<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1996
REGISTRATION NO. 333-14355
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
DECATUR FIRST BANK GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
GEORGIA 6712 58-2254289
(STATE OR JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
755 COMMERCE DRIVE
SUITE 516
DECATUR, GEORGIA 30030
(404) 373-6548
(ADDRESS, AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
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1120 COMMERCE DRIVE
DECATUR, GEORGIA 30030
(404) 373-6548
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR INTENDED PRINCIPAL PLACE OF
BUSINESS)
----------------
JUDY B. TURNER COPY TO:
755 COMMERCE DRIVE KATHRYN L. KNUDSON, ESQ.
SUITE 516 POWELL, GOLDSTEIN, FRAZER
DECATUR, GEORGIA 30030 & MURPHY
(404) 373-6548 191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
(NAME, ADDRESS, AND TELEPHONE NUMBER, (404) 572-6600
OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
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 the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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 SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER
AND HEADING CAPTION IN PROSPECTUS
---------------------------------- ---------------------
<C> <S> <C>
1. Front of the Registration
Statement and Outside Front Cover Page; Outside Front Cover Page
Cover Page of Prospectus..... of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front Cover Page of
Prospectus; Additional Information;
Outside Back Cover Page of
Prospectus
3. Summary Information and Risk
Factors...................... Summary; Risk Factors
4. Use of Proceeds............... Use of Proceeds
5. Determination of Offering
Price........................ Risk Factors
6. Dilution...................... Not Applicable
7. Selling Security Holders...... Not Applicable
8. Plan of Distribution.......... Terms of the Offering
9. Legal Proceedings............. Not Applicable
10. Directors, Executive Officers,
Promoters and Control Management--Proposed Directors and
Persons...................... Officers
11. Securities Ownership of
Certain Beneficial Owners and Management--Proposed Directors and
Management................... Officers
12. Description of the Dividends; Description of Common
Securities................... Stock of the Company; Certain
Provisions of the Company's
Articles of Incorporation and
Bylaws
13. Interests of Named Experts and
Counsel...................... Not Applicable
14. Disclosure of Commission
Position on Indemnification Certain Provisions of the Company's
for Securities Act Articles of Incorporation and
Liabilities.................. Bylaws-Indemnification
15. Organization Within Last Five
Years........................ Management
16. Description of Business....... Summary; Business; Supervision and
Regulation
17. Management's Discussion and
Analysis or Plan of
Operation.................... Business
18. Description of Property....... Business--Facilities
19. Certain Relationships and
Related Transactions......... Management--Certain Transactions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER
AND HEADING CAPTION IN PROSPECTUS
---------------------------------- ---------------------
<C> <S> <C>
20. Market for Common Equity and
Related Stockholder Matters... Description of Common Stock of the
Company
21. Executive Compensation......... Management
22. Financial Statements........... Balance Sheet of Decatur First Bank
Group, Inc.
23. Changes in and Disagreement
With Accountants on Accounting
and Financial Disclosure...... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
DECATUR FIRST BANK GROUP, INC.
A PROPOSED BANK HOLDING COMPANY FOR
DECATUR FIRST BANK (IN ORGANIZATION)
1,200,000 SHARES OF COMMON STOCK
(PAR VALUE $5.00 PER SHARE)
(MINIMUM PURCHASE: 100 SHARES)
This Prospectus relates to the offering by DECATUR FIRST BANK GROUP, INC., a
Georgia corporation (the "Company") of a minimum of 810,000 shares and a
maximum of 1,200,000 shares of its Common Stock, $5.00 par value per share (the
"Common Stock"), at the purchase price of $10.00 per share. The Company has
been organized to hold, upon receipt of regulatory approvals, all of the common
stock of DECATUR FIRST BANK (In Organization) (the "Bank"), Decatur, Georgia.
The organizers of the Company and the Bank intend to subscribe for an aggregate
of at least 164,790 of the shares of Common Stock sold in this offering (20.3%
of the minimum and 13.7% of the maximum number of shares to be sold). In the
event that the minimum number of shares in this offering is not sold, the
organizers may acquire additional shares of Common Stock, up to a maximum
aggregate number for all organizers of 324,000 shares (40% of the minimum and
27% of the maximum number of shares to be sold). The organizers of the Bank
will not be granted options or warrants in connection with the formation of the
Bank; instead, the organizers will be entitled to purchase shares on the same
basis as all other investors. The Company and the Bank have not conducted
active business operations. The commencement of business operations is
contingent upon various regulatory approvals by state and federal agencies and
the sale of a minimum of 810,000 shares of the Common Stock offered hereby. ALL
SUBSCRIPTIONS ARE BINDING AND IRREVOCABLE UNTIL THE "EXPIRATION DATE" AS
DEFINED HEREIN. In the event (a) that the Company is unable to sell 810,000
shares of Common Stock or (b) that the Company and the Bank do not satisfy, or
do not make a determination that they will satisfy, the conditions included in
their respective regulatory approvals, the organizers of the Company will pay
all incurred expenses, and all escrowed subscription proceeds will be returned
to investors without interest. See "THE OFFERING--Release From Escrow"--Page 9.
INVESTMENT IN THESE SECURITIES INVOLVES A SUBSTANTIAL DEGREE OF RISK. SEE "RISK
FACTORS AND SHOULD ONLY BE PURCHASED BY INVESTORS WHO CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT."--PAGE 5
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS
OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS COMPANY(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.......................... $ 10.00 -0- $ 10.00
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Total Minimum(4)................... $ 8,100,000.00 -0- $ 8,100,000.00
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Total Maximum(5)................... $12,000,000.00 -0- $12,000,000.00
</TABLE>
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(1) The offering price has been arbitrarily established by the Company. See
"RISK FACTORS--Offering Price Arbitrarily Determined"--Page 7.
(2) Offers and sales of the Common Stock will be made on behalf of the Company
on a best-efforts basis by its officers and directors, who will receive no
commissions or other remuneration in connection with such activities, but
they will be reimbursed for their reasonable expenses incurred in the
offering. In reliance on Rule 3a4-1 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Company believes such officers and
directors will not be deemed to be brokers and/or dealers under the
Exchange Act.
(3) Before deducting offering and organizational operating expenses of the
Company. Such expenses are estimated to be approximately $52,000.
(4) Subscription proceeds will be deposited promptly in an escrow account with
The Bankers Bank, Atlanta, Georgia, pending receipt of subscriptions for
not less than 810,000 shares and completion of certain other matters on or
before , the expiration date of the offering (unless the offering is
terminated sooner or extended). The Offering will not be extended beyond
, 1997. Subscription funds will be released from escrow (a) upon the
receipt of $8,100,000 of subscription proceeds and (b) upon a determination
by the organizers that the remaining conditions set forth in the
preliminary approvals issued by the applicable regulatory agencies will be
satisfied. If the Offering is successful, the Company anticipates that the
Offering funds will be released from escrow in the second quarter of 1997.
See "THE OFFERING--Terms of the Offering." The Company will return to each
subscriber, without interest, the amount of any proceeds received in full
with respect to subscriptions that are not accepted.
(5) The Company reserves the right to issue up to 1,200,000 shares at $10.00
per share. See "THE OFFERING--Terms of the Offering."
The date of this Prospectus is , 1996.
<PAGE>
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission ("SEC"). The Company will furnish its shareholders with
annual reports containing audited financial information for each fiscal year
on or before the date of the annual meeting of shareholders as required by
Rule 80-6-1-.05 of the Georgia Department of Banking and Finance ("Department
of Banking"). The Company's fiscal year ends on December 31. Additionally, the
Company will also furnish such other reports as it may determine to be
appropriate or as otherwise may be required by law.
Upon the effective date of the Registration Statement, the Company will be
subject to the reporting requirements of the Securities Exchange Act of 1934
(the "Exchange Act"), which include requirements to file annual reports on
Form 10-K and quarterly reports on Form 10-Q with the SEC. This reporting
obligation will exist for at least one year and will continue for fiscal years
thereafter, except that such reporting obligations may be suspended for any
subsequent fiscal year if at the beginning of such year the Common Stock of
the Company is held of record by less than three hundred persons.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement
and the exhibits thereto. The Registration Statement may be examined at, and
copies of the Registration Statement may be obtained at prescribed rates from,
the Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549. The SEC also maintains a Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission.
The Company and the organizers have filed or will file various applications
with the Federal Deposit Insurance Corporation, the Federal Reserve Bank of
Atlanta and the Department of Banking. Prospective investors should rely only
on information contained in this Prospectus and in the Company's related
Registration Statement in making an investment decision. To the extent that
other available information not presented in this Prospectus, including
information available from the Company and information in public files and
records maintained by the Federal Deposit Insurance Corporation, the Federal
Reserve Bank of Atlanta and the Department of Banking, is inconsistent with
information presented in this Prospectus or provides additional information,
such other information is superseded by the information presented in this
Prospectus and should not be relied on. Projections appearing in the
applications are based on assumptions that the organizers believe are
reasonable, but as to which no assurances can be made. The Company
specifically disaffirms those projections for purposes of this Prospectus and
cautions prospective investors against placing reliance on them for purposes
of making an investment decision.
2
<PAGE>
SUMMARY
The following Summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
THE COMPANY
The Company was incorporated under the laws of the State of Georgia on August
2, 1996, primarily to serve as the holding company for a state bank. After the
Bank receives preliminary approval from the Department of Banking, the Company
will file applications with the Federal Reserve Bank of Atlanta (the "Federal
Reserve") and the Department of Banking for prior approval to become a bank
holding company by using the proceeds of this offering to acquire all of the
capital stock of the Bank. The organizers anticipate receiving such approvals
during the first quarter of 1997. Such approvals will require the Company to
sell at least 810,000 shares of its Common Stock, but are not expected to
contain other conditions. See "RISK FACTORS--Regulatory Approvals Required."
Following acquisition of the Bank, the initial business of the Company will be
conducted through the Bank. See "BUSINESS OF THE COMPANY AND THE BANK."
THE BANK
The Bank is in the process of being organized as a state-chartered bank under
Georgia law. It has filed an application with the Department of Banking for
this purpose and with the Federal Deposit Insurance Corporation (the "FDIC")
for deposit insurance, and such applications are pending. The Bank will not be
authorized to conduct its banking business until it receives a permit to begin
business from the Department of Banking. The issuance of the permit to begin
business will depend, among other things, upon the Bank's receiving $8,000,000
in capital from the Company and upon compliance with certain standard
conditions expected to be imposed by the FDIC and the Department of Banking
which are generally designed to familiarize the Bank with certain applicable
operating requirements (e.g., no directors' fees are payable until the Bank
earns a cumulative profit) and to prepare the Bank to commence business
operations (e.g., the adoption of loan, investment and other policies to govern
the Bank's operations). The Bank expects to satisfy all conditions for
organizing the Bank and to open for business during the second quarter of 1997,
or as soon thereafter as practicable. See "RISK FACTORS--Regulatory Approvals
Required" and "USE OF PROCEEDS." The Bank intends to engage in a general
commercial banking business, emphasizing the banking needs of individuals and
small to medium-sized businesses in its primary service area. See "BUSINESS OF
THE COMPANY AND THE BANK."
The Bank's philosophy with respect to its initial operations will be to
emphasize prompt and responsive personal service to the residents of Decatur,
Georgia and the other communities located in DeKalb County in order to attract
customers and acquire market share now controlled by other financial
institutions in the Bank's market area. The organizers believe that the Bank
offers the residents of Decatur and the surrounding areas the opportunity to
have an ownership interest in a community bank, while also receiving the
benefits associated with a locally owned and managed community bank. Through
ownership in the Company, the residents of the community will have a greater
role in the development of the Bank.
The offices of the Company and the Bank will be located at 1120 Commerce
Drive, Decatur, Georgia 30030. The current principal executive office of the
Company and the Bank is located at: 755 Commerce Drive, Suite 516, Decatur,
Georgia 30030 and their telephone number at that address is (404) 373-6548.
3
<PAGE>
THE OFFERING
Security ................... Common Stock, $5.00 par value, of the Company
Offering Price ............. $10.00 per share
Number of Shares Offered ...
Minimum: 810,000
Maximum: 1,200,000
Use of Proceeds ............ To purchase 100% of the Common Stock of the Bank;
to pay organizational expenses of the Company and
of this offering; and to provide working capital
for the Company.
The Bank will use the proceeds of this offering
to pay organizational and pre-opening operating
expenses, including paying officers' and
employees' salaries; to lease, renovate and
furnish a site for the Bank's main office; and,
following the commencement of business, to
provide working capital to be used for business
purposes, including making loans and other
investments. See "USE OF PROCEEDS."
RISK FACTORS
Investment in the Common Stock involves a significant degree of risk. See
"RISK FACTORS."
REGULATORY APPROVALS
The Bank's application to organize a new state bank and for federal deposit
insurance was filed with the Department of Banking and the FDIC on September
16, 1996. On November 22, 1996, the Department of Banking approved the Bank's
application. As of December 4, 1996, the application with the FDIC was pending.
The approval of the Department of Banking is subject to the condition that at
least $8,000,000 be invested in the Bank by the Company, as well as a number of
other standard conditions which are regularly imposed by the Department of
Banking and are generally designed to familiarize the Bank with certain
applicable operating requirements (e.g., no directors' fees are payable until
the Bank earns a cumulative profit) and to prepare the Bank to commence
business operations (e.g., the adoption of loan, investment and other policies
to govern the Bank's operations). The organizers expect that the FDIC approval
will contain similar provisions
The Company must receive the approval of the Federal Reserve and the
Department of Banking before it can become the holding company of the Bank. The
organizers anticipate receiving approval to become a bank holding company from
the Federal Reserve and the Department of Banking during the first quarter of
1997. Such approvals will require the Company to sell at least 810,000 shares
of its Common Stock but are not expected to contain other conditions.
RELEASE OF OFFERING FUNDS FROM ESCROW
Subscription proceeds will be deposited in an escrow account with The Bankers
Bank, Atlanta, Georgia (the "Escrow Agent") for the Company pending completion
of this offering. See "THE OFFERING--Escrow." Subscription proceeds will be
released from escrow to the Company upon the occurrence of all of the following
events: (a) the sale by the Company of at least 810,000 shares of its Common
Stock, (b) receipt by the Company of approval from the Federal Reserve and the
Department of Banking to become a bank holding company, (c) satisfaction by the
Company of, or a determination by the Company that it will satisfy, all of the
conditions that the Federal Reserve and the Department of Banking may impose in
their approvals to the Company, (d) receipt by the Bank of approval from the
Department of Banking and the FDIC of the Bank's application to organize a new
state bank and for deposit insurance, and (e) satisfaction by the Bank of, or a
determination by the Bank that it will satisfy, all of the conditions that the
Department of Banking and the FDIC have imposed in their approvals to the Bank.
