soliciting dealers' fees,
paid by the Interested Shareholder for any shares of
Common Stock acquired by it (I) within the two-year
period immediately prior to the first public announcement
date of the Affiliated Transaction ("Announcement Date"),
or (ii) in the transaction in which it became an
Interested Shareholder, whichever is higher;
b.the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter
date is referred to in this Article IX as the
"Determination Date"), whichever is higher;
c.if applicable, the price per share equal to the Fair
Market Value per share of such class or series determined
pursuant to sub-paragraph (b) of this Section 3,
multiplied by the ratio of the Highest Per Share Price,
including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of Voting Stock acquired by it
within the two-year period immediately prior the
Announcement Date (the numerator), to the Fair Market
Value per share of such class or series on the first day
in such two-year period on which the Interested
Shareholder acquired the Voting Stock (the denominator);
or
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d.if applicable, the highest preferential amount per share
to which the holders of shares of such Voting Stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
2. The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as the
Interested Shareholder has previously paid for shares of such
Voting Stock. If the Interested Shareholder has paid for
shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of
Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock
previously acquired by it. The consideration to be received
pursuant to this provision shall be subject to appropriate
adjustment in the event of any stock dividend, stock split,
combination of shares or similar event.
3. During such portion of the three-year period
preceding the announcement date that such Interested
Shareholder has become an Interested Shareholder and except as
approved by a majority of the Disinterested Directors:
a.there shall have been no failure to declare and pay at
the regular date any full quarterly dividends (whether or
not cumulative) on any outstanding stock having
preference over the Common Stock as to dividends or
liquidation;
b.there shall have been (I) no reduction in the annual rate
of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common
Stock), and (ii) an increase in such annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the
effect of reducing the number of outstanding shares of
the Common Stock, and (iii) no such Interested
Shareholder who has become the Beneficial Owner of any
additional shares of Voting Stock except as part of the
transaction which results in such Interested Shareholder
becoming an Interested Shareholder.
4. Unless approved by a majority of the
Disinterested Directors, no Interested Shareholder shall have
received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such
Affiliated Transaction or otherwise, during the three-year
period preceding the date the Interested Shareholder became
an Interested Shareholder.
5. A proxy or information statement describing the
proposed Affiliated Transaction and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
shareholders of the Corporation at least 30 days prior to the
consummation of such business combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
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Section 4 - Board Discretion: A majority of the Disinterested Directors of
the Corporation shall have the power and duty to determine for the purposes of
this Article IX, on the basis of information known to them after reasonable
inquiry, (I) whether a person is an Interested Shareholder; (ii) the number of
shares of Voting Stock beneficially owned by any person; (iii) whether a person
is an Affiliate or Associate of another; and (iv) whether the assets which are
the subject of any Affiliated Transaction have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Affiliated Transaction has, an aggregate Fair Market Value
equal to or greater than 25% of the combined assets of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article IX.
Section 5 - Interested Shareholder's Duty: Nothing contained in this
Article IX shall be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
Section 6 - Amendment: Notwithstanding any other provisions of these
Articles of Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, or these
Articles of Incorporation, the affirmative vote of the holders of at least 66%
of the voting power of all of the then-outstanding shares of the Voting Stock
(after giving effect to the provisions of Article III of these Articles of
Incorporation), voting together as a single class, shall be required to alter,
amend or repeal this Article IX.
ARTICLE X - CONTROL SHARE ACQUISITIONS
It is the intent of the Organizers of the Corporation that the
provisions of the "Florida Control-Share Acquisitions" statute, Section 607.0902
Florida Statutes (1994 Supp.) shall apply to acquisitions of the Corporation's
shares by a person acting alone or as part of a group which would result in an
Acquiring Person, as defined herein, owning Control Shares of the Company,
except for those acquisitions defined in Section 1(f)(2) and (3) of this
Article.
SECTION 1 - Definitions: The following terms when used in this section
shall mean:
(a) "Acquiring Person" means a person who makes or proposes to make, or
persons acting as a "group" as defined in sec. 13(d)(3) of the Securities
Exchange Act of 1934 who make or propose to make, a Control-Share Acquisition;
but "Acquiring Person" does not include the Corporation.
(b) "Acquiring Person Statement" means the statement provided for in
Section 607.0902(6), Florida Statutes (1994 Supp.) which shall set forth all of
the following:
(1) The identity of the Acquiring Person and each other member of
any group of which the Acquiring Person is a part for purposes of determining
Control Shares.
(2) A statement that the Acquiring Person Statement is given
pursuant to Section 607.0902(6), Florida Statutes (1994 Supp.).
(3) The number of shares of the Corporation owned, directly or
indirectly following the acquisition, by the Acquiring Person and each other
member of the group.
(4) The range of voting power under which the Control-Share
Acquisition falls or would, if consummated, fall.
(5) If the Control-Share Acquisition has not taken place:
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(I) A description in reasonable detail of the terms of the
proposed Control-Share Acquisition; and
(ii) Representations of the Acquiring Person, together with a
statement, in reasonable detail of the facts upon which they are based, that the
proposed Control-Share Acquisition, if consummated, will not be contrary to law
and that the Acquiring Person, has the financial capacity to make the proposed
Control-Share Acquisition, including the acquisition of dissenter's shares, if
any.
