<PAGE> 1
As filed with the Securities and Exchange Commission on October 7, 1997
Registration No. 333-19081
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GBC BANCORP, INC.
(Name of Small Business Issuer in Its charter)
6712
(Primary Standard Industrial
Classification Code Number)
318 Pike Street, Suite 475
Lawrenceville, Georgia 30045
GEORGIA (770) 995-0000 58-2265327
(State or jurisdiction (Address, and telephone number (I.R.S. Employer
of incorporation of principal executive offices Identification
or organization) Number)
165 Nash Street
Lawrenceville, Georgia 30045
(770) 995-0000
(Address of principal place of business or
intended principal place of business)
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Steven S. Dunlevie, Esq.
Womble Carlyle Sandridge & Rice, PLLC
1275 Peachtree Street, Suite 700
Atlanta, Georgia 30309-3574
(404) 872-7000
(Name, address, and telephone
number of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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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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GBC BANCORP, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER CAPTION IN PROSPECTUS
AND HEADING ---------------------
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<S> <C>
1. Front of the Registration Statement and Outside Front Cover
Page of Prospectus............................................... Cover Page; Outside Front Cover Page 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 Persons.... Management - Proposed Directors and Officers
11. Security Ownership of Certain Beneficial Owners and
Management....................................................... Management - Proposed Directors and Officers
12. Description of Securities........................................ Dividends; Description of Common 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 for
Securities Act Liabilities....................................... Certain Provisions of the Company's Articles
of Incorporation and 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
20. Market for Common Equity and Related Stockholder Matters......... Description of Common Stock of the Company
21. Executive Compensation........................................... Management
22. Financial Statements............................................. Financial Statements of GBC Bancorp, Inc.
23. Changes in and Disagreement With Accountants on
Accounting and Financial Disclosure.............................. Not Applicable
</TABLE>
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GBC BANCORP, INC.
A Proposed Bank Holding Company for
GWINNETT BANKING COMPANY (In Organization)
Up to 1,200,000 Shares of Common Stock
(Par Value $1.00 Per Share)
(Minimum Purchase: 500 Shares)
This Prospectus relates to the offering by GBC Bancorp, Inc., a Georgia
corporation (the "Company") of a minimum of 950,000 shares and a maximum of
1,200,000 shares of its common stock, $1.00 par value per share (the "Common
Stock"), at $10.00 per share (the "Offering"). The Company has been organized to
hold, upon receipt of regulatory approvals, all of the common stock of Gwinnett
Banking Company (In Organization) (the "Bank"), Lawrenceville, Georgia. The
organizers of the Company and the Bank intend to subscribe for an aggregate of
at least 375,761 of the shares of Common Stock sold in the Offering
(approximately 40% of the minimum and 31% 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 950,000
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 950,000 shares of Common Stock, or (b) that the
Company and the Bank do not satisfy, or make a determination that they will not
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 promptly to investors without interest.
See "THE OFFERING - Release From Escrow," page 5.
INVESTMENT IN THESE SECURITIES INVOLVES A SUBSTANTIAL
DEGREE OF RISK. SEE "RISK FACTORS" - Pages 3 to 4.
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.
<TABLE>
<CAPTION>
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Price to Underwriting Discounts Proceeds to
Public(1) and Commissions (2) Company(3)
=================================================================================================================
<S> <C> <C> <C>
Per Share........................ $ 10.00 -0- $ 10.00
- -----------------------------------------------------------------------------------------------------------------
Total Minimum(4)................. $ 9,500,000 -0- $ 9,500,000
- -----------------------------------------------------------------------------------------------------------------
Total Maximum(5)................. $12,000,000 -0- $12,000,000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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(1) The Offering price has been arbitrarily established by the Company. See
"RISK FACTORS - Offering Price Arbitrarily Determined."
(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, organizational and pre-opening operating
expenses of the Company and the Bank. Such expenses are estimated to be
approximately $786,000.
(4) Subscription proceeds will be deposited promptly in an escrow account
with Columbus Bank and Trust Company, Columbus, Georgia, pending
receipt of subscriptions for not less than 950,000 shares and
completion of certain other matters on or before October 13, 1997, the
expiration date of the Minimum Offering. The expiration date of the
Maximum Offering is December 31, 1997. Subscription funds will be
released from escrow (a) upon the receipt of $9,500,000 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. 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 October __, 1997.
<PAGE> 4
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 maintains a Web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. The address of such site is (http://www.sec.gov).
The Company and the organizers have filed 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.
ii
<PAGE> 5
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 21, 1996 primarily to serve as the holding company for a state bank and
trust company. The Company has filed applications with the Federal Reserve Bank
of Atlanta (the "Federal Reserve") and the Georgia Department of Banking and
Finance (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 Company's application with the Department of
Banking was approved on April 15, 1997, and the Company's Federal Reserve
application was approved on May 2, 1997. Such approvals require the Company to
sell at least 950,000 shares of its Common Stock, but do not contain other
material 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
and trust company 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. The Bank's application with the
Department of Banking was approved on February 28, 1997 and the FDIC application
was also approved on February 28, 1997. 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 $9,000,000 in capital from
the Company and upon compliance with certain standard conditions that have been
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 fourth 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 philosophy of the management of the Bank with respect to its
initial operations will be to emphasize prompt and responsive personal service
to the residents of Gwinnett 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 Gwinnett
County 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 165 Nash
Street, Lawrenceville, Georgia 30246. The current principal executive and
administrative offices of the Company and the Bank are located at 318 Pike
Street, Suite 475, Lawrenceville, Georgia 30246, and their telephone number at
that address is (770) 995-0000.
THE OFFERING
<TABLE>
<S> <C>
Securities............................... Common Stock, $1.00 par value, of the Company
Offering Price........................... $10.00 per share
Number of Shares Offered................. Minimum: 950,000
Maximum: 1,200,000
Use of Proceeds ......................... To purchase 100% of the Common Stock of the Bank; the remaining
proceeds will be applied to working capital and used to repay outstanding
amounts under a line of credit from the Gwinnett Banking Company Joint
Venture (the "Joint Venture") borrowed to pay certain organizational
expenses of the Company and certain expenses of this Offering.
</TABLE>
The Bank will use the proceeds of the sale of its common stock to the
Company to repay outstanding amounts under a line of credit from the Gwinnett
Banking Company Joint Venture (the "Joint Venture") borrowed to pay certain
organizational and pre-opening expenses of the Bank, including paying officers'
and employees' salaries; 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."
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<PAGE> 6
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.
REGULATORY APPROVALS REQUIRED
The Company has filed applications with 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 Company's application with the Department of Banking was approved on
April 15, 1997, and the Company's application with the Federal Reserve was
approved on May 2, 1997. Such approvals require the Company to sell at least
950,000 shares of its Common Stock but do not contain other material conditions.
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 and both
such authorities issued their approvals on February 28, 1997. Both approvals are
subject to the condition that at least $9,000,000 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 the FDIC 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).
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 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 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. 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.
COMPETITIVE INDUSTRY
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 Gwinnett 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."
HIGHLY REGULATED INDUSTRY
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.
EFFECT OF MONETARY POLICIES
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."
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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 ("PSA") of Gwinnett 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 "DIVIDENDS." It is the Company's
policy not to pay dividends until the Bank is currently and cumulatively
profitable.
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 a market for the Common Stock 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.
ANTITAKEOVER PROVISIONS IN THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation of the Company contain certain provisions
which would have the effect of impending an attempt to change or remove
management of the Company or to gain control of the Company in a transaction not
supported by the Company's Board of Directors. Although the Company's management
believes that these protective provisions in the Company's Articles of
Incorporation and Bylaws are beneficial to shareholders of the Company, such
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. See "Antitakeover Provisions of the Company's Articles of Incorporation
and Bylaws."
