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As filed with the Securities and Exchange Commission on April 2, 1997
Registration No. 333-19081
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2 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)
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318 Pike Street, Suite 475
Lawrenceville, Georgia 30246
GEORGIA (770) 995-0000 58-2265327
(State or jurisdiction of (Address, and telephone number (I.R.S. Employer
incorporation or organization) of principal executive offices) Identification Number)
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165 Nash Street
Lawrenceville, Georgia 30246
(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
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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
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REGISTRATION STATEMENT ITEM NUMBER
AND HEADING CAPTION IN PROSPECTUS
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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
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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 110,000 of the shares of Common Stock sold in the Offering
(approximately 11.6% of the minimum and 9.2% 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 4.
INVESTMENT IN THESE SECURITIES INVOLVES A SUBSTANTIAL
DEGREE OF RISK. SEE "RISK FACTORS" - Pages 2 to 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
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Price to Underwriting Discounts Proceeds to
Public(1) and Commissions (2) Company(3)
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Per Share........................ $ 10.00 -0- $ 10.00
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Total Minimum(4)................. $ 9,500,000 -0- $ 9,500,000
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Total Maximum(5)................. $12,000,000 -0- $12,000,000
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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 $458,748.
(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 * , 1997 the expiration date of the
Offering (unless the Offering is terminated sooner or extended).
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 April __, 1997.
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* The blanks will be completed when the Company's Registration Statement on Form
SB-2 is declared effective by the SEC.
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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
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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 organizers anticipate receiving such approvals
during the second quarter of 1997. Such approvals will require the Company to
sell at least 950,000 shares of its Common Stock, but are not expected to
contain other conditions. See "RISK FACTORS - Regulatory Approvals Required."
Following acquisition of the Bank, the initial business of the Company will be
conducted through the Bank. See "BUSINESS OF THE COMPANY AND THE BANK."
THE BANK
The Bank is in the process of being organized as a state-chartered bank 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 second quarter of 1997, or as soon thereafter as practicable. See
"RISK FACTORS -- Regulatory Approvals Required" and "USE OF PROCEEDS." The Bank
intends to engage in a general commercial banking business, emphasizing the
banking needs of individuals and small to medium-sized businesses in its primary
service area. See "BUSINESS OF THE COMPANY AND THE BANK."
The 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 is located at 318 Pike Street, Suite 475,
Lawrenceville, Georgia 30246, and their telephone number at that address is
(770) 995-0000.
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THE OFFERING
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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.
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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 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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RISK FACTORS
Investment in the Common Stock involves a significant degree of risk,
including that (i) the Company has not received all of the regulatory approvals
required before it can become a bank holding company; (ii) the Bank, which is
the sole subsidiary of the Company is in organization and has no operating
history; (iii) the banking industry is highly competitive and is a highly
regulated, (iv) the results of operations of the Bank will be affected by credit
policies of monetary authorities; (v) the success of the Bank will depend
largely on the general economic conditions in the Bank's primary service area;
(vi) the Offering price for the Company's Common Stock has been determined
arbitrarily without particular reference to customary criteria; (vii) it is the
policy of the Board of Directors of the Company to reinvest earnings and not pay
dividends for the period of time necessary to ensure the success of the
Company's operations; and (viii) there is no public trading market for the
shares of the Company's Common Stock. See "RISK FACTORS."
2
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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 must receive the approval of the Federal Reserve and the
Department of Banking before it can become the holding company of the Bank.
Applications for such approvals have been filed with such agencies and are
pending. The organizers anticipate receiving such approvals during the second
quarter of 1997. Such approvals will require the Company to sell at least
950,000 shares of its Common Stock but are not expected to contain other
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."
3
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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 and a
maximum of 1,200,000 shares 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 110,000 shares of Common Stock sold in the Offering
(approximately 11.6% of the minimum and 9.2% of the maximum number of shares to
be sold). No organizer intends to individually purchase more than 5% of shares
sold in this Offering.
Offering Period and Expiration Date. The Offering period for the shares
will terminate at the earlier of the date all shares offered hereby are sold or
5:00 p.m. Atlanta, Georgia time, on * , 1997). This date
may be extended at the discretion of the Company for additional periods not
exceeding an aggregate of 180 days (i.e., until * ,
1997). Written notice of any such extension will be given to all persons who
are already subscribers at the time of the extension. The date on which this
Offering terminates plus any extension thereof is referred to in this
Prospectu"Expiration Date."
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* The blanks will be completed when the Company's Registration Statement on
Form SB-2 is declared effective by the Securities and Exchange Commission.
4
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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. All subscriptions will be
binding and irrevocable until the Expiration Date.
Escrow. Subscription proceeds will be deposited in an escrow account with
the Escrow Agent for the Company pending completion of this 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. The Company reserves the right, in its sole discretion,
to accept or reject any subscription in whole or in part on or before the
Expiration Date. Without limiting the generality of the foregoing, the Company
also reserves the right to accept subscriptions on a prorated basis if it
receives subscriptions for more than 1,200,000 shares. The Company will notify
all subscribers within five business days after the Expiration Date whether
their subscriptions have been accepted. With respect to any subscriptions which
are not accepted, in whole or in part, by the Company, the notification will be
accompanied by the unaccepted portion of the subscription funds, without
interest.
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 expects to receive approvals from the
Federal Reserve and the Department of Banking during the second quarter of 1997.
In the opinion of the organizers, the only significant condition to all of the
foregoing approvals will be that a minimum of 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 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> 11
It is expected that the organizers will purchase a total of 110,000 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 Pike Street, Suite 475 P.O. Box 1719
Lawrenceville, Georgia 30246 Lawrenceville, Georgia 30246-1719
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 $40,000, and to repay
in full a line of credit loan from the Joint Venture in the approximate amount
of $350,100 at December 31, 1996 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 has established a $500,000 line of credit from the Gwinnett
Banking 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 to the Company,
including a portion of certain salaries of the officers of the Company. The line
of credit has a one-year term ending on July 17, 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 prime rate. Interest is
paid monthly. At December 31, 1996, the aggregate outstanding balance on the
lines of credit from the Joint Venture to the Company and the Bank was $350,100.
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 $117,000), 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 $301,748), 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 $458,748. The Bank has established a $500,000 line of
credit from the Joint Venture. The line of credit has a one-year term ending on
July 17, 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 prime rate. Interest is paid monthly. Funds advanced to the Bank under the
line of credit were used to pay certain organizational and pre-opening expenses
of the Bank.
The estimates of pre-opening operating expenses assume that the Bank will
open in the second 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 second quarter of 1997.
6
<PAGE> 12
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).......................... $ 40,000 $ 40,000
Working Capital................................................... 460,000 2,960,000
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) ...................................... $ 117,000 $ 117,000
Pre-opening Operating Expenses (2) ............................... 301,748 301,748
Working Capital................................................... 8,581,252 8,581,252
--------------- -----------------
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> 13
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization as of December 31, 1996,
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
December 31, Minimum Maximum
1996 Offering Offering
------------ -------- --------
<S> <C> <C> <C>
Debt
- ----
Total Debt (1).................................. $ 386,980 $ -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)................................ (238,538) (458,748) (458,748)
---------- -----------
Total shareholders' equity .......................... $ (237,738) $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 $40,000 and such amount was
used in the calculation of the amounts shown in columns two and three.