(c) "Affiliate" means a person who directly or indirectly controls the
Corporation. "Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the Corporation,
whether through the ownership of voting securities, by contract, or otherwise. A
person's beneficial ownership of ten percent or more of the voting power of a
Corporation's outstanding shares entitled to vote in the election of directors
(except a person holding voting power in good faith as an agent, bank, broker,
nominee, custodian or trustee for one or more beneficial owners who do not
individually or as a group control the Corporation) creates a presumption that
the person controls the Corporation.
(d) "All voting power" means the aggregate voting power that the
shareholders of the Corporation would have in the election of directors, except
for this Article.
(e) "Control Shares" means issued and outstanding shares of the
Corporation that, except for this section, would have voting power when added to
all other shares of the Corporation owned of record or beneficially by an
Acquiring Person or in respect to which that Acquiring Person may exercise or
direct the exercise of voting power, that would entitle the Acquiring Person,
immediately after acquisition of the shares (directly or indirectly), to
exercise or direct the exercise of the voting power of the Corporation in the
election of directors within any of the following ranges of voting power:
(1) One-fifth (1/5) or more but less than one-third (1/3) of all
voting power;
(2) One-third (1/3) or more but less than a majority of all
voting power; or
(3) A majority or more of all voting power.
(f)(1) "Control-Share Acquisition" means acquisition by any person of
ownership of, or the power to direct the exercise of voting power with respect
to, Control Shares.
(2) A person who acquires shares in the ordinary course of business
for the benefit of others in good faith and not for the purpose of circumventing
this section has not made a Control-Shares Acquisition of shares in respect of
which that person is not able to exercise or direct the exercise of votes
without further instruction from others.
(3) The acquisition of any Control Shares does not constitute a
Control-Share Acquisition if the acquisition is made in good faith and not for
the purpose of circumventing this section in any of the following circumstances:
A. Shares acquired in any distribution conducted by the Corporation
through any public or private offering or acquired pursuant to any warrant
certificate, stock option plan or other employee benefit plan.
B. Pursuant to the laws of descent and distribution.
C. By a donee under an inter vivos gift.
D. Pursuant to a transfer between or among immediate family members,
or between or among persons under direct common control. An "immediate family
member" is any relative or spouse of a person, or any relative of such spouse,
who has the same home as such person.
E. Pursuant to the satisfaction of a pledge or other security
interest.
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F. Pursuant to a merger or plan of consolidation or share exchange
effected in compliance with Florida Statute, if the Corporation is a party to
the agreement of merger or plan of consolidation or share exchange.
G. From any person whose previous acquisition of Control Shares would
have constituted a Control-Shares Acquisition but for this Section 1(e)(3)
(other than this subsection 1(e)(3)(G), provided the acquisition does not result
in the Acquiring Person holding voting power within a higher range of voting
power than that of the person from whom the Control Shares were acquired.
H. Acquisition by a person of additional shares within the range of
voting power for which such person has received approval pursuant to the Control
Share Statute or within the range of voting power resulting from shares acquired
in a transaction described in this Section 1(e)(3).
I. An increase in voting power resulting from any action taken by the
Corporation, provided the person whose voting power is thereby affected is not
an Affiliate of the Corporation.
J. Pursuant to the solicitation of proxies subject to Regulation 14A
under the Securities Exchange Act of 1934 or Chapter 607 of the Florida
Statutes.
(g) "Interested Shares" means the shares of the Corporation in respect
of which any of the following persons may exercise or direct the exercise, as of
the applicable record date, of the voting power of the Corporation in the
election of directors, other than solely by the authority of a revocable proxy:
(1) The Acquiring Person.
(2) Any officer of the Corporation.
(3) Any employee of the Corporation who is also a director of the
Corporation.
(h) "Person" means any individual, Corporation, partnership,
unincorporated association or other entity.
SECTION 2 - Voting Rights: Control Shares of the Corporation acquired
in a Control-Share Acquisition shall have only such voting rights as are granted
by resolution approved by the holders of other than Interested Shares of the
Corporation, as provided for in Section 607.0902(a), Florida Statutes (1994
Supp).
SECTION 3. - Redemption of Control Shares by the Company: Control
Shares acquired in a Control-Share Acquisition with respect to which no
Acquiring Person Statement has been filed with the Corporation are subject to
redemption by the Corporation at any time during the period ending 60 days after
the last acquisition of Control Shares by such Acquiring Person or persons. Such
shares are also subject to redemption by the Corporation in the event the
Control Shares are not accorded full voting rights by the shareholders as
provided for in Section 607.0902 (10)(b) and Section 607.0902(9) of the Florida
Statutes (1994 Supp.). Such shares shall be subject to redemption at the fair
value thereof. Fair value shall be the higher of, the average price paid for all
shares of the Corporation, exclusive of the Control Shares, for the 90 days
prior to the date of redemption by the Corporation or book value of the
Corporation's shares on the last day of the month preceding the date of
redemption by the Corporation, as calculated by Generally Accepted Accounting
Procedures ("GAAP").
SECTION 4 - Rights of Dissenting Shareholders: If the Control-Share
Acquisition is approved by the required vote at the meeting of shareholders at
which it was voted upon, then any shareholder who did not vote in favor of the
Control-Share Acquisition shall have the right to file with the Corporation a
written demand for payment for his/her shares within ten (10) days after the
date of the shareholder meeting. A shareholder may demand payment for less than
all of the shares registered in his/her name. The Corporation shall deliver all
such demands for payment to the Acquiring Person immediately following the
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expiration of the ten (10) day period. The Acquiring Person shall then be
obligated to purchase all shares subject to the demand for payment for the
highest amount he has proposed to pay per share in the Control-Share
Acquisition. Payment to shareholders making demand must be made on the day upon
which the Control-Share Acquisition is consummated or upon surrender of the
certificate or certificates representing shares for which demand has been made
to the Acquiring Person, whichever is later. Any shareholder failing to make
demand within the applicable ten (10) day period shall remain a shareholder of
the Corporation.