4
<PAGE>
If the above conditions are met, the Company intends to instruct the Escrow
Agent to release to the Company the amount of subscription proceeds relating to
subscriptions or portions thereof accepted by the Company. Shares of the
Company's Common Stock will be issued to subscribers once the subscription
proceeds have been released from escrow.
The Bank expects to receive a permit to begin business from the Department of
Banking and approval for federal deposit insurance from the FDIC during the
first quarter of 1997. The Company also expects to receive approvals from the
Federal Reserve and the Department of Banking during the first quarter of 1997.
In the opinion of the organizers, the only significant condition to the
foregoing approvals will be that a minimum of 810,000 shares of Common Stock of
the Company has to be sold in this offering. If the requisite shares are not
sold, or if the Company or the Bank determine that they cannot satisfy the
other conditions included in the approvals by the expiration date of this
offering (see "THE OFFERING--Offering Period and Expiration Date"), then the
subscriptions agreements will be of no further force and effect, and the full
amount of all subscription funds will be promptly returned to the subscribers
within five business days after such expiration date.
5
<PAGE>
RISK FACTORS
Investment in the shares of the Common Stock offered hereby involves a
significant degree of risk. The shares of Common Stock should be purchased by
investors who can afford the loss of their entire investment. In addition to
considering factors set forth elsewhere in this Prospectus, persons interested
in purchasing shares of the Common Stock should carefully consider the
following risks before making a decision to subscribe.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
FAILURE TO SATISFY REGULATORY CONDITIONS
It is possible that subsequent to the release of the subscription funds from
escrow (the requisite shares having been sold and the determination having
been made that the other regulatory conditions will be satisfied) events could
occur which could have the effect of preventing the Bank from commencing
business. If that were to occur, the Company intends to liquidate and would
return to the then shareholders of the Company the portion of their investment
which is equal to their total investment less their pro rata share of the
expenses incurred by the Company and the Bank. See "USE OF PROCEEDS," and
"CAPITALIZATION." While no assurance can be given that the foregoing will not
take place, the organizers cannot foresee any such events and believe it is
highly unlikely that such events will occur. After consulting with applicable
regulatory authorities, the organizers are not aware of any Georgia state
banks which failed to commence business after they or their holding companies
had raised the required capital. See "THE OFFERING--Release from Escrow."
LIMITATION ON GROWTH
At least during the first years of the Bank's operations, the Bank's lending
limits will be lower than many of its competitors because it will initially
have less capital than many of its competitors. While the Bank's lower lending
limits may discourage potential borrowers who have lending needs that exceed
the Bank's limits, thereby limiting the Bank's ability to grow, the organizers
anticipate serving the needs of such borrowers by selling loan participations
to other institutions. See "BUSINESS OF THE COMPANY AND THE BANK--The Bank--
Lending Policy."
DETERRENT EFFECT OF ANTITAKEOVER PROVISIONS
The Articles of Incorporation and the Bylaws of the Company contain certain
provisions that may deter an attempt to change or gain control of the Company.
As a result, the shareholders of the Company may be deprived of opportunities
to sell some or all of their shares at prices that represent a premium over
market prices. See "ANTITAKEOVER PROVISIONS OF THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS."
POTENTIAL CONTROL BY DIRECTORS AND OFFICERS
The directors and officers may purchase an amount of shares that exceeds the
original purchase commitment of the directors and officers in an effort to
enable the Company to satisfy the minimum offering amount. One result of
increased ownership by directors and officers is that the directors and
officers acting together would effectively be able to control the outcome of
director elections and have greater influence over the course of the Company's
future activities. See "MANAGEMENT--Proposed Officers and Directors."
DEPENDENCE ON KEY PERSONNEL
Judy Turner has been instrumental in the organization of the Company and the
Bank. The success of the Company and the Bank may depend upon the continued
service of Ms. Turner as the President and Chief Executive Officer of the
Company and the Bank. See "MANAGEMENT--Cash Compensation."
NO OPERATING HISTORY
The Bank, which will be the sole subsidiary of the Company, is in
organization and has no operating history on which to base any estimate of its
future prospects. The Company's initial profitability will depend entirely
6
<PAGE>
upon the Bank's operations. The Bank's proposed operations are subject to
risks inherent in the establishment of a new business and, specifically, of a
new bank. Initially, all of the Bank's loans will be unseasoned--new loans to
new borrowers. Accordingly, it will take several years to determine the
borrowers' payment histories and, therefore, the quality of the Bank's loan
portfolio cannot be determined until that time. While the Bank's pro forma
financial statements project a substantial loss in the first year of
operations and a profit by the end of the second year of operations,
unforeseen circumstances could delay such profit. If the Bank is ultimately
unsuccessful, there is no assurance that shareholders will recover all or any
part of their investment in the Common Stock of the Company.
INDUSTRY COMPETITION MAY HAVE ADVERSE EFFECT ON SUCCESS OF THE COMPANY
The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms soliciting business from
residents of DeKalb County, Georgia, many of which have greater resources than
will be available to the Bank or the Company. See "BUSINESS OF THE COMPANY AND
THE BANK--The Bank--Competition and Historic Deposit Trends."
CHANGES IN INDUSTRY REGULATIONS MAY HAVE ADVERSE EFFECT ON SUCCESS OF THE
COMPANY
The potential success or failure of the Bank will depend not only upon
competitive factors, but also upon state and federal regulations affecting
banks and bank holding companies generally. Regulations now affecting the
Company and the Bank may be changed at any time, and there is no assurance
that such changes will not adversely affect the business of the Company and
the Bank.
POSSIBLE ADVERSE EFFECT OF MONETARY POLICIES ON SUCCESS OF THE COMPANY
The results of operations of the Bank will be affected by credit policies of
monetary authorities, particularly the Board of Governors of the Federal
Reserve System. There can be no assurance that the effect of actions by
monetary and fiscal authorities, including the Federal Reserve, will not have
an adverse effect on the deposit levels, loan demand or the business and
earnings of the Bank. See "SUPERVISION AND REGULATION--Monetary Policies."
SUCCESS DEPENDS ON ECONOMIC CONDITIONS
The success of the Bank will depend largely on the general economic
conditions in the Bank's primary service area of DeKalb County, Georgia.
Although the Bank expects favorable economic development in this market area,
there is no assurance that favorable economic development will occur or that
the Bank's expectation of corresponding growth will be achieved. See "BUSINESS
OF THE COMPANY AND THE BANK."
OFFERING PRICE ARBITRARILY DETERMINED
Since the Company and the Bank are in the process of being organized, the
offering price of $10.00 per share has been determined arbitrarily by the
organizers without particular reference to historical or projected earnings,
book value or other customary criteria. The organizers did not retain an
independent investment banking firm to assist in determining the offering
price. Should a market develop for the Common Stock of the Company, there is
no assurance that any of the Common Stock offered hereby could be resold for
the offering price or any other amount.
NO DIVIDENDS
Since 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 the
period of time necessary to help ensure the success of their operations. As a
result, the Company has no current plans to initiate the payment of cash
dividends, and its 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. See "SUPERVISION AND
REGULATION--Bank Regulation."
NO ESTABLISHED TRADING MARKET
There is no public trading market for the shares of the Common Stock of the
Company, and it is not anticipated that an active market for the shares will
develop as a result of this offering. As a result, investors who may wish or
need 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
assuming that third parties are willing to purchase the Common Stock.
7
<PAGE>
THE OFFERING
MINIMUM/MAXIMUM
The Company is offering a minimum of 810,000 shares and a maximum of
1,200,000 shares of its Common Stock for a price of $10.00 per share, for an
aggregate minimum price of $8,100,000 and an aggregate maximum price of
$12,000,000. The minimum purchase for any investor (together with the
investor's affiliates) is 100 shares of Common Stock ($1,000) unless the
Company, in its sole discretion, accepts a subscription for a lesser number of
shares. The maximum purchase for any investor (together with the investor's
affiliates) is 39,690 shares ($396,900) of Common Stock, unless the Company,
in its sole discretion, accepts a subscription for a greater number of shares.
ORGANIZER SUBSCRIPTIONS
The organizers of the Company intend to purchase an aggregate of 164,790
shares of Common Stock sold in the offering (20.3% of the minimum and 13.7% of
the maximum number of shares to be sold). No organizer intends to individually
purchase more than 5% of shares sold in this offering. In the event, however,
that the minimum number of shares in this offering are not sold, the
organizers may acquire additional shares of the Common Stock, up to a maximum
aggregate number for all organizers of 324,000 shares (40% of the minimum and
27% of the maximum number of shares to be sold.)
OFFERING PERIOD AND EXPIRATION DATE
The offering period for the shares will terminate at the earlier of the date
all shares offered hereby are sold or 5:00 p.m. Decatur, Georgia time, on .
This date may be extended at the discretion of the Company for additional
periods not exceeding an aggregate extension of 180 days (i.e., until ).
Written notice of any such extension will be given to all persons who are
already subscribers at the time of the extension. The date on which this
offering terminates plus any extension thereof is referred to in this
Prospectus as the "Expiration Date."
ESCROW
Subscription proceeds will be deposited in an escrow account with The
Bankers Bank, Atlanta, Georgia, as escrow agent (the "Escrow Agent") for the
Company pending completion of this offering. Subscription proceeds held in the
escrow account will be invested in short-term deposit accounts or certificates
of deposit which are fully insured by the FDIC or securities of the United
States or an agency of the United States Government with 30-day maturities or
in such other short-term investments as may be agreed upon by the Company and
the Escrow Agent from time to time. The Escrow Agent has not investigated the
desirability or advisability of an investment in the Company, and has not
approved, endorsed or passed upon the merits of the Common Stock.
COMPANY DISCRETION
The Company reserves the right, in its sole discretion, to accept or reject
any subscription in whole or in part on or before the Expiration Date. Without
limiting the generality of the foregoing, the Company also reserves the right
to accept subscriptions on a prorated basis if it receives subscriptions for
more than 1,200,000 shares. The Company will notify all subscribers within
five business days after the Expiration Date whether their subscriptions have
been accepted. With respect to any subscriptions which are not accepted, in
whole or in part, by the Company, the notification will be accompanied by the
unaccepted portion of the subscription funds.
TERMINATION
The Company reserves the right to terminate the offering at any time after
810,000 shares have been subscribed for if the Company determines that the
total amount of subscriptions will provide adequate capitalization for the
Company after payment of expenses.
8
<PAGE>
RELEASE FROM ESCROW
Subscription proceeds will be released from escrow to the Company upon the
occurrence of all of the following events: (a) the sale by the Company of at
least 810,000 shares of its Common Stock, (b) receipt by the Company of
approval from the Federal Reserve and the Department of Banking to become a
bank holding company, (c) satisfaction by the Company of, or a determination
by the Company that it will satisfy, all of the conditions that the Federal
Reserve and the Department of Banking may impose in their approvals to the
Company, (d) receipt by the Bank of approval from the Department of Banking
and the FDIC of the Bank's application to organize a new state bank and for
deposit insurance, and (e) satisfaction by the Bank of, or a determination by
the Bank that it will satisfy, all of the conditions that the Department of
Banking and the FDIC have imposed in their approvals to the Bank.
If the above conditions are met, the Company intends to instruct the Escrow
Agent to release to the Company the amount of subscription proceeds relating
to subscriptions or portions thereof accepted by the Company, together with
any interest earned thereon. Shares of the Company's Common Stock will be
issued to subscribers once the subscription proceeds have been released from
escrow. Any subscription proceeds received after the above conditions are met
but before termination of this offering will not be deposited in the escrow
account, and will be available for immediate use by the Company, to the extent
accepted by the Company.
The Bank received preliminary approval from the Department of Banking on
November 22, 1996. The Bank expects to receive approval from the FDIC during
the first quarter of 1997. The Company also expects to receive approvals from
the Federal Reserve and the Department of Banking during the first quarter of
1997. In the opinion of the organizers, the only significant condition to all
of the foregoing approvals will be that a minimum of 810,000 shares of Common
Stock of the Company has to be sold in this offering. In its preliminary
approval, the Department of Banking requested that the Company increase the
amount used to capitalize the Bank from $7,000,000 to $8,000,000 because the
Department of Banking anticipates that the Bank will grow quickly and
therefore require more capital. Accordingly, the Company increased its minimum
offering amount from $7,100,000 to $8,100,000. If the requisite shares are not
sold, or if the Company or the Bank determine that they cannot satisfy the
other conditions included in the approvals by the Expiration Date, then the
subscription agreements will be of no further force or effect, and the full
amount of all subscription funds will be returned to the subscribers within
five business days after the Expiration Date.
It is possible that subsequent to the release of the subscription funds from
escrow (the requisite shares having been sold and the determination having
been made that the other regulatory conditions will be satisfied) events could
occur which could have the effect of preventing the Bank from commencing
business. If that were to occur, the Company intends to liquidate and would
return to the then shareholders of the Company the portion of their investment
which is equal to their total investment less their pro rata share of the
expenses incurred by the Company and the Bank. See "USE OF PROCEEDS," and
"CAPITALIZATION." While no assurance can be given that the foregoing will not
take place, the organizers cannot foresee any such events and believe it is
highly unlikely that such events will occur. After consulting with applicable
regulatory authorities, the organizers are not aware of any Georgia state
banks which failed to commence business after they or their holding companies
had raised the required capital.
PLAN OF DISTRIBUTION
Offers and sales of the Common Stock will be made on behalf of the Company
primarily by certain of its officers and directors. The officers and directors
will receive no commissions or other remuneration in connection with such
activities, but they will be reimbursed for their reasonable expenses incurred
in the offering. In reliance on Rule 3a4-1 of the Exchange Act, the Company
believes such officers and directors will not be deemed to be brokers and/or
dealers under the Exchange Act.
The Company may find it necessary to utilize the services of brokers and/or
dealers in order to effect the sale of the Common Stock in certain
jurisdictions. The Company has no present arrangements or agreements with any
such brokers and/or dealers with respect to this offering. The Company
anticipates that all such arrangements, if any, will be on a "best efforts"
basis, with the Company paying to the broker and/or dealer a commission based
on the shares sold through its efforts. The Company believes that the range of
possible commissions to be paid to brokers and/or dealers in such transactions
is $.50 to $.70 per share and that the
9
<PAGE>
maximum average commission payable in the offering when all shares subject to
this offering are taken into account is $0.10. The Company anticipates that
those sales of Common Stock requiring the use of brokers and/or dealers will
not comprise a major part of this offering. In the event that broker/dealers
are used, all such funds will be promptly transmitted to the Escrow Agent
under the terms of the escrow agreement.
It is expected that the organizers will purchase a total of 164,790 of the
shares of Common Stock offered hereby; however, the organizers may, subject to
regulatory approval, purchase up to 40% of the minimum number of shares
offered hereby if necessary to complete the offering. Any shares purchased by
the organizers in excess of their original commitment will be purchased for
investment and not with a view to the resale of such shares, and any such
purchases will be subject to regulatory approval.