Offering costs incurred through December 31, 1996 consist primarily of
legal expenses totaling approximately $28,000.
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> 14
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 will apply 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. If such approvals are granted, upon its
acquisition of the common stock of the Bank, the Company will become a bank
holding company within the meaning of the Bank Holding Company Act of 1956, as
amended, and the Georgia Bank Holding Company Act. See "SUPERVISION AND
REGULATION."
The Company has been organized to facilitate the Bank's ability to serve
its future customers' requirements for financial services. The holding company
structure will provide flexibility for expansion of the Company's banking
business through the possible acquisition of other financial institutions and
the provision of additional banking-related services which the traditional
commercial bank may not provide under present laws. For example, banking
regulations require that the Bank maintain a minimum ratio of capital to assets.
In event that the Bank's growth is such that this minimum ratio is not
maintained, the Company may borrow funds, subject to capital adequacy guidelines
of the Federal Reserve, and contribute them to the capital of the Bank and
otherwise raise capital in a manner which is unavailable to the Bank under
existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank or to acquire any 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.
9
<PAGE> 15
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-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. Highway 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
10
<PAGE> 16
adjacent to Lawrenceville. Gwinnett County is within 45 minutes of Atlanta's
Hartsfield International Airport. Gwinnett County currently does not have any
public transportation.
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.
11
<PAGE> 17
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 have changed the general structure of the industry with a
reduction in the number of community banks based in Gwinnett County. The largest
financial institutions serving Gwinnett County as of June 30, 1996, were
NationsBank of Georgia, N.A., SunTrust Bank, Atlanta, Wachovia Bank of Georgia,
N.A. and First Union Bank of Georgia, N.A., who had $1,317,407,000,
$566,636,000, $570,529,000 and $477,587,000, respectively in deposits. The
largest Gwinnett County based banks as of June 30, 1996, are Bank of Gwinnett,
Lawrenceville; Brand Banking Co., Lawrenceville; and Peoples Bank, Buford, which
have approximately $187,595,000; $174,332,000 and $126,160,000 respectively in
deposits. Based on published information, there are 18 banks, one thrift
institution and three credit unions that operate 100 offices in Gwinnett County.
There are approximately 18 financial institutions that have offices in the
immediate vicinity of the main office of the Bank.
Management believes that deposits will increase in Gwinnett County in the
next three years. With regard to the Bank, deposit growth will consist of two
components: (i) the normal annual deposit growth for an existing institution;
and (ii) deposits attracted by management from previously established
relationships. Management believes that initially the Bank will not attract 100%
of the normal deposit growth due to the initial size of the Bank and its single
location. However, management believes that at least 25% of the normal deposit
growth will be attracted due to the personal services offered by the community
bank and its centralized location in Gwinnett County. Assuming that the Bank
acquires 25% of the average deposit growth per bank, deposits from the market
growth in the next three years would be $11,050,000; $17,182,000 and
$21,773,000, respectively.
LENDING POLICY
The Bank is being established initially to support Gwinnett County and
plans to expand its support to the immediately-surrounding counties of Cobb,
DeKalb and Fulton in Georgia. The Bank will be authorized to make both secured
and unsecured loans to individuals, partnerships, corporations and other public
and private entities. Management believes that the Bank's lending business will
consist principally of making loans to small- and medium-sized businesses and to
their owners, officers and employees, loans to independent single-family
residential contractors, loans that are guaranteed by the Small Business
Administration and loans to individual consumers.
The Bank's legal lending limits will be 15% of its statutory capital base
(its capital stock, surplus, and appropriated retained earnings) for unsecured
loans and 25% of its statutory capital base for secured loans. Statutory limits
with respect to loans to a single entity may restrict the ability of the Bank to
originate large commercial or construction and development loans. However, such
loans may be originated in cooperation with other financial institutions that
commit to purchase such loans originated by the Bank.
Management anticipates that the Bank will focus its lending on the
extension of relatively short-term loans or, to the extent it makes long-term
loans, the extension of loans with variable or adjustable interest rates in an
effort to retain a positive spread between its interest income and expenses.
Management of the Bank anticipates at least 80% of the Bank's loan portfolio
will consist of variable-rate loans. The Bank's loan portfolio will consist of
42.5% single-family residential construction loans, 42.5% commercial loans, 10%
consumer and 5% Small Business Administration loans. Construction loans and
commercial loans are short-term obligations with interest rates based on prime
plus some percentage point. Therefore, more than 80% of the Bank's loan
portfolio's interest rate will be adjusted annually.
Management plans to take advantage of the 180-day turnover in construction
loans so that management can better match the interest rates earned on the
Bank's loans to the interest rates paid on the Bank's deposits. Of the Bank's
initial $9,000,000 in capital, $3,000,000 will be allocated to common stock,
$5,100,000 to paid-in capital, and $900,000 will be set aside as an expense fund
to cover pre-opening expenses and potential losses in its first year of
operation. The $900,000 expense fund will not be included in the Bank's
statutory capital base. Accordingly, the Bank's initial legal lending limits
will be $1,215,000 for unsecured loans and $2,025,000 for secured loans. While
the Bank expects generally to employ more conservative lending limits, the Board
of Directors will have discretion to lend up to the legal lending limits as
described above.
Real Estate Loans. The Bank will make and hold real estate loans,
consisting primarily of single-family residential construction loans for
one-to-four unit family structures. The Bank will require a first lien
position on the land associated with the construction project and will offer
these loans to professional building contractors and homeowners. Loan
12
<PAGE> 18
disbursements will require on-site inspections to assure the project is on
budget and that the loan proceeds are being used for the construction project
and not being diverted to another project. The loan-to-value ratio for such
loans will be predominantly 75% of the lower of the as-built appraised value or
project cost, and will be a maximum of 80% if the loan is amortized. Loans for
construction can present a high degree of risk to the lender, depending upon,
among other things, whether the builder can sell the home to a buyer, whether
the buyer can obtain permanent financing, whether the transaction produces
income in the interim and the nature of changing economic conditions.
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 interests 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.
13
<PAGE> 19
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.
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:
<TABLE>
<S> <C>
Larry D. Key President, Chief Executive Officer
John T. Hopkins III Executive Vice President, Chief Financial Officer, Secretary and
Treasurer
</TABLE>
The Bylaws of the Company provide that there shall be nine members of the
Board of Directors. There are currently six members of the Board of Directors of
the Company and three vacancies. The current directors plan to fill these
vacancies with persons who have strong ties to Gwinnett County.
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 April 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>
NUMBER
POSITION OF % AFTER % AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Larry D. Key 51 President, Chief 20,010 2.1% 1.7%
3300 Jim Moore Road Executive Officer
Dacula, Georgia 30211 and Chairman
John T. Hopkins III 55 Executive Vice 5,010 .5% .4%
4310 Antelope Lane President, Chief
Lithonia, Georgia 30058 Financial Officer,
Secretary and
Treasurer
Paul C. Birkhead 52 Senior Vice 20,010 2.1% 1.7%
4651 Warrior Trail President -
Lilburn, Georgia 30247 Commercial Loan
Officer
James B. Ballard 52 Director 10,010 1.0% .8%
2400 Bagley Road
Cumming, Georgia 30130
</TABLE>
14
<PAGE> 20
<TABLE>
<CAPTION>
NUMBER
POSITION OF % AFTER % AFTER
NAME AND ADDRESS AGE TO BE HELD SHARES(1) MINIMUM MAXIMUM
- ---------------- --- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Jerry M. Boles 56 Director 25,010 2.6% 2.0%
Boles Parts Supply, Inc.