SECTION 5 - Alteration or Repeal of this Section: This Section shall
not be altered, amended, or repealed, except by an affirmative vote of at least
662/3 percent of the total number of shares of the Corporation entitled to vote
on such matter.
ARTICLE XI - ACQUISITION OFFERS
The Board of Directors of the Corporation, when evaluating any offer of
another Person to (I) make a tender or exchange offer for any equity security of
the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries (as defined in Article IX); on the
communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objectives
as a financial institution holding company and on the ability of its subsidiary
financial institutions to fulfill the objectives of such institutions under
applicable statutes and regulations.
ARTICLE XII - INDEMNIFICATION
Section 1 - General: The Corporation shall indemnify any officer,
director, employee or agent of the Corporation to the fullest extent authorized
by Section 607.0850 of the Florida Business Corporation Act as it now exists or
may hereafter be amended (the "FBCA") but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment. This includes, but is not limited to, any
person who was or is made a party or is threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such Proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
reasonably incurred or suffered by such person in connection therewith. Such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnity in connection with an action, suit
or Proceeding (or part thereof) initiated by such person only if such action,
suit or Proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. Such right shall be a contract right and shall include the
right to be paid by the Corporation for all expenses incurred in defending any
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such proceeding in advance of its final disposition; provided, however, that,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this Article or
otherwise.
Section 2 - Failure to Pay Claim: If a claim under Section 1 of this
Article is not paid in full by the Corporation within 90 days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the FBCA for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the FBCA, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its shareholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that claimant has not met the applicable
standard of conduct.
Section 3 - Other Rights: The rights conferred on any individual by
Sections 1 and 2 of this Article shall not be exclusive of any other right which
such individual may have or hereafter acquire under any statute, provision of
these Articles of Incorporation, Bylaws of the Corporation, agreement, vote of
shareholders or Disinterested Directors or otherwise.
Section 4 - Insurance: The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the FBCA.
Section 5 - Personal Liability: A director of the Corporation shall not
be personally liable to the Corporation or its shareholders for monetary damages
for any statement, vote, decision or failure to act regarding corporate
management or policy except as provided in the FBCA. If the FBCA is amended
after adoption of these Articles of Incorporation and such amendment further
eliminates or limits the personal liability of directors, then the liability of
a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the FBCA, as so amended.
Any repeal or modification of the foregoing paragraph by the
shareholders or the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE XIII - AMENDMENT
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The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by the
laws of the State of Florida, and all rights conferred upon shareholders are
granted subject to this reservation; provided, however, that, notwithstanding
any other provision of these Articles of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 66% of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors (after giving effect to the provisions of Article III),
voting together as a single class, shall be required to amend or repeal this
Article XIII, Section 3 of Article VII, Article VIII, Article IX, Article X or
Article XI.
In witness of the foregoing, the undersigned has executed these
Articles of Incorporation on behalf of the Board of Directors this 14th day of
August, 1996.
/s/ Herbert D. Haughton
------------------------
Herbert D. Haughton
General Counsel
STATE OF FLORIDA )
COUNTY OF LEON )
BEFORE ME, the undersigned Notary Public, in and for the State of
Florida at large, personally appeared Herbert D. Haughton, known personally to
me to be the individual described in and who executed the foregoing Amended
Articles of Incorporation of The Commercial Bancorp, Inc. and after being duly
sworn, acknowledged that he executed the same for the uses and purposes therein
expressed.
(Seal) /s/ Shannon H. Rivera
----------------------
Notary Public
Shannon H. Rivera
-----------------
Name Typed or Printed
My commission expires:
May 25, 1997
------------
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CERTIFICATE DESIGNATING
REGISTERED AGENT/REGISTERED OFFICE
In accordance with Section 48.091, Florida Statutes, the following
designation and acceptance are being submitted in compliance thereof.
DESIGNATION:
Pursuant to the provision of Section 607.0501, Florida Statutes, The
Commercial Bancorp, Inc. desires to organize under the laws of the State of
Florida, and in connection therewith, hereby designates Igler & Dougherty, P.A.
as its registered agent whose address is 1501 Park Avenue East, Tallahassee,
Florida 32301, which address shall also be the address of the Registered Office
of the Corporation.
ACCEPTANCE:
Having been named to accept service of process for the above-stated
corporation, at the place designated in this certificate, we hereby agree to act
in this capacity, and we further agree to comply with the provisions of all
statutes relative to the proper and complete performance of our duties, and we
accept the duties and obligations of Section 607.0501, Florida Statutes.
IGLER & DOUGHERTY, P.A.
By: /s/ Herbert D. Haughton
-------------------------
Herbert D. Haughton
Dated: August 14, 1996
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APPENDIX "B"
ESCROW AGREEMENT
15
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Independent Bankers' Bank of Florida
ESCROW AGREEMENT
This Escrow Agreement is entered into and effective this 26th day of
August , 1996 , by and between The Commercial Bancorp, Inc., a Florida
corporation ( the "Company") and the Independent Bankers' Bank of Florida
("Escrow Agent" or "Agent").
