<PAGE>
As filed with the Securities and Exchange Commission on January 21, 1998.
Registration No. 333-37405
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
AMENDMENT NO. 1
to the
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------------------------
BUCKHEAD COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Georgia 6021 58-2265980
- --------------------------------- ---------------------------- ------------------------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
415 East Paces Ferry Road, N.E., Atlanta, Georgia 30305-3398
(404) 231-2265
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------------------------------
Marvin Cosgray
President and Chief Executive Officer
415 East Paces Ferry Road, N.E.
Atlanta, Georgia 30305-3398
(404) 231-2265
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------------------------
Copies of all communications, including copies of all communications
sent to agent for service, should be sent to:
Larry W. Shackelford, Esq.
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
(404) 233-7000
(404) 365-9532 (Fax)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [X].
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] 33-_________________
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. [_] 33-_________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [_].
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
================================================================================
<PAGE>
PROSPECTUS
BUCKHEAD COMMUNITY BANCORP, INC.
A Proposed Holding Company For
[THE BUCKHEAD COMMUNITY BANK, N.A. LOGO]
(Proposed)
2,400,000 SHARES OF COMMON STOCK
------------------------
This Prospectus relates to the offer of a minimum of 1,600,000 and a
maximum of 2,400,000 shares of common stock, par value $.01 per share (the
"Common Stock"), to be issued by BUCKHEAD COMMUNITY BANCORP, INC., a Georgia
corporation (the "Company"), which has been organized to own and control all of
the capital stock of THE BUCKHEAD COMMUNITY BANK, N.A. (Proposed) (the "Bank").
The Company's mailing address and telephone number are currently 415 East Paces
Ferry Road, N.E., Atlanta, Georgia 30305-3398, (404) 231-2265. The Organizers
(as hereinafter defined) filed an application to organize the Bank as a national
banking association with the United States Office of the Comptroller of the
Currency on November 8, 1996. It is currently anticipated that there will be no
active trading market for the Common Stock.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES 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 DEPOSITS OR SAVINGS ACCOUNTS
OR SAVINGS DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<TABLE>
<CAPTION>
=================================================================================================================================
Price to Public(1) Underwriting Discounts and Proceeds to the Company(3)
Commissions(2)
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<S> <C> <C> <C>
Per Share $ 5.00 None $ 5.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total (Minimum)............................... $ 8,000,000 None $ 8,000,000
(Maximum)............................... $12,000,000 None $12,000,000
=================================================================================================================================
</TABLE>
(1) The offering price has been arbitrarily established by the Company. See
"Risk Factors - Determination of Offering Price without Regard to Market
Price."
(2) This offering is expected to be made on behalf of the Company solely by
certain of its directors and executive officers, to whom no commission or
other compensation will be paid on account of such activity, although they
will be reimbursed for reasonable expenses incurred in the offering. The
Company believes such participating officers and directors shall not be
deemed brokers under the Securities Exchange Act of 1934 (the "Exchange
Act") based on reliance on Rule 3a4-1 of the Exchange Act.
(3) Before deducting expenses related to this offering, estimated to be
approximately $40,000. See "Use of Proceeds - By the Company."
INVESTMENT IN THESE SECURITIES INVOLVES SIGNIFICANT RISK. SEE "RISK FACTORS"
ON PAGE 7. AFTER COMPLETION OF THE OFFERING, BUT PRIOR TO THE COMPANY OBTAINING
ALL FINAL REGULATORY APPROVALS FOR THE BANK TO COMMENCE BANKING OPERATIONS AND
RECEIPT OF ITS CHARTER, IT IS POSSIBLE THAT THE BANK MAY NOT BE ABLE TO COMMENCE
BANKING OPERATIONS, AND IN SUCH EVENT UPON LIQUIDATION OF THE COMPANY
SHAREHOLDERS COULD RECEIVE LESS THAN THEIR ORIGINAL SUBSCRIPTION PRICE. SEE
"RISK FACTORS - RETURN OF LESS THAN SUBSCRIPTION AMOUNT."
Sale of the Common Stock will commence on or about January 13, 1998. This
is a "best efforts" offering by the Company, and it will be terminated by the
Organizers upon the sale of 2,400,000 shares or September 30, 1998, whichever
occurs first, unless the offering is extended, at the discretion of the Company,
for additional periods ending no later than March 31, 1999. However, the
Organizers reserve the right to terminate the offering at any time after the
sale of the minimum offering of 1,600,000 shares.
This Prospectus sets forth information which a prospective investor should
know about the Company before investing. Prospective investors should carefully
review the Prospectus before subscribing for shares. Subscribers must warrant in
the Subscription Agreement that they have received a copy of this Prospectus.
See "The Offering - How to Subscribe." The Company has established a minimum
subscription of 2,000 shares. However, the Organizers reserve the right to waive
this limit without notifying any subscriber. The Organizers (together with
members of their immediate families) intend to purchase an aggregate of at least
690,000 shares (43.1% if the minimum number of shares is sold and 28.8% if the
maximum number is sold) of the Common Stock to be sold in the offering. In
addition, the Organizers reserve the right to purchase up to 100% of the shares
of stock being offered hereunder if necessary to complete the offering.