HOW TO SUBSCRIBE
1. If you desire to purchase 100 shares or more and did not complete a
Preliminary Subscription Agreement, complete, date and sign the Subscription
Agreement, which is attached as Exhibit A to this Prospectus. Upon receipt by
the Company of your completed Subscription Agreement and a check in the amount
equal to $10.00 multiplied by the number of shares subscribed for, your
subscription will be binding and irrevocable.
2. If you completed and delivered to the Company a Preliminary Subscription
Agreement, the Company will deliver to you an Acknowledgement of Subscription,
the form of which is attached as Exhibit B to this Prospectus. You will need
to complete, date and sign the Acknowledgement of Subscription indicating that
you have received a copy of the Company's final Prospectus. Upon receipt by
the Company of the Acknowledgement of Subscription and a check in the amount
equal to $10.00 multiplied by the number of shares subscribed for, your
subscription will be binding and irrevocable.
3. All checks should be made payable to "The Bankers Bank--Escrow Account
for Decatur First Bank Group, Inc."
4. The completed Subscription Agreement or Acknowledgement of Subscription
and check should be sent to the Company as follows:
Before March 1, 1997 After March 1, 1997
Decatur First Bank Group, Inc. Decatur First Bank Group, Inc.
755 Commerce Drive 1120 Commerce Drive
Suite 516 Decatur, Georgia 30030
Decatur, Georgia 30030 Attn: Judy B. Turner
Attn: Judy B. Turner
10
<PAGE>
USE OF PROCEEDS
BY THE COMPANY
Upon satisfaction of all of the conditions discussed in "THE OFFERING--
Release from Escrow" all subscription funds held in escrow will be released
and will become capital of the Company. The gross proceeds to the Company from
the sale of the shares offered hereby will be between $8,100,000 and
$12,000,000. The net proceeds of the offering to the Company will be between
$8,048,000 and $11,948,000. Net proceeds to the Company reflect reductions
from gross proceeds of the offering in the amount of $52,000 for estimated
offering and organizational expenses. Interest on the subscriptions will be
retained by the Company whether the minimum number of shares to be subscribed
for hereunder is subscribed for or not and will be utilized to defray
organizational and other expenses.
The Company will use approximately $52,000 of the net proceeds to pay
organizational and offering expenses of the Company. The Company's
organizational and offering expenses will consist primarily of legal,
accounting, marketing and printing expenses. Thereafter, the Company will use
at least $8,000,000 million of the net proceeds to purchase all of the stock
of the Bank. The Company will retain the balance of the net proceeds,
estimated at $48,000 in the case of the minimum offering and $4,948,000 in the
case of the maximum offering, for working capital and other general purposes,
including payment of expenses of the Company and the provision of additional
capital for the Bank, if necessary. In addition the Company will be reimbursed
by the Bank for amounts advanced by the Company to the Bank for pre-opening
and organizational expenses of the Bank. See "USE OF PROCEEDS--By The Bank."
The following table sets forth the use of the gross proceeds of this
offering by the Company if the minimum number of shares are sold in this
offering and if the maximum number of shares are sold in this offering.
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
OFFERING(1) OFFERING(2)
----------- -----------
<S> <C> <C>
Gross Proceeds from Offering................ $8,100,000 $12,000,000
Organizational and Offering Expenses........ (52,000) (52,000)
Investment in Stock of the Bank............. (8,000,000) (8,000,000)
---------- -----------
Remaining Proceeds.......................... $ 48,000 (3) $ 3,948,000 (3)
========== ===========
</TABLE>
- --------
(1) Assumes that 810,000 shares of Common Stock are sold in this offering.
(2) Assumes that 1,200,000 shares of Common Stock are sold in this offering.
(3) This amount will be used by the Company for working capital and may be
used to provide additional capital for the Bank, if necessary.
If sufficient proceeds are available, the Company may choose to capitalize
the Bank at a level in excess of $8.0 million. If the Company raises in excess
of the minimum offering, the Company plans to retain the excess sums at the
holding company level and initially invest the sums in United States
government securities or as a deposit at the Bank. The Company may be required
by the Department of Banking or the FDIC to capitalize the Bank at a level in
excess of $8.0 million, in which case the Company will have to receive net
proceeds in excess of the minimum offering or obtain additional capital from
another source. If the Department of Banking or FDIC requires that the Bank be
capitalized in excess of $8.0 million, the Company plans to seek additional
subscriptions up to the maximum subscription amount required by the
regulators. If the Company meets the minimum subscription amount but is unable
to meet the capitalization requirements of the Department of Banking or the
FDIC, then it is possible that the Bank will be unable to commence banking
operations and that the amount returned to subscribers could be substantially
less than their original investment. See "RISK FACTORS--Release from Escrow."
11
<PAGE>
BY THE BANK
The Bank will receive at least $8,000,000 from the sale of its common stock
to the Company. The Bank will use approximately $318,000 of such proceeds to
reimburse the Company for amounts advanced by the Company to pay
organizational and pre-opening expenses of the Bank, including amounts funded
by the Company with advances from the organizers, which the Company will in
turn repay to the organizers. Organizational expenses of the Bank, estimated
at $62,000, include consulting fees, expenses for market analysis and
feasibility studies, and legal fees and expenses. Organizational expenses will
be deferred and amortized over five years. Pre-opening expenses, estimated at
$256,000, include officers' and employees' salaries and benefits estimated at
$111,000 (assuming the Bank opens for business on its target date of March 31,
1997), as well as lease payments, marketing expenses, interest expenses,
accounting and other pre-opening expenses. For additional information
concerning the compensation of the President of the Company and the Bank, see
"BUSINESS OF THE BANK AND COMPANY--Cash Compensation." The Bank will use
approximately $328,000 for furniture, fixtures and equipment for Bank's
principal facility. In addition, the Bank will use approximately $400,000 to
renovate the Bank's main office. Expenses for furniture, fixtures, equipment
and renovations will be capitalized and amortized over the life of the lease
or over the estimated useful life of the asset. The balance of the proceeds to
be received by the Bank, estimated at approximately $6,954,000, will be used
for loans to customers, investments and other general corporate purposes.
The following table sets forth the use of proceeds by the Bank. All proceeds
received by the Bank will be in the form of an investment by the Company in
the Bank's common stock. The initial amount of the Company's investment will
not vary based on the number of shares sold in this offering. Although the
amounts set forth herein provide an indication of the proposed use of funds
based on the plans and estimates of the organizers', actual expenses may vary
from the estimates.
<TABLE>
<S> <C>
Investment by the Company in the Bank's Common Stock......... $8,000,000
Reimbursement to the Company for Amounts Advanced by the
Company to the Bank to Pay Organizational and Pre-opening
Expenses of the Bank........................................ (318,000)
Furniture, Fixtures and Equipment............................ (328,000)
Renovation of Bank's Main Office............................. (400,000)
----------
$6,954,000 (1)
==========
</TABLE>
- --------
(1) This amount is to be used by the Bank for loans to customers, investments
and other general corporate purposes.
In the opinion of the organizers the estimated minimum net proceeds of
approximately $8,100,000 to the Company from the offering will satisfy the
cash requirements of the Company and the Bank for their respective first three
years of operations and that the Company and the Bank will not need to raise
additional funds for operations during this period, but there can be no
assurance that this will be the case.
The organizers have obtained a line of credit for the Company in the amount
of $300,000 with The Bankers Bank of Atlanta, Georgia, to be used by the
Company for the purpose of paying expenses incurred in connection with the
organization of the Company and the Bank, this offering and the commencement
of business by the Bank. Interest of the line of credit is paid quarterly and
is based on the floating prime rate as published in the Wall Street Journal.
The line of credit matures on August 27, 1997. The Company may seek to
increase the line of credit. The line of credit has been guaranteed, jointly
and severally, by the organizers. Any amounts required to pay organizational,
pre-opening and offering expenses that exceed the amount available under the
line of credit will be advanced by the organizers. All funds advanced by the
organizers to the Company and the Bank will be repaid to the organizers by the
Company and the Bank, respectively, from the proceeds of this offering.
12
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996, and the proforma consolidated capitalization of the
Company and the Bank, as adjusted to give effect to the sale of the minimum of
810,000 shares in this offering. The Bank has established March 31, 1997, as
the target date for opening the Bank; accordingly, the "As Adjusted" column
reflects the estimated pre-opening expenses of the Company and the Bank
through March 31, 1997.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
SHAREHOLDER'S EQUITY SEPTEMBER 30, 1996 MARCH 31, 1996
-------------------- ------------------ --------------
<S> <C> <C>
Preferred Stock, par value not stated;
2,000,000 shares authorized, no shares
issued and outstanding.................... $ -- $ --
Common Stock, par value $5 per share:
10,000,000 shares authorized; 1 share
issued ($10) and outstanding(1); 810,000
shares issued ($10 each) and outstanding
as adjusted (minimum offering)............ 5 4,050,000
Additional paid-in capital(2).............. 5 4,014,000 (2)
Accumulated Deficit........................ (43,398) (196,000)
Total shareholders' equity................. (43,388)(3) 7,808,000 (4)
-------- ----------
Total Capitalization..................... $(43,388) $7,808,000
======== ==========
</TABLE>
- --------
(1) Judy B. Turner, the President of the Company, was issued one share of
Common Stock upon the organization of the Company, which share will be
redeemed for $10 (the price at which it was issued) upon the first
issuance of shares offered hereby.
(2) The expenses of the offering will be charged against this account.
Offering expenses are estimated to be $36,000 and such amount was used in
the calculation of the amount shown in the "As Adjusted" column
($4,050,000 less $36,000).
(3) This deficit reflects pre-opening expenses incurred through September 30,
1996, consisting primarily of salaries and employee benefits.
(4) The "As Adjusted" deficit accumulated during the pre-opening stage results
from expensing estimated pre-opening expenses for the Bank of $256,000.
See "USE OF PROCEEDS--By The Bank." (The Company is not expected to have
any pre-opening expenses.) Pre-opening expenses will be charged against
operating results and are estimates. Actual pre-opening expenses may be
higher. Higher actual pre-opening expenses would increase the deficit
accumulated during the pre-opening stage and thereby further reduce
shareholders' equity. The Company will retain any interest earned on
subscription payments held in escrow to defray pre-opening expenses. Such
interest will offset the deficit accumulated during the pre-opening stage,
but the amounts shown above do not include any estimate for interest which
may be earned.
DIVIDENDS
Since 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 the
period of time necessary to help ensure the success of the their operations.
As a result, the Company has no current plans to initiate the payment of cash
dividends, and its 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. See "SUPERVISION AND
REGULATION--Bank Regulation."
13
<PAGE>
BUSINESS OF THE COMPANY
AND THE BANK
THE COMPANY
The Company was incorporated as a Georgia business corporation on August 2,
1996 to become a bank holding company by acquiring all the common stock of the
Bank upon its formation. Initially, the Bank will be the sole operating
subsidiary of the Company. The Company will apply to the Federal Reserve and
the Department of Banking for prior approval to use $8,000,000 of the proceeds
of this offering to acquire the Bank. If such approvals are granted, upon its
acquisition of the common stock of the Bank, the Company will become a bank
holding company within the meaning of the Bank Holding Company Act of 1956, as
amended, and the Georgia Bank Holding Company Act. See "SUPERVISION AND
REGULATION."
The Company has been organized to facilitate the Bank's ability to serve its
future customers' requirements for financial services. The holding company
structure will provide flexibility for expansion of the Company's banking
business through the possible acquisition of other financial institutions and
the provision of additional banking-related services which the traditional
commercial bank may not provide under present laws. For example, banking
regulations require that the Bank maintain a minimum ratio of capital to
assets. In event that the Bank's growth is such that this minimum ratio is not
maintained, the Company may borrow funds, subject to 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. It is expected, however, that the Company may make additional
acquisitions in the future in the event that the Company 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."
The Company does not have any plans to issue additional securities.
THE BANK
General. The organizers filed an application on behalf of the Bank with the
Department of Banking and with the FDIC on September 16, 1996, for authority
to organize as a state bank, the deposits of which will be federally insured,
and to conduct a commercial banking business from Decatur, Georgia. The Bank
received preliminary approval from the Department of Banking on November 22,
1996. As of December 4, 1996, the application filed with the FDIC was pending.
The Bank intends to be a full service commercial bank. The Bank plans to
offer personal and business checking accounts, senior checking accounts,
interest-bearing checking accounts, savings accounts, money market funds and
various types of certificates of deposit. The Bank also plans to offer
installment loans, real estate loans, construction loans, second mortgage
loans, commercial and SBA loans and home equity lines of credit. In addition,
the Bank intends to provide such services as official bank checks and money
orders, Mastercard and Visa credit cards, safe deposit box, traveler's checks,
bank by mail, direct deposit of payroll and social security checks, and US
Savings Bonds.
Philosophy. The Bank's philosophy with respect to its initial operations
will be to emphasize prompt and responsive personal service to the residents
of Decatur, Georgia and the other communities located in DeKalb County in
order to attract customers and acquire market share now controlled by other
financial institutions in the Bank's market area. The organizers believe that
the Bank offers the residents of Decatur and the surrounding areas the
opportunity to have an ownership interest in a community bank, while also
receiving the benefits associated with a locally owned and managed community
bank. Through ownership in the Company, the residents of the community will
have a greater role in the development of the Bank.
Management of the Bank intends to implement an active officer and director
call program to promote these efforts. The purpose of this call program will
be to describe the products, services and philosophy of the Bank to both
existing and new business prospects. All of the organizers are active members
in the Decatur community
14
<PAGE>
and their 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.
Bank Location and Facilities. The Bank will be located in Decatur, Georgia
in DeKalb County. The organizers have obtained a lease on a landmark site in
the financial district of downtown Decatur. The downtown business district has
several streets with historic commercial and government buildings, residential
structures and churches. The county government administration and court
buildings are one block south of the Bank's proposed office. The Chamber of
Commerce and Decatur Hospital are two blocks east of the Bank's proposed
office. Additionally, there are several high rise office buildings and retail
stores near the Bank's proposed office.
The Company entered into an Agreement to Lease, dated August 20, 1996, with
Daniel B. Pattillo, which provides that the Company may sublease the property
from Atlanta Gas Light Company until June 1, 1997 and thereafter may lease the
building from Mr. Pattillo until June 1, 2002. The Agreement to Lease provides
that the Company has an option to purchase the building under certain
conditions. The Company entered into an Agreement of Sublease, dated September
9, 1996 with Atlanta Gas Light Company, dated September 9, 1996 to sublease
the property from September 1, 1996 until May 31, 1997.
The building currently contains 5,400 square feet of usable space which can
be expanded. The organizers plan to renovate the building and use the current
square footage. The top floor contains 3,917 square feet and will be converted
into the banking lobby and executive offices. The lower level, which contains
1,487 square feet, will be used for operations, storage and the board room.
The board room will be used for meetings and training space. Most of the
operations and back-room work will be outsourced so less space will be needed.