WITNESSETH:
WHEREAS, the Company, proposes to offer for sale up to 750,000 shares
of its $ 0.01 par value common stock (the "Common Stock"), which shares shall be
registered under the Securities Act of 1933, as amended, at a price of $10.00
each, in minimum subscriptions of 250 shares ("Offering"); and
WHEREAS, the Company has requested the Escrow Agent to serve as the
depository for the payment of subscription proceeds ('Payments") received by the
Company from investor(s) who are subscribing to purchase shares of Common Stock
in the Company pursuant to, and in accordance with, the terms and conditions
contained in the Company's Prospectus and Subscription Agreements thereto; and
WHEREAS, the Offering will terminate at 5:00 P.M. Eastern Time, 90 Days
after the Effective Date of the Company's Registration Statement, unless
extended by the Company for up to an additional 60 days ( "Initial Offering
Period"), and, if during the Initial Offering Period the minimum number of
shares have been subscribed to, the Offering will continue until the earlier of
: (i) the maximum number of shares are subscribed to, or (ii) one year after the
Effective Date of the Company's Registration Statement.
NOW THEREFORE, in consideration of the premises and understandings contained
herein, the parties agree as follows:
(1) The Company hereby appoints and designates the Escrow Agent for the
Purposes set forth herein. The Escrow Agent acknowledges and accepts said
appointment and designation. The Company understands that the Escrow Agent, by
accepting said appointment and designation, in no way endorses the merits of the
offering of the shares described herein. The Company agrees to notify any person
acting on its behalf that the position of Escrow Agent does not constitute such
an endorsement, and to prohibit said persons from the use of the Agent's name as
an endorser of such offering. The Company further agrees to allow the Escrow
Agent to review any sales literature in which the Agent's name appears and which
is used in connection with such offering.
(3) The Company shall deliver all payments received (the "Subscription
Funds") to the Escrow Agent (Independent Bankers' Bank of Florida, Attn:
Customer Service Group) in the form in which they are received by noon of the
fifth (5th) business day after their receipt by the Company, and the Company
shall deliver to the Escrow Agent within ten(10) calendar days copies of written
acceptances of the Company for shares in the Company for which the Subscription
Funds represent payment. Upon receipt of such written acceptance by the Company,
the Escrow Agent shall deposit such funds into the escrow account. The Company
shall also deliver to the Escrow Agent completed copies of Subscription
Agreements for each subscriber, along with such subscriber's name, address,
number of shares subscribed and social security or taxpayer identification
number.
(4) Subscription Funds shall be held and disbursed by the Escrow Agent
in accordance with the terms of this Agreement.
Page 1 of 5
<PAGE>
(5) In the event any Subscription Funds are dishonored for payment for
any reason, the Escrow Agent agrees to orally notify the Company thereof as soon
as practicable and to confirm same in writing and to return due dishonored
Subscription Funds to the Company in the form in which they were delivered.
(6) Should the Company elect to accept a subscription for less than the
number of shares shown in the purchaser's Subscription Agreement, by indicating
such lesser number of shares on the written acceptance of the Company
transmitted to the Escrow Agent, the Agent shall deposit such payment in the
escrow account and then, upon separate instruction from the Company, remit
within ten (10) days after such deposit to such subscriber at the address shown
in his Subscription Agreement that amount of his Subscription Funds in excess of
the amount which constitutes full payment for the number of subscribed shares
accepted by the Company as shown in the Company's written acceptance, without
interest or diminution. Said address shall be provided by the Company to the
Escrow Agent as requested.
(7) Definitions as used herein:
(a) "Total Receipts" shall mean the sum of all Subscription
Funds delivered to the Escrow Agent pursuant to Paragraph (3) hereof, less (i)
all Subscription Funds returned pursuant to Paragraphs (5) and (6) hereof and
(ii) all Subscription Funds which have not been paid by the financial
institution upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Eastern Time, 90
days after the Effective Date of the Company's Registration Statement; provided,
however, in the event that the Escrow Agent is given oral notification followed
in writing, by the Company that it has elected to extend the offering to a date
not later than 60 additional days, then the Expiration Date shall mean 5:00
P.M., Eastern Time, on the date to which the offering has been extended. The
Company will notify the Escrow Agent of the effective date of the Offering
Circular as soon as practicable after such date has been determined.
(c) "Closing Date" shall mean the business day on which the
Company, after determining that all of the Offering conditions have been met,
selects in its sole discretion. The Closing Date shall be confirmed to the
Escrow Agent in writing by the Company.
(d) "Escrow Release Conditions" shall mean that (i) the
Company has not canceled the Offering, and (ii) that the Company has received
preliminary approval from the appropriate regulatory entity to charter the Bank
as well as preliminary approval for deposit insurance from the FDIC.
(8) If, on or before the Expiration Date, (i) the Total Receipts held
by the Escrow Agent equal or exceed $4,500,000 and (ii) the Company has
certified to the Agent that, upon receipt of the net proceeds of the offering
(after the deduction of all fees, commissions, and other expenses of the
offering): (a) the Company will have stockholders' equity of at least
$4,250,000; and (b) the Escrow Release Conditions have been consummated, the
Escrow Agent shall :
(a) No later than 10:00 A.M., Eastern Time, one day prior to
Closing Date (as that term is defined herein), deliver to the Company all
Subscription Agreements provided to the Escrow Agent; and
(b) On the Closing Date, no later than 10:00 o'clock A.M.,
Eastern Time, upon receipt of 24-hour written instructions from the Company,
remit all amounts representing Subscription Funds, plus any profits or earnings,
held by the Escrow Agent pursuant hereto to the Company in accordance with such
instructions.