THE OFFERING
TERMS OF THE OFFERING
Minimum/Maximum. The Company is offering a minimum of 950,000 shares
(the "Minimum Offering") and a maximum of 1,200,000 shares (the "Maximum
Offering") of its Common Stock for a price of $10.00 per share, for an aggregate
minimum Offering price of $9,500,000 and an aggregate maximum Offering price of
$12,000,000. The minimum purchase for any investor (together with the investor's
affiliates) is 500 shares of Common Stock ($5,000) unless the Company, in its
sole discretion, accepts a subscription for a lesser number of shares.
Organizer Subscriptions. The organizers of the Company intend to
purchase an aggregate of 375,761 shares of Common Stock sold in the Offering
(approximately 40% of the minimum and approximately 31% of the maximum number
of shares to be sold). No organizer intends to individually purchase more than
9.9% of shares sold in this Offering.
Offering Period and Expiration Date. The Minimum Offering period for
the shares will terminate at 4:00 p.m., Atlanta, Georgia time, on October 13,
1997 (the "Minimum Offering Expiration Date"). The Maximum Offering will
terminate at 4:00 p.m., Atlanta, Georgia time, on December 31, 1997 (the
"Maximum Offering Expiration Date"). The Company may, in its sole discretion,
terminate the offering following the Minimum Offering Expiration Date and prior
to the Maximum Offering Expiration Date if the Company determines that the total
amount of subscriptions will provide adequate capitalization for the Company
after payment of expenses.
Subscription. As indicated below under "How to Subscribe," upon
execution and delivery of a subscription agreement for shares of the Common
Stock, subscribers will be required to deliver to the Company a check in the
amount of $10.00 times the number of shares subscribed for.
4
<PAGE> 8
Escrow. Subscription proceeds will be deposited in an escrow account
with the Escrow Agent for the Company pending completion of the Minimum
Offering. Subscription proceeds held in the escrow account will be invested in a
separate account designated as "GBC Bancorp, Inc. Escrow Account." 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. With regard to the Minimum Offering, the Company
reserves the right, in its sole discretion, to accept or reject any subscription
in whole or in part on or before the Minimum Offering Expiration Date. The
Company will notify all subscribers within five business days after the Minimum
Offering 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, without interest. With regard to the Maximum Offering, the
Company reserves the right, in its sole discretion, to accept or reject any
subscription in whole or in part on or before the Maximum Offering Expiration
Date. The Company will notify those subscribers whose subscriptions are received
after the Minimum Offering Expiration Date and prior to the Maximum Offering
Expiration Date within fifteen business days of receipt of a subscription
whether their subscriptions have been accepted. 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.
Termination. The Company reserves the right to terminate the Offering
at any time after 950,000 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.
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 950,000 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, and (d) 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. The Company will pay any interest earned on
the first $9,000,000 deposited with the Escrow Agent to the Bank. 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 approvals from the Department of Banking and from the
FDIC on February 28, 1997. The Company received the approval of the Department
of Banking on April 15, 1997 and the approval of the Federal Reserve on May 2,
1997. In the opinion of the organizers, the only significant condition to all of
the foregoing approvals will be that a minimum of 950,000 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 Minimum Offering Expiration Date,
then the subscription agreements will be of no further force or effect, and the
Escrow Agent shall return promptly by regular mail, to each subscriber at the
address shown on the subscriber's payment, all collected funds received from
each subscriber, without interest; and the Escrow Agent shall pay over and
deliver to the Company all interest earned on the collected funds received from
each subscriber to be used solely by the Company to pay organizational expenses
of the Company and the Bank.
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," "ESTIMATED
EXPENDITURES" and "PRO FORMA 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. Additionally, based on
conversations with applicable regulatory authorities, there are no indications
that the Company and the Bank will have any difficulty in satisfying the
applicable regulatory conditions.
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.
5
<PAGE> 9
It is expected that the organizers will purchase a total of 375,761 of
the shares of Common Stock offered hereby. Any shares purchased by the
organizers in excess of their original commitment will be subject to regulatory
approval.
HOW TO SUBSCRIBE
Each prospective investor who (together with the investor's affiliates)
desires to purchase 500 or more shares must:
1. Complete, date and execute the Subscription Agreement, which
is attached as Exhibit "A" to this Prospectus.
2. Make a check payable to " Columbus Bank and Trust
Company--Escrow Account for GBC Bancorp, Inc." in an amount
equal to $10.00 multiplied by the number of shares subscribed
for.
3. Return the completed Subscription Agreement as follows:
<TABLE>
<CAPTION>
BY HAND OR OVERNIGHT DELIVERY: BY U.S. MAIL DELIVERY:
------------------------------ ----------------------
<S> <C>
GBC Bancorp, Inc. GBC Bancorp, Inc.
318 W. Pike Street, Suite 475 P.O. Box 1719
Lawrenceville, Georgia 30045 Lawrenceville, Georgia 30045
Attention: Larry D. Key, President Attention: Larry D. Key, President
</TABLE>
4. UPON RECEIPT BY THE COMPANY OF PAYMENT FOR THE SHARES
SUBSCRIBED FOR, THE SUBSCRIPTION AGREEMENT WILL BECOME FINAL
AND BINDING AND WILL BE IRREVOCABLE.
USE OF PROCEEDS
The proceeds to the Company from the sale of shares of the Common Stock
offered hereby will be used to pay expenses of this Offering and organizational
expenses of the Company, which are estimated not to exceed $92,000, and to repay
in full a line of credit loan from the Joint Venture in the approximate amount
of $725,000 at August 31, 1997 and then to capitalize the Bank through the
purchase of 450,000 shares of the Bank's common stock, $10.00 par value, at
$20.00 per share.
The Company and the Bank have established a $750,000 line of credit
from the Joint Venture which is a joint venture formed by the organizers of the
Company and the Bank. Funds advanced to the Company under the line of credit
were used to pay certain organizational and Offering expenses of the Company,
including a portion of certain salaries of the officers of the Company; and
funds advanced to the Bank under the line of credit were used to pay certain
organizational and pre-opening expenses of the Bank. The line of credit has a
term ending on December 31, 1997 and bears interest initially at 9.25%. The
interest rate on the line of credit will fluctuate automatically with the prime
rate at a level of 1% above the prime rate. Interest is paid monthly. At August
31, 1997, the aggregate outstanding balance on the lines of credit from the
Joint Venture to the Company and the Bank was $724,600. See "ESTIMATED
EXPENDITURES" and "PRO FORMA CAPITALIZATION."
The Bank will use the $9,000,000 proceeds from the sale of its common
stock to the Company to pay expenses incurred in connection with the
organization of the Bank (estimated at $86,000), including consulting fees for
market analysis and feasibility studies, and legal and accounting fees and
expenses, and expenses incurred in connection with certain pre-opening
operations of the Bank (estimated at $580,000), including officers' and
employees' salaries, rent and occupancy, and interest expense. The total
Offering, organizational and pre-opening operating expenses as described above
of the Company and the Bank are not expected to exceed $666,000.
The estimates of pre-opening operating expenses assume that the Bank
will open in the fourth quarter of 1997. While no assurance can be given that
the Bank will open by then, the organizers are hopeful that the Bank will
actually open during the fourth quarter of 1997.
6
<PAGE> 10
ESTIMATED EXPENDITURES
In the opinion of the Company, the minimum gross proceeds of $9,500,000
from the Offering will satisfy the cash requirements of the Company and the Bank
for their respective first five years of operation. The Bank is required to
maintain capital of 6% over its initial five years of operations. It is not
anticipated that the Company will find it necessary to raise additional funds to
meet expenditures required to operate the business of the Company and the Bank
over the next five years. All anticipated material expenditures for such period
have been identified and provided for out of the proceeds of this Offering.
The following table illustrates the intended use by the Company and the
Bank of the gross proceeds of this Offering. Although the amounts set forth
below provide an indication of the proposed use of funds based upon the plans
and estimates of the organizers of the Company and the Bank, actual expenditures
may vary from the estimates.