1057 Boulevard, S.E.
Atlanta, Georgia 30312
W. H. Britt 58 Director 5,010 .5% .4%
W. H. Britt & Assoc., Inc.
535 Grayson Parkway
Grayson, Georgia 30221
Norris J. Nash 69 Director 5,010 .5% .4%
Gwinnett DeKalb Realty, Inc.
4830 Lawrenceville Hwy.
Lilburn, Georgia 30247-3845
William S. Stanton 41 Director 20,010 2.1% 1.7%
Print Direction, Inc.
1455 Oakbrook Drive
Norcross, Georgia 30093
</TABLE>
- -------------
(1) Each of the Directors of the Company, Mr. Hopkins and Mr. Birkhead
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 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 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.
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.
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
15
<PAGE> 21
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.
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.
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.
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 Operating $ 55,000
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.
16
<PAGE> 22
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 each 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 $500,000 to pay organizational and pre-opening
expenses for the Company and Bank. The line of credit has a one-year term ending
on July 17, 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 believe that the terms of the Company's line of credit with the Joint
Venture are as or more favorable than the Company 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.
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 as will serve as the Escrow Agent in
connection with the Offering and will serve the Bank through purchasing and
selling federal funds. 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 at arms-length. There is no
affiliation between the Bank and any of its officers and directors and 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 is 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.
17
<PAGE> 23
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 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-
18
<PAGE> 24
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.
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
19
<PAGE> 25
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 and its
shareholders. As used herein, the term "acquisition proposal" refers to any
offer of another party (a) to make a tender offer or exchange offer for any
equity security of the Company, (b) to merge or consolidate the Company with
another corporation, or (c) to purchase or otherwise acquire all or
substantially all of the properties and assets owned by the Company.
Article 13 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (a) the expected social and economic
effects of the transaction on the employees, customers and other constituents
(e.g., suppliers of goods and services) of the Company and the Bank, (b) the
expected social and economic effects on the communities within which the Company
and the Bank operate, and (c) the consideration being offered by the other
corporation in relation (i) to the then current value of the Company as
determined by a freely negotiated transaction and (ii) to the Board of
Directors' then estimate of the Company's future value as an independent entity.
The enumerated factors are not exclusive, and the Board may consider other
relevant factors.
This Article has been included in the Company's Articles of Incorporation
because the Bank is charged with providing support to and being involved with
the communities it serves, and the Board believes its obligations in evaluating
an acquisition proposal extend beyond evaluating merely the consideration being
offered in relation to the then market or book value of the Common Stock. No
provisions of Georgia law specifically enumerate the factors a corporation's
board of directors should consider in the event the corporation is presented
with an acquisition proposal.
While the value of the consideration offered to shareholders is the main
factor when weighing the benefits of an acquisition proposal, the Board believes
it appropriate also to consider all other relevant factors. For example, this
Article directs the Board to evaluate the consideration being offered in
relation to the then current value of the Company determined in a freely
negotiated transaction and in relation to the Board's then estimate of the
future value of the Company as an independent concern. A takeover bid often
places the target corporation virtually in the position of making a forced sale,
sometimes when the market price of its stock may be depressed. The Board
believes that frequently the consideration offered in such a situation, even
though it may be in excess of the then market value (i.e., the value at which
shares are then currently
20
<PAGE> 26
trading), it is less than that which could be obtained in a freely negotiated
transaction. In a freely negotiated transaction, management would have the
opportunity to seek a suitable partner at a time of its choosing and to
negotiate for the most favorable price and terms which reflect not only the
current value, but also the future value of the Company.
One effect of this Article may be to discourage a tender offer in advance.
Often an offeror consults the Board of a target corporation prior to or after
commencing a tender offer in an attempt to prevent a contest from developing. In
the opinion of the Board, this provision will strengthen its position in dealing
with any potential offeror which might attempt to acquire the Company through a
hostile tender offer. Another effect of this Article may be to dissuade
shareholders who might be displeased with the Board's response to an acquisition
proposal from engaging the Company in costly litigation. This provision,
however, does not affect the right of a shareholder displeased with the Board's
response to an acquisition proposal to institute litigation against the Company
and to allege that the Board breached an obligation to shareholders by not
limiting its evaluation of an acquisition proposal to the value of the
consideration being offered in relation to the then market or book value of the
Common Stock.
Article 13 would not make an acquisition proposal regarded by the Board as
being in the best interests of the Company more difficult to accomplish. It
would, however, permit the Board to determine that an acquisition proposal was
not in the best interests of the Company (and thus to oppose it) on the basis of
the various factors deemed relevant. In some cases, such opposition by the Board
might have the effect of maintaining the positions of incumbent management.
AMENDMENT OF PROVISIONS
Any amendment of Articles 7, 8, 10, 12, and 13 of the Company's Articles of
Incorporation requires the affirmative vote of the holders of at least 2/3 of
the outstanding shares of Common Stock, unless 2/3 of the entire Board of
Directors approves the amendment. If 2/3 of the Board approves the amendment,
the applicable provisions of Georgia law would govern, and the approval of only
a majority of the outstanding shares of Common Stock would be required.
INDEMNIFICATION
The Bylaws of the Company contain certain indemnification provisions which
provide that directors, officers, employees or agents of the Company will be
indemnified against expenses actually and reasonably incurred by them if they
are successful on the merits of a claim or proceeding.
When a case or dispute is not ultimately determined on its merits (i.e., it
is settled), the indemnification provisions provide that the Company will
indemnify directors when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the director acted in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, if the director
had no reasonable cause to believe his or her conduct was unlawful. Whether the
applicable standard of conduct has been met is determined by the Board of
Directors, the shareholders or independent legal counsel in each specific case.
The Bylaws of the Company also provide that the indemnification rights set
forth therein are not exclusive of other indemnification rights to which a
director may be entitled under any bylaw, resolution or agreement, either
specifically or in general terms approved by the affirmative vote of the holders
of a majority of the shares entitled to vote thereon. The Company can also
provide for greater indemnification than that set forth in the Bylaws if it
chooses to do so, subject to approval by the Company's shareholders. The Company
may not, however, indemnify a director for liability arising out of
circumstances which constitute exceptions to limitation of a director's
liability for monetary damages.
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
21
<PAGE> 27
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.
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.
22
<PAGE> 28
The Bank will also be insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC with respect
to insured banks include paying depositors to the extent provided by law in the
event an insured bank is closed without adequately providing for payment of the
claims of depositors, acting as a receiver of state banks placed in receivership
when so appointed by state authorities, and preventing the continuance or
development of unsound and unsafe banking practices. In addition, the FDIC is
authorized to examine insured state banks which are not members of the Federal
Reserve to determine the condition of such banks for insurance purposes. The
FDIC also approves conversions, mergers, consolidations and assumption of
deposit liability transactions between insured banks and noninsured banks or
institutions to prevent capital or surplus diminution in such transactions where
the resulting, continued or assuming bank is an insured non-member state bank.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the BHC Act on any extension of credit to the bank
holding company or any of its subsidiaries, on investment in the stock or other
securities of the bank holding company or its subsidiaries, and on the taking of
such stock or securities as collateral for loans to any borrower. In addition, a
bank holding company and its subsidiaries are prohibited from engaging in
certain tying arrangements in connection with any extension of credit or
provision of any property or services.