(9) If (i) the Escrow Release Conditions are not met by the Expiration
Date, or (ii) the offering is canceled by the company at any time prior to the
Expiration Date, then the Escrow Agent shall promptly remit to each subscriber
at the address set forth in his Subscription Agreement an amount equal to the
amount of his Subscription Funds thereunder, plus any profits or earnings
thereon. The earnings accruing to any individual subscriber under this paragraph
shall be a prorated share of the gross earnings on all funds under escrow,
weighted by the amount and the duration of the funds tendered for the individual
Page 2 of 5
<PAGE>
subscription. Under no circumstances will earnings accrue to any subscription
canceled for any reason other than those provided for in this paragraph.
(10) Pending disposition of the Subscription Funds under this
Agreement, the Escrow Agent will invest collected Subscription Funds, in $1,000
increments above a maintained balance of $50,000, in overnight repurchase
agreements collateralized at 102% with obligations of the United States Treasury
or United States Government Agencies. These repurchase agreement transactions
will earn interest at a rate of 35 basis points below the daily Overnight Fed
Funds Sold rate.
(11) The obligations as Escrow Agent hereunder shall terminate upon the
Agents transferring all funds held hereunder pursuant to the terms of Paragraphs
(7) or (8) herein, as applicable.
(12) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, or other
paper or document which the Agent believes to be genuine and what it purports to
be.
(13) The Escrow Agent shall not be liable for anything which the Agent
may do or refrain from doing in connection with this Escrow Agreement, except
for the Agent's own gross negligence or willful misconduct.
(14) The Escrow Agent may confer with legal counsel in the event of any
dispute or questions as to the construction of any of the provisions hereof, or
the Agent's duties hereunder, and shall incur no liability and shall be fully
protected in acting in accordance with the opinions and instructions of such
counsel. Any and all expenses and legal fees in this regard will be paid by the
Company.
(15) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection with any
Subscription Funds involved herein or affected hereby, the Agent shall be
entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held under this Agreement, and in so
doing shall be entitled to continue to refrain from acting until (a) the right
of adverse claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court in Orange County, Florida assuming and having
jurisdiction of the Subscription Funds involved herein or affected hereby or (b)
all differences shall have been adjusted by agreement and the Agent shall have
been notified in writing of such agreement signed by the parties hereto. In the
event of such disagreement, the Agent may, but need not, tender into the
registry or custody of any court of competent jurisdiction in Orange County,
Florida all money or property in the Agent's hands under the terms of this
Agreement, together with such legal proceedings as the Agent deems appropriate
and thereupon to be discharged from all further duties under this Agreement. The
filing of any such legal proceeding shall not deprive the Agent of compensation
earned prior to such filing. The Escrow Agent shall have no obligation to take
any legal action in connection with this Agreement or towards its enforcement,
or to appear in, prosecute or defend any action or legal proceeding which would
or might involve the Agent in any cost, expense, loss or liability unless
indemnification shall be furnished.
(16) The Escrow Agent may resign for any reason, upon thirty (30) days
written notice to the Company. Upon the expiration of such thirty (30) day
notice period, the Escrow Agent may deliver all Subscription Funds and
Subscription Agreements in possession under this Escrow Agreement to any
successor Escrow Agent appointed by the Company, or if no successor Escrow Agent
has been appointed, to any court of competent jurisdiction. Upon either such
delivery, the Escrow Agent shall be released from any and all liability under
this Escrow Agreement. A termination under this paragraph shall in no way change
the terms of Paragraphs (15) and (17) affecting reimbursement of expenses,
indemnity and fees.
(17) The Escrow Agent will charge the Company for services hereunder a
fee of $1,500.00, plus an additional fee of $5.00 for each check issued, $10.00
for each wire and $.50 for each photo copy necessitated in the performance of
duties, with total fees for services not to exceed $2,500.00. All actual
expenses and costs incurred by the Agent in performing obligations under this
Page 3 of 5
<PAGE>
Escrow Agreement will be paid by the Company. All fees and expenses shall be
paid on the Closing Date by the Company. Any subsequent fees and expenses will
be paid by the Company upon receipt of invoice.
(18) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, to the respective addresses set forth herein. The Escrow
Agent shall not be charged with knowledge of any fact, including but not limited
to performance or non-performance of any condition, unless the Escrow Agent has
actually received written notice thereof from the Company or its authorized
representative clearly referring to this Escrow Agreement.
(19) The rights created by this Escrow agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the Escrow Agent and the parties hereto.
(20) This Escrow Agreement shall be construed and enforced according
to the laws of the State of Florida.
(21) This Escrow Agreement shall terminate and the Escrow Agent shall
be discharged of all responsibility hereunder at such time as the Escrow Agent
shall have completed all duties hereunder.
(22) This Escrow Agreement may be executed in several counterparts,
which taken together shall constitute a single document.
(23) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
(24) If any provision of this Escrow Agreement is declared by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(25) The Company shall provide the Escrow Agent with its Employer
Identification Number as assigned by the Internal Revenue Service. Additionally,
the Company shall complete and return to the Escrow Agent any and all tax forms
or reports required to be maintained or obtained by the Escrow Agent.