<TABLE>
<CAPTION>
Minimum Offering Maximum Offering
---------------- ----------------
<S> <C> <C>
Gross Proceeds From This Offering(1).............................. $9,500,000 $12,000,000
- --------------------------------- ---------- ----------
Anticipated Use of Proceeds by the Company
- ------------------------------------------
Offering and Organizational Expenses(2)........................... $ 92,000 $ 92,000
Working Capital................................................... 408,000 2,908,000
Capitalization of Bank through Purchase of
Common Stock of the Bank................................. 9,000,000 9,000,000
---------- -----------
Total............................................... $9,500,000 $12,000,000
========== ===========
Anticipated Use of Capital by the Bank
- --------------------------------------
Organizational Expenses(2)........................................ $ 86,000 $ 86,000
Pre-opening Operating Expenses(2)................................. 580,000 580,000
Working Capital................................................... 8,334,000 8,334,000
---------- -----------
Total............................................... $9,000,000 $ 9,000,000
========== ===========
</TABLE>
- --------------------
(1) Assuming sale of 950,000 shares and 1,200,000 shares, respectively, at
$10.00 per share.
(2) Reflects expenses to be paid directly out of the proceeds of this
Offering and amounts advanced under the lines of credit from the Joint
Venture. Funds advanced under the lines of credit have been utilized to
pay various organizational and pre-offering expenses of the Bank and
the Company. The Company's line of credit will be repaid in full by the
Company from the proceeds of the Offering. The Bank's line of credit
will be repaid in full by the Bank from the proceeds of the sale of its
common stock to the Company.
7
<PAGE> 11
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization as of August 31,
1997, and pro forma capitalization as of completion of the Offering, of the
Company assuming that 950,000 shares and 1,200,000 shares of the Common Stock,
respectively, are sold and the proceeds therefrom are invested as described
under "USE OF PROCEEDS" and "ESTIMATED EXPENDITURES."
<TABLE>
<CAPTION>
After the (1)
----------------------------
Actual as of
August 31, Minimum Maximum
1997 Offering Offering
------------ -------- --------
<S> <C> <C> <C>
Debt
- ----
Total Debt(1)............................... $ 850,333 $ -0- $ -0-
Shareholders' Equity
- --------------------
Common Stock, $1.00 par value,
3,000,000 shares authorized
(950,000 and 1,200,000 shares,
respectively, issued and outstanding)(2)............. $ 80 (3) $ 950,080 $ 1,200,080
Additional paid-in capital........................... 720 (3) 8,550,720 10,800,720
Deficit accumulated during the pre-opening
development stage(4)................................. (608,689) (648,689) (648,689)
--------- ---------- -----------
Total shareholders' equity .......................... $(607,889) $9,042,052 $11,542,052
========= ========== ===========
</TABLE>
- --------------------
(1) Represents amounts outstanding under the Company's line of credit and
accounts payable to Gwinnett Banking Company Joint Venture.
(2) Represents the Company's sale of 950,000 shares and 1,200,000 shares of
Common Stock, respectively, at $10.00 per share.
(3) Represents 10 shares purchased by each organizer of the Company for
$10.00 per share.
(4) The expenses of the Offering are charged against this account. These
expenses are estimated to be $50,000 and such amount was used in the
calculation of the amounts shown in columns two and three.
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. It is
the Company's policy not to pay dividends until the Bank is currently and
cumulatively profitable. As a result, the Company has no current plans to
initiate the payment of cash dividends. See "SUPERVISION AND REGULATION -- Bank
Regulation."
8
<PAGE> 12
BUSINESS OF THE COMPANY
AND THE BANK
THE COMPANY
The Company was incorporated as a Georgia business corporation on
August 21, 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 has applied to the Federal
Reserve and the Department of Banking for prior approval to use $9,000,000 of
the proceeds of this Offering to acquire the Bank. The Company received the
approval of the Department of Banking on April 15, 1997 and of the Federal
Reserve on May 2, 1997 to become a bank holding company within the meaning of
the Georgia Bank Holding Company Act and the Bank Holding Company Act of 1956,
as amended, respectively. 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 or to acquire any other significant assets. 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." It is not anticipated that the Company will need
to raise additional funds to meet its cash requirements for the next five years.
THE BANK
General. The organizers filed an application on behalf of the Bank with
the Department of Banking and with the FDIC on October 9, 1996, for authority to
organize as a state bank and trust company, the deposits of which will be
federally insured, and to conduct a commercial banking business from Gwinnett
County, Georgia. The organizers received approvals from the Department of
Banking and from the FDIC on February 28, 1997. The Bank will not commence
business until all pre-opening conditions imposed by its regulators have been
satisfied and the Department of Banking has issued the Bank a permit to begin
business.
The Bank intends to be a full service commercial bank with trust powers
to be exercised at some time after opening. The principal business of the Bank
will be to accept deposits from the public and to make loans and other
investments. The principal source of funds for the bank's loans and investments
are expected to be demand, time, savings, and other deposits (including
negotiable orders of withdrawal or NOW accounts), amortization and prepayments
of loans and borrowings. A portion of the net proceeds of the Offering will be
used by the Bank to fund loans. The principal sources of income for the Bank are
expected to be interest and fees collected on loans, interest and dividends
collected on other investments and service charges. The principal expenses of
the Bank are expected to be interest paid on savings and other deposits
(including NOW accounts) interest paid on other borrowings by the Bank, employee
compensation, office expenses and other overhead expenses.
Philosophy. Management's philosophy with respect to the initial
operations of the Bank will be to emphasize prompt and responsive personal
service to the residents of Gwinnett 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
Gwinnett County 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. Although other community banks are
located in the Gwinnett County area, the Bank will be unique in that ownership
of the Company's stock will be available to residents in the community. 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. In addition, the organizers of the Bank
represent a strong, stable, diversified cross-
9
<PAGE> 13
section of the business and professional community which is at the core of the
Bank's primary trade area. Six members of the senior management team of the
Company and the Bank have 125 collective years of banking experience, and served
key roles in the development of three banks. Given the changes and consolidation
in the Gwinnett County's banks, management believes that there is a need for a
strong, stable community bank that will be responsive to the small business and
consumer banking needs of residents of Gwinnett County.
BANK LOCATION AND FACILITIES
The Bank will be located in Lawrenceville, Georgia in Gwinnett County
in a two-story building leased from the Joint Venture. The site selected for the
proposed Bank is 165 Nash Street, Lawrenceville, Georgia. Branch offices are not
contemplated during the first five years of operation.
The Bank plans to provide services to Gwinnett County residents, as
well as to residents from the adjacent counties of Fulton, DeKalb and Cobb in
Georgia. The City of Lawrenceville is the county seat of Gwinnett County.
Lawrenceville had an estimated population of 17,300 as of April 1, 1994 and was
the largest city in the county followed by Snellville, Duluth, Lilburn, Buford,
Sugar Hill and Norcross.
The Bank will enter into a primary lease agreement with the Joint
Venture to lease permanent office space for the Bank located at 165 Nash Street
(the "Permanent Premises") for five years beginning on the completion of the
construction of the Permanent Premises with two five-year renewal options (the
"Lease Agreement"). Pursuant to the proposed Lease Agreement, the initial annual
rental for the 9,000 square feet office space is $135,000 or $15.00 per square
foot. The rental for the renewal will be increased based on the increase in the
Consumer Price Index.
The Bank will lease temporary facilities at 165 Nash Street from the
Joint Venture for a rental of $5,000 a month beginning on the opening of the
Bank which is expected to occur in the second quarter of 1997 and until the
Permanent Premises are constructed. Upon completion of the construction of
Permanent Premises, the temporary modular office will be removed and temporary
operation and administrative offices will be vacated.
The organizers of the Bank obtained two appraisals for the fair rental
value of the Permanent Premises. One appraisal, dated October 8, 1996, provided
a range of market rental for the Permanent Premises. The mid point of such range
was $16.00 per square foot. The other appraisal, also dated October 8, 1996,
determined that fair market rental of the premises to be $15.66 per square foot.
Copies of the appraisals for the Permanent Premises were filed with the Bank's
application to the Department of Banking and the FDIC.