CAPITAL REQUIREMENTS
Regulatory agencies measure capital adequacy with a framework that makes
capital requirements sensitive to the risk profile of the individual banking
institution. The guidelines define capital as either Tier 1 capital (primarily
shareholders equity) or Tier 2 capital (certain debt instruments and a portion
of the reserve for loan losses). There are two measures of capital adequacy for
bank holding companies and their subsidiary banks: the Tier 1 leverage ratio and
the risk-based capital requirements. Bank holding companies and their subsidiary
banks must maintain a minimum Tier 1 leverage ratio of 4%. In addition, Tier 1
capital must equal 4% of risk-weighted assets, and total capital (Tier 1 plus
Tier 2) must equal 8% of risk-weighted assets. These are minimum requirements,
however, and institutions experiencing internal growth (which will initially be
the case for the Bank) or making acquisitions, as well as institutions with
supervisory or operational weaknesses, will be expected to maintain capital
positions well above these minimum levels.
The federal banking agencies have proposed amending the capital adequacy
standards to provide for the consideration of interest rate risk in the overall
determination of a bank's capital ratio and to require banks with greater
interest rate risk to maintain adequate capital for the risk. It is uncertain
what effect these regulations, when implemented, would have on the Company and
the Bank.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"1991 Act") imposes a regulatory matrix which requires the federal banking
agencies to take prompt corrective action to deal with depository institutions
that fail to meet their minimum capital requirements or are otherwise in a
troubled 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% --
</TABLE>
23
<PAGE> 29
<TABLE>
<CAPTION>
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
---------------- -------------- ------------------ ------------- -----
<S> <C> <C> <C> <C>
Significantly less than 3% less than 6% less than 3% --
Undercapitalized
Critically 2% or less -- -- --
Undercapitalized tangible equity
</TABLE>
The Department of Banking will require the Bank to maintain a ratio (the
"primary capital ratio") of total capital (which is essentially Tier 1 capital
plus the allowance for loan losses) to total assets (defined as balance sheet
assets plus the allowance for loan losses) of at least 6%. In addition, the Bank
will be required to maintain a primary capital ratio of 8% during its first
three years of operation.
The capital guidelines can affect the Company and the Bank in several ways.
After completion of this Offering, the Company and the Bank will both have
capital ratios which are significantly greater than those required for "well
capitalized" institutions. However, rapid growth, poor loan portfolio
performance, poor earnings performance, or a combination of these factors, could
change the capital position of the Company and the Bank, making an additional
capital infusion necessary.
CRA AND FAIR LENDING
On April 19, 1995, the federal bank regulatory agencies adopted revisions
to the regulations promulgated pursuant to the Community Reinvestment Act (the
"CRA"), which are intended to set distinct assessment standards for financial
institutions. The revised regulation contains three evaluation tests: (a) a
lending test which will compare the institution's market share of loans in low-
and moderate-income areas to its market share of loans in its entire service
area and the percentage of a bank's outstanding loans to low- and
moderate-income areas or individuals, (b) a services test which will evaluate
the provision of services that promote the availability of credit to low- and
moderate-income areas, and (c) an investment test, which will evaluate an
institution's record of investments in organizations designed to foster
community development, small- and minority-owned businesses and affordable
housing lending, including state and local government housing or revenue bonds.
The regulation is designed to reduce the paperwork requirements of the current
regulations and provide regulators, institutions and community groups with a
more objective and predictable manner with which to evaluate the CRA performance
of financial institutions. The rule became effective on January 1, 1996 when
evaluation under streamlined procedures began for institutions with assets of
less than $250 million that are owned by a holding company with total assets of
less than $1 billion.
Congress and various federal agencies (including, in addition to the bank
regulatory agencies, the Department of Housing and Urban Development, the
Federal Trade Commission and the Department of Justice) (collectively the
"Federal Agencies") responsible for implementing the nation's fair lending laws
have been 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.
24
<PAGE> 30
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 December 31, 1996, 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> 31
================================================================================
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............................................................... 2
THE OFFERING............................................................... 3
USE OF PROCEEDS............................................................ 5
ESTIMATED EXPENDITURES..................................................... 5
PRO FORMA CAPITALIZATION................................................... 6
DIVIDENDS.................................................................. 7
BUSINESS OF THE COMPANY AND THE BANK....................................... 7
MANAGEMENT................................................................. 12
MARKET FOR COMMON STOCK AND RELATED
SHAREHOLDER MATTERS..................................................... 14
DESCRIPTION OF COMMON STOCK OF THE
COMPANY................................................................. 15
ANTITAKEOVER PROVISIONS OF THE
COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS ............................................................. 15
SUPERVISION AND REGULATION................................................. 18
LEGAL MATTERS.............................................................. 21
EXPERTS.................................................................... 21
</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> 32
EXHIBIT A
SUBSCRIPTION AGREEMENT
GBC Bancorp, Inc.
318 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
April ___, 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.
<TABLE>
<S> <C> <C>
Number of Shares
(minimum 500 shares):
--------------
-------------------------------------------------
Total Subscription Price Please PRINT or TYPE exact names in
(at $10.00 per share): $ which undersigned desires shares to be registered
-------------
</TABLE>
27
<PAGE> 33
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.
28
<PAGE> 34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
II - 1
<PAGE> 35
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)..................................... 28,000.00
Accounting Fees and Expenses (Estimate)................................ 3,000.00
Printing and Engraving Expenses (Estimate)............................. 4,500.00
Miscellaneous (Estimate)............................................... 864.00
------------
TOTAL ..................................................... $ 40,000.00
</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.
<TABLE>
<CAPTION>
Exhibit
Number Description
- -----------------------------
<S> <C>
3.1* Articles of Incorporation, as amended
3.2* Bylaws
</TABLE>
II - 2
<PAGE> 36
<TABLE>
<S> <C>
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
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 (for SEC use only).
</TABLE>
- --------------------------
*Previously filed in connection with the Registrant's initial filing on December
31, 1996.
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section
10 (a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events which, individually or together, represent a
fundamental change in the 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.
(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.
II - 3
<PAGE> 37
(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.
II - 4
<PAGE> 38
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this First Amendment
to Registration Statement to be signed on its behalf by the undersigned, in the
City of Lawrenceville, State of Georgia on April 1, 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 agent, with full power of substitution and
resubstitution, for such persons and in such person's 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 First
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 Executive April 1, 1997
Larry D. Key Officer)
/s/ John T. Hopkins III
- --------------------------- Executive Vice President, Secretary and April 1, 1997
John T. Hopkins III Treasurer, (Principal Financial and
Accounting Officer)
/s/ James B. Ballard*
- --------------------------- Director April 1, 1997
James B. Ballard
</TABLE>
II - 5
<PAGE> 39
<TABLE>
<CAPTION>
Name Position Date
- ---- -------- ----
<S> <C> <C>
/s/ Jerry M. Boles*
- ------------------- Director April 1, 1997
Jerry M. Boles
/s/ W. H. Britt*
- ---------------- Director April 1, 1997
W. H. Britt
/s/ Norris J. Nash*
- ------------------- Director April 1, 1997
Norris J. Nash
/s/ William S. Stanton*
- ----------------------- Director April 1, 1997
William S. Stanton
</TABLE>
*Signed by Larry D. Key as attorney in fact.