(26) The authorized signature of the Escrow Agent hereto is consent
that a signed copy hereof may be filed with the various regulatory authorities
of the State of Florida and with any Federal Government agencies or regulatory
authorities.
Page 4 of 5
<PAGE>
In Agreement and acceptance of the Independent Bankers' Bank of Florida Escrow
Agreement between The Commercial Bancorp, Inc. (Company), for the purpose of
organizing a financial institution to be known as The Commercial Bank Of Volusia
County, and the Independent Bankers' Bank of Florida (Escrow Agent).
The Commercial Bancorp, Inc.
Company
Address: P.O. Box 730428
Ormond Beach, Florida 32173-0428
Fax: (904) 672-3003
Phone: (904) 672-2094
By: /s/ Gary G. Campbell
---------------------
Authorized Signature
Title: Gary G. Campbell, Chief Financial Officer
-----------------------------------------
(Type Name and Title)
Attest: 9/18/96
-------
Date ADDITIONAL AUTHORIZED SIGNER
By: /s/ Josephine B. Vern Name: /s/ Larry A. Kent
---------------------- -----------------------------
Additional Authorized Signature
Title: Title: Larry A. Kent, Chairman
----------------------- ------------------------------
(Type Name and Title)
(SEAL)
INDEPENDENT BANKERS' BANK OF FLORIDA
------------------------------------
Address: 109 E. Church Street, Suite BB,
or
P.O. Box 4998
Orlando, Florida 32802-4998
Attest: Fax: (407) 843-4817
------------------------
Date
By: By: /s/ James H. McKillop
------------------------ ----------------------------------------
Authorized Signature
Title: Title: James H. McKillop, Senior Vice President
------------------------ ----------------------------------------
(Type Name and Title)
(CORPORATE SEAL)
Page 5 of 5
<PAGE>
APPENDIX "C"
STOCK SUBSCRIPTION AGREEMENT
Page 6 of 5
<PAGE>
THE COMMERCIAL BANCORP, INC.
SUBSCRIPTION AGREEMENT
To: The Commercial Bancorp, Inc.
258 N. Nova Road
Ormond Beach, Florida 32174
Gentlemen:
You have informed me that The Commercial Bancorp, Inc.("TCB, Inc."), a
Florida corporation ("Company"), is offering during an Initial Offering Period
which will end on ____________, 199_ up to a maximum of 450,000 Units, each
consisting of one share of the Company's $0.01 par value common stock ("Common
Stock") and one Warrant to purchase one share of Common Stock, at a price of
$10.00 per Unit as described in and offered pursuant to the Prospectus dated
December , 1996, ("Prospectus") which has been furnished to the undersigned. In
addition, you have informed me that the minimum subscription is 250 Units.
1. Subscription. Subject to the terms and conditions hereof, the
undersigned hereby tenders this Subscription Agreement ("Agreement"), together
with payment in United States currency by check, bank stock draft or money order
payable to "IBBF, Escrow Agent for TCB, Inc."(the "Funds"), representing the
payment of $10.00 per Unit for the number of Units indicated below.
2. Acceptance of Subscription. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company shall reject this subscription,
if at all, in writing within five business days after receipt of this Agreement.
The Company may reduce the number of Units for which the undersigned has
subscribed, indicating acceptance of less than all of the Units subscribed on
the Company's written Form of Acceptance.
3. Acknowledgments. The undersigned hereby acknowledges that he/she has
received a copy of the Prospectus and agrees to be bound by the terms of this
Agreement and the Subscription Escrow Agreement.
4. Revocation. The undersigned agrees that once this Agreement is
accepted by the Company, it may not be withdrawn. Therefore, until the earlier
of the expiration of five business days after receipt by the Company of this
Agreement or acceptance of this Agreement by the Company, the undersigned may
withdraw his/her subscription and receive a full refund of the subscription
price. The undersigned agrees that, except as provided in this Section 4, he/she
shall not cancel, terminate or revoke this Agreement or any agreement of the
undersigned made hereunder and that this Agreement shall survive the death or
disability of the undersigned.
Page 7 of 5
<PAGE>
The Shares to be issued in connection with this subscription are not
insured by the Federal Deposit Insurance Corporation or any other Federal or
State agency. By executing this Agreement, the subscriber is not waiving any
rights the subscriber may have under federal securities laws, including the 33
Act and the Securities Exchange Act of 1934.
Please fill in the information requested below, make your check payable to
"IBBF, Escrow Agent for TCB, Inc.," and mail the Agreement, Stock Certificate
Registration Instructions and payment to the attention of: Gary G. Campbell,
President and CFO, The Commercial Bancorp, Inc., 258 N. Nova Road, Ormond Beach,
Florida 32174.
- -------------------- ---------------------------------------
No. of Units Subscribed (Signature of Subscriber)
---------------------------------------
(Signature of Subscriber)
- -------------------- ---------------------------------------
Fund Tendered ($10.00 Name(s) (Please Print or Type)
per Unit subscribed)
Date: ____________________________
Phone Number:
__________________________(Home)
__________________________(Office)
Residence Address:
---------------------------------
---------------------------------
---------------------------------
City, State and Zip Code
Page 8 of 5
<PAGE>
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Additional Name if Tenant in Common, Joint Tenant or Tenants by the Entireties
(see below).