Video drive-ups will be used instead of physical drive-ups, which will reduce
the need for additional square footage. The lower parking lot has sufficient
room to put two drive-up lanes in addition to employee parking. The property
fronts Commerce Drive, which is a main thoroughfare in Decatur, and backs up
to a retail area and residential property. Access to the drive-ups will be
available through a side street off of Commerce Drive. The main parking lot
will be accessible from Commerce Drive.
Parking is difficult to find in downtown Decatur and the Bank's proposed
office offers over 40 parking spaces in an open, well-lighted area with easy
access to the building. The drive-ups will be on the opposite side of the
building from the customer parking, which will eliminate traffic from the
drive-ups backing up into this area.
Primary Service Area. The Bank's Primary Service Area ("PSA") will be a five
mile radius of the center of Decatur, Georgia. Decatur is the county seat of
DeKalb County and is located 12 minutes east of downtown Atlanta, Georgia.
Decatur is four square miles in size and there are over 12 distinct
neighborhoods within the City of Decatur.
Economic and Demographic Factors. DeKalb County is part of the Atlanta,
Georgia metropolitan area. The designated area, a five mile radius from the
center of the city of Decatur, is comprised of the incorporated towns of
Decatur, Avondale Estates and Clarkston, a portion of Atlanta, and
unincorporated DeKalb County. Decatur is the county seat and attracts a much
larger daytime population than the 17,000+ residents. The government buildings
alone employ 13,722 workers.
Decatur adjoins Atlanta's city limits six miles east of Atlanta's central
business district. The MARTA rapid rail system has a station in downtown
Decatur and the Interstate 285 perimeter is located less than three miles east
of the downtown district. These and other nearby transportation facilities
provide easy access to downtown Decatur from Atlanta and other metro area
locations, improving the district's potential for business.
As the financial, service and government center of DeKalb County, Decatur's
downtown business district has played an important role in the county and the
Atlanta metro area.
15
<PAGE>
Competition and Historical Deposit Trends. Decatur is served by eleven
commercial banks, two savings institutions and four credit unions, which,
collectively, operate 41 banking offices. Commercial banks control 99% of the
$1.4 billion of deposits in the Bank's PSA. Several of the commercial banks
located in the Bank's PSA are larger regional banks, such as First Union,
SunTrust, NationsBank and Wachovia. As a group, the large regional banks
control over 83% of the deposit market in the Bank's PSA. The larger regional
banks' presence in Decatur is through branch offices, with many of the
customer service functions, as well as authority for loan approval, being
located outside of the Bank's PSA. There is no other community bank
headquartered in Decatur. There are several community banks located in DeKalb
County; however, the Bank intends to differentiate itself from these banks
primarily through strong involvement in the Decatur community.
According to Sheshunoff's Bancpen, between 1991 and 1995, Decatur
experienced a $352 million decrease in deposits. The organizers do not believe
that this decrease is indicative of the market, but rather is a reflection of
how the larger regional banks report information. For example, First Union's
reported deposits decreased by $348 million from 1991 to 1995; however, since
there was not a corresponding increase in deposits reflected at other bank
offices, the organizers believe these deposits are not market loss, but were
shifted to other First Union offices. The demographic data for Decatur reveals
positive trends in all categories.
Lending Policy. The Bank is being established to support Decatur and
surrounding areas of DeKalb County. Consequently, the Bank will aggressively
seek creditworthy loans within a limited geographic area. The Bank's primary
commercial lending function will be to make consumer loans to individuals and
commercial loans to small and medium-sized businesses and professional
concerns. In addition, the bank plans to make real-estate-related loans,
including construction loans for residential and commercial properties, and
primary and secondary mortgage loans for the acquisition or improvement of
personal residences. The Bank plans to avoid concentrations of loans to a
single industry or based on a single type of collateral.
The Bank's legal lending limits will be 15% of its statutory capital base
for unsecured loans and 25% of its statutory capital base for secured loans.
The Bank's statutory capital base is determined by the sum of its common
stock, paid-in capital, appropriated retained earnings, and capital debt, or
the amount of net assets of the Bank, whichever is the lower amount. Of the
Bank's initial $8,000,000 in capital, $4,000,000 will be allocated to common
stock, $3,400,000 to paid-in capital and $600,000 will be set aside as an
expense fund to cover pre-opening expenses and potential losses in its first
year of operation. The $600,000 expense fund will not be included in the
Bank's statutory capital base. Accordingly, the Bank's initial legal lending
limits will be $1,110,000 for unsecured loans and $1,850,000 for secured
loans. While the Bank expects generally to employ more conservative lending
limits, the Board of Directors will have discretion to lend up to the legal
lending limits as described above.
Consumer Loans. The Bank plans to make consumer loans, consisting primarily
of installment loans to individuals for personal, family and household
purposes, including loans for automobiles, home improvements and investments.
Risks associated with consumer loans include, but are not limited to, fraud,
deteriorated or non-existing collateral, general economic downturn and
customer financial problems.
Commercial Loans. Commercial lending will be directed principally toward
small to mid-size businesses whose demand for funds falls within the legal
lending limits of the Bank. This category of loans includes loans made to
individual, partnership or corporate borrowers, and obtained for a variety of
business purposes. Risks associated with these loans can be significant and
include, but are not limited to, fraud, bankruptcy, economic downturn,
deteriorated or non-existing collateral and changes in interest rates.
Real Estate Loans. The Bank will make and hold real estate loans, consisting
primarily of single-family residential construction loans for one-to-four unit
family structures. The Bank will require a first lien position on the land
associated with the construction project and will offer these loans to
professional building contractors and homeowners. Loan disbursements will
require on-site inspections to assure the project is on budget and that the
loan proceeds are being used for the construction project and not being
diverted to another project. The loan-to-value ratio for such loans will be
predominantly 80% of the lower of the as-built appraised value or
16
<PAGE>
project cost, and will be a maximum of 90% if the loan is amortized. Loans for
construction can present a high degree of risk to the lender, depending upon,
among other things, whether the builder can sell the home to a buyer, whether
the buyer can obtain permanent financing, whether the transaction produces
income in the interim and the nature of changing economic conditions.
Investments. In addition to loans, the Bank will make other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable securities. No
investment in any of those instruments will exceed any applicable limitation
imposed by law or regulation.
Deposits. The Bank plans to establish solid core deposits, including
checking accounts, money market accounts, a variety of certificates of
deposit, and IRA accounts. The primary means used to attract deposits will be
an aggressive marketing plan in the overall service area, a broad product
line, and competitive services. The primary sources of deposits will be
residents of, and businesses and their employees located in, the Bank's PSA
obtained through personal solicitation by the Bank's officers and directors,
direct mail solicitations and advertisements published in the local media.
Deposits will be generated by offering a broad array of competitively priced
deposit services, including demand deposits, regular savings accounts, money
market deposits (transaction and investment), certificates of deposit,
retirement accounts, and other deposit or funds transfer services which may be
permitted by law or regulation and which may be offered to remain competitive
in the market.
Asset and Liability Management. The Bank intends to manage its assets and
liabilities to provide an optimum and stable net interest margin, a profitable
after-tax return on assets and return on equity, and adequate liquidity. These
management functions will be conducted within the framework of written loan
and investment policies which the Bank will adopt. The Bank will attempt to
maintain a balanced position between rate sensitive assets and rate sensitive
liabilities. Specifically, it will chart assets and liabilities on a matrix by
maturity, effective duration, and interest adjustment period, and endeavor to
manage any gaps in maturity ranges.
Employees. Upon commencement of operations, the Bank is expected to have
approximately 15 full-time employees and one part-time employee. The Company
is not expected to have any employees who are not also employees of the Bank.
Judy Turner will be the President of the Bank. Ms. Turner has over 28 years
of banking experience, including extensive administration and retail banking
experience. See "MANAGEMENT -- Proposed Officers and Directors."
The Bank plans to employ a senior lending officer with a minimum of 15 years
banking experience, primarily in commercial lending. The senior lending
officer will be the primary person responsible for making loans, as well as
the design and implementation of the Bank's lending policies and procedures.
In addition, the senior lending officer will be responsible for loan
administration, financial reporting and hiring of personnel.
The Bank has employed a branch manager who has over 20 years of banking
experience, including 10 years in a retail/commercial branch of a large bank.
The branch manager also has experience in operations, loan approval and loan
administration.
17
<PAGE>
MANAGEMENT
PROPOSED OFFICERS AND DIRECTORS
The following table sets forth for the initial members of the Board of
Directors of the Company and the Bank, (a) their names, addresses and ages at
September 30, 1996, (b) the positions they will hold in the Company and the
Bank, (c) the number of shares of Common Stock for which they intend to
subscribe, and (d) the percentage of outstanding shares such number will
represent if the minimum number of shares are sold in this offering and if the
maximum number of shares are sold in this offering.
<TABLE>
<CAPTION>
POSITIONS NUMBER % OF % OF
NAME AND ADDRESS (AGE) TO BE HELD OF SHARES* MINIMUM* MAXIMUM*
---------------- ----- ------------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
John L. Adams, Jr. ..... (42) Director 10,000 1.2 .8
130 Glenn Circle
Decatur, Georgia 30030
Merriell Autrey ........ (70) Director 10,000 1.2 .8
1887 Bedfordshire Court
Decatur, Georgia 30033
Mary Bobbie Bailey ..... (68) Director 34,790 4.3 2.9
239 15th Street
Atlanta, Georgia 30309
James A. Baskett ....... (48) Director 10,000 1.2 .8
160 South Candler Street
Decatur, Georgia 30030
William F. Floyd ....... (50) Director 15,000 1.9 1.3
712 W. Ponce de Leon Av-
enue
Decatur, Georgia 30030
John C. Joyner ......... (56) Secretary, 10,000 1.2 .8
631 Pinetree Drive Director
Decatur, Georgia 30030
Robert E. Lanier ....... (57) Director 15,000 1.9 1.3
5459 Lichenheath Court
Stone Mountain, Georgia
30087
Carol G. Nickola ....... (45) Director 20,000 2.5 1.7
7540 Chaparral Drive
Dunwoody, Georgia 30350
Lynn Pasqualetti ....... (41) Director 10,000 1.2 1.3
889 Artwood Road
Atlanta, Georgia 30307
Roger K. Quillen ....... (43) Director 10,000 1.2 1.3
124 Glenn Circle
Decatur, Georgia 30030
Judy B. Turner ......... (49) President, Chief 20,000 2.5 1.7
235 Drexel Avenue Executive Officer,
Decatur, Georgia 30030 Director
All Proposed Directors
and Officers, as a Group
........................ 164,790 20.3% 13.7%
</TABLE>
- --------
* In the event that the minimum number of shares in this offering is not sold,
the organizers may purchase additional shares of Common Stock up to an
aggregate of 324,000 shares of Common Stock (40% of the minimum and 27% of
the maximum number of shares to be sold).
18
<PAGE>
JOHN L. ADAMS, JR. John Adams is a native of DeKalb County and a graduate of
Emory University. He is President and Managing Broker of Clairmont Place
Realty, Inc., a residential real estate brokerage firm. Mr. Adams has served
as President of the Decatur Business Association and as Chairman of the DeKalb
Unit of the American Heart Association. He is a former Trustee of Dekalb
Medical Center Foundation.
MERRIELL AUTREY, JR. Merriell Autrey is a native of Georgia. He worked for
the Citizens & Southern National Bank (now known as NationsBank) for over 35
years in various departments. His last assignment at the bank was his election
in 1969 as President of C & S Emory Bank, a wholly owned affiliate of the
Citizens and Southern Georgia Corporation. C & S Emory Bank merged into C & S
National Bank, and Mr. Autrey retired as an Executive Vice President in 1987.
He has served on numerous civic and community boards, a past President of the
Atlanta Athletic Club, and a member of The Lutheran Church. He is a graduate
of the University of Georgia and has studied at The School of Credit &
Financial Management at Dartmouth and the Emory School of Advanced Management.
JAMES A. BASKETT Jim Baskett is a native of DeKalb County. He owns Prolific
Impressions, Inc., which produces instructional books for the adult craft
market. He and his wife have operated this business in Decatur for more than
20 years. He is the Past Chair of the DeKalb County Public Library Board of
Trustees and serves on the City of Decatur Board of Commissioners. A graduate
of Leadership DeKalb, he has served as a director for the American Heart
Association, Our House, Inc., Decatur Rotary Club, and Leadership DeKalb, Inc.
MARY BOBBIE BAILEY Bobbie Bailey is a resident of Fulton County, and is the
founder, President and sole owner of Our-Way, Inc., the world's largest
independent remanufacturer of commercial air conditioning and refrigeration
compressors. Ms. Bailey also currently serves as a Foundation Trustee for
Kennesaw State College, a Director of the Greenland Expedition Society,
President of Georgia Music Festival Hall of Fame, a member of the Mayor's
Commission on the Atlanta Entertainment Industry, and a Trustee of the
National Academy of Recording Arts & Sciences. Her other endeavors include
President and sole owner of two music companies, as well as Bailey Design
Company, a residential construction company.
WILLIAM F. FLOYD Bill Floyd has been a resident of Decatur, Georgia since
1972. He has been involved in the construction of water and sewer facilities
in the Southeast United Stated since 1972. He is currently Secretary-Treasurer
of Southern Champion Construction, Inc., a company he helped start in July,
1977. Prior to moving to the Atlanta area in 1972, Mr. Floyd served three
years as a Captain in the U.S. Army. He graduated from Auburn University in
1969 with a degree in Civil Engineering and received an MBA from Georgia State
University in August, 1978. He is a registered Professional Engineer in the
State of Georgia and is currently completing his second term as a member of
the Decatur City Commission.
JOHN C. JOYNER John Joyner is an attorney and has been a resident of and
practiced law in the City of Decatur for over 30 years. Mr. Joyner is a
graduate of Georgia State University and Emory University Law School. He is
chairman of The Decatur Downtown Development Authority and legal counsel for
the DeKalb Chamber of Commerce, the Decatur Business Association and the
DeKalb Convention and Visitors Bureau.
ROBERT E. LANIER Robert E. Lanier is a native of DeKalb County and is
President and CEO of REL properties, Inc., a local real estate development
company founded over 30 years ago by Mr. Lanier. He served on the DeKalb
County Board of Commissioners from 1976 to 1990 and was Presiding Officer of
the Board for three years. Mr. Lanier currently serves on the Georgia College
Foundation Board, and the DeKalb College Foundation. He is a board member of
the Decatur Rotary Club, and is Governor Miller's appointee to the Georgia
Trust of Historic Preservation. He has previously served on the Emory
University Board of Visitors, is a past president of the Metro Atlanta
Homebuilders Association/Dekalb Chapter, and has served on various other
boards including the YMCA, Christian City, American Cancer Society, American
Heart Association, Leadership DeKalb, and the Regional Leadership Institute.
CAROL G. NICKOLA Carol Nickola is a native of North Carolina. She received
her Bachelors Degree from Brenau University and her MBA from Emory University.