II - 6
<PAGE> 1
EXHIBIT 5.1
March 6 April 2, 1997
GBC Bancorp, Inc.
165 Nash Street
Lawrenceville, Georgia 30246
Dear Ladies and Gentlemen:
We are acting as special counsel to GBC Bancorp, Inc., a
Georgia corporation (the "Company"). In such capacity, we have supervised
certain proceedings taken by the Company in connection with the registration
under the Securities Act of 1933, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder (collectively,
the "Act"), of the offer and sale of a minimum of 950,000 shares and a maximum
of 12,000,000 shares (the "Shares") of common stock, $1.00 par value, of the
Company.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the documents and corporate records relating
to the authorization, issuance and sale of the Shares and have made such other
investigation as we have deemed appropriate and relevant in order to furnish the
opinion set forth below.
This opinion letter is limited by, and is in accordance with
the January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards are attached hereto as Exhibit A and are
incorporated in the opinion letter by this reference. In addition, it is our
belief that third parties, including, but not limited to, Company shareholders,
may not rely upon this opinion letter to support any claims against us arising
under applicable Georgia law. Notwithstanding the foregoing, the availability of
such a defense is subject to resolution by a court of competent jurisdiction,
the resolution of which shall have no effect on the rights and responsibilities
of the Company under applicable Georgia law and shall have no effect on the
Company's or our rights and responsibilities under federal securities laws.
Capitalized terms used in this opinion letter and not
otherwise defined herein shall have the meanings assigned to them in the
Interpretive Standards.
<PAGE> 2
GBC Bancorp, Inc.
April 2, 1997
Page 2
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as original
documents, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to questions of fact material and
relevant to our opinion, where such facts were not independently verified by us,
we have relied, to the extent we deemed such reliance proper, upon certificates
or representations of officers and representatives of the Company and
appropriate federal, state and local officials.
Based upon the foregoing, we are of the opinion that the
Shares have been duly authorized and when sold, will be validly issued, fully
paid and nonaccessible.
We hereby consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission by the Company in connection with the
offer and sale of the Shares.
This letter is furnished solely to you in connection with the
offer and sale of the Shares and may not be relied upon by any third party.
Sincerely yours,
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
<PAGE> 3
EXHIBIT A
INTERPRETIVE STANDARDS
APPLICABLE TO CERTAIN LEGAL OPINIONS
TO THIRD PARTIES IN CORPORATE TRANSACTIONS
EFFECTIVE JANUARY 1, 1992
PURPOSE AND SCOPE OF INTERPRETIVE STANDARDS
The purpose of these Interpretive Standards is to explain the meaning
of Opinion Letters (which incorporate these Interpretive Standards by
reference) addressed to non-client third parties in connection with corporate
acquisition or financing transactions. Included in these Interpretive Standards
are general qualifications to legal opinions, common assumptions as to fact and
law, standards governing an opinion that an agreement is "enforceable" and
interpretations of certain recurring legal opinions and confirmations of fact.
Incorporation in an Opinion Letter of these Interpretive Standards is intended
to shorten the content of the letter while expanding the mutual understanding
of its meaning. Any part of these Interpretive Standards, however, may be
overridden by a specific statement in an Opinion Letter which supersedes a
contrary Interpretive Standard.
Definitions of Terms Used in Interpretive Standards
The following capitalized terms have the following meanings when used
in these Interpretive Standards:
Agreement means the primary legal document which evidences the
Transaction.
Assets means all of the tangible and intangible real and personal
property of Company.
Company means the entity which is the client of Opinion Giver and on
whose behalf the Opinion Letter is given.
Documents means the Agreement, together with any other document
identified in the Opinion Letter, which contain one or more obligations of
Company related to the Transaction.
GBCC means the Georgia Business Corporation Code in effect on the date
of the Opinion Letter.
Law(s), whether or not a capitalized term, means the constitution,
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies of the Opining Jurisdiction and, unless otherwise
specified, federal law.
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Local Law means the statutes, administrative decisions, and rules and
regulations of any county, municipality or subdivision, whether created at the
federal, state or regional level.
Opining Jurisdiction means a jurisdiction, the law of which Opinion
Giver addresses.
Opinion means a legal opinion contained in an Opinion Letter.
Opinion Giver means the law firm or lawyer giving an Opinion.
Opinion Letter means the letter containing one or more Opinions or
confirmations of fact by Opinion Giver.
Opinion Recipient means the person or persons to whom the Opinion
Letter is addressed.
Other Agreements mean documents (other than the Documents) to which
Company is a party or by which Company is bound.
Other Counsel means counsel (other than Opinion Giver) providing a
legal opinion or confirmation of fact on aspects of the Transaction directed to
Opinion Recipient or Opinion Giver or both.
Other Jurisdiction means any jurisdiction (other than the Opining
Jurisdiction) the law of which is stipulated to be the governing law.
Personal Property means all of the tangible and intangible personal
property of Company.
Primary Lawyer Group has the meaning discussed in Interpretive
Standard 7.
Public Authority Documents means certificates issued by a governmental
office or agency, such as the Secretary of State, or by a private organization
having access to and regularly reporting on government files and records, as to
a person's property or status.
Remedies Opinion means an Opinion dealing with the enforceability
against Company of one or more Documents.
Transaction means the transaction with respect to which the Opinion
Letter is given.
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Qualifications To Each Opinion
1. Law Addressed by Opinion.
If an Opinion Letter is expressly limited to the Law of one or more
specified jurisdictions or to one or more discrete laws within one or more
jurisdictions, an Opinion with respect to any other law, or the effect of any
other law, is disclaimed.
2. Scope of Opinion.
An Opinion covers only those matters both essential to the conclusion
stated by the Opinion and, based upon prevailing norms and expectations found
among experienced legal practitioners in the Opining Jurisdiction, reasonable
in the circumstances. Other matters are not included in an Opinion by
implication. The following matters, including their effects and the effects of
noncompliance, are not covered by implication or otherwise in any Opinion,
unless coverage is specifically addressed in the Opinion Letter as provided by
Interpretive Standard 11:
<TABLE>
<S> <C>
(1) Local Law
(2) Law relating to permissible rates, computation or disclosure of interest, e.g., usury
(3) Antitrust and unfair competition law
(4) Securities law
(5) Fiduciary obligations
(6) Pension and employee benefit law, e.g., ERISA
(7) Regulations G, T, U and X of the Board of Governors of the Federal Reserve System
(8) Fraudulent transfer tax
(9) Environmental law
(10) Land use and subdivision law
(11) Except with respect to a No Consent Opinion (Interpretive Standard 28), Hart-Scott-Rodino, Exon-Florio
and other laws related to filing requirements, other than charter-related filing requirements, such as
requirements for filing articles of merger
(12) Except with respect to a No Violation Opinion (Interpretive Standard 27), law concerning creation,
attachment, perfection or priority of a security interest in any Assets
(13) Bulk transfer law
(14) Tax law
(15) Patent, copyright, trademark and other intellectual property law
(16) Racketeering law, e.g., RICO
(17) Criminal statutes of general application, e.g., mail fraud and wire fraud
(18) Health and safety law, e.g., OSHA
(19) Labor law
(20) Law concerning national or local emergency
</TABLE>
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3. Unwarranted Reliance.