Proceeds of the offering will be deposited in an escrow account under the
control of SunTrust Bank, Atlanta, as escrow agent, pending receipt of
subscriptions and subscription proceeds for a minimum of 1,600,000 shares and
satisfaction of certain other conditions of the offering. See "The Offering -
Conditions of the Offering and Release of Funds." If the offering is terminated
prior to completion, subscription payments will be promptly returned by the
Company to the subscribers with interest actually earned on subscription
payments. Any subscription proceeds accepted after satisfaction of the
conditions set forth above but before termination of this offering will not be
deposited in escrow but will be available for immediate use by the Company to
fund offering and organizational expenses and for working capital.
The date of this Prospectus is January_____, 1997
<PAGE>
REPORTS TO SHAREHOLDERS
The Company is not a reporting company as defined by the Securities and
Exchange Commission (the "SEC"). The Company will furnish its shareholders with
annual reports containing audited financial information for each fiscal year and
will distribute quarterly reports for the first three quarters of each fiscal
year containing unaudited summary financial information. The Company's fiscal
year ends on December 31.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933 with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to the Company and
the Common Stock, reference is hereby made to the Registration Statement and the
exhibits thereto. Statements contained in this Prospectus concerning the
provisions of such documents are necessarily summaries of the material
provisions of such documents and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed with the SEC.
The Registration Statement may be inspected and copied at, and copies of the
Registration Statement may be obtained at prescribed rates from, the public
reference facilities of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549, as well as the SEC's Regional Offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 75 Park Place, Room 1400, New
York, New York 10007. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, DC 20549. In addition, the Company is required to file electronic
versions of the documents with the SEC through the SEC's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. The SEC maintains a World Wide
Web site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC.
The Company and the Organizers have filed or will file various applications
with the Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Federal Reserve Bank of Atlanta and the Georgia
Department of Banking and Finance. 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 in public files and records maintained by the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation, the
Federal Reserve Bank of Atlanta and the Georgia Department of Banking and
Finance, is inconsistent with information presented in this Prospectus, such
other information is superseded by the information presented in this Prospectus.
Projections appearing in the applications were based on assumptions that the
Organizers believed were 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 any reliance on
them for purposes of making an investment decision.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus.
The shares of Common Stock offered hereby are not deposits or savings
accounts or savings deposits and are not insured or guaranteed by the FDIC or
any other governmental agency.
The Company
Buckhead Community Bancorp, Inc. (the "Company") was incorporated under the
laws of the State of Georgia on October 15, 1996, primarily to hold all of the
capital stock of its proposed national banking subsidiary, The Buckhead
Community Bank, N.A. (Proposed) (the "Bank"). The Company may not acquire the
capital stock of the Bank without the prior approval of the Federal Reserve Bank
of Atlanta (the "Federal Reserve"), as the delegate of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), and the Georgia
Department of Banking and Finance (the "Georgia Department"). The Company will
file an application for Federal Reserve approval once it obtains preliminary
approval of the application for a charter from the United States Office of the
Comptroller of the Currency (the "OCC"). The Company initially will engage in
no business other than owning and managing the Bank.
The Bank
The Organizers (as defined below) filed an application with the OCC on
November 8, 1996, to charter the Bank as a national banking association. The
Organizers also filed an application on November 8, 1996, with the Federal
Deposit Insurance Corporation (the "FDIC") for insurance by the FDIC of the
deposits of the Bank. The Bank may not conduct any banking business until the
OCC grants final approval of the Bank's application and issues the Bank a
charter and the FDIC grants deposit insurance to the Bank. The issuance of a
charter will depend, among other things, upon compliance with certain legal
requirements that may be imposed by the OCC, including initial capitalization of
the Bank of an amount which the Organizers believe will be not less than
$8,000,000. In order to receive deposit insurance, the Bank must also comply
with certain legal requirements that may be imposed by the FDIC. See "The
Offering" and "Supervision and Regulation." Additionally, the Company must
obtain the approval of the Federal Reserve and the Georgia Department to become
a bank holding company before acquiring the capital stock of the Bank.
The Bank will engage in a general commercial banking business, emphasizing
the needs of small businesses and professionals primarily in the Buckhead area
of Atlanta, Georgia (the "Buckhead Area"). The Organizers expect that the Bank
will be located near the center of the Buckhead Area, on East Paces Ferry Road
between Peachtree Road and Piedmont Road. The Buckhead Area is an affluent
section of the City of Atlanta about five miles north of downtown. The Buckhead
market area extends roughly from the convergence of I-75 and I-85 at the north
end of the downtown connector, northward to the northern city limits of Atlanta,
bounded on the east by the DeKalb County line and on the west by the Cobb County
line. The Bank will not initially have trust powers. The Bank may in the future
offer a full-service trust department, but it cannot do so without the prior
approval of the OCC. See "Proposed Business."