Mailing Address:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Social Security Number or other Taxpayer Identification Number:
-----------------
Number of Shares to be registered in above name(s):
----------------------------
Legal form of ownership:
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Tenants by the Entirety ___ Other ______________________
(Husband and wife only)
<TABLE>
<CAPTION>
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder I would be interested in the following services checked below:
PERSONAL BUSINESS
<S> <C> <C> <C>
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft ___ ___
Protection
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
(m) Debit Card ___ ___
(n) Visa/MasterCard ___ ___
(o) Future Trust Services ___ ___
2. I would like our new bank to provide the following additional services:
--------------------------------------------------------------------
--------------------------------------------------------------------
</TABLE>
Page 9 of 5
<PAGE>
FORM OF ACCEPTANCE
The Commercial Bancorp, Inc.
258 N. Nova Road
Ormond Beach, Florida 32174
To:
Dear Subscriber:
The Commercial Bancorp, Inc., ("Company") acknowledges receipt of your
subscription for _______ Units, each consisting of one share of its $0.01 par
value Common Stock and one Warrant to purchase one share of Common Stock and
your check in the amount of $________________.
The Company hereby accepts your subscription for the purchase of
_________ Units, for an aggregate amount of $______________, effective as of the
date of this letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK DULY
AUTHORIZED AND FULLY PAID ALONG WITH YOUR WARRANT CERTIFICATE WILL BE ISSUED TO
YOU AS SOON AS PRACTICABLE AFTER ALL SUBSCRIPTION FUNDS ARE RELEASED TO THE
COMPANY FROM THE SUBSCRIPTION ESCROW ACCOUNT, AS DESCRIBED IN THE SUBSCRIPTION
AGREEMENT EXECUTED BY YOU AND IN THE PROSPECTUS WHICH YOU HAVE BEEN FURNISHED.
IN THE EVENT THAT: (i) THE OFFERING IS CANCELED; OR (ii) THE MINIMUM NUMBER OF
SUBSCRIPTIONS (450,000 UNITS) IS NOT OBTAINED; OR (iii) THE COMPANY SHALL NOT
HAVE RECEIVED APPROVAL FROM THE FEDERAL RESERVE TO BECOME A BANK HOLDING
COMPANY; OR (iv) THE BANK SHALL NOT HAVE RECEIVED FINAL CHARTER APPROVAL FROM
THE FLORIDA COMPTROLLER AND APPROVAL FOR DEPOSIT INSURANCE FROM THE FEDERAL
DEPOSIT INSURANCE CORPORATION, YOUR SUBSCRIPTION FUNDS WILL BE RETURNED TO YOU,
TOGETHER WITH ANY PRO RATA PORTION OF INTEREST EARNED THEREON, IF ANY, AS
DESCRIBED IN THE PROSPECTUS.
If this acceptance is for a lesser number of Units than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Units in excess of the number of Units accepted hereby will be
refunded to you by mail, without interest, within ten (10) days of the date
hereof.
Very truly yours,
THE COMMERCIAL BANCORP, INC.
BY: _______________________________________
Gary G. Campbell
President & Chief Financial Officer
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell or an offer to buy, any
securities other than the Units to which it relates, or any offer of such Units
to any person in any state or other jurisdiction in which such offer is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to any of the dates as of
offers or sales are being made hereunder, the Company is required to update the
Prospectus to reflect any facts or events arising after the effective date of
the Registration Statement filed with the Securities and Exchange Commission
which represent a fundamental change in the information set forth in the
Registration Statement.
Until ____________, 1997, all dealers effecting transactions in the Units,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This delivery requirement is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Prospectus Summary............................. 5
Risk Factors................................... 7
The Company.................................... 10
Terms of the Offering.......................... 10
Use of Proceeds................................ 13
Dividend Policy................................ 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ............................ 16
Business of the Company........................ 16
Business of the Bank........................... 17
Regulation and Supervision..................... 20
Organizers and Principal Shareholders.......... 25
Management..................................... 27
Articles of Incorporation - Summary............ 31
Legal Proceedings.............................. 33
Legal Matters.................................. 33
Experts........................................ 33
Additional Information......................... 33
Index to Financial Statements.................. F-1
Appendix A - Articles of Incorporation
Appendix B - Escrow Agreement
Appendix C - Stock Subscription Agreement
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Minimum 450,000 Shares
Maximum 1,200,000 Shares
[LOGO]
THE COMMERCIAL
BANCORP, INC.
Each Unit consists of One Share of
Common Stock and One
Warrant to Purchase One
Share of Common Stock
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
January ___, 1996
----------------------------------------------------------
<PAGE>
PART-II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24: Indemnification of Directors and Officers
As provided under Florida law, the Company's Directors shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of duty of care or any other duty owed to the Company as a director,
unless the breach of or failure to perform those duties constitutes: (i) a
violation of criminal law, unless the director had reasonable cause to believe
his conduct was lawful, or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which the director received an improper
personal benefit; (iii) for unlawful corporate distributions; or (iv) an act or
omission which involves a conscious disregard for the best interests of the
Corporation or which involves willful misconduct; or (v) an act of recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety,
or property.
Article XII of the Company's Articles of Incorporation provides that the
Company shall indemnify a director who has been successful in the defense of any
proceeding to which he was a party or in defense of any claim, issue or matter
therein because he is or was a director of the Company, against reasonable
expenses incurred by him in connection with such defense.