She is the Chief Executive Officer of Decatur Hospital. She is a member of the
Decatur Rotary Club, and serves on the Board of the DeKalb County Heart
Association.
19
<PAGE>
LYNN PASQUALETTI Lynn Pasqualetti is a native of Missoula, Montana, and
relocated to the Decatur area in 1985. She holds a Certification in Tax from
the American Institute of Tax Studies. Ms. Pasqualetti is an Enrolled Agent,
enrolled to practice before the Internal Revenue Service. She is President and
co-owner of HLM Services, Inc., a full service public accounting firm located
in downtown Decatur. She is a member of the Decatur Business Association,
DeKalb Chamber of Commerce, National Association of Public Accountants,
National Society of Tax Professionals, and the National Directory of Who's Who
in Executives and Professionals Journal. Ms. Pasqualetti's volunteer
experiences include board member of National Federation of Career Women;
Program Director of Fourth Tuesday, a professional women's association;
Accountant for the DeKalb Council of the Arts, Inc.; United Way campaign area
representative; Advisor-Atlanta City Council, Domestic Partnership Issue; and
PTA Executive Board Member, Westchester School in Decatur.
ROGER K. QUILLEN Roger K. Quillen is an attorney whose practice is limited
to representing management in all phases of employment-related matters. Mr.
Quillen is admitted to the bars of the United States Courts of Appeals for the
seven different circuits in the United States where he has argued employment-
related cases. He is also admitted to the United States Supreme Court. Mr.
Quillen holds Bachelor and Master's degrees from Ohio State University and a
Juris Doctor Degree from Ohio State's College of Law. He lives in Decatur and
is a member of Decatur First United Methodist Church.
JUDY B. TURNER Judy Turner will be the President & CEO of the Bank and the
Company. She is a native of Decatur, Georgia, and her banking career started
in 1965 with C & S National Bank. While at C & S for 28 years she held various
administrative and retail positions culminating in being manager of three
offices. From 1993 until March 1995, she was manager of Bank South's Decatur
Office, one of Bank South's largest commercial offices with a staff of 19
persons. She managed a loan portfolio of $10 million and deposits of $79
million. In March 1995, Ms. Turner was promoted to Regional Sales and Service
Manager. Her responsibilities in this position included supervising and
monitoring the quality of customer service in 20 branches, and leading a
business development effort that produced $12 million in new business for the
bank in 6 months.
Ms. Turner graduated from Graduate School of Banking of the South, Louisiana
State University. She earned the "Certified Commercial Lender" recognition
while at C & S and holds two certificates from the American Institute of
Banking. She later became a Certified Trainer for C & S National Bank and the
American Institute of Banking.
In areas of community service, Ms. Turner is serving on the Policy Advisory
Board of The Atlanta Project, is a director of Decatur Hospital, a director of
the DeKalb Chamber of Commerce and was honored as Rotarian of the Year (1994-
1995) by the Decatur Rotary. She is a member of the Decatur Business
Association and has held the positions of Director, President and Historian
with this organization. She is a Director and has held the position of
Treasurer with the South Decatur Community Development Corporation. Ms. Turner
is a graduate of Leadership DeKalb and The Regional Leadership Institute.
CASH COMPENSATION
The Company entered into an employment agreement with Judy Turner regarding
Ms. Turner's employment as President and Chief Executive Officer of the
Company (the "Employment Agreement"). Under the terms of the Employment
Agreement, Ms. Turner will receive a starting salary of $6,500 per month until
the Company satisfies the conditions for releasing offering funds from the
Escrow Account. After the Company breaks escrow, Ms. Turner will begin
receiving a salary of $8,000 per month. The Employment Agreement provides that
at the end of each year of operation, Ms. Turner will be entitled to receive a
cash bonus in the amount of 5% of the Company's audited consolidated pretax
net income, provided that certain performance criteria are satisfied.
Additionally, the Employment Agreement provides that after the Company
receives the funds from the Escrow Account, the Company will grant Ms. Turner
a non-qualified ten-year option to purchase a number of shares of Common Stock
equal to 5% of the number of shares of Common Stock sold in this offering. The
option will become vested and exercisable in 20% increments on the
anniversaries of the grant date at a purchase price of
20
<PAGE>
$10.00 per share. Pursuant to the Employment Agreement, the Company will also
lease an automobile to be used by Ms. Turner. In the event Ms. Turner is
terminated by the Company without cause, the Company will be required to meet
its obligations under the Employment Agreement with respect to Ms. Turner's
compensation for a period of twelve months from the date of termination. In
the event of termination of Ms. Turner's employment, other than by the Company
without cause or by Ms. Turner for cause, as defined in the employment
agreement, Ms. Turner will be prohibited from competing with the Bank or
soliciting its customers or employees for a period of twelve months from the
date of termination.
Directors of the Bank will not be compensated for their services as
directors until the Bank earns a cumulative profit.
Officers and directors of the Company will not be separately compensated for
their services to the Company until the Company earns a cumulative profit.
CERTAIN TRANSACTIONS
It is possible that the Company and the Bank will have banking and other
business transactions in the ordinary course of business with directors and
officers of the Company and the Bank, including members of their families or
corporations, partnerships or other organizations in which such directors and
officers have a controlling interest. If such transactions occur, (a) they
will be on substantially the same terms (including price, or interest rate and
collateral) as those prevailing at the time for comparable transactions with
unrelated parties, and any banking transactions will not be expected to
involve more than the normal risk of collectibility or present other
unfavorable features to the Company and the Bank, and (b) they will be on
terms no less favorable than could be obtained from an unaffiliated third
party and will be approved by a majority of the directors, including a
majority of the disinterested directors.
The organizers arranged a line of credit from The Bankers Bank in Atlanta,
Georgia in the aggregate amount of $300,000 to pay organizational and pre-
opening expenses for the Bank and the Company. The line of credit bears
interest at The Bankers Bank's prime rate and has a one-year term. The
organizers have personally guaranteed the line of credit. The line of credit
and interest costs will be repaid from the offering proceeds when the
conditions to the offering have been satisfied. See "USE OF PROCEEDS." It is
anticipated that The Bankers Bank will operate as a correspondent bank for the
Bank.
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
There is currently no market for the shares of Common Stock and it is not
likely that an active trading market will develop for the shares in the
future. There are no present plans for the Company's Common Stock to be traded
on any stock exchange or over-the-counter market. As a result, investors who
need or wish to dispose of all or part of their shares may be unable to do so
except in private, directly negotiated sales.
21
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
COMMON STOCK
General. The Company's Articles of Incorporation authorize the Company to
issue up to 10,000,000 shares of Common Stock, par value $5.00 per share, of
which a minimum of 810,000 shares and a maximum of 1,200,000 shares will be
issued pursuant to this offering.
All shares of Common Stock of the Company will be entitled to share equally
in dividends from funds legally available therefor, when, as and if declared
by the Board of Directors, and upon liquidation or dissolution of the Company,
whether voluntary or involuntary, to share equally in all assets of the
Company available for distribution to the shareholders. It is not anticipated
that the Company will pay any cash dividends on the Common Stock in the near
future. See "DIVIDENDS." Each holder of Common Stock will be entitled to one
vote for each share on all matters submitted to the shareholders. Holders of
Common Stock will not have any preemptive right to acquire authorized but
unissued capital stock of the Company. There is no cumulative voting,
redemption right, sinking fund provision, or right of conversion in existence
with respect to the Common Stock. All shares of the Common Stock issued in
accordance with the terms of this offering as described in this Prospectus
will be fully-paid and non-assessable.
Shares Held by Affiliates. Upon completion of this offering, the Company
will have a minimum of 810,000 shares and a maximum of 1,200,000 shares
outstanding. All of these shares will be freely tradeable without restriction
or registration under the Securities Act of 1933, as amended (the "1933 Act"),
except for shares purchased in this offering by the organizers.
The organizers are "affiliates" of the Company (as that term is defined in
Rule 144 adopted under the 1933 Act) and, as a result, their shares will be
subject to certain resale restrictions.
Rule 144 generally provides that a person (including an affiliate of the
Company) who has beneficially owned shares for at least two years will be
entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the then outstanding shares of the Common
Stock or the average weekly trading volume of the Common Stock during the four
calendar weeks preceding such sale, whichever is greater. While affiliates may
generally sell non-restricted shares under Rule 144 without regard to the
length of their holding period, all shares purchased by the organizers will be
purchased for investment purposes and not with a present intention of
redistribution.
There can be no assurance that a public market for the Common Stock will
exist at any time subsequent this offering. As a result, investors who may
wish or who need to dispose of all or a part of their investment in the Common
Stock may not be able to do so except for private direct negotiations with
third parties, assuming that third parties are willing to purchase the Common
Stock.
PREFERRED STOCK
The Company's Articles of Incorporation also authorize the Board of
Directors to issue up to 2,000,000 shares of preferred stock ("Preferred
Stock"). The Board of Directors has the authority to determine the
designation, powers, preferences and relative rights of the Preferred Stock.
Preferred Stock may have voting rights, subject to applicable law and
determination by the Board of Directors.
22
<PAGE>
ANTITAKEOVER PROVISIONS OF THE COMPANY'S
ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation of the Company contain certain provisions
which would have the effect of impeding an attempt to change or remove
management of the Company or to gain control of the Company in a transaction
not supported by its Board of Directors (the "Protective Provisions"). In
general, one purpose of the Protective Provisions is to assist the Company's
Board of Directors in playing a role in connection with attempts to acquire
control of the Company, so that the Board of Directors of the Company can
further and protect the interests of the Company and its shareholders as
appropriate under the circumstances, including if the Board of Directors
determines that a sale of control is in the best interest of the Company and
its shareholders, by enhancing the Board's ability to maximize the value to be
received by the shareholders upon such sale.
Although the Company's management believes the Protective Provisions are,
therefore, beneficial to shareholders of the Company, the Protective
Provisions also may tend to discourage some takeover bids. As a result,
shareholders of the Company may be deprived of opportunities to sell some or
all of their shares at prices that represent a premium over prevailing market
prices. On the other hand, defeating undesirable acquisition offers can be a
very expensive and time-consuming process. To the extent that the Protective
Provisions discourage undesirable proposals, the Company may be able to avoid
those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of the
Company's Common Stock temporarily, enabling shareholders to sell their shares
at a price higher than that which otherwise would prevail. In addition, the
Protective Provisions may decrease the market price of the Company's Common
Stock by making the stock less attractive to persons who invest in securities
in anticipation of price increases from potential acquisition attempts. The
Protective Provisions also may make it more difficult and time consuming for a
potential acquirer to obtain control of the Company through replacing the
Board of Directors and management. Furthermore, the Protective Provisions may
make it more difficult for shareholders of the Company to replace the Board of
Directors or management, even if a majority of the shareholders believes such
replacement is in the best interests of the Company. As a result, the
Protective Provisions may tend to perpetuate the incumbent Board of Directors
and management.
The Articles of Incorporation of the Company also contain a provision which
eliminates the potential personal liability of directors for monetary damages.
In addition, the Bylaws of the Company contain certain provisions which
provide indemnification for directors of the Company.
The Protective Provisions and the provisions relating to elimination of
liability and indemnification of directors are discussed more fully below.
PREFERRED STOCK
The existence of Preferred Stock may impede the takeover of the Company
without the approval of the Company's Board of Directors by enabling the
Company's Board of Directors to issue shares to persons friendly to current
management, which could render more difficult or discourage any attempt to
gain control of the Company through a proxy contest, tender offer, merger or
otherwise. In addition, the issuance of shares of preferred stock with voting
rights may have an adverse effect on the rights of the holders of Common
Stock, and in certain Circumstances such issuances of Preferred Stock could
decrease the market price of the Common Stock.
STAGGERED TERMS FOR BOARD OF DIRECTORS
Article 8 provides that the Board of Directors of the Company will be
divided into three classes and that the directors in each class will serve for
staggered terms of three years each. This means that, unless the existing
directors were to resign (which might be the case in a friendly acquisition of
the Company), it would take two annual meetings of the Company's shareholders
to replace a majority of its directors.
Under Georgia law, directors are elected annually for a term of one year
unless the Articles of Incorporation provide otherwise.
23
<PAGE>
CHANGE IN NUMBER OF DIRECTORS
Article 10 of the Articles of Incorporation of the Company provides that any
change in the number of directors of the Company, as set forth in its Bylaws,
would have to be made by the affirmative vote of 2/3 of the entire Board of
Directors or by the affirmative vote of the holders of at least 2/3 of the
outstanding shares of Common Stock.
Under Georgia law, the number of directors may be increased or decreased
from time to time by amendment to the Bylaws, unless the Articles of
Incorporation provide otherwise or unless the number of directors is otherwise
fixed by the shareholders.
REMOVAL OF DIRECTORS
Article 9 of the Articles of Incorporation of the Company provides that
directors of the Company may be removed during their terms by the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock.
"Cause" for this purpose is defined as final conviction of a felony, request
or demand for removal by any bank regulatory authority having jurisdiction
over the Company, or determination by at least 2/3 of the incumbent directors
of the Company that the conduct of the director to be removed has been
inimical to the best interests of the Company. Article 9 of the Articles of
Incorporation of the Company provides that directors of the Company may be
removed during their terms without cause by the affirmative vote of the
holders of 2/3 of the outstanding shares of Common Stock.
Under Georgia law, any or all of the directors of a corporation may be
removed with or without cause by the affirmative vote of a majority of the
shares represented at a meeting at which a quorum is represented and entitled
to vote thereon, unless the Articles of Incorporation provide otherwise.
SPECIAL SHAREHOLDERS' MEETINGS
Article 12 allows only the President, the Chairman of the Board of Directors
or a majority of the Board of Directors to call a special meeting of the
shareholders. Under Georgia law, special meetings of shareholders may be
called by the Board of Directors or persons authorized to call such meetings
by the Articles of Incorporation or Bylaws of the corporation.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS
Under Article 13 of the Articles of Incorporation of the Company, with
certain exceptions, any merger or consolidation involving the Company or any
sale or other disposition of all or substantially all of its assets will
require the affirmative vote of the holders of at least 2/3 of the outstanding
shares of Common Stock. However, if the Board of Directors of the Company has
approved the particular transaction by the affirmative vote of 2/3 of the
entire Board, then the applicable provisions of Georgia law would govern and
shareholder approval of the transaction would require the affirmative vote of
the holders of only a majority of the outstanding shares of Common Stock
entitled to vote thereon.
The primary purpose of this Article is to discourage any party from
attempting to acquire control of the Company through the acquisition of a
substantial number of shares of Common Stock followed by a forced merger or
sale of assets without negotiation with management. Such a merger or sale
might not be in the best interests of the Company or its shareholders.