3
<PAGE>
Marvin Cosgray, the proposed President of the Bank, has over 26 years of
experience in the commercial banking industry. The Organizers believe that the
proposed President's banking experience and the extensive business experience
and contacts of the Organizers in the Buckhead Area should create immediate
business opportunities for the Bank. See "Management." The Organizers
presently are engaged in completing the tasks necessary to open the Bank,
although no assurances can be given that the Bank will open for business or that
the projected opening date can be achieved.
The principal executive offices of the Company are located at 415 East
Paces Ferry Road, N.E., Atlanta, Georgia 30305-3398. The Organizers currently
plan for the Bank to be located at the same address.
The Organizers
The organizers of the Company and the Bank (the "Organizers") are Hugh C.
Aldredge, Marvin Cosgray, J. Rex Fuqua, Julian LeCraw, Sr., R. Charles
Loudermilk, Sr., Larry P. Martindale and William T. Towles. Additional
individuals may be added as Organizers, subject to regulatory approval. All of
the Organizers will serve as directors of the Company and the Bank. See
"Management."
The Organizers (together with members of their immediate families) intend
to purchase an aggregate of at least 690,000 shares of the Common Stock to be
sold in this offering. The Organizers may subscribe for up to 100% of the shares
to be sold in the offering if necessary to help the Company achieve the minimum
subscription level necessary to release subscription proceeds from escrow, and
some Organizers may decide to purchase additional shares even if the minimum
subscription amount has been achieved. Any shares purchased by the Organizers in
excess of their original commitment will be purchased for investment and not
with a view to the resale of such shares. Because purchases by the Organizers
may be substantial, investors should not place any reliance on the sale of a
specified minimum offering amount as an indication of the merits of this
offering or that an Organizer's investment decision is shared by unaffiliated
investors. See "The Offering" and "Management."
The Offering
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<CAPTION>
<S> <C>
Security Offered Common Stock of the Company, par value $.01 per share
Offering Price $5.00 per share
Number of Shares Offered Minimum: 1,600,000
Maximum: 2,400,000
Use of Proceeds The Company will use the net proceeds of the offering
(gross proceeds less offering expenses, which are
estimated to be $40,000) to capitalize the Bank
through the purchase of capital stock of the Bank,
subject to regulatory approval; to pay organizational
expenses of the Company; and to provide working
capital. The Company will use a minimum of $7,960,000
of the net proceeds, together with $40,000 of existing
capital, to capitalize the Bank of a minimum of
$8,000,000. The Company plans to retain sums in excess
of the minimum necessary to capitalize the Bank at the
Company and initially invest the sums in United States
government securities or as a deposit at the Bank. The
Company may be required by the OCC
</TABLE>
4
<PAGE>
to capitalize the Bank at a level in excess
of the minimum of $8,000,000, in which case
the Company would have to receive net
proceeds in the offering in excess of the
minimum or obtain additional capital from
other sources. If the OCC requires that the
Bank be capitalized with an amount in excess
of the minimum of $8,000,000, the Company
plans to seek additional subscriptions up to
the maximum subscription of $12,000,000. The
Bank will use the capital received from the
sale of its stock to the Company to provide
working capital to be used for business
purposes, including making loans and
investments. See "Use of Proceeds - By the
Bank."
Return of Less Than If the conditions for releasing subscription
Subscription Amount funds from escrow are met and such funds are
released but final regulatory approval to
commence banking operations is not obtained
from the OCC or the FDIC or the Bank does
not open for any other reason, it is
possible that subscribers could be returned
an amount less than their original
investment. See "Risk Factors - Return of
Less Than Subscription Amount."
Conditions to Offering This offering will be terminated and all
subscription funds, together with interest
actually earned thereon, will be returned
promptly to subscribers unless on or before
September 30, 1998 (or such later date if
the offering is extended by the Company for
additional periods not to extend beyond
March 31, 1999), (i) the Company has
accepted subscriptions and payment in full
for a minimum of 1,600,000 shares; (ii) the
Company has obtained approval of the Federal
Reserve and the Georgia Department to
acquire the capital stock of the Bank and
thereafter to become a bank holding company;
and (iii) the Bank has received preliminary
approval of its application for a charter
from the OCC and of its application for
deposit insurance from the FDIC.
Subscription proceeds for shares will be
deposited promptly in an escrow account with
SunTrust Bank, Atlanta, as escrow agent (the
"Escrow Agent"), under the terms of an
escrow agreement (the "Escrow Agreement"),
pending the satisfaction of the conditions
set forth above or the termination of the
offering. Subscriptions are binding on
subscribers and may not be revoked by
subscribers except with the consent of the
Company. Any subscription proceeds accepted
after satisfaction of the conditions set
forth above but before termination of this
offering will not be deposited in escrow but
will be available for immediate use by the
Company to fund offering and organizational
expenses and for working capital. See "The
Offering."