The owner of the property and the building where the temporary and
Permanent Premises are located is the Joint Venture. The members of the Joint
Venture include directors of the Company and organizers of the Bank. In the
opinion of such organizers, the terms of the Lease Agreement are at least as
favorable to the Bank as terms available from unrelated third parties.
The Permanent Premises when completed will include a full-service
teller line and drive-in and walk-up windows. The Bank will offer safe deposit
boxes.
PRIMARY SERVICE AREA
The Bank's primary service area ("PSA") is defined as all of Gwinnett
County, Georgia. The Bank also expects to serve the adjacent counties or parts
thereof of Cobb, DeKalb and Fulton. Gwinnett County is easily accessible from
all directions by several major roadways: I-85, U.S. Highways 23, 29 and 78 and
Georgia Highways 316, 985, 141, 20 and 120. The I-285 perimeter highway around
Atlanta passes within five miles of the Gwinnett County border. Lawrenceville is
approximately 35 miles northeast of downtown Atlanta and is approximately 40
miles from Athens, Georgia.
ECONOMIC AND DEMOGRAPHIC FACTORS
The City of Lawrenceville is served by the CSX Family Lines Railroad
and the Southern Railway on lines between Atlanta and Athens. Over 60
interstate/intrastate motor freight carriers serve Gwinnett County and many of
these maintain break/bulk terminals within Gwinnett County. General aviation
services are provided at Gwinnett County's Briscoe Field adjacent to
Lawrenceville. Gwinnett County is within 45 minutes of Atlanta's Hartsfield
International Airport. Gwinnett County currently does not have any public
transportation.
10
<PAGE> 14
Gwinnett County has grown during each census since 1930. Its aggregate
rate of population growth between 1930 and 1990 was 1167.2%, making it Georgia's
second fastest growing county over this 60-year period. Gwinnett County was one
of only 38 counties (out of Georgia's 159) that did not experience at least one
population decline in the six censuses since 1930. While Gwinnett County was
Georgia's 17th most populous county in 1930, it was the 4th most populous in
1990. In each of the two decades between 1970 and 1990, Gwinnett County's rate
of growth exceeded 100%. From 1980 to 1990, it was the third fastest growing
county in Georgia. For three of the past 10 years, its rate of growth has been
so rapid that it ranks as the fastest growing county in the nation. Visions
2020: Baseline Forecasts has projected that Gwinnett County will pass both Cobb
and DeKalb Counties to become Georgia's second most populous county during the
second decade of the next century. Given the fact that estimates of Gwinnett
County's rate of population growth have been continually revised upward during
the past five years, the editors of Georgia Trend Magazine indicate that it is
not inconceivable that the County could challenge Fulton County for first place
by the year 2020.
According to the 1990 Census figures, 245,416 residents of Gwinnett
County, or 69.5% of the total population of 352,910, were over the age of
nineteen and thus potential customers of the proposed Bank. With only 4.8% of
the county's residents 65 years old or older, the third lowest percentage of any
county in the Atlanta metropolitan statistical area ("MSA"), management believes
that the banking market will be characterized by a strong loan demand for
consumer, commercial, and mortgage loans.
Gwinnett County has a diverse employment base. According to the
Gwinnett County Chamber of Commerce, approximately 383 high-tech companies, over
700 manufacturing firms and 274 international firms are located in Gwinnett
County. The largest employer in Gwinnett County is the Gwinnett County Public
School System with 8,400 employees. AT&T Atlanta Works and Scientific Atlanta
follow with 3,500 and 3,000 employees, respectively. There is also a wide
variety of manufacturing activity in Gwinnett County which contributes to its
economic stability.
Employment growth has also been strong. According to the Atlanta
Regional Commission, Gwinnett County has created 10,800 new jobs per year since
1985 which is 1,100 more new jobs than second place Fulton County at 9,700.
Gwinnett County's projected rate of job increase between 1995 and 2000 is 12.7%
which is the highest expected increase in the Atlanta MSA.
Gwinnett County also has low unemployment. In only two years between
1987 and 1993 did Gwinnett County's unemployment rate exceed 4.0%. Gwinnett
County has always been well below Georgia's average unemployment rate. Gwinnett
County's unemployment rate for 1993 was lower than any of the counties
contiguous to it. At the end of 1995, unemployment in Gwinnett County was at
3.6%.
The housing and construction market in Gwinnett County has been and,
according to all forecasts, will continue to be strong. Housing units in
Gwinnett County increased by 137.2% during the decade 1980-1990 and by 15.8%
between 1990 and 1994. The bulk of the increase in housing was in single
family/duplex housing as opposed to multi-family dwellings or mobile homes, and
an inspection of Gwinnett County's many new residential subdivisions reveals new
units in a wide range of prices. For the month of June, 1996, Gwinnett County
led the Atlanta MSA (and all other counties in Georgia) in the number of both
single-family residential and total building permits. According to statistics
published by the Gwinnett County Chamber of Commerce, Gwinnett County has also
held first place in both categories of permits for every month since the end of
1994.
In terms of office development, the Atlanta Regional Commission has
reported that Gwinnett County has a total inventory of 5.7 million square feet
in 194 buildings, with an overall vacancy rate of 10%. In terms of industrial
space, Gwinnett County accounts for more than 30% of the total in the MSA and
has been the MSA's most active market in new construction and absorption.
Gwinnett County has a total inventory of 53.5 million square feet of industrial
space and a current vacancy rate of 7.7%. The total inventory of retail space is
nine million square feet, and the vacancy rate is 7.8%. The Gwinnett County
Chamber of Commerce's 1996 Absorption Study, which provides a twelve-year
history of office and industrial growth in Gwinnett County, reports an annual
average of 248 projects and 5.2 million square feet. In 1995, 303 projects were
reported for Gwinnett County. According to the Gwinnett County Chamber of
Commerce between 1984 and 1996, the number of hotels/motels in Gwinnett County
has grown from six to 66, with 25 facilities added in 1995-96 alone. Over the
past 12 years, the number of motel rooms has increased from 548 to 8,212. During
1995, 2,360 apartment units were permitted in Gwinnett County.
COMPETITION AND HISTORICAL DEPOSIT TRENDS
Management believes that Gwinnett County has a very active and
competitive banking market. According to the Gwinnett County Chamber of
Commerce, Gwinnett County's bank deposits have shown a very healthy, steady
growth rate with the average annual growth rate at 17.13%. There have been a
number of mergers and acquisitions that
11
<PAGE> 15
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. The Bank's consumer loans will be both secured
and unsecured loans. Unsecured loans, however, will be only made to customers of
sound net worth, above average liquidity, and unquestionable repayment ability.
Unsecured loans will have maturities of less than one year. Secured loans will
be margined so that money received from collateral in a foreclosure situation
would repay the loan.
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.
The Bank will make secured and unsecured commercial loans. Unsecured commercial
loans, however, will be only made to customers who demonstrate sound net worth,
above average liquidity, and unquestionable repayment ability. Unsecured loans
will have maturities of less than one year. Secured loans will be margined so
that money received from collateral in a foreclosure situation would repay the
loan.
INVESTMENTS
In addition to loans, the Bank will make other investments in
obligations of the United States 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 primary sources of deposits will be residents of, and businesses
and their employees located initially in Gwinnett County, and to a lesser extent
Cobb County, DeKalb County, Fulton County in Georgia obtained through personal
solicitation by the Bank's officers and directors. The Bank will be authorized
to accept and pay interest on deposits received from individuals, corporations,
partnerships and any other type of legal entity, including fiduciaries (such as
private trusts) subject to the requirements of the Department of Banking and the
FDIC with regard to the maximum rates of interest payable on deposits, the
manner in which such interest may be calculated and paid, the frequency of
payment and penalties for early withdrawal of deposits. Management anticipates
that the total deposit mix will consist of 20% non-interest-bearing demand
deposits, 26% interest bearing demand and money market deposits, 4% savings
deposits, 10% time deposits of $100,000 or more and 40% other time deposits. The
Bank will not utilize or permit the use of brokered deposits. Qualified deposits
will be insured by the FDIC in an amount up to $100,000.