The foregoing provision could enable a minority of the Company shareholders
to prevent a transaction favored by the majority of the shareholders. Also, in
some, circumstances, the directors could cause a 2/3 vote to be required to
approve the transaction by withholding their consent to such a transaction,
thereby enhancing their positions with the Company and the Bank. However, of
the eleven persons who are directors of the Company, only one will be
affiliated with the Company and the Bank in a full-time management position.
EVALUATION OF AN ACQUISITION PROPOSAL
Article 14 of the Company's Articles of Incorporation provides that the
response of the Company to any acquisition proposal made by another party will
be based on the Board's evaluation of the best interests of the
24
<PAGE>
Company and its shareholders. As used herein, the term "acquisition proposal"
refers to any offer of another party (a) to make a tender offer or exchange
offer for any equity security of the Company, (b) to merge or consolidate the
Company with another corporation, or (c) to purchase or otherwise acquire all
or substantially all of the properties and assets owned by the Company.
Article 14 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (a) the expected social and economic
effects of the transaction on the employees, customers and other constituents
(e.g., suppliers of goods and services) of the Company and the Bank, (b) the
expected social and economic effects on the communities within which the
Company and the Bank operate, and (c) the consideration being offered by the
other corporation in relation (i) to the then current value of the Company as
determined by a freely negotiated transaction and (ii) to the Board of
Directors' then estimate of the Company's future value as an independent
entity. The enumerated factors are not exclusive, and the Board may consider
other relevant factors.
This Article has been included in the Company's Articles of Incorporation
because the Bank is charged with providing support to and being involved with
the communities it serves, and the Board believes its obligations in
evaluating an acquisition proposal extend beyond evaluating merely the
consideration being offered in relation to the then market or book value of
the Common Stock. No provisions of Georgia law specifically enumerate the
factors a corporation's board of directors should consider in the event the
corporation is presented with an acquisition proposal.
While the value of the consideration offered to shareholders is the main
factor when weighing the benefits of an acquisition proposal, the Board
believes it appropriate also to consider all other relevant factors. For
example, this Article directs the Board to evaluate the consideration being
offered in relation to the then current value of the Company determined in a
freely negotiated transaction and in relation to the Board's then estimate of
the future value of the Company as an independent concern. A takeover bid
often places the target corporation virtually in the position of making a
forced sale, sometimes when the market price of its stock may be depressed.
The Board believes that frequently the consideration offered in such a
situation, even though it may be in excess of the then market value (i.e., the
value at which shares are then currently trading), it is less than that which
could be obtained in a freely negotiated transaction. In a freely negotiated
transaction, management would have the opportunity to seek a suitable partner
at a time of its choosing and to negotiate for the most favorable price and
terms which reflect not only the current value, but also the future value of
the Company.
One effect of this Article may be to discourage a tender offer in advance.
Often an offeror consults the Board of a target corporation prior to or after
commencing a tender offer in an attempt to prevent a contest from developing.
In the opinion of the Board, this provision will strengthen its position in
dealing with any potential offeror which might attempt to acquire the Company
through a hostile tender offer. Another effect of this Article may be to
dissuade shareholders who might be displeased with the Board's response to an
acquisition proposal from engaging the Company in costly litigation. This
provision, however, does not affect the right of a shareholder displeased with
the Board's response to an acquisition proposal to institute litigation
against the Company and to allege that the Board breached an obligation to
shareholders by not limiting its evaluation of an acquisition proposal to the
value of the consideration being offered in relation to the then market or
book value of the Common Stock.
Article 14 would not make an acquisition proposal regarded by the Board as
being in the best interests of the Company more difficult to accomplish. It
would, however, permit the Board to determine that an acquisition proposal was
not in the best interests of the Company (and thus to oppose it) on the basis
of the various factors deemed relevant. In some cases, such opposition by the
Board might have the effect of maintaining the positions of incumbent
management.
AMENDMENT OF PROVISIONS
Any amendment of Articles 8, 9, 10, 11, 12, 13 and 14 of the Company's
Articles of Incorporation requires the affirmative vote of the holders of at
least 2/3 of the outstanding shares of Common Stock, unless 2/3 of the entire
Board of Directors approves the amendment. If 2/3 of the Board approves the
amendment, the applicable provisions of Georgia law would govern, and the
approval of only a majority of the outstanding shares of Common Stock would be
required.
25
<PAGE>
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS
INDEMNIFICATION
The Bylaws of the Company contain certain indemnification provisions which
provide that directors, officers, employees or agents of the Company will be
indemnified against expenses actually and reasonably incurred by them if they
are successful on the merits of a claim or proceeding.
When a case or dispute is not ultimately determined on its merits (i.e., it
is settled), the indemnification provisions provide that the Company will
indemnify directors when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the director acted in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, if the
director had no reasonable cause to believe his or her conduct was unlawful.
Whether the applicable standard of conduct has been met is determined by the
Board of Directors, the shareholders or independent legal counsel in each
specific case.
The Bylaws of the Company also provide that the indemnification rights set
forth therein are not exclusive of other indemnification rights to which a
director may be entitled under any bylaw, resolution or agreement, either
specifically or in general terms approved by the affirmative vote of the
holders of a majority of the shares entitled to vote thereon. The Company can
also provide for greater indemnification than that set forth in the Bylaws if
it chooses to do so, subject to approval by the Company's shareholders. The
Company may not, however, indemnify a director for liability arising out of
circumstances which constitute exceptions to limitation of a director's
liability for monetary damages. See "CERTAIN PROVISIONS OF THE COMPANY'S
ARTICLES AND BYLAWS--Limitation of Liability."
The indemnification provisions of the Bylaws specifically provide that the
Company may purchase and maintain insurance on behalf of any director against
any liability asserted against such person and incurred by him or her in any
such capacity, whether or not the Company would have had the power to
indemnify against such liability.
The Company is not aware of any pending or threatened action, suit or
proceeding involving any of its directors or officers for which
indemnification from the Company may be sought.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
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 Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
LIMITATION OF LIABILITY
Article 11 of the Company's Articles of Incorporation, subject to certain
exceptions, eliminates the potential personal liability of a director for
monetary damages to the Company and to the shareholders of the Company for
breach of a duty as a director. There is no elimination of liability for (a) a
breach of duty involving appropriation of a business opportunity of the
Company, (b) an act or omission not in good faith or involving intentional
misconduct or a knowing violation of law, (c) a transaction from which the
director derives an improper material tangible personal benefit, or (d) as to
any payment of a dividend or approval of a stock repurchase that is illegal
under the Georgia Business Corporation Code. Article 11 does not eliminate or
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving monetary damages.
26
<PAGE>
Article 11 was adopted by the Company pursuant to the Georgia Business
Corporation Code which allows Georgia corporations, with the approval of their
shareholders, to include in their Articles of Incorporation a provision
eliminating or limiting the liability of directors, except in the
circumstances described above. Article 11 was included in the Company's
Articles of Incorporation to encourage qualified individuals to serve and
remain as directors of the Company. While the Company has not experienced any
problems in locating directors, it could experience difficulty in the future
as the Company's business activities increase and diversify. Article 11 was
also included to enhance the Company's ability to secure liability insurance
for its directors at a reasonable cost. The Company intends to obtain
liability insurance covering actions taken by its directors in their
capacities as directors. The Board of Directors believes that Article 11 will
enable the Company to secure such insurance on terms more favorable than if
such a provision were not included in the Articles of Incorporation.
SUPERVISION AND REGULATION
Bank holding companies and banks are extensively regulated under both
federal and state law. The following is a brief summary of certain statutes,
rules and regulations affecting the Company and the Bank. This summary is
qualified in its entirety by reference to the particular statutory and
regulatory provision referred to below and is not intended to be an exhaustive
description of the statutes or regulations applicable to the business of the
Company and the Bank. Supervision, regulation and examination of the Company
and the Bank by the bank regulatory agencies are intended primarily for the
protection of depositors rather than shareholders of the Company.
BANK HOLDING COMPANY REGULATION
The Company will be a registered holding company under the Bank Holding
Company Act of 1956 (the "BHC Act") and the Georgia Bank Holding Company Act
(the "Georgia BHC Act") and will be regulated under such acts by the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and by the
Department of Banking, respectively.
As a bank holding company, the Company is required to file annual reports
with the Federal Reserve and the Department of Banking and such additional
information as the applicable regulator may require pursuant to the BHC Act
and the Georgia BHC Act. The Federal Reserve and the Department of Banking may
also conduct examinations of the Company to determine whether it is in
compliance with both BHC Acts and the regulations promulgated thereunder.
The BHC Act also requires every bank holding company to obtain prior
approval from the Federal Reserve before acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any bank which is
not already majority owned or controlled by that bank holding company.
Acquisition of any additional banks would also require prior approval from the
Department of Banking.
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") which
amends federal law to permit bank holding companies to acquire existing banks
in any state effective September 29, 1995, and any interstate bank holding
company is permitted to merge its various bank subsidiaries into a single bank
with interstate branches effective June 1, 1997. States have the authority to
authorize interstate branching prior to June 1, 1997, or alternatively, to opt
out of interstate branching prior to that date.
In addition to having the right to acquire ownership or control of other
banks, a bank holding company is authorized to acquire ownership or control of
nonbanking companies, provided the activities of such companies are so closely
related to banking or managing or controlling banks that the Federal Reserve
considers such activities to be proper to the operation and control of banks.
Regulation Y, promulgated by the Federal Reserve, sets forth those activities
which are regarded as closely related to banking or managing or controlling
banks and, thus, are permissible activities for bank holding companies,
subject to approval by the Federal Reserve in individual cases.
27
<PAGE>
Federal Reserve policy requires a bank holding company to act as a source of
financial strength and to take measures to preserve and protect bank
subsidiaries in situations where additional investments in a troubled bank may
not be warranted. Under these provisions, a bank holding company may be
required to loan money to its subsidiaries in the form of capital notes or
other instruments which qualify for capital under regulatory rules. Any loans
by the holding company to such subsidiary banks are likely to be unsecured and
subordinated to such bank's depositors and perhaps to its other creditors.
BANK REGULATION
The Company will initially have one subsidiary bank. The Bank will be a
state bank chartered under the laws of the State of Georgia and will be
subject to examination by the Department of Banking. The Department of Banking
regulates or monitors all areas of a bank's operations and activities,
including reserves, loans, mergers, issuance of securities, payment of
dividends and establishment of branches.
The Bank will also be insured and regulated by the Federal Deposit Insurance
Corporation (the "FDIC"). The major functions of the FDIC with respect to
insured banks include paying depositors to the extent provided by law in the
event an insured bank is closed without adequately providing for payment of
the claims of depositors, acting as a receiver of state banks placed in
receivership when so appointed by state authorities, and preventing the
continuance or development of unsound and unsafe banking practices. In
addition, the FDIC is authorized to examine insured state banks which are not
members of the Federal Reserve to determine the condition of such banks for
insurance purposes. The FDIC also approves conversions, mergers,
consolidations and assumption of deposit liability transactions between
insured banks and noninsured banks or institutions to prevent capital or
surplus diminution in such transactions where the resulting, continued or
assuming bank is an insured non-member state bank.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the BHC Act on any extension of credit to the bank
holding company or any of its subsidiaries, on investment in the stock or
other securities of the bank holding company or its subsidiaries, and on the
taking of such stock or securities as collateral for loans to any borrower. In
addition, a bank holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with any extension of
credit or provision of any property or services.
CAPITAL REQUIREMENTS
Regulatory agencies measure capital adequacy with a framework that makes
capital requirements sensitive to the risk profile of the individual banking
institution. The guidelines define capital as either Tier 1 capital (primarily
shareholders equity) or Tier 2 capital (certain debt instruments and a portion
of the reserve for loan losses). There are two measures of capital adequacy
for bank holding companies and their subsidiary banks: the Tier 1 leverage
ratio and the risk-based capital requirements. Bank holding companies and
their subsidiary banks must maintain a minimum Tier 1 leverage ratio of 4%. In
addition, Tier 1 capital must equal 4% of risk-weighted assets, and total
capital (Tier 1 plus Tier 2) must equal 8% of risk-weighted assets. These are
minimum requirements, however, and institutions experiencing internal growth
(which will initially be the case for the Bank) or making acquisitions, as
well as institutions with supervisory or operational weaknesses, will be
expected to maintain capital positions well above these minimum levels.
The federal banking agencies have proposed amending the capital adequacy
standards to provide for the consideration of interest rate risk in the
overall determination of a bank's capital ratio and to require banks with
greater interest rate risk to maintain adequate capital for the risk. It is
uncertain what effect these regulations, when implemented, would have on the
Company and the Bank.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the "1991
Act") imposes a regulatory matrix which requires the federal banking agencies
to take prompt corrective action to deal with depository institutions that
fail to meet their minimum capital requirements or are otherwise in a troubled
28
<PAGE>
condition. The prompt corrective action provisions require undercapitalized
institutions to become subject to an increasingly stringent array of
restrictions, requirements and prohibitions, as their capital levels
deteriorate and supervisory problems mount. Should these corrective measures
prove unsuccessful in recapitalizing the institution and correcting its
problems, the 1991 Act mandates that the institution be placed in
receivership.
Pursuant to regulations promulgated under the 1991 Act, the corrective
actions that the banking agencies either must or may take are tied primarily
to an institution's capital levels. In accordance with the framework adopted
by the 1991 Act, the banking agencies have developed a classification system,
pursuant to which all banks and thrifts are placed into one of five
categories: well-capitalized institutions, adequately capitalized
institutions, undercapitalized institutions, significantly undercapitalized
institutions and critically undercapitalized institutions. The capital
thresholds established for each of the categories are as follows:
<TABLE>
<CAPTION>
TOTAL RISK- TIER 1 RISK-
CAPITAL CATEGORY TIER 1 CAPITAL BASED CAPITAL BASED CAPITAL OTHER
---------------- --------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Well Capitalized ....... 5% or more 10% or more 6% or more Not subject to a
capital directive
Adequately Capitalized 4% or more 8% or more 4% or more --
.......................
Undercapitalized ....... less than 4% less than 8% less than 4% --
Significantly less than 3% less than 6% less than 3% --
Undercapitalized ......
Critically 2% or less -- -- --
Undercapitalized ...... tangible equity
</TABLE>
The Department of Banking will require the Bank to maintain a ratio (the
"primary capital ratio") of total capital (which is essentially Tier 1 capital
plus the allowance for loan losses) to total assets (defined as balance sheet
assets plus the allowance for loan losses) of at least 6%. In addition, the
Bank will be required to maintain a primary capital ratio of 8% during its
first three years of operation.
The capital guidelines can affect the Company and the Bank in several ways.
After completion of this offering, the Company and the Bank will both have
capital ratios which are significantly greater than those required for "well
capitalized" institutions. However, rapid growth, poor loan portfolio
performance, poor earnings performance, or a combination of these factors,
could change the capital position of the Company and the Bank, making an
additional capital infusion necessary.