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 reasonable expenses
incurred in the offering.
5
<PAGE>
Risk Factors
An investment in the shares offered hereby involves certain risks,
including, among others, lack of an operating history, dependence on key
employees of the Bank, significant control of the Company by the Organizers,
absence of an existing market for the Common Stock and lack of assurance that an
active trading market in the Common Stock will develop, no intention to pay
dividends in the foreseeable future, and competition from a number of other
financial institutions with substantially greater financial and other resources
than the Bank will have. See "Risk Factors."
6
<PAGE>
RISK FACTORS
An investment in the shares offered hereby involves certain risks. A
subscription for shares should be made only after careful consideration of the
risk factors set forth below and elsewhere in this Prospectus and should be
undertaken only by persons who can afford an investment involving such risks.
The shares of Common Stock offered hereby are not deposits or savings accounts
or savings deposits and are not insured or guaranteed by the FDIC or any other
governmental agency.
Return of Less Than Subscription Amount. The amounts paid by subscribers
in this offering will be held in escrow pending receipt of subscriptions and
subscription proceeds for a minimum of 1,600,000 shares and satisfaction of
certain other conditions of the offering. See "The Offering - Conditions of the
Offering and Release of Funds." If these conditions are not met by September 30,
1998, or by such subsequent date, not beyond March 31, 1999, to which the
offering may be extended by the Company, all subscriptions will be returned
promptly in full along with interest actually earned thereon. If these
conditions are satisfied, the subscription amounts held in escrow may be paid to
the Company and shares issued to subscribers, and all interest earned on the
subscription proceeds will be retained by the Company.
However, even if the Company meets the conditions for release of the
subscription funds from escrow, there is no assurance that the Bank will open
for business. If the conditions for releasing subscription funds from escrow are
met and such funds are released but final regulatory approval to commence
banking operations is not obtained from the OCC or the FDIC or the Bank does not
open for any other reason, the Company's board of directors (the "Board of
Directors") intends to propose that the shareholders approve a plan to liquidate
the Company. Upon such a liquidation, the Company would be dissolved and the
Company's net assets (generally consisting of the amounts received in this
offering plus any interest earned thereon, less the amount of all costs and
expenses incurred by the Company and the Bank, including the salary of the
President and Chief Executive Officer of the Company and the Bank and other pre-
opening expenses) would be distributed to the shareholders. In such event, the
Company will have incurred numerous expenses related to the organization of the
Company and the Bank, and the amount distributed to shareholders may be
substantially less than the subscription amount, and in an extreme case
shareholders may not be returned any amount.
Lack of Operating History; Lack of Initial Profitability. The Company and
the Bank currently are in the organizational stage, and neither has any
operating history. As a consequence, prospective purchasers of the shares have
limited information on which to base an investment decision. As a bank holding
company, the Company's profitability will depend upon the Bank's operations. The
Bank's proposed operations are subject to the risks inherent in the
establishment of any new business and, specifically, of a new bank. The Company
expects that the Bank will incur substantial initial expenses and may not be
profitable for several years after commencing business, if ever. Shareholders
are likely to experience additional dilution in the book value of the Common
Stock due to operating losses expected to be incurred during the initial years
of the Bank's operations. See "Proposed Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Dependence on Key Employee. As a new enterprise, the Company and the Bank
will be materially dependent on the performance of Marvin Cosgray, who will be
President and Chief
7
<PAGE>
Executive Officer of the Company and the Bank. The loss of the services of Mr.
Cosgray or his failure to perform his management functions in the manner
anticipated by the Organizers could have a material adverse effect on the
Company and the Bank. The Company has entered into an employment agreement with
Mr. Cosgray (the "Employment Agreement") pursuant to which Mr. Cosgray will be
employed as President and Chief Executive Officer of the Bank. The Employment
Agreement provides for the employment of Mr. Cosgray for a three-year term,
subject to earlier termination by the Company for cause, upon the death or
disability of Mr. Cosgray, or otherwise if a termination payment equal to six
months of Mr. Cosgray's base salary is made, and by Mr. Cosgray upon 60 days
written notice. The Employment Agreement restricts Mr. Cosgray's ability to
compete with the Company or the Bank for a period of one year following his
termination. See "Management - Employment Agreement."
Control of the Company; Purchases by Organizers. The Organizers, all of
whom will serve as directors of the Company and the Bank, and members of their
immediate families intend to purchase an aggregate of at least 690,000 shares,
equal to 43.1% of the minimum number of shares offered hereby and 28.8% of the
maximum number of shares offered hereby. Organizers may purchase additional
shares in the offering and additional persons may be named as Organizers,
subject to regulatory approval. The Organizers presently own all 60,000
outstanding shares of the Company. As a result of the anticipated stock
ownership in the Company by the Organizers, together with the influence which
may be exerted by such persons due to their positions as directors of the
Company and the Bank, the Organizers as a group will have substantial control of
the Company and the Bank following the offering. The Organizers may subscribe
for up to 100% of the shares in this offering if necessary to help the Company
achieve the minimum subscription level necessary to release subscription
proceeds from escrow, and some Organizers may decide to purchase additional
shares even if the minimum subscription amount has been achieved. Any shares
purchased by the Organizers in excess of their original commitment will be
purchased for investment and not with a view to the resale of such shares.