TRUST POWERS
The Bank's Charter authorizes it to execute trust powers in accordance
with the Financial Institutions Code of Georgia. The Bank will not be permitted
to exercise such trust powers without approval from the Department of Banking
and the FDIC. Management of the Bank does not anticipate that the Bank will seek
approval to exercise its trust powers in the immediately foreseeable future.
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 no part-time employees. The Company is
not expected to have any employees who are not also employees of the Bank. There
are no expected significant changes in the number of employees of the Company or
the Bank.
13
<PAGE> 16
DATA PROCESSING SERVICES
The Bank has entered into a three-year contract with Provesa, Inc.
whereby Provesa will provide data processing and item processing/imaging
services for the Bank. Data processing services are a normal service provided by
data processing entities and used by small community banks.
MANAGEMENT
OFFICERS AND DIRECTORS
On August 21, 1996, the Board of Directors of the Company elected the
following persons as officers of the Company:
Larry D. Key President, Chief Executive Officer
John T. Hopkins III Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
The Bylaws of the Company provide that the Board of Directors of the
Company shall consist of not less than seven nor more than fifteen members.
There are currently ten members of the Board of Directors of the Company.
The following table sets forth for the current members of the Board of
Directors and senior and executive officers of the Company and the Bank (a)
their names, addresses and ages at October 1, 1997, (b) the positions they will
hold in the Bank, if any, (c) the number of shares of Common Stock for which
they intend to subscribe, and (d) the approximate 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>
POSITION NUMBER OF % AFTER % AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Larry D. Key 52 President, Chief 30,010 3.2% 2.5%
3300 Jim Moore Road Executive
Dacula, Georgia 30211 Officer and
Chairman
John T. Hopkins III 55 Executive Vice 10,010 1.1% .8%
4310 Antelope Lane President, Chief
Lithonia, Georgia 30058 Financial
Officer,
Secretary and
Treasurer
Paul C. Birkhead 52 Senior Vice 25,010 2.6% 2.1%
4651 Warrior Trail President -
Lilburn, Georgia 30247 Commercial
Loan Officer
James B. Ballard 52 Director 40,010 4.2% 3.3%
2400 Bagley Road
Cumming, Georgia 30130
Jerry M. Boles 57 Director 75,010 7.9% 6.3%
Boles Parts Supply, Inc.
1057 Boulevard, S.E.
Atlanta, Georgia 30312
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
POSITION NUMBER OF % AFTER % AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
W. H. Britt 58 Director 15,010 1.6% 1.3%
W. H. Britt & Assoc., Inc.
535 Grayson Parkway
Grayson, Georgia 30221
Richard F. Combs 50 Director 20,361 2.1% 1.7%
Pureflow Ultraviolet, Inc.
1750 Spectrum Drive
Lawrenceville, GA 30043
William G. Hayes 58 Director 5,000 0.5% 0.4%
Hayes, James & Associates
3005 Breckenridge Blvd.
Suite 200
Duluth, Georgia 30096
Douglas A. Langley 39 Director 20,000 2.1% 1.7%
Ashworth & Associates
270 Constitution Blvd.
Lawrenceville, GA 30045
Norris J. Nash 70 Director 65,010 6.8% 5.4%
Gwinnett DeKalb Realty,
Inc.
4830 Lawrenceville Hwy.
Lilburn, Georgia 30247-3845
Joseph J. Powell 53 Director 30,000 3.2% 2.5%
Joe Powell & Associates
500 Miller Court
Norcross, Georgia 30071
William S. Stanton 41 Director 40,410 4.3% 3.4%
Print Direction, Inc.
1455 Oakbrook Drive
Norcross, Georgia 30093
</TABLE>
- --------------------
(1) Messrs. Key, Hopkins, Birkhead, Ballard, Boles, Britt, Nash and Stanton
each purchased 10 shares of common stock of the Company for $10.00 per
share in connection with the initial organization of the Company.
In addition, Marcia N. Watkins will serve as Senior Vice President and
Chief Operating Officer of the Bank. She does not serve on the Board of
Directors of the Company or the Bank.
BIOGRAPHIES
JAMES B. BALLARD was the Chief Executive Officer, founder and a member
of the board of directors from 1972 until January 1996 of Spartan Constructors,
Inc., an industrial constructor serving the continental United States as well as
the international market. Mr. Ballard currently serves as a consultant to Day
and Zimmerman.
PAUL C. BIRKHEAD was Executive Vice President and Senior Lending
Officer of Commercial Bank of Georgia from 1988 when Commercial Bank opened
until July 1995 when he resigned to participate in the current organizing group
of the Company. Mr. Birkhead was Group Vice President of Commercial Lending of
Heritage Bank from 1984 until November 1987, when Heritage Bank merged with Bank
South, N.A. Mr. Birkhead was Vice President of Commercial Lending for Bank
South, N.A. until he resigned in January 1988 to join the organizing group of
Commercial Bank of Georgia.
15
<PAGE> 18
JERRY M. BOLES has been in the wholesale automotive after-market for 35
years. Mr. Boles is owner and president of Boles Parts Supply, Inc., which was
founded in 1964, with headquarters in Atlanta, Georgia and distribution
warehouses in Oklahoma City, Oklahoma; Tappahannock, Virginia and Dahlonega,
Georgia.
W. H. BRITT has been an active businessman in the Gwinnett County area
since 1975. He is the founder and owner of H & H Truck and Tractor, Inc., an
equipment sales company and W. H. Britt and Associates, Inc., a real estate
brokerage and development company. Mr. Britt was an organizer of Gwinnett County
Bank (Heritage Bank) in 1972 and served as a director until 1987 when the bank
was sold.
RICHARD F. COMBS is the Founder and President of Pureflow Ultraviolet,
Inc., a company specializing in ultraviolet disinfecting equipment, parts and
services to industrial clients since 1978.
WILLIAM G. HAYES is President and Chairman of Hayes, James and
Associates, an engineering and survey company based in Lawrenceville, Georgia.
Mr. Hayes was a director of the First National Bank of Gwinnett from 1984 to
1986.
JOHN T. HOPKINS III was the Chief Financial Officer and Executive Vice
President of Commercial Bank of Georgia until he resigned in July 1996 to
participate in the Company's organizing group. Mr. Hopkins was Chief Financial
Officer and Chief Operating Officer of Paragon Mortgage from 1993 to 1995. He
was Chief Financial Officer of West Corp. which operated commercial, electrical
and mechanical contracting companies from 1989 to 1993. From 1985 to 1989, he
was Internal Auditor and Chief Financial Officer of Heritage Bank and Corporate
Accountant of Williams Service Group. Prior to 1985, Mr. Hopkins was a partner
with H. H. Brunet and Company, Certified Public Accountants, specializing in the
financial services industry.
LARRY D. KEY was the Executive Vice President and Chief Lending Officer
of Commercial Bank of Georgia from the merger of Commercial Bank of Georgia and
Commercial Bank of Gwinnett in March 1995 until he resigned in July 1996 to
participate in current organizing group. Mr. Key served as President and Chief
Executive Officer of the former Commercial Bank of Georgia from 1994 until
merger. He served as Executive Vice President and Chief Credit Officer of the
former Commercial Bank of Georgia from 1992 until 1994. Mr. Key was Senior Vice
President from the opening of the former Commercial Bank of Georgia in 1988
until 1992. He was Group Vice President and an advisory director of Heritage
Bank from 1984 until 1987. Mr. Key managed Moores Building Center, Inc. in
Dahlonega, Georgia from 1987 to 1988. Mr. Key served as a director of Commercial
Bancorp of Georgia, Inc. and Commercial Bank of Georgia from their initial
organization in 1988 until July 1996.
DOUGLAS A. LANGLEY is a managing partner of Ashworth and Associates, a
CPA firm in Tucker and Lawrenceville, Georgia since 1977.
NORRIS J. NASH is the President of Metropolitan Land Development and
Investment Corporation and Gwinnett- DeKalb, Inc. He has been a real estate
developer since 1962. Mr. Nash has served as director of the former Gwinnett
County Bank, and on the Advisory Board of Wachovia Bank of Georgia, N.A. Mr.