Opinion Giver may not rely for purposes of the Opinion Letter upon
information, whether or not in a Public Authority Document, or (except in the
case of arbitrary or hypothetical assumptions contained in an overriding
agreement referred to in Interpretive Standard 11 or as stated in Interpretive
Standard 22 with respect to choice of law) upon an assumption otherwise
appropriate, if Opinion Giver has knowledge that such information or assumption
would be unreasonable. "Knowledge" or "recognizes" for purposes of the
foregoing sentence and wherever used in these Interpretive Standards means the
current awareness of information by any lawyer in the Primary Lawyer Group.
4. Reliance on Other Sources of Information.
Subject to Interpretive Standard 3, Opinion Giver may rely, without
investigation, upon facts established by a Public Authority Document, facts
provided by an agent of Company or others and, if discussed in the Opinion
Letter, facts asserted by a party to the Transaction in a representation or
warranty embodied in the Documents, provided:
(1) if not established by a Public Authority Document,
the facts do not constitute a statement, directly or in practical effect, of
the legal conclusion in question;
(2) the person providing facts is, in Opinion Giver's
professional judgment, an appropriate source; and
(3) if the facts are set forth in a certificate, Opinion
Giver has used reasonable professional judgment as to its form and content.
5. Scope of Opinion Giver's Inquiry.
Opinion Giver is presumed to have reviewed such documents and given
consideration to such matters of law and fact as Opinion Giver deemed
appropriate in order to give an Opinion or confirmation of fact, unless Opinion
Giver has expressly limited the scope of inquiry in the Opinion Letter. A
recital of specific documents reviewed or specific procedures followed, without
more, is not a limitation on the scope of Opinion Giver's inquiry for purposes
of the foregoing presumption.
6. Opinion or Confirmation Qualified by Knowledge of Opinion
Giver.
Whenever an Opinion Letter qualifies an Opinion or confirmation of
fact by the words "to our knowledge," "known to us" or words of similar
meaning, the quoted words mean the current awareness by lawyers in the Primary
Lawyer Group of information such lawyers recognize as relevant to the Opinion
or confirmation so qualified. The quoted words do not include within what is
known information not within such current awareness that might be revealed if a
canvass of lawyers outside
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the Primary Lawyer Group were made, if the Opinion Giver's files were searched
or if any other investigation were made.
7. "Primary Lawyer Group."
"Primary Lawyer Group" means that lawyer in Opinion Giver's
organization who signs the Opinion Letter and, solely as in information
relevant to an Opinion or confirmation issue, any lawyer in Opinion Giver's
organization who is responsible for providing the response concerning the
particular issue.
8. Who May Rely On Opinion.
Opinion Recipient and designated principals of Opinion Recipient, if
Opinion Recipient is identified in the Opinion Letter as an agent for
designated principals, are the only persons entitled to rely upon any Opinion
or confirmation of fact contained in the Opinion Letter, and then only for
purposes of the Transaction.
9. Other Counsel.
Opinion Giver's responsibility for the opinion of Other Counsel
depends upon what it stated in the Opinion Letter. A statement that Opinion
Giver has relied on an opinion of Other Counsel means only that Opinion Giver
believes that (i) based upon Other Counsel's professional reputation, it is
competent to render such opinion, and (ii) such opinion on its face appears to
address the matters upon which Opinion Giver places reliance. A statement that
Opinion Giver believes that Opinion Recipient is justified in relying on an
opinion of Other Counsel means that Opinion Giver has assumed the
responsibility for verifying the accuracy of the opinion of Other Counsel. If
no concurrence by Opinion Giver is expressed, no concurrence is implied. If
Opinion Giver merely identifies or remains silent with respect to the opinion
of Other Counsel, Opinion Giver assumes no responsibility for Other Counsel's
opinion, and Opinion Recipient may not assume that Opinion Giver has relied
upon Other Counsel's opinion.
10. Updating.
An Opinion Letter speaks as of the date of its delivery, and Opinion
Giver has no obligation to advise Opinion Recipient or anyone else of any
matter of fact or law thereafter occurring, whether or not brought to the
attention of Opinion Giver, even though that matter affects any analysis or
conclusion in the Opinion Letter.
11. Overriding Agreement.
Opinion Giver and Opinion Recipient may agree upon arbitrary or
hypothetical assumptions that may not be true and upon qualifications,
standards or interpretations inconsistent with these Interpretive Standards.
Any such agreement with respect to such assumptions, qualifications,
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standards or interpretations, when described with reasonable particularity in
the Opinion Letter, will supersede any contrary provision of these Interpretive
Standards.
Assumptions
12. Assumptions As To Parties Other Than Company.
Opinion Recipient in the Transaction has acted in good faith and
without notice of any defense against enforcement of rights created by, or
adverse claim to any property transferred as part of, the Transaction. Each
party to the Transaction other than Company has complied with all laws
applicable to it that affect the Transaction.
13. Assumptions As To Natural Persons and Documents.
Each natural person acting on behalf of any party to the Transaction
has sufficient legal competency to carry out such person's role in the
Transaction. Each document submitted to Opinion Giver for review is accurate
and complete, each document purporting to be original is authentic each
document purporting to be a copy conforms to an authentic original, and each
signature on a document is genuine.
14. Assumption As To Transaction.
The Transaction complies with any test required by law of good faith
or fairness. Each party will act in accordance with the terms and conditions of
the Documents.
15. Assumption As To Accessibility of Laws.
Each Law for which Opinion Giver is deemed to be responsible is
published, accessible and generally available to lawyers practicing in the
Opining Jurisdiction.
16. Assumptions As To Company.
No discretionary act of Company or on its behalf will be taken after
the date of the Transaction if such act might result in a violation of law or
breach or default under any agreement, decree, writ, judgment or court order.
Company will obtain all permits and governmental approvals and take all other
actions which are both (i) relevant to performance of the Documents or
consummation of the Transaction, and (ii) required in the future under
applicable law. Company holds requisite title and rights to its Assets.
17. Assumptions As To Other Agreement.
Any Other Agreement will be enforced as written.
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18. Assumption As To Understanding.
There is no understanding or agreement not embodied in a Document
among parties to the Transaction that would modify any term of a Document or
any right or obligation of a party.
19. Assumption As To Absence of Mistake or Fraud.
With respect to the Transaction and the Documents, there has been no
mutual mistake of fact and there exists no fraud or duress.
20. Assumption As To Invalidity.
No issue of unconstitutionality or invalidity of a relevant Law exists
unless a reported case has so held.
Remedies Opinion Standards
21. Meaning of Remedies Opinion.
A. General Meaning. The Remedies Opinion, with respect to any
referenced Document, and subject to the limitations contained in these
Interpretive Standards and in the Opinion Letter, means that:
(i) a contract has been formed under the law of contracts
of the jurisdiction applicable under Interpretive Standard 22;
and
(ii) under laws normally applicable to contracts like the
Document, to parties like the Company and to transactions like
the Transaction, each obligation imposed on Company by the
Document, each agreement made by Company in the Document, and
each right, benefit and remedy conferred by Company in the
Document, will be given effect as stated in the Document.