Because purchases by the Organizers may be substantial, investors should not
place any reliance on the sale of a specified minimum offering amount as an
indication of the merits of this offering or that an Organizer's investment
decision is shared by unaffiliated investors. See "The Offering" and
"Management."
Antitakeover Effects. Certain provisions of the Company's Articles of
Incorporation and Bylaws may have the effect of discouraging attempts to
takeover the Company, including: (i) provisions requiring prior notice of
matters to be brought before meetings of shareholders; (ii) provisions requiring
prior notice of nominees for election as directors; (iii) the ability of the
Board of Directors to issue additional shares of common stock and special stock
authorized in the Articles of Incorporation without shareholder approval; and
(iv) a provision of the Articles of Incorporation granting the Board of
Directors the discretion, when considering whether a proposed merger or similar
transaction is in the best interests of the Company and its shareholders, to
take into account the effect of the transaction on the employees, customers, and
suppliers of the Company and upon the communities in which the offices of the
Company are located. Any of these measures may impede the takeover of the
Company without the approval of the Board of Directors. See "Description of
Capital Stock of the Company - Certain Antitakeover Effects."
Determination of Offering Price Without Regard to Market Price. Because
the Company and the Bank are in organization, the offering price of $5.00 per
share was determined by the Organizers without reference to traditional criteria
for determining stock value such as book value or historical or projected
earnings since such criteria are not applicable to companies with no history of
operations. The price per share was set to enable the Company to raise gross
proceeds of between
8
<PAGE>
$8,000,000 and $12,000,000 in this offering through the sale of a reasonable
number of shares, and the price per share is essentially equivalent to the
initial book value per share prior to the payment of the Company's and the
Bank's organizational expenses. No assurance is or can be given that any of the
shares could be resold for the offering price or any other amount.
Absence of Trading Market. There currently is no market for the shares and
it is not likely that any trading market will develop for the shares in the
future. There are no present plans for the Common Stock to be traded on any
stock exchange or in the over-the-counter market. Furthermore, the development
of any trading market for the shares may be adversely affected by purchases of
large amounts of shares in this offering by the Organizers since shares
purchased by the Organizers will generally not be freely tradable. Furthermore,
in the event that a small number of Organizers or other persons acquire
substantial additional amounts of the Common Stock, a trading market for the
Common Stock will be even less likely to develop. As a result, investors who may
need or wish to dispose of all or part of their shares may be unable to do so
except in private, directly negotiated sales. In addition, sales of substantial
amounts of the Common Stock after the offering, by the Organizers or others,
could adversely affect prevailing market prices. See "Description of Capital
Stock of the Company - Shares Eligible for Future Sale."
Established Competition. The banking business is highly competitive, and
the Bank will encounter strong competition from other commercial banks, as well
as from savings institutions, mortgage banking firms, consumer finance
companies, securities brokerage firms, insurance companies, money market mutual
funds, and other financial institutions operating in the Atlanta area. As of
August 1997, the Buckhead market measured by 11 commercial banks with a total of
35 branches and one credit union. A number of these competitors are well
established in the Buckhead Area. Most of them have substantially greater
resources and lending limits and a lower cost of funds than the Bank will have
initially and may offer certain services, such as extensive and established
branch networks and trust services, that the Bank either does not expect to
provide or will not provide initially. As a result of these competitive factors,
the Bank may have to pay higher rates of interest to attract deposits. In
addition, non-depository institution competitors are generally not subject to
the extensive regulations applicable to the Company and the Bank. Federal
legislation in recent years has removed restrictions on the establishment of
nationwide operations by commercial banks, further increasing competition from
out-of-state financial institutions. No assurances can be given regarding the
Bank's ability to compete effectively with these institutions. See "Proposed
Business - Competition" and "Supervision and Regulation."
Supervision and Regulation. The banking industry is heavily regulated. The
success of the Company and the Bank depends not only on competitive factors but
also on state and federal regulations affecting banks and bank holding
companies. These regulations are primarily intended to protect depositors, not
shareholders. Regulation of the financial institutions industry is undergoing
continued changes, and the ultimate effect of such changes cannot be predicted.
Over the last 10 years, legislative enactments and the regulations thereunder
have substantially increased the regulatory and supervisory requirements for
financial institutions, which have resulted and will continue to result in
increased operating expenses. Additional statutes affecting financial
institutions have been proposed and may be enacted. Regulations now affecting
the Company and the Bank may be modified at any time, and there is no assurance
that such modifications will not adversely affect the business of the Company
and the Bank. See "Supervision and Regulation."