Nash was a member of the House of Representatives for Gwinnett County, District
22, Post #1 from 1967 to 1969.
JAMES J. POWELL is President of Joe Powell and Associates, Inc. since
1971 representing Liebert Corporation, provider of mechanical equipment for
computer operations.
WILLIAM S. STANTON is President of Print Direction, Inc. and Atlanta
Screen Print, Inc. Mr. Stanton has served as President of Print Direction since
its inception in 1984 and Atlanta Screen Print since 1988. He was an Account
Representative with Xerox Corporation from 1977 to 1981.
MARCIA N. WATKINS is Senior Vice President and Chief Operating Officer
of the Bank. Prior to serving as Senior Vice President and Chief Operating
Officer, Ms. Watkins served as Senior Vice President and Chief Operations
Officer of Commercial Bank of Georgia from its inception in February 1988 to
June 1996. Ms. Watkins was one of the original seven employees involved in the
opening of Gwinnett County Bank, a/k/a Heritage Bank, in February 1971. Ms.
Watkins served as Senior Operations Officer of Heritage Trust from February 1986
to February 1988. Ms. Watkins held various positions with the Heritage Bank,
including Vice President and Cashier between 1971 and 1986.
16
<PAGE> 19
CASH COMPENSATION
While no employment agreements exist or are presently contemplated, it
is anticipated that the Company will pay initial annual salaries to its officers
as follows:
<TABLE>
<CAPTION>
Person Position Salary
------ -------- ------
<S> <C> <C>
Larry D. Key President; Chief Executive Officer and $130,000 (1)
Chairman
John T. Hopkins III Executive Vice President, Chief Financial $ 95,000 (1)
Officer, Secretary and Treasurer
</TABLE>
In addition, the Bank will pay initial annual salaries to its officers
as follows:
<TABLE>
<CAPTION>
Person Position Salary
------ -------- ------
<S> <C> <C>
Paul C. Birkhead Senior Vice President $ 80,000
Marcia N. Watkins Senior Vice President and Chief $ 55,000
Operating Officer
</TABLE>
- --------------------
(1) Through the organization of the Bank and until the Bank commences
business, the Joint Venture will pay 5% of the compensation expense for
these persons.
The Bank plans to also hire a chief credit officer/senior loan officer
and to pay such officer an annual salary of $90,000. The employment of such
officer will be subject to the approval of the Department of Banking.
The officers of the Company and the Bank will also receive health, life
and disability insurance under the same plan and terms as other employees of the
Bank. In addition, Messrs. Key and Hopkins will each receive an automobile
allowance of $650 per month. In the case of Messrs. Key and Hopkins, 5% of their
automobile allowances will be paid by the Joint Venture until the Bank commences
business.
Directors of the Bank will not be compensated for their services as
directors until the Bank earns a profit both currently and cumulatively.
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, they will be
on substantially the same terms (including price, 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.
In addition, the Company and the Bank have a line of credit loan from
the Joint Venture which consists of the organizers of the Company and the Bank
in the aggregate amount of $750,000 (originally $500,000) to pay organizational
and pre-opening expenses of the Company and the Bank. The line of credit has a
term ending on December 31, 1997 and bears interest at an initial rate of 9.25%
which interest rate will fluctuate automatically with the prime rate at a level
of 1.0% above prime rate. Interest on the amounts advanced under the line of
credit are payable monthly on the last day of each calendar month. The line of
credit and interest costs will be repaid by the Company from the proceeds of
this Offering. See "USE OF PROCEEDS." The line of credit and interest costs will
be repaid by the Bank from the proceeds of the sale of its common stock to the
Company. Management believes that the terms of the Company's line of credit with
the Joint Venture are as or more favorable than the Company and the Bank could
have obtained from a non-affiliated lending institution. Neither the Company nor
the Bank will borrow from the Joint Venture after completion of the Offering.
17
<PAGE> 20
It is anticipated that Columbus Bank and Trust Company, the Bankers
Bank and SunTrust Bank, Atlanta will operate as correspondent banks for the
Bank. The Bankers Bank will provide correspondent bank services such as check
clearing, international services, wire transfers and various additional
services for the Bank. Columbus Bank and Trust Company will serve as the Escrow
Agent in connection with the Offering and will serve the Bank through
purchasing and selling federal funds. The Bankers Bank and SunTrust Bank,
Atlanta will also assist the Bank in purchasing and selling federal funds and
with the Bank's investments.
All of the relationships established or to be established with the
banks providing correspondent banking services were or will be at arms-length.
There is no affiliation between the Bank and any of its officers and directors
with any of the Bank's correspondent Banks.
The Bank will enter into a Lease Agreement with the Joint Venture to
lease the Permanent Premises. Most of the members of the Joint Venture are
directors of the Company and organizers of the Bank. The Permanent Premises
lease rate is market rental value established by two MAI appraisals and,
therefore, is as favorable as rates obtainable from an unaffiliated third party.
In addition, during the period during which the Permanent Premises are being
constructed, the Bank will lease from a third party the temporary premises. See
"BUSINESS OF THE COMPANY" and "THE BANK--Bank Location and Facilities."
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 Common Stock 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.
DESCRIPTION OF COMMON STOCK OF THE COMPANY
GENERAL
The Company's Articles of Incorporation authorize the Company to issue
up to 3,000,000 shares of Common Stock, par value $1.00 per share, of which a
minimum of 950,000 shares and a maximum of 1,200,000 shares will be issued
pursuant to this Offering. Eighty shares of Common Stock were issued prior to
the Offering to the initial organizers of the Company.
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
950,000 shares and a maximum of 1,200,000 shares outstanding from the Offering.
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 officers and directors of the Company.
Such officers and directors 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 would 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
18
<PAGE> 21
generally sell nonrestricted shares under Rule 144 without regard to the length
of their holding period, all shares purchased by the officers and directors 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 to 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.
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.
CHANGE IN NUMBER OF DIRECTORS
Article 7 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.
19
<PAGE> 22
REMOVAL OF DIRECTORS
Article 8 of the Articles of Incorporation of the Company provides that
directors of the Company may be removed during their terms with or without cause
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.
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.
LIMITATION OF LIABILITY
Article 10 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 10 does not eliminate or limit the right of
the Company or its shareholders to seek injunctive or other equitable relief not
involving monetary damages.
Article 10 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 10 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 10 was also
included to enhance the Company's ability to secure liability insurance for its
directors at a reasonable cost. While the Company intends to obtain liability
insurance covering actions taken by its directors in their capacities as
directors, the Board of Directors believes that the current director's liability
insurance environment, and the environment for the foreseeable future, is
characterized by increasing premiums, reduced coverage and an increasing risk of
litigation and liability. The Board of Directors believes that Article 10 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.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS
Under Article 12 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. This provision may
also serve to reduce the risk of a potential conflict of interest between a
substantial shareholder on the one hand and the Company and its other
shareholders on the other.
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 nine persons who are directors of the Company, only one will be
affiliated with the Company and with the Bank in a full-time management
position.
EVALUATION OF AN ACQUISITION PROPOSAL
Article 13 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 Company
20
<PAGE> 23
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.
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 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 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.
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 the BHC Act and the Georgia BHC Act 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.
22
<PAGE> 24
On September 29, 1994, President Clinton signed the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act")
which amended 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 non-banking 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.
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, interest rates 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.
23
<PAGE> 25
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 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 Tier 1 Risk-
Capital Category Tier 1 Capital Risk-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 4% or more 8% or more 4% or more --
Capitalized
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.
24
<PAGE> 26
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 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. 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. Beginning in January, 1996, the
highest-rated institutions were required to pay the statutory annual minimum of
$2,000 for FDIC insurance. Rates for all other institutions were reduced by four
cents per $100 as well, leaving a premium range of 3 cents to 27 cents per $100.
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 Womble Carlyle Sandridge & Rice, PLLC, Atlanta, Georgia.