CRA AND FAIR LENDING
On April 19, 1995, the federal bank regulatory agencies adopted revisions to
the regulations promulgated pursuant to the Community Reinvestment Act (the
"CRA"), which are intended to set distinct assessment standards for financial
institutions. The revised regulation contains three evaluation tests: (a) a
lending test which will compare the institution's market share of loans in
low- and moderate-income areas to its market share of loans in its entire
service area and the percentage of a bank's outstanding loans to low- and
moderate-income areas or individuals, (b) a services test which will evaluate
the provision of services that promote the availability of credit to low- and
moderate-income areas, and (c) an investment test, which will evaluate an
institution's record of investments in organizations designed to foster
community development, small- and minority-owned businesses and affordable
housing lending, including state and local government housing or revenue
bonds. The regulation is designed to reduce the paperwork requirements of the
current regulations and provide regulators, institutions and community groups
with a more objective and predictable manner with which to evaluate the CRA
performance of financial institutions. The rule became effective on January 1,
1996 when evaluation under streamlined procedures began for institutions with
assets of less than $250 million that are owned by a holding company with
total assets of less than $1 billion.
Congress and various federal agencies (including, in addition to the bank
regulatory agencies, the Department of Housing and Urban Development, the
Federal Trade Commission and the Department of Justice) (collectively the
"Federal Agencies") responsible for implementing the nation's fair lending
laws have been
29
<PAGE>
increasingly concerned that prospective home buyers and other borrowers are
experiencing discrimination in their efforts to obtain loans. In recent years,
the Department of Justice has filed suit against financial institutions which
it determined had discriminated, seeking fines and restitution for borrowers
who allegedly suffered from discriminatory practices. Most, if not all, of
these suits have been settled (some for substantial sums) without a full
adjudication on the merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify what
constitutes lending discrimination and to specify the factors the agencies
will consider in determining if lending discrimination exists, announced a
joint policy statement detailing specific discriminatory practices prohibited
under the Equal Credit Opportunity Act and the Fair Housing Act. In the policy
statement, three methods of proving lending discrimination were identified:
(a) overt evidence of discrimination, when a lender blatantly discriminates on
a prohibited basis, (b) evidence of disparate treatment, when a lender treats
applicants differently based on a prohibited factor even where there is no
showing that the treatment was motivated by prejudice or a conscious intention
to discriminate against a person, and (c) evidence of disparate impact, when a
lender applies a practice uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral on their face and
are applied equally, unless the practice can be justified on the basis of
business necessity.
FDIC INSURANCE ASSESSMENTS
The Bank will be subject to FDIC deposit insurance assessments for the Bank
Insurance Fund ("BIF"). The FDIC has implemented a risk-based assessment
system whereby banks are assessed on a sliding scale depending on their
placement in nine separate supervisory categories. Recent legislation provides
that BIF insured institutions, such as the Bank, will share the Financial
Corporation ("FICO") bond service obligation. Previously, only Savings
Association Insurance Fund ("SAIF") insured institutions were obligated to
contribute to the FICO bond service. The BIF deposit insurance premium will be
less than $.02 per $100 of BIF insured deposits for the highest-rated
institutions.
FUTURE REQUIREMENTS
Statutes and regulations are regularly proposed which contain wide-ranging
proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. It cannot be predicted
whether or what form any proposed statute or regulation will be adopted or the
extent to which the business of the Company and the Bank may be affected by
such statute or regulation.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Powell, Goldstein, Frazer & Murphy, Atlanta, Georgia.
EXPERTS
The financial statements of the Company at September 30, 1996, and for the
period from August 2, 1996 (inception) until September 30, 1996, set forth
herein have been so included in reliance on the report of Porter Keadle Moore,
LLP, independent certified public accountants, given on the authority of that
firm as experts in accounting and auditing.
30
<PAGE>
[ART]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Decatur First Bank Group, Inc.
We have audited the accompanying balance sheet of Decatur First Bank Group,
Inc. (a development stage corporation) as of September 30, 1996, and the
related statements of operations, changes in stockholder's equity and cash
flows for the period from August 2, 1996 (inception) to September 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 balance sheet is 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 Decatur First Bank Group,
Inc. as of September 30, 1996 and the results of its operations and its cash
flows from August 2, 1996 (inception) to September 30, 1996 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Decatur First Bank Group, Inc. will continue as a going concern. As discussed
in note 1 to the financial statements, the Company is in the organization
stage and has not commenced operations. Also, as discussed in note 3, the
Company's future operations are dependent on obtaining capital through an
initial stock offering and obtaining the necessary final regulatory approvals.
These factors and the expense associated with development of a new banking
institution raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are described
in note 3. The financial statements do not include any adjustments relating to
the recoverability of reported asset amounts or the amount of liabilities that
might result from the outcome of this uncertainty.
Porter Keadle Moore, LLP
Atlanta, Georgia
November 22, 1996
Certified Public Accountants
- -------------------------------------------------------------------------------
Suite 1800 . 235 Peachtree Street NE . Atlanta, Georgia 30303 . Phone 404-588-
4200 . Fax 404-588-4222
F-1
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
ASSETS
Cash.................................................................. $10,751
Organization costs.................................................... 57,808
Deferred offering expenses............................................ 3,000
Other assets.......................................................... 5,511
-------
$77,070
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable and accrued expenses................................. $15,458
Accounts payable--organizers.......................................... 55,000
Note payable--line of credit.......................................... 50,000
-------
Currrent liabilities.............................................. 120,458
-------
Stockholder's equity (notes 2 and 5):
Preferred stock, no par value; 2,000,000 shares authorized; no
shares issued and outstanding...................................... --
Common stock, par value $5 per share; 10,000,000 shares authorized;
1 share issued and outstanding..................................... 5
Additional paid-in capital.......................................... 5
Deficit accumulated during the development stage.................... (43,398)
-------
Total stockholders equity......................................... (43,388)
-------
$77,070
=======
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM AUGUST 2, 1996 (INCEPTION) TO SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Expenses:
Salaries and employee benefits....................................... $32,364
Interest............................................................. 240
Other operating...................................................... 10,794
-------
Net loss........................................................... $43,398
=======
Pro Forma net loss per share....................................... $ .05
=======
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM AUGUST 2, 1996 (INCEPTION) TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
PREFERRED COMMON PAID-IN DEVELOPMENT
STOCK STOCK CAPITAL STAGE TOTAL
--------- ------ ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
Proceeds from the sale of
organization shares......... $ -- 5 5 -- 10
Net loss..................... -- -- -- (43,398) (43,398)
----- --- --- ------- -------
Balance, September 30, 1996.. $ -- 5 5 (43,398) (43,388)
===== === === ======= =======
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM AUGUST 2, 1996 (INCEPTION) TO SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss........................................................... $(43,398)
Adjustments to reconcile net loss to net cash used in operating
activities:
Increase in other assets......................................... (5,511)
Increase in accounts payable and accrued expenses................ 15,458
--------
Net cash used in operating activities.......................... (33,451)
--------
Cash flows from investing activities:
Organization costs................................................. (57,808)
Payments for stock offering expenses............................... (3,000)
--------
Net cash used in investing activities.......................... (60,808)
--------
Cash flows from financing activities:
Proceeds from accounts payable--organizers ........................ 55,000
Proceeds from note payable......................................... 50,000
Proceeds from the sale of organization share....................... 10
--------
Net cash provided by financing activities...................... 105,010
--------
Net increase in cash and cash equivalents............................ 10,751
Cash and cash equivalents at beginning of period..................... --
--------
Cash and cash equivalents at end of period........................... $ 10,751
========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Decatur First Bank Group, Inc. (the Company) was incorporated for the
purpose of becoming a bank holding company. The Company intends to acquire
100% of the outstanding common stock of Decatur First Bank (the Bank), which
will operate in the Decatur, Georgia area. The organizers of the Bank filed a
joint application to charter the Bank with the Department of Banking and
Finance and the Federal Deposit Insurance Corporation. Provided that the
application is timely approved and necessary capital is raised, it is expected
that operations will commence in the second quarter of 1997. The Company
intends to file an application to become a bank holding company with the
Federal Reserve Bank of Atlanta.
Operations through September 30, 1996 relate primarily to expenditures by
the organizers for incorporating and organizing the Company. All expenditures
by the organizers are considered expenditures of the Company.
The Company plans to raise between $8,100,000 and $12,000,000 through an
offering of its common stock at $10 per share, of which $8,000,000 will be
used to capitalize the Bank. The organizers and directors expect to subscribe
for a minimum of approximately $1,647,900 of the Company's stock.
Upon chartering of the Bank and approval of the Company as a bank holding
company, the Company and its Bank subsidiary will assume certain obligations
from the organizers, including certain organization costs and offering
expenses. Upon the successful completion of the sale of common stock, the
organizers will be reimbursed from the proceeds from the offering; if the
offering is not successful, all of these expenses will be absorbed by the
organizers and will not become an obligation of the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Flows
For purposes of reporting cash flows, cash consists of amounts due from
banks.
Organization Costs
Costs incurred for the organization of the Company and the Bank (consisting
principally of legal, accounting, consulting and incorporation fees) are being
capitalized and will be amortized over five years. Amortization of the
organization costs will begin when banking operations commence.
Deferred Offering Expenses
Costs incurred in connection with the stock offering, consisting of direct,
incremental costs of the offering, are being deferred and will be offset
against the proceeds of the stock sale as a charge to additional paid
in capital.
Pre-Opening expenses
Costs incurred for overhead and other operating expenses are included in the
current period's operating results.
Pro Forma Net Loss Per Common Share
Pro forma net loss per common share is calculated by dividing net loss by
the minimum number of common shares which would be outstanding should the
offering be successful, as prescribed in Staff Accounting Bulletin Topic 1:B
F-6
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(3) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $43,398 for the period from August 2,
1996 (inception) to September 30, 1996. At September 30, 1996, liabilities
exceeded assets by $43,388.
At September 30, 1996, the Company is funded by advances from the organizers
and from a line of credit from a bank. Management believes that the current
level of expenditures is well within the financial capabilities of the
organizers and adequate to meet existing obligations and fund current
operations, but obtaining final regulatory approvals and commencing banking
operations is dependent on successfully completing the stock offering.
To provide permanent funding for its operation, the Company is currently
offering a minimum of 810,000 and a maximum of 1,200,000 shares of its common
stock, $5 par value, at $10 per share in an initial public offering. Costs
related to the organization and registration of the Bank's common stock will
be paid from the gross proceeds of the offering. Shares issued which are
outstanding at September 30, 1996 will be redeemed concurrently with the
consummation of the offering. Should subscriptions for the minimum offering
not be obtained, amounts paid by the subscribers with their subscriptions will
be returned and the offer withdrawn.
(4) LINE OF CREDIT
Organization, offering and pre-opening costs incurred prior to the opening
for business will be funded under a $300,000 line of credit. The terms of the
existing line of credit, which is guaranteed by the organizers, include a
maturity of August 27, 1997 and interest calculated at the prime interest
rate.
(5) PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or more
series as established by resolution of the Board of Directors of the Company.
Each resolution shall include the number of shares issued, preferences,
special rights and limitations as determined by the Board.
(6) COMMITMENTS
On September 9, 1996 the Company entered into an operating lease agreement
for space which will serve as the main office of the Company and the Bank.
Through May of 1997, the Company has entered into a sublease agreement with
the current lessor at a rate of $3,200 per month, but from June 1997 through
June 2002 the Company has committed to a monthly rental of $4,500, contingent
upon the receipt of all required regulatory approvals. The lease terms also
include an option to purchase at a price of $500,000. The lease may be
canceled by the Company prior to March 1, 1997 should the Company and the Bank
not receive the required regulatory approvals.
In regards to this lease, certain expenditures for modifications to the
exisiting structure are anticipated to prepare the building to serve as the
main office of the Company and the Bank. It is management's estimate that
these costs should approximate $400,000.
The Company entered into an employment agreement with its President and
Chief Executive Officer, providing for an initial term of five years
commencing June 1, 1996, and an automatic annual extension subsequent to that
five year period. The agreement provides for a base salary, an incentive bonus
based on five percent of the Company's pre-tax earnings, and stock options
which vest equally over five years at $10 per share equal to five percent of
the number of shares sold in the initial public offering. Additionally, the
Company is to maintain a $1,000,000 key man life insurance policy, with
$500,000 payable to the Company and $500,000 payable to the President's
family. The agreement further provides for other perquisites, and subjects the
President to certain non-compete restrictions.
F-7
<PAGE>
DECATUR FIRST BANK GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) INCOME TAXES
At September 30, 1996, the Company had a net operating loss carryforward for
tax purposes of approximately $250, which will expire in 2011, if not
previously utilized. No income tax expense or benefit was recorded for the
period ended September 30, 1996, due to this loss carryforward.
The following summarizes the sources and expected tax consequences of future
taxable deductions which comprise the net deferred taxes at September 30,
1996:
<TABLE>
<S> <C>
Deferred tax assets:
Pre-opening expenses............................................. $ 14,668
Operating loss carryforwards..................................... 87
--------
Total gross deferred tax assets.................................. 14,755
Less valuation allowance......................................... (14,755)
--------
Net deferred taxes............................................... $ --
========
</TABLE>
The future tax consequences of the differences between the financial
reporting and tax basis of the Company's assets and liabilities resulted in a
net deferred tax asset. A valuation allowance was established for the net
deferred tax asset, as the realization of these deferred tax assets is
dependent on future taxable income.
F-8
<PAGE>
EXHIBIT A
SUBSCRIPTION AGREEMENT
Decatur First Bank Group, Inc.
755 Commerce Drive
Suite 516
Decatur, Georgia 30030
Attn: Judy B. Turner
Ladies and Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of Common Stock, par value $5.00 per share (the "Common Stock"), of
Decatur First Bank Group, Inc., a Georgia corporation (the "Company"),
indicated below. The undersigned has executed and delivered this Subscription
Agreement in connection with the Company's offering of Common Stock described
in its Prospectus dated October 18, 1996. (Such Prospectus, including any
amendments and supplements thereto, is herein called the "Prospectus.")
The undersigned intends to purchase the shares of Common Stock subscribed
for herein for the purchase price of $10.00 per share.
The undersigned acknowledges receipt of a copy of the Prospectus. The
undersigned further acknowledges that an investment in the Common Stock
involves significant risks, as set forth under "Risk Factors" in the
Prospectus. The undersigned understands that no federal or state agency has
made any finding or determination regarding the fairness of the offering of
the Common Stock, the accuracy or adequacy of the Prospectus, or any
recommendation or endorsement concerning an investment in the Common Stock.
THE UNDERSIGNED AGREES THAT THIS SUBSCRIPTION IS BINDING ON THE UNDERSIGNED
AND IS IRREVOCABLE BY THE UNDERSIGNED UNTIL THE EXPIRATION DATE DEFINED IN THE
PROSPECTUS. THE UNDERSIGNED ACKNOWLEDGES THAT THIS SUBSCRIPTION AGREEMENT
SHALL NOT CONSTITUTE A VALID AND BINDING OBLIGATION OF THE COMPANY UNTIL
ACCEPTED BY THE COMPANY IN WRITING. THE UNDERSIGNED ACKNOWLEDGES THAT THE
COMPANY HAS THE RIGHT TO REJECT THIS SUBSCRIPTION AGREEMENT, EITHER IN WHOLE
OR IN PART, IN ITS SOLE DISCRETION.