Economic Conditions. The success of the Company and the Bank will depend,
to a certain extent, upon economic and political conditions, both local and
national, as well as governmental
9
<PAGE>
monetary policies. Conditions such as inflation, recession, unemployment, high
interest rates, short money supply, and other factors beyond the control of the
Company and the Bank may adversely affect the Bank's deposit levels and loan
demand and, therefore, the earnings of the Bank and the Company. There is no
assurance that favorable economic development will occur or that the Bank's
expectation of corresponding growth will be achieved. See "Proposed Business."
Lack of Plans to Pay Dividends. The Company has no plans to pay any cash
dividends to its shareholders in the foreseeable future. Since the Company and
the Bank are both start-up operations and may incur initial losses, both the
Company and the Bank intend to retain any earnings for the period of time
management believes necessary to ensure the success of their operations. The
Company will be dependent upon the Bank for its earnings and funds to pay
dividends on the Common Stock. The payment of dividends by the Company and the
Bank is also subject to legal and regulatory restrictions. Any payment of
dividends by the Company in the future will depend on the Bank's earnings,
capital requirements, financial condition, and other factors considered relevant
by the Board of Directors. See "Dividend Policy," "Proposed Business," and
"Supervision and Regulation."
Lending Limit. Under the National Bank Act, the Bank is limited in the
amount it can loan a single borrower (including the borrower's related
interests) by the amount of the Bank's capital. These limits will increase and
decrease as the Bank's capital increases and decreases as a result of the Bank's
earnings or losses, among other reasons. Unless the Bank is able to sell
participations in its loans to other financial institutions, the Bank will not
be able to meet all of the lending needs of loan customers requiring aggregate
extensions of credit above these limits. See "Supervision and Regulation."
10
<PAGE>
THE COMPANY AND THE BANK
The Company was incorporated under the laws of Georgia on October 15, 1996,
for the purpose of becoming a bank holding company by acquiring all of the
capital stock of the Bank upon its formation. The Bank is being organized as a
national banking association under the laws of the United States. On November 8,
1996, the Organizers of the Bank filed an application for a charter for the Bank
with the OCC and an application for insurance of the deposits of the Bank with
the FDIC. Upon receipt by the Organizers of preliminary approval of the
application for a charter from the OCC, the Company will file an application
with the Federal Reserve and the Georgia Department seeking approval to become a
bank holding company by acquiring all of the capital stock to be issued by the
Bank. If and when the Company and the Bank receive required regulatory
approvals, the Company will use a minimum of $8,000,000 of the aggregate net
proceeds of this offering (together with up to $40,000 of existing capital) to
purchase all of the shares of the capital stock of the Bank. See "Use of
Proceeds." The Company initially will engage in no business other than owning
and managing the Bank.
The Bank will engage in a general commercial banking business, emphasizing
the needs of small businesses and professionals primarily in the Buckhead Area.
The Bank will not initially have trust powers. The Bank may in the future offer
a full-service trust department, but it cannot do so without the prior approval
of the OCC. See "Proposed Business." Marvin Cosgray, the proposed President and
Chief Executive Officer of the Bank, has over 26 years experience in the
commercial banking industry. See "Management."
The Organizers believe that the banking experience of the proposed
President and the extensive business experience and contacts of the Organizers
in the Buckhead Area should create immediate business opportunities for the
Bank. The Organizers presently are engaged in completing the tasks necessary to
open the Bank, although no assurance can be given that the Bank can be opened by
a particular date. See "Proposed Business."
The Organizers of the Bank are Hugh C. Aldredge, Marvin Cosgray, J. Rex
Fuqua, Julian LeCraw, Sr., R. Charles Loudermilk, Sr., Larry P. Martindale, and
William T. Towles. Additional individuals may be added as Organizers, subject to
regulatory approval. All of the Organizers will serve as directors of the
Company and the Bank. The Organizers (together with members of their immediate
families) intend to purchase an aggregate of at least 690,000 shares of the
Common Stock to be sold in this offering. The Organizers may subscribe for up to
100% of the shares in the offering if necessary to help the Company achieve the
minimum subscription level necessary to release subscription proceeds from
escrow, and some Organizers may decide to purchase additional shares even if the
minimum subscription amount has been achieved. Any shares purchased by the
Organizers in excess of their original commitment will be purchased for
investment and not with a view to the resale of such shares. Because purchases
by the Organizers may be substantial, investors should not place any reliance on
the sale of a specified minimum offering amount as an indication of the merits
of this offering or that an Organizer's investment decision is shared by
unaffiliated investors. See "Management."
The principal executive offices of the Company are located at 415 East
Paces Ferry Road, N.E., Atlanta, Georgia 30305-3389, and the Organizers expect
that the Bank's initial office will be at that address. The Company's telephone
number is (404) 231-2265.