EXPERTS
The financial statements of the Company at December 31, 1996, and for
the period from July 17, 1996 until August 31, 1997, set forth herein have been
so included in reliance on the report of Mauldin & Jenkins, LLC independent
certified public accountants, given on the authority of that firm as experts in
accounting and auditing.
25
<PAGE> 27
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
AUGUST 31, 1997
<PAGE> 28
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
AUGUST 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT...........................................................F-1 AND F-2
BALANCE SHEET, AUGUST 31, 1997.................................................................F-3
STATEMENT OF LOSS, PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO AUGUST 31, 1997........................................................................F-4
STATEMENT OF STOCKHOLDERS' (DEFICIT), PERIOD FROM JULY 17, 1996,
DATE OF INCEPTION, TO AUGUST 31, 1997.....................................................F-5
STATEMENT OF CASH FLOWS, PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO AUGUST 31, 1997........................................................................F-6
NOTES TO FINANCIAL STATEMENTS...........................................................F-7 - F-11
</TABLE>
<PAGE> 29
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS
GBC BANCORP, INC.
LAWRENCEVILLE, GEORGIA
We have audited the accompanying balance sheet of GBC BANCORP,
INC., a development stage company, as of August 31, 1997, and the related
statements of loss, stockholders' (deficit) and cash flows for the period from
July 17, 1996, date of inception, to August 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of GBC Bancorp,
Inc. as of August 31, 1997, and the results of its operations and its cash flows
for the period from July 17, 1996, date of inception, to August 31, 1997, in
conformity with generally accepted accounting principles.
<PAGE> 30
The accompanying financial statements have been prepared
assuming that GBC Bancorp, 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 4, the Company's
future operations are dependent on obtaining capital through an initial stock
offering and obtaining the necessary final regulatory approvals to operate under
a commercial bank charter. 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 4. The financial statements do not
include any adjustments relating to the recoverability of reported asset amounts
or the amount of liabilities that might result form the outcome of this
uncertainty.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
October 6, 1997
F-2
<PAGE> 31
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO AUGUST 31, 1997
<TABLE>
<S> <C>
INCOME
Interest $ 31,580
Loan origination fees 29,944
---------
61,524
---------
EXPENSES
Personnel expenses 505,834
Interest 42,944
Equipment and occupancy expenses 79,164
Other expenses 42,271
---------
670,213
---------
Net loss $(608,689)
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE> 32
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' (DEFICIT)
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO AUGUST 31, 1997
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING THE TOTAL
-------------------- CAPITAL DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE SUPRLUS STAGE (DEFICIT)
------ --------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 17, 1996
(DATE OF INCEPTION) -- $ -- $ -- $ -- $ --
Issuance of 80 shares of
common stock 80 80 720 -- 800
Net loss -- -- -- (608,689) (608,689)
----- ----- ----- --------- ---------
BALANCE, AUGUST 31, 1997 80 $ 80 $ 720 $(608,689) $(607,889)
===== ===== ===== ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE> 33
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 17, 1996, DATE OF INCEPTION,
TO AUGUST 31, 1997
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (608,689)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Preopening expenses incurred by the Joint Venture
on behalf of the Company 640,269
----------
Net cash provided by operating activities 31,580
----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 800
Proceeds from stock subscription deposits 3,340,700
----------
Net cash provided by financing activities 3,341,500
----------
Net increase in cash and cash equivalents 3,373,080
Cash and cash equivalents at beginning of period --
----------
Cash and cash equivalents at end of period $3,373,080
==========
NONCASH TRANSACTION
Cost of equipment and deferred organization and
stock offering costs incurred by the Joint Venture
on behalf of the Company $ 210,064
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE> 34
GBC BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
GBC Bancorp, Inc. (the "Company") was incorporated on August 21, 1996,
to operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended, and the Georgia Bank Holding
Company Act. The Company intends to acquire 100% of the issued and
outstanding capital stock of Gwinnett Banking Company (the "Bank"), a
corporation organized under the laws of the State of Georgia to conduct
a general banking business in Lawrenceville, Georgia. In addition to
the conditional approval of the organization of the Bank granted by the
Georgia Department of Banking and Finance (the "DBF"), the Federal
Deposit Insurance Corporation (the "FDIC") also approved the
application previously filed by the Bank's organizers for FDIC
insurance of Bank's deposits. As an insured bank, the Bank will be a
member of the Bank Insurance Fund. The Company has filed an application
with the Federal Reserve Bank of Atlanta (the "FRB") and the DBF to
become a bank holding company. Upon obtaining regulatory approval, the
Company will be a registered bank holding company subject to regulation
by the FRB and the DBF.
Activities since inception have consisted primarily of the Company's
and the Bank's organizers engaging in organizational and preopening
activities necessary to obtain regulatory approvals and to prepare to
commence business as a financial institution. The organizers have also
been involved in limited mortgage loan organization activities.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
F-7
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ORGANIZATION AND STOCK OFFERING COSTS
Organization costs will be amortized in accordance with applicable DBF
regulations and accounting policies over a period not to exceed five
years from the commencement of operations. Stock offering costs will be
charged to capital surplus upon completion of the stock offering.
Additional costs are expected to be incurred for organization costs and
stock offering costs.
Following is a summary of deferred organization and stock offering
costs:
<TABLE>
<S> <C>
Consulting $ 15,000
Legal 131,381
Filing fees 19,446
Other 11,861
--------
$177,688
========
</TABLE>
INCOME TAXES
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued because
of operating losses incurred during the preopening period.
FISCAL YEAR
The Company will adopt a calendar year for both financial reporting and
tax reporting purposes.
F-8
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
NOTE 2. DUE TO RELATED PARTY
To facilitate the formation of the Company and the Bank, the organizers
of the Company formed Gwinnett Banking Company Joint Venture ("the
Joint Venture") on July 17, 1996. The Joint Venture has established a
$750,000 line of credit with an independent bank for the purpose of
paying organization and preopening expenses for the Company and the
Bank and the expenses of the Company's common stock offering. The line
of credit bears interest at the lender's prime rate plus 1% and matures
on December 17, 1997. Interest is payable monthly. The interest rate at
August 31, 1997 was 9.25%. The organizers have personally guaranteed
repayment of the line of credit. All funds advanced by the Joint
Venture on behalf of the Company and the Bank will be repaid from the
proceeds of the stock offering. The Company's ability to repay these
advances and relieve the organizers from their personal guarantees
depends upon the completion of the offering. The assets and liabilities
of the Joint Venture as of August 31, 1997 are as follows:
<TABLE>
<S> <C>
ASSETS
Cash $ 30,111
Investment in Company 800
Due from Company 850,333
Other assets 19,447
--------
Total assets $900,691
========
LIABILITIES
Line of credit $724,600
Accounts payable 176,091
--------
Total liabilities $900,691
========
</TABLE>
F-9
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
NOTE 2. DUE TO RELATED PARTY (CONTINUED)
As of August 31, 1997, the Joint Venture had incurred organization and
preopening expenses on behalf of the Company as follows:
<TABLE>
<S> <C>
ORGANIZATION:
Fixed assets purchased:
Furniture and equipment $ 32,376
--------
Deferred organization and stock offering costs:
Consulting fees 15,000
Legal fees 131,381
Filing fees and other 31,307
--------
177,688
--------
PREOPENING EXPENSES:
Personnel expenses 505,834
Interest 42,944
Equipment and occupancy expenses 79,164
Other expenses 12,327
--------
640,269
--------
$850,333
========
</TABLE>
NOTE 3. COMMITMENTS
The Joint Venture has entered into an agreement to acquire a two acre
tract of land for the proposed site for the location of the Bank for a
price of $251,575. The Joint Venture will retain ownership of the
property and will lease to the Bank permanent office space for an
initial annual rental of $135,000. Prior to completion of permanent
facilities for the Bank, the Joint Venture will lease to the Bank
temporary modular facilities for a monthly rental of $5,000. In the
opinion of the organizers of the Joint Venture, the terms of the leases
are at least as favorable to the Bank as terms available from unrelated
third parties.