Number of Shares _____________________________________
(minimum 100 shares): Please PRINT or TYPE exact name(s) in
which undersigned desires shares to
Total Subscription Price be registered
(at $10.00 per share): $
(CONTINUED)
A-1
<PAGE>
SUBSTITUTE W-9
Under the penalties of perjury, I certify that: (1) the Social Security
number or Taxpayer Identification Number given below is correct; and (2) I am
not subject to backup withholding. INSTRUCTION: YOU MUST CROSS OUT #2 ABOVE IF
YOU HAVE BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN.
_____________________________________ ___________________________________
Date
Signature(s)*
_____________________________________ ___________________________________
Area Code and Telephone No.
Please indicate form of ownership
_____________________________________ the undersigned desires for the
shares (individual, joint tenants
with right of survivorship,
tenants in common, trust,
corporation, partnership,
custodian, etc.)
Social Security or Federal Taxpayer Identification No.
___________________________________
Street Address
___________________________________
City/State/Zip Code
TO BE COMPLETED BY THE COMPANY
Accepted as of , 199 , as to shares.
DECATUR FIRST BANK GROUP, INC.
By: _________________________________
Signature
___________________________________
Print Name
* When signing as attorney, trustee, administrator, or guardian, please give
your full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. In case of joint tenants,
each joint owner must sign.
A-2
<PAGE>
EXHIBIT B
ACKNOWLEDGMENT OF SUBSCRIPTION
DECATUR FIRST BANK GROUP, INC.
755 COMMERCE DRIVE
SUITE 516
DECATUR, GEORGIA 30030
Dear Subscriber:
Please sign below as indicated to acknowledge receipt of a final prospectus
and to convert your preliminary subscription to a final and binding
subscription. Please enclose a check payable to "The Bankers Bank--Escrow
Account for Decatur First Bank Group, Inc." in the amount of $10.00 multiplied
by the number of shares you intend to subscribe for.
Your stock certificate(s) representing shares of common stock duly
authorized and fully paid will be issued to you as soon as possible after all
subscription funds are released to the Company from the subscription escrow
account, all as described in the Prospectus, dated , 1996. In the event (a)
that the offering is cancelled, or (b) that subscriptions for the minimum
number of 810,000 shares are not obtained, your subscription funds will be
returned to you as described in the Prospectus.
Very Truly Yours,
Decatur First Bank Group, Inc.
By: _________________________________
Judy B. Turner
President
_____________________________________
Date
The undersigned acknowledges the receipt of the final Prospectus of Decatur
First Bank Group, Inc. and converts the Preliminary Subscription Agreement to
a final Subscription Agreement, which will be binding and irrevocable until
the Expiration Date as defined in the Prospectus. The undersigned encloses
$ for the purchase of shares, at the purchase price of $10.00 per
share.
_____________________________________
Signature
_____________________________________
Print Name
_____________________________________
Date
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO REJECT ANY AND ALL
SUBSCRIPTIONS, AND NO SUBSCRIPTION WILL BE EFFECTIVE UNTIL ACCEPTED BY THE
COMPANY.
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND ANY INFORMATION
OR STATEMENT NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY. THE DELIVERY OF THIS PROSPECTUS DOES NOT IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
THE COMPANY HAS UNDERTAKEN TO UPDATE THIS PROSPECTUS TO REFLECT ANY FACTS OR
EVENTS ARISING AFTER THE DATE HEREOF, WHICH INDIVIDUALLY OR IN THE AGGREGATE
REPRESENT A FUNDAMENTAL CHANGE IN THE INFORMATION SET FORTH HEREIN AND TO IN-
CLUDE ANY MATERIAL INFORMATION WITH RESPECT TO THE PLAN OF DISTRIBUTION NOT
PREVIOUSLY DISCLOSED IN THIS PROSPECTUS OR ANY MATERIAL CHANGES TO SUCH INFOR-
MATION.
EACH SUBSCRIBER SHOULD CONSULT HIS OR HER OWN COUNSEL, ACCOUNTANTS AND OTHER
PROFESSIONAL ADVISORS AS TO ALL MATTERS CONCERNING HIS OR HER INVESTMENT IN
SHARES OF THE COMMON STOCK.
THE SHARES OF COMMON STOCK OF THE COMPANY OFFERED HEREBY ARE NOT DEPOSITS IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL IN ANY JURISDICTION OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OF THE COMMON STOCK TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Risk Factors........................................................ 6
The Offering........................................................ 8
Use of Proceeds..................................................... 11
Capitalization...................................................... 13
Dividends........................................................... 13
Business of the Company and the Bank................................ 14
Management.......................................................... 18
Market for Common Stock and Related Shareholder Matters............. 21
Description of Capital Stock of the Company......................... 22
Antitakeover Provisions of the Company's Articles of Incorporation
and Bylaws......................................................... 23
Indemnification and Limitation of Liability of Directors............ 26
Supervision and Regulation.......................................... 27
Legal Matters....................................................... 30
Experts............................................................. 30
Financial Statements................................................ F-1
Subscription Agreement.............................................. Exhibit A
Acknowledgment of Subscription...................................... Exhibit B
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DECATUR FIRST BANK GROUP, INC.
A PROPOSED BANK HOLDING COMPANY
FOR
DECATUR FIRST BANK
(IN ORGANIZATION)
1,200,000
SHARES OF
COMMON STOCK
PROSPECTUS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the pertinent provisions of the laws of Georgia, the
Registrant's Articles of Incorporation provide that the Registrant shall have
the power to indemnify its directors and officers against expenses (including
attorneys' fees) and liabilities arising from actual or threatened actions,
suits or proceedings, whether or not settled, to which they become subject by
reason of having served in such role if such director or officer acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. Advances against expenses shall be made so long as the person
seeking indemnification agrees to refund the advances if it is ultimately
determined that he or she is not entitled to indemnification. A determination
of whether indemnification of a director or officer is proper because he or
she met the applicable standard of conduct shall be made (a) by the Board of
Directors of the Registrant, (b) in certain circumstances, by independent
legal counsel in a written opinion, or (c) by the affirmative vote of a
majority of the shares entitled to vote.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses of the sale of the Registrant's Common Stock, $5.00 par value, are
as follows:
<TABLE>
<S> <C>
Registration Fee.................................................... $ 3,637
Legal Fees and Expenses (Estimate).................................. 10,000
Printing and Engraving Expenses (Estimate).......................... 20,000
Miscellaneous (Estimate)............................................ 2,363
-------
Total............................................................. $36,000
=======
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On August 2, 1996, the Registrant issued to Judy B. Turner, in a private
placement, one share of the Registrant's Common Stock, $5.00 par value per
share, for an aggregate purchase price of $10 in connection with the
organization of the Company. The sale to Ms. Turner was exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) of such
Act because it was a transaction by an issuer which did not involve a public
offering.
II-1
<PAGE>
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Articles of Incorporation, as amended by Articles of Amendment to
Articles of Incorporation*
3.2 Bylaws*
4.1 Instruments Defining Rights of Security Holders. See Articles of
Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.*
5.1 Legal Opinion of Powell, Goldstein, Frazer & Murphy
10.1 Agreement To Lease, dated August 20, 1996, between Daniel B. Pattillo
and Decatur First Bank Group, Inc.*
10.2 Agreement of Sublease, dated September 9, 1996, between Atlanta Gas
Light Company and Decatur First Bank Group, Inc.*
10.3 Escrow Agreement, dated October 17, 1996, between Decatur First Bank
Group, Inc. and The Bankers Bank*
10.4 Employment Agreement, dated as of June 1, 1996 among Decatur First
Bank (In Organization), Decatur First Bank Group, Inc. and Judy B.
Turner*
21.1 Subsidiaries of Decatur First Bank Group, Inc.*
23.1 Consent of Porter Keadle Moore, LLP
23.2 Consent of Powell, Goldstein, Frazer & Murphy (appears in Legal
Opinion at Exhibit 5.1 hereto)
24.1 Power of Attorney (appears on the signature pages to this Registration
Statement on Form SB-2)*
27 Financial Data Schedule*
</TABLE>
- --------
* Included in the Registration Statement on Form SB-2, SEC File No. 333-14355,
filed October 18, 1996.
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a)(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 which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement, and not
withstanding the forgoing, 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 offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b)
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 additional or changed material information in
the plan of distribution.
(2) For the purpose of determining any liability under the Securities Act
of 1933, to treat each post-effective amendment as a new Registration
Statement of the securities offered, and the offering the securities at the
time shall be deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities being registered which remain unsold at the termination of
this offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the provisions set
forth in Item 24, or otherwise, the Registrant has been advised that in the
opinion of the Securities and
II-2
<PAGE>
Exchange 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 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.
II-3
<PAGE>
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS OF FILING ON FORM SB-2 AND AUTHORIZED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, IN THE
CITY OF DECATUR, STATE OF GEORGIA ON DECEMBER 4, 1996.
DECATUR FIRST BANK GROUP, INC.
/s/ Judy B. Turner
By: _________________________________
Print Name: Judy B. Turner
Title: President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
NAME POSITION DATE
---- -------- ----
/s/ John L. Adams, Jr.* Director December 4, 1996
- -------------------------------------
JOHN L. ADAMS, JR.
/s/ Merriell Autrey* Director December 4, 1996
- -------------------------------------
MERRIELL AUTREY
/s/ Mary Bobbie Bailey* Director December 4, 1996
- -------------------------------------
MARY BOBBIE BAILEY
/s/ James A. Baskett* Director December 4, 1996
- -------------------------------------
JAMES A. BASKETT
II-4
<PAGE>
NAME POSITION DATE
---- -------- ----
/s/ William F. Floyd* Director December 4, 1996
- ------------------------------------
WILLIAM F. FLOYD
/s/ John C. Joyner* Director December 4, 1996
- ------------------------------------
JOHN C. JOYNER
/s/ Robert E. Lanier* Director December 4,1996
- ------------------------------------
ROBERT E. LANIER
/s/ Carol G. Nickola* Director December 4, 1996
- ------------------------------------
CAROL G. NICKOLA
/s/ Lynn Pasqualetti* Director December 4, 1996
- ------------------------------------
LYNN PASQUALETTI
/s/ Roger K. Quillen* Director December 4, 1996
- ------------------------------------
ROGER K. QUILLEN
/s/ Judy B. Turner President and Chief December 4, 1996
- ------------------------------------ Executive Officer,
JUDY B. TURNER Director
(Principal
Financial and
Accounting
Officer)
/s/ Judy B. Turner
*By: ___________________________
JUDY B. TURNER, ATTORNEY-IN-FACT
II-5
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE
------- ----------- ----------
<C> <S> <C>
3.1 Articles of Incorporation*...............................
3.2 Bylaws*..................................................
4.1 Instruments Defining Rights of Security Holders. See
Articles of Incorporation at
Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto*....
5.1 Legal Opinion of Powell, Goldstein, Frazer & Murphy......
10.1 Agreement To Lease, dated August 20, 1996 between Daniel
B. Pattillo and Decatur First Bank Group, Inc.*.........
10.2 Agreement To Sublease, dated September 9, 1996, between
Atlanta Gas Light Company and Decatur First Bank Group,
Inc.*...................................................
10.3 Escrow Agreement, dated October 17, 1996, between Decatur
First Bank Group, Inc. and The Bankers Bank*............
10.4 Employment Agreement, dated as of June 1, 1996 among
Decatur First Bank
(In Organization), Decatur First Bank Group, Inc. and
Judy B. Turner*.........................................
21.1 Subsidiaries of Decatur First Bank Group, Inc.*..........
23.1 Consent of Porter Keadle Moore, LLP......................
23.2 Consent of Powell, Goldstein, Frazer & Murphy (appears in
Legal Opinion at Exhibit 5.1 hereto)....................
24.1 Power of Attorney (appears on the signature pages to this
Registration Statement on
Form SB-2)*.............................................
27 Financial Data Schedule*.................................
</TABLE>
- --------
* Included in the Registration Statement on Form SB-2, SEC File No. 333-14355,
filed October 18, 1996.
<PAGE>
EXHIBIT 5.1
LEGAL OPINION OF POWELL, GOLDSTEIN, FRAZER & MURPHY
<PAGE>
POWELL, GOLDSTEIN, FRAZER & MURPHY
191 Peachtree Street, N.E.
Suite 1600
Atlanta, Georgia 30303
December 4, 1996
Decatur First Bank Group, Inc.
755 Commerce Drive
Suite 516
Decatur, Georgia 30330
Ladies and Gentlemen:
We are acting as special counsel to Decatur First Bank Group, Inc., a
Georgia corporation (the "Company"), located in Decatur, Georgia. In such
capacity, we have supervised certain proceedings taken by the Company in
connection with the registration under the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder (collectively, the "Act"), of the offer and sale of a
minimum of 810,000 shares and a maximum of 1,200,000 shares (the "Shares") of
common stock, $5.00 par value, of the Company.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the documents and corporate records relating
to the authorization, issuance and sale of the Shares and have made such other
investigation as we have deemed appropriate and relevant in order to furnish
the opinion set forth below.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal
Opinion Committee of the Corporate and Banking Law Section of the State Bar of
Georgia, which are incorporated in the opinion letter by this reference.
Capitalized terms used in this opinion letter and not otherwise defined herein
shall have the meanings assigned to them in the Interpretive Standards.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as original documents, and
the conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to questions of fact material and relevant
to our opinion, where such facts were not independently verified by us, we have
relied, to the extent we deemed such reliance proper, upon certificates or
representations of officers and representatives of the Company and appropriate
federal, state and local officials.
<PAGE>
Decatur First Bank Group, Inc.
October 17, 1995
Page 2
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and when sold, will be validly issued, fully paid and
nonassessable.
We hereby consent to the reference to our firm under the heading
"Legal Matters" in the Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission by the Company in connection with the offer
and sale of the Shares.
Very truly yours,
/s/ Powell, Goldstein, Frazer & Murphy
POWELL, GOLDSTEIN, FRAZER & MURPHY
<PAGE>
CONSENT OF INDEPENDENT AUDITOR
------------------------------
We have issued our report dated November 22, 1996, accompanying the financial
statements of Decatur First Bank Group, Inc., contained in the Registration
Statement and Prospectus. We consent to the use of the aforementioned report
in the Registration Statement and Prospectus, and to the use of our name as it
appears under the caption "Experts."
/s/ PORTER KEADLE MOORE, LLP
Atlanta, Georgia
December 4, 1996
<PAGE>
EXHIBIT 23.1
CONSENT OF PORTER KEADLE & MOORE