11
<PAGE>
THE OFFERING
General
The Company is offering for sale a minimum of 1,600,000 shares and a
maximum of 2,400,000 shares of its Common Stock at a price of $5.00 per share to
raise gross proceeds of between $8,000,000 and $12,000,000 for the Company. The
minimum purchase for any investor (together with the investor's affiliates) is
2,000 shares unless the Company, in its sole discretion, accepts a subscription
for a lesser number of shares. Subscribers should be aware that beneficial
ownership of as little as 5% of the outstanding shares could obligate the
beneficial owner to comply with certain reporting and disclosure requirements of
federal and state securities and banking laws.
It is expected that the Organizers as a group will purchase a total of
690,000 of the shares offered hereby; however, the Organizers may, subject to
regulatory approval, elect to purchase up to 100% of the shares offered hereby,
and additional persons may be named as Organizers. Any shares purchased by the
Organizers in excess of their original commitment will be purchased for
investment and not with a view to the resale of such shares. Because purchases
by the Organizers are expected to be substantial, investors should not place any
reliance on the sale of the specified minimum offering amount as an indication
of the merits of this offering or that an Organizer's investment decision is
shared by other unaffiliated investors.
Subscriptions to purchase shares will be received until September 30, 1998,
unless all of the shares are earlier sold or the offering is earlier terminated
or extended by the Company. See "Conditions to the Offering and Release of
Funds." The Company reserves the right to terminate the offering at any time or
to extend the expiration date for additional periods not to extend beyond March
31, 1999. The date the offering terminates is referred to herein as the
"Expiration Date." No written notice of an extension of the offering period need
be given prior to any extension, and any such extension will not alter the
binding nature of subscriptions already accepted by the Company. Extension of
the Expiration Date might cause an increase in the Company's organizational and
pre-opening expenses and in the expenses incurred with this offering. The
Company and the Bank may find it necessary to utilize the services of brokers or
dealers in order to effectuate the sales of these securities in certain
jurisdictions.
Following acceptance by the Company, subscriptions will be binding on
subscribers and may not be revoked by subscribers except with the consent of the
Company. In addition, the Company reserves the right to cancel accepted
subscriptions at any time and for any reason until the proceeds of this offering
are released from escrow (as discussed in greater detail in "Conditions to the
Offering and Release of Funds" below), and the Company reserves the right to
reject, in whole or in part, and in its sole discretion, any subscription. The
Company may, in its sole discretion, allocate shares among subscribers in the
event of an oversubscription for the shares. In determining which subscriptions
to accept, in whole or in part, the Company may take into account any factors it
considers relevant, including the order in which subscriptions are received, a
subscriber's potential to do business with, or to direct customers to, the Bank,
and the Company's desire to have a broad distribution of stock ownership.
In the event the Company rejects all, or accepts less than all, of any
subscription, the Company will refund promptly, with interest actually earned
thereon, the amount remitted that corresponds to $5.00 multiplied by the number
of shares as to which the subscription is not accepted. If the Company accepts a
subscription but in its discretion subsequently elects to cancel all or part of
12
<PAGE>
such subscription, the Company will refund promptly the amount remitted that
corresponds to $5.00 multiplied by the number of shares as to which the
subscription is canceled, together with interest actually earned thereon.
Certificates representing shares duly subscribed and paid for will be
issued by the Company promptly after the offering conditions are satisfied and
escrowed funds are delivered to the Company.
Conditions to the Offering and Release of Funds
Subscription proceeds accepted by the Company for the initial 1,600,000
shares subscribed for in this offering will be promptly deposited in an escrow
account with the Escrow Agent until the conditions to this offering have been
satisfied or the offering has been terminated. The offering will be terminated,
no shares will be issued, and no subscription proceeds will be released from
escrow to the Company unless on or before the Expiration Date: (i) the Company
has accepted subscriptions and payment in full for a minimum of 1,600,000
shares; (ii) the Company has obtained approval of the Federal Reserve and the
Georgia Department to acquire the capital stock of the Bank and thereafter to
become a bank holding company; and (iii) the Bank has received preliminary
approval of its application for a charter from the OCC and of its application
for deposit insurance from the FDIC.
If the above conditions are satisfied, the subscription amounts held in
escrow may be paid to the Company and shares issued to subscribers. Once the
Company has met the conditions for the offering, the Escrow Agreement will be
terminated and any subscription proceeds accepted after satisfaction of the
conditions before termination of this offering will not be deposited in escrow
but will be available for immediate use by the Company to fund offering and
organizational expenses and for working capital. When the subscription funds are
released to the Company, the Company will use a portion of the proceeds to repay
the Organizers for amounts advanced by them for organizational and offering
expenses.
If the conditions for releasing subscription funds from escrow are met and
such funds are released but final regulatory approval to commence banking
operations is not obtained from the OCC or the Bank does not open for any other
reason, the Board of Directors intends to propose that the shareholders approve
a plan to liquidate the Company. Upon such a liquidation, the Company would be
dissolved and the Company's net assets (generally consisting of the amounts
received in this offering plus any interest earned thereon, less the amount of
all costs and expenses incurred by the Company and the Bank, including the
salary of the President, which is $115,000 per year) would be distributed to the
shareholders. In such event, the Company will have incurred numerous expenses
related to the organization of the Company and the Bank, and the amount
distributed to shareholders may be substantially less than the subscription
amount, and in an extreme case shareholders may not be returned any amount.