F-10
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS
NOTE 4. LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company has incurred a net loss of $608,689 from inception (July
17, 1996) to August 31, 1997.
At August 31, 1997, the Company has been funded primarily from advances
from the Joint Venture, which in turn has been funded by a $750,000
line of credit that has been fully utilized. Management believes that
the current level of expenditures is within the financial capabilities
of the organizers and adequate to meet existing obligations and fund
current obligations, but obtaining final regulatory approvals and
commencing bank operations is dependent on successfully completing the
stock offering.
The Company has filed a registration Statement on Form SB-2 with the
Securities and Exchange Commission offering for sale a minimum of
950,000 shares and a maximum of 1,200,000 shares of the Company's
common stock at a price of $10 per share. Should subscriptions for the
minimum offering not be obtained, amounts paid by subscribers will be
refunded and the offer withdrawn.
As of August 31, 1997, the Company had received subscriptions and
committments for subscriptions of approximately $7,000,000.
F-11
<PAGE> 39
================================================================================
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 authorized
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
include any material information with respect to the plan of distribution not
previously disclosed in this Prospectus or any material changes to such
information.
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
insured 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>
<S> <C>
REPORTS TO SHAREHOLDERS.............................................................ii
ADDITIONAL INFORMATION..............................................................ii
SUMMARY .............................................................................1
RISK FACTORS.........................................................................3
THE OFFERING.........................................................................4
USE OF PROCEEDS......................................................................6
ESTIMATED EXPENDITURES...............................................................7
PRO FORMA CAPITALIZATION.............................................................8
DIVIDENDS............................................................................8
BUSINESS OF THE COMPANY AND THE BANK.................................................9
MANAGEMENT..........................................................................14
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS.............................18
DESCRIPTION OF COMMON STOCK OF THE COMPANY..........................................18
ANTITAKEOVER PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS .....19
SUPERVISION AND REGULATION..........................................................22
LEGAL MATTERS.......................................................................25
EXPERTS ............................................................................25
</TABLE>
================================================================================
================================================================================
GBC BANCORP, INC.
A PROPOSED BANK HOLDING COMPANY
FOR
GWINNETT BANKING COMPANY
A PROPOSED STATE BANK
UP TO 1,200,000
SHARES OF
COMMON STOCK
PROSPECTUS
================================================================================
26
<PAGE> 40
SUBSCRIPTION AGREEMENT
GBC Bancorp, Inc.
318 W. Pike Street, Suite 475
Lawrenceville, Georgia 30246
Gentlemen:
The undersigned hereby subscribes for and agrees to purchase
the number of shares of Common Stock, par value $1.00 per share (the "Common
Stock"), of GBC Bancorp, 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 __, 1997. (Such Prospectus, including any amendments
and supplements thereto, is herein called the "Prospectus.")
The undersigned agrees to purchase the shares of Common Stock
subscribed for herein for the purchase price of $10.00 per share. All checks
should be made payable to "Columbus Bank and Trust Company - Escrow Account for
GBC Bancorp, Inc." A check in an amount equal to the full subscription price is
enclosed with this Subscription Agreement.
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 findings 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 Agreement is
binding on the undersigned and is irrevocable by the undersigned until the
Expiration Date as 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, and 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 500 shares): ------------
Total Subscription Price
(at $10.00 per share): $
------------
-------------------------------------------
Please PRINT or TYPE exact name(s) in which
undersigned desires shares to be registered
<PAGE> 41
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________________, 1997, as to____________shares.
GBC BANCORP, 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.
<PAGE> 42
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, $1.00 par value,
are as follows:
<TABLE>
<S> <C>
Registration Fee......................................... $ 3,636.00
Legal Fees and Expenses (Estimate)....................... 35,000.00
Accounting Fees and Expenses (Estimate).................. 4,000.00
Printing and Engraving Expenses (Estimate)............... 6,500.00
Miscellaneous (Estimate)................................. 864.00
----------
TOTAL ............................................... $50,000.00
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The sales to Messrs. Key, Hopkins, Birkhead, Ballard, Boles, Britt,
Nash and Stanton were 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.
ITEM 27. EXHIBITS.
Exhibit
Number Description
3.1* Articles of Incorporation, as amended
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.)
4.2* Specimen Common Stock Certificate
<PAGE> 43
Exhibit
Number Description
5.1* Legal Opinion of Womble Carlyle Sandridge & Rice, PLLC
10.1* Escrow Agreement between the Registrant and Columbus Bank and Trust
Company.
10.2* Line of Credit Promissory Note in the amount of $500,000 having
Registrant as Maker and Gwinnett Banking Company Joint Venture as
Holder.
10.3* Provesa, Inc. Data Processing Agreement.
21.1* Subsidiaries of the Registrant.
23.1 Consent of Mauldin & Jenkins, LLC
23.2* Consent of Womble Carlyle Sandridge & Rice, PLLC (appears in Legal
Opinion at Exhibit 5.1 hereto).
24.1* Power of Attorney (appeared on the signature page to the Registration
Statement on Form SB-2).
27 Financial Data Schedule
- --------------------
* Previously filed in connection with the Registrant's initial filing on
December 31, 1996 and on March 6, 1997.
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 registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the maximum 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 on the plan of distribution.
<PAGE> 44
(2) For determining 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 of the securities
at the time 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 end of the 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 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.
<PAGE> 45
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 this Post-Effective Amendment to its Form SB-2 and
authorized this Post-Effective Amendment to be signed on its behalf by the
undersigned, in the City of Lawrenceville, State of Georgia on October 6, 1997.
GBC Bancorp, Inc.
By: /s/ Larry D. Key
-------------------------------------
Larry D. Key, President and
Principal Executive Officer
Power of Attorney
Know all men by these presents that each person whose signature appears
below constitutes and appoints each of Larry D. Key and John T. Hopkins III his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for such persons and in such persons' name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully and to all
interests and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue of the
powers herein granted.
Pursuant to the requirements of the Securities Act of 1933, this Second
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ Larry D. Key President and Chairman (Principal October 6, 1997
- ------------------------------ Executive Officer)
Larry D. Key
/s/ John T. Hopkins III Executive Vice President, Secretary and October 6, 1997
- ------------------------------ Treasurer, (Principal Financial and
John T. Hopkins III Accounting Officer)
/s/ James B. Ballard* Director October 6, 1997
- ------------------------------
James B. Ballard
/s/ Richard F. Combs Director October 6, 1997
- ------------------------------
Richard F. Combs
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ William G. Hayes Director October 6, 1997
- ------------------------------
William G. Hayes
/s/ Douglas A. Langley Director October 6, 1997
- ------------------------------
Douglas A. Langley
/s/ Jerry M. Boles* Director October 6, 1997
- ------------------------------
Jerry M. Boles
/s/ W. H. Britt* Director October 6, 1997
- ------------------------------
W. H. Britt
/s/ Norris J. Nash* Director October 6, 1997
- ------------------------------
Norris J. Nash
/s/ Joseph J. Powell Director October 6, 1997
- ------------------------------
Joseph J. Powell
/s/ William S. Stanton* Director October 6, 1997
- ------------------------------
William S. Stanton
</TABLE>
*Signed by Larry D. Key as attorney in fact.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated October 6, 1997, accompanying the financial
statements of GBC Bancorp, Inc., as of and for the period ending August 31,
1997, contained in the Registration Statement. We consent to the use of the
aforementioned report in the Registration Statement and to the use of our name
as it appears under the caption "Experts."
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
October 6, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-17-1996
<PERIOD-END> AUG-31-1997
<CASH> 3,373,080
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 3,583,144
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,191,033
<LONG-TERM> 0
0
0
<COMMON> 800
<OTHER-SE> (608,689)
<TOTAL-LIABILITIES-AND-EQUITY> 3,583,144
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 31,580
<INTEREST-TOTAL> 31,580
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 42,944
<INTEREST-INCOME-NET> (11,364)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 627,269
<INCOME-PRETAX> (608,689)
<INCOME-PRE-EXTRAORDINARY> (608,689)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (608,689)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