B. Existence of Contract. The professional judgment reflected in
subparagraph A(i) above requires the Opinion Giver to conclude that:
(i) All legal requirements under contract law for the
formation of a contract of the type involved in the referenced
Document effective against Company (other than requirements that would
be covered by a Corporate Status Opinion, a Corporate Powers Opinion
and a Corporate Acts Opinion discussed at Interpretive Standards 24,
25 and 26) are met, such as necessary formalities (including
compliance with any applicable statute of frauds), consideration
(where necessary), definiteness, and the inclusion of essential terms.
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(ii) The Document does not violate a law as to
formation of contracts that would prevent a court presented with the
Document from enforcing it.
(iii) Company does not presently have available any
contractual defense to the Document, such as the statute of
limitations.
22. Choice of Law in Remedies Opinion.
If a Document covered by the Remedies Opinion contains no governing
law provision, or contains a governing law provision which names the Opining
Jurisdiction, the Remedies Opinion means that if Company is brought before a
proper court of the Opining Jurisdiction to enforce rights under the Document,
and if such court applies the substantive law of the Opining Jurisdiction, the
result will be as stated in the Opinion and these Interpretive Standards.
If the Document contains a governing law provision which names a
jurisdiction other than the Opining Jurisdiction, the Remedies Opinion does not
opine whether any court of any jurisdiction will give effect to the governing
law provision in the Agreement, but assumes that if Company is brought before a
proper court of the Opining Jurisdiction to enforce rights under the Document,
such court will apply the substantive law of the Opining Jurisdiction,
notwithstanding the governing law provision in the Document, and based upon
such assumption, the result will be as stated in the Opinion and these
Interpretive Standards.
The Remedies Opinion does not extend to the content or effect of any
law other than the law of the Opining Jurisdiction and federal law.
23. Exceptions to the Remedies Opinion.
Any Remedies Opinion contained in an Opinion Letter which incorporates
these Interpretive Standards by reference will be deemed not to address the
matters excluded in Interpretive Standard 2 and subject to the following
exceptions:
(i) The effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights and remedies of
creditors. This includes the effect of the Federal Bankruptcy Code in
its entirely, including manner of contract rejection, fraudulent
conveyance and obligation, turn-over, preference, equitable
subordination, automatic stay, conversion of a non-recourse obligation
into a recourse obligation, and substantive consolidation. This also
includes state laws regarding fraudulent transfers, obligations, and
conveyances, including O.C.G.A. Section 18-2-20, et. seq., and state
receivership laws.
(ii) The effect of general principles of equity, whether
applied by a court of law or equity. This includes the following
concepts: (a) principles governing the availability of specific
performances, injunctive relief or other traditional equitable
remedies; (b) principles affording traditional equitable defenses
(e.g., waiver, laches and estoppel); (c) good faith and
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fair dealing; (d) reasonableness; (e) materiality of the breach; (f)
impracticability or impossibility of performance; (g) the effect of
obstruction, failure or perform or otherwise to act in accordance with
an agreement by any person other than Company; (h) the effect of
Section 1-102(3) of the Uniform Commercial Code; and (i)
unconscionability.
(iii) The effect and possible unenforceability of
contractual provisions providing for choice of governing law.
(iv) The possible unenforceability of provisions
purporting to waive certain rights of guarantors.
(v) The possible unenforceability of provisions requiring
indemnification for, or providing exculpation, release or exemption
from liability for, action or inaction, to the extent such action or
inaction involves negligence or willful misconduct or to the extent
otherwise contrary to public policy.
(vi) The possible unenforceability of provisions
purporting to require arbitration of disputes.
(vii) The possible unenforceability of provisions
prohibiting competition, the solicitation or acceptance of customers,
of business relationships or of employees, the use of disclosure of
information, or other activities in restraint of trade.
(viii) The possible unenforceability of provisions imposing
increased interest rates or late payment charges upon delinquency in
payment or default or providing for liquidated damages, or for
premiums on prepayment, acceleration, redemption, cancellation, or
termination, to the extent any such provisions are deemed to be
penalties or forfeitures.
(ix) The possible unenforceability of waivers or advance
consents that have the effect of waiving statutes of limitation,
marshaling of assets or similar requirements, or as to the
jurisdiction of courts, the venue of actions, the right to jury trial
or, in certain cases, notice.
(x) The possible unenforceability of provisions that
waivers or consents by a party may not be given effect unless in
writing or in compliance with particular requirements or that a
person's course of dealing, course of performance, or the like or
failure or delay in taking actions may not constitute a waiver of
related rights or provisions or that one or more waivers may not under
certain circumstances constitute a waiver of other matters of the same
kind.
(xi) The effect of course of dealing, course of
performance, or the like, that would modify the terms of an agreement
or the respective rights or obligations of the parties under an
agreement.
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(xii) The possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies elected or
that all remedies are cumulative.
(xiii) The effect of O.C.G.A. Section 13-1-11 on provisions
relating to attorneys fees.
(xiv) The possible unenforceability of provisions that
determinations by a party or party's designee are conclusive.
(xv) The possible unenforceability of provisions
permitting modifications of an agreement only in writing.
(xvi) The possible unenforceability of provisions that the
provisions of an agreement are severable.
(xvii) The effect of laws requiring mitigation of damages.
(xviii) The possible unenforceability of provisions
permitting the exercise, under certain circumstances, of rights
without notice or without providing opportunity to cure failures to
perform.
(xix) the effect of agreements as to rights of set off
otherwise than in accordance with the applicable law.
Interpretations
24. Corporate Status Opinion.
An Opinion to the effect that Company was duly organized as a
corporation and is existing in good standing under the laws of the State of
Georgia (Corporate Status Opinion) is subject to the following understandings:
(1) "duly organized" means that Company (i) properly
complied with the Georgia statutory requirements for incorporation,
and (ii) property complied with the Georgia statutory requirements for
organization;
(2) "is existing" means that Company is a corporation
which has not ceased to exist under the GBCC;
(3) The Opinion refers to the status of Company only for
purposes of and under the GBCC; and
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(4) "good standing" has no official meaning under the
GBCC, and for purposes of any Opinion with respect to a corporation
subject to the GBCC means;
(i) Company has filed no notice of intent to
dissolve under Section 1403 ofthe GBCC;
(ii) the Secretary of State has signed no
certificate of dissolution with respect to Company;
(iii) the Superior Court of the county of Company's
registered office has entered no decree ordering Company
dissolved; and
(iv) Company has satisfied its tax and annual
registration requirements under Section 1420 of the GBCC.
An Opinion limited to the conclusion that the Company "is a
corporation" means that third parties may not challenge Company's corporate
existence, the State of Georgia recognizes such existence, and the state may
challenge Company's incorporation only under the circumstances described in
Section 203(b) of the GBCC.
25. Corporate Powers Opinion.
An Opinion to the effect that Company has the corporate power to
execute and deliver a Document, to perform its obligations under a Document, to
own and use its Assets and to conduct its business (Corporate Powers Opinion)
is subject to the following understandings:
(1) the Opinion refers only to the GBCC and Company's
articles of incorporation as sources of corporate power;
(2) "power" refers only to whether the acts referenced in
the Opinion are ultra vires;
(3) the Opinion is built upon an assumption that the
Corporate Status Opinion could also be given;
(4) "own and use" refers to every right Company has in
the Assets;
(5) the Opinion refers to Assets owned and used and
business conducted on the date of the Opinion, and not those
contemplated for future ownership, use or conduct except to the extent
the acquisition of the Assets or conduct of the business is concurrent
with, and recognized by Opinion Giver as constituting part of, the
consummation of the Transaction; and
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(6) the Opinion does not affirm that Company is engaged
in no unlawful business and in no business which Georgia law would not
permit to be conducted by a corporation incorporated under the GBCC.