The Company's Articles of Incorporation also provide that the Company is
required to indemnify any director, officer, employee or agent made a party to a
proceeding because he is or was a director, employee or agent against liability
incurred in the proceeding if he acted in a manner he believed in good faith or
to be in or not opposed to the best interests of the Company and, in the case of
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by: (i) a disinterested majority of the Board
of Directors; (ii) a majority of a committee of disinterested directors; (iii)
independent legal counsel; or (iv) an affirmative vote of a majority of shares
held by disinterested stockholders. No indemnification may be made to or on
behalf of a director, officer, disinterested stockholder, employee or agent in
connection with a proceeding by or in the right of the Company in which such
person was adjudged liable to the Company or in connection with any other
proceeding in which such person was adjudged liable on the basis that personal
benefit was improperly received by him.
<PAGE>
Item 25: Other Expenses of Issuance and Distribution
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts and commissions, if any. All
of the amounts shown are estimated except for the registration fees of the SEC.
SEC Registration Fees............................ $ 4,175
Blue Sky Registration Fees & Expenses............ 825
Legal fees and expenses.......................... 15,000
Accounting Fees.................................. 1,000
Printing and Engraving expenses.................. 2,700
Advertising...................................... 2,000
Total..................................... $25,700
Item 26: Recent Sales of Unregistered Securities.
During the organizational phase of the Company, and in order to meet the
net worth requirements of a Florida issuer, the Company issued 6,500 shares of
Common Stock in a private Offering to its directors for $10.00 per share. These
shares will be exchanged for an equal number of Units to be issued in this
Offering. The exchange will not occur until the Conditions of the Offering have
been met.
<PAGE>
Item 27: Exhibits and Financial Statement Schedules
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
3.1 Articles of Incorporation of the Company (Appendix A to Prospectus).
3.2 By-Laws of the Company.
4.1 Specimen Common Stock Certificate.
4.2 Specimen Warrant Certificate.
4.3 Escrow Agreement with Independent Bankers' Bank of Florida
(Appendix B of prospectus).
4.4 Warrant Plan adopted by the Company on August 7, 1996.
5.1 Opinion of Igler & Dougherty, P.A.
10.1 Proposed Employment Agreement between the Bank and Gary G. Campbell.
10.2 Lease Agreement.
23.1 Consent of Igler & Dougherty, P.A., included in the Opinion Letter
23.2 Consent of Hacker, Johnson, Cohen & Grieb
24 Power of Attorney (included in signature page to this Registration
Statement).
27 Financial Data Schedule
- ------------------------------------
<PAGE>
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (ss. 230.424[b] of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms different from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
<PAGE>
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Pre-Effective Amendment No. 1 to Form SB-2 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 7th day of March, 1997.
THE COMMERCIAL BANCORP, INC.
By: /s/ Gary G. Campbell
------------------------------------
Gary G. Campbell
President & Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to Form SB-2 Registration Statement has been
signed by the following persons in the capacities and as of the dates indicated:
Signature Title Date
* Director December 30, 1996
- ----------------------------
Kirk T. Bauer
/s/ Gary G. Campbell Director December 30, 1996
- ----------------------------
Gary G. Campbell President and
Chief Financial Officer
* Director December 30, 1996
- ----------------------------
Larry A. Kent Chairman of the Board
* Director December 30, 1996
- ----------------------------
Christopher K. Likes
* Director December 30, 1996
- ----------------------------
James R. Peacock Vice Chairman of the Board
* Pursuant to Power of Attorney filed January 3, 1997, authorizing Gary
G. Campbell and Larry Kent, or either of them, as the true and lawful
attorneys-in-fact to sign all amendments to the Form SB-2 Registration
Statement.
<PAGE>
--------------------------------------------------------------
EXHIBITS FILED WITH
FORM SB-2
--------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Sequential
Number Description of Exhibit Page Number
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
* 3.1 Articles of Incorporation of the Company (Appendix A
to Prospectus)
* 3.2 By-Laws of the Company
* 4.1 Specimen Common Stock Certificate
* 4.2 Specimen Warrant Certificate
* 4.3 Stock Subscription Agreement (Appendix C to Prospectus)
* 4.4 Escrow Agreement with Independent Bankers' Bank of Florida
(Appendix B of prospectus).
* 4.5 Warrant Plan adopted by the Company on August 7, 1996
* 5.1 Opinion of Igler & Dougherty, P.A.
* 10.1 Proposed Employment Agreement between the Bank and Gary G.
Campbell
* 10.2 Lease Agreement - including assignment to Bank
* 23.1 Consent of Igler & Dougherty, P.A., included in the Opinion Letter
23.2 Consent of Hacker, Johnson, Cohen & Grieb
* 24 Power of Attorney (included in signature page to this Registration
Statement)
* 27 Financial Data Schedule
-----------------------------------
* Filed with original filing of SB-2 Registration Statement on January 3, 1997.
</TABLE>
<PAGE>
<PAGE>
Exhibit 23.2
Consent of Hacker, Johnson, Cohen & Grieb
32
<PAGE>
Accountant's Consent
The Commercial Bancorp, Inc.
Ormond Beach, Florida:
We consent to the use of our report dated December 12, 1996 on the balance sheet
of The Commercial Bancorp, Inc. as of November 30, 1996 and the related
statements of operations, stockholders' deficit and cash flows for the period
from August 15, 1996 to November 30, 1996, included in the Prospectus of the
Registration Statement of The Commercial Bancorp, Inc. on Form SB-2 and to the
reference to our firm under the heading "Experts" in the Prospectus.
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
March 12, 1997