26. Corporate Acts Opinion.
An Opinion to the effect that Company has duly authorized the
execution and delivery of, and performance by Company under, the Documents and
has duly executed and delivered the Documents (Corporate Acts Opinion) is
subject to the following understandings:
(1) the Opinion affirms compliance with all corporate
action necessary under the GBCC, Company's articles of incorporation
and bylaws and, if applicable, Company's duly adopted policies and
practices for delegation of authority in order to authorize the
execution and delivery of, and performance under, the Documents;
(2) the Opinion affirms that the execution and delivery
of the Documents was, and Company's performance of its obligations
under the Documents in accordance with the Documents as written will
be, in accordance with the authorization;
(3) the Opinion is built upon an assumption that the
Corporate Status Opinion and the Corporate Powers Opinion could also
be given;
(4) the Opinion addresses no law other than the GBCC and
applicable law of agency.
27. No Violation Opinion.
An Opinion to the effect that Company's execution and delivery of the
Documents do not, and if Company were now to perform its obligations under the
Documents such performance would not, result in (i) a violation of Company's
articles of incorporation, bylaws or any law to which Company or its Assets are
subject, or (ii) a breach of or default under described agreements, or (iii) a
creation or imposition of contractual liens or security interests arising out
of described agreements, or (iv) a violation of any known judicial or
administrative decree, writ, judgment or order to which Company or its Assets
are subject (No Violation Opinion) is subject to the following understandings:
(1) a "violation" or "breach of default" means any act or
omission that, by itself or upon notice or the passage of time or
both, would constitute a violation, breach or default giving rise to
a remedy under the document or law in question;
(2) the Opinion addresses only the relevant facts and law
as they exist on the date of the Opinion Letter;
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(3) "agreements" refers to agreements, indentures,
documents and other instruments in writing, identified in the Opinion
Letter;
(4) references to any law or to "decree, writ, judgment
or order" or the like include only those (i) which either prohibit
performance by Company under the Documents or subject the Company to a
fine, penalty or other similar sanction, and (ii) which a lawyer,
using customary professional diligence, would reasonably recognize as
applicable to the Company and the Transaction;
(5) the Opinion addresses only whether the specific terms
of the relevant Document violate the law or cause a breach of or
default under the specific terms of an obligation created by a
described Other Agreement, taking into account information provided in
accordance with Interpretive Standard 4 and other facts known to
Opinion Giver;
(6) the Opinion does not address acts permitted or
contemplated but not required, or inferred but not set forth, by the
relevant Document, except to the extent such acts are concurrent with,
and recognized by Opinion Giver as constituting part of, the
consummation of the Transaction;
(7) to the extent the interpretation of words in
described agreements requires resort to law, the law is that of the
Opining Jurisdiction; and
(8) the Opinion does not address liens or security
interests created by or in favor of Opinion Recipient, created under a
Document or arising by operation of law.
28. No Consent Opinion.
An Opinion to the effect that no consent, approval, authorization or
other action by, or filing with, any governmental authority is required for
Company's execution and delivery of the Documents and consummation of the
Transaction (No Consent Opinion) is subject to the understandings set forth in
Interpretive Standards 2 and 27(2) and (4). "Required" means that there is no
governmental consent, approval, authorization or filing, the absence of which
would either prohibit performance by Company of its obligations under the
Documents or subject Company to a fine, penalty or other similar sanction.
29. Capitalization Opinion.
An Opinion to the effect that described shares have been duly
authorized and are, or upon issuance will be, validly issued, fully paid and
nonaccessible (Capitalization Opinion) is subject to the following
understandings:
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(1) the Opinion affirms compliance with all corporate
action necessary to create and issue the shares under the Georgia
corporate law in effect at the time of such creation and issuance
("Corporate Code") and Company's articles of incorporation and bylaws;
(2) "duly authorized" means Company had the corporate
power to create the shares, the shares so created have the rights and
attributes required by the Corporate Code, and the rights and
attributes of the shares so created were permitted by the Corporate
Code and are permitted by the GBCC and Company's articles of
incorporation and bylaws;
(3) "validly issued" means that at the time of issuance
the Company had sufficient authorized and unissued shares to permit
the shares to be issued, Company took the steps necessary to accord
shareholder status to the persons to whom the shares were issued and
Company has taken no step to deprive the shares of the "validly
issued" status;
(4) "fully paid and nonaccessible" means that the
consideration received upon issuance of the shares (i) was legally
sufficient, (ii) satisfied the requirements of the Corporate Code,
Company's articles of incorporation and bylaws, and relevant corporate
resolutions, (iii) was approved (e.g., as to value of property or
services) by the directors or shareholders, as required, and (iv) was
in fact received, subject to paragraph (1) above; and
(5) the Opinion is based upon the assumption that the
Corporate Status Opinion could also be given.
30. Share Transfer Opinion.
The only laws addressed in any Opinion as to the rights of a seller in
shares of Company acquired by any purchaser are the GBCC and Article 8 of the
UCC, and no Opinion is given regarding liens (other than UCC security
interests) that may be perfected without filing or possession of the share
certificate. The Opinion is based upon the assumption that the Capitalization
Opinion could also be given.
31. Personal Property Transfer Opinion.
An Opinion as to Company's transfer of Personal Property expresses no
opinion as to Company's title. See Interpretive Standard 16.
32. Foreign Qualification Confirmation.
A confirmation to the effect that Company is qualified to transact
business as a foreign corporation in any one or more named jurisdictions is not
a legal opinion, but a statement which may be based solely upon one or more
certificates referenced in the Opinion Letter and limited in meaning to the
words of each certificate. No implication arises from such confirmation that
certificates have
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been acquired from all jurisdictions in which Company is required to be
qualified, or that certificates obtained are from the appropriate public
officials in the jurisdictions referenced.
33. Litigation Confirmation.
A confirmation regarding litigation pending or threatened in writing
against Company or any Assets derives from Opinion Giver's knowledge as defined
at Interpretive Standard 6 and certificate reliance discussed at Interpretive
Standard 4, but not from any reviews of public or court records or files of
Opinion Giver or others.
Incorporation by Reference Accord
34. These Interpretive Standards may be incorporated by reference
in the Opinion Letter by a statement similar to the following:
This Opinion Letter is limited by, and is in accordance with,
the January 1, 1992 edition of the Interpretive Standards
applicable to Legal Opinions to Third Parties in Corporate
Transactions adopted by the Legal Opinion Committee of the
Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards are incorporated in this Opinion
Letter by this reference.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated January 10, 1997, accompanying the financial
statements of GBC Bancorp, Inc., as of and for the period ending December 31,
1996, contained in the Registration Statement and Prospectus. We consent to the
use of the aforementioned report in the Registration Statement and Prospectus,
and to the use of our name as it appears under the caption "Experts"
MAULDIN & JENKINS, LLC
/s/ Mauldin & Jenkins, LLC
April 2, 1997