If the above conditions are not satisfied by the Expiration Date or the
offering is otherwise earlier terminated, accepted subscription agreements will
be of no further force or effect, and the full amount of all subscription funds
will be returned promptly to subscribers together with any interest actually
earned on such subscription funds.
The Escrow Agent has not investigated the desirability or advisability of
an investment in the shares by prospective investors and has not approved,
endorsed, or passed upon the merits of an investment in the shares. Subscription
funds held in escrow will be invested in the deposit accounts or short-term
certificates of deposit which are fully insured by the FDIC or another agency of
the United
13
<PAGE>
States Government, short-term securities issued or fully guaranteed by the
United States government (or money market funds consisting entirely thereof) or
federal funds until released from escrow. The Organizers do not intend to invest
the subscription proceeds held in escrow in instruments that would mature after
the Expiration Date of the offering.
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 reasonable expenses incurred in the
offering. Although it is not currently anticipated, the Company and the Bank
reserve the right to use brokers or dealers to effectuate sales of the Common
Stock in the offering.
How to Subscribe
Shares may be subscribed for by delivering the subscription agreement (the
"Subscription Agreement") attached hereto as Exhibit A, completed and executed,
to the Company, on or prior to the Expiration Date. Subscribers should retain a
copy of the completed Subscription Agreement for their records. The subscription
price is due and payable when the Subscription Agreement is delivered. Payment
must be made in United States dollars by cash or by check, bank draft or money
order drawn to the order of SunTrust Bank, Atlanta, Escrow Account for Buckhead
Community Bancorp, Inc., in the amount of $5.00 multiplied by the number of
shares subscribed for.
14
<PAGE>
USE OF PROCEEDS
By the Company
Upon satisfaction of all of the conditions discussed in "The Offering -
Conditions to the Offering and Release of Funds," all subscription funds held in
escrow will be released and will become capital of the Company. The gross
proceeds to the Company from the sale of the shares offered hereby will be
between $8,000,000 and $12,000,000. The Company will use $40,000 of the gross
proceeds to pay the expenses of this offering, which will consist primarily of
legal, accounting, marketing and printing expenses. Thereafter, the Company will
use a minimum of $7,960,000 and a maximum of $10,000,000 of the gross proceeds
to purchase all of the capital stock of the Bank. The Company will retain any
balance of the proceeds, which may be up to $1,960,000 in the case of the
maximum offering, for working capital and other general corporate purposes,
including payment of expenses of the Company and the provision of additional
capital for the Bank in the future, if necessary.
The following table sets forth the anticipated use of proceeds by the
Company based on the sale of the minimum number and maximum number of shares in
this offering.
<TABLE>
<CAPTION>
Minimum Maximum
Offering (1) Offering (2)
------------- ------------
<S> <C> <C>
Gross proceeds from offering..................... $ 8,000,000 $ 12,000,000
Expenses for organization and issuance and (40,000) (40,000)
distribution of Common Stock....................
Investment in capital stock of the Bank(3)....... (7,960,000) (10,000,000)
----------- -----------
Remaining proceeds(4)............................ $ --- $ 1,960,000
=========== ============
</TABLE>
_______________________
(1) Assumes that 1,600,000 shares of Common Stock are sold in this offering.
(2) Assumes that 2,400,000 shares of Common Stock are sold in this offering.
(3) To the extent that the net proceeds of the offering are less than
$8,000,000, the Company will invest a portion of its existing capital in
the Bank so that the Bank's initial capital is at least $8,000,000.
(4) This amount will be used by the Company for working capital and may be used
to provide additional capital for the Bank, if necessary.
By the Bank
The Bank currently plans to use approximately $250,000 of the proceeds it
receives from the sale of its stock to the Company to reimburse the Company for
amounts advanced by it to pay organizational and pre-opening expenses of the
Bank. Organizational expenses of the Bank, estimated at $125,000, include
consulting fees, expenses for market analysis and feasibility studies,
application fees, and legal fees and expenses. Pre-opening expenses, estimated
at $125,000, include officers' and employees' salaries and benefits estimated at
$75,000 and estimated lease expenses of $26,000. The Bank will use approximately
$250,000 for furniture, fixtures and equipment for its banking office. The Bank
expects to pay approximately $160,000 during the first year to rent the location
of the Bank office from Longpoint Investors, Ltd., which is not affiliated with
any of the Organizers. The balance of the funds to be received by the Bank and
available for use in the first year, estimated at
15
<PAGE>
$7,340,000 if the minimum number of shares is sold and $9,340,000, if the
maximum number of shares is sold, will be used for loans to customers,
investments, and other general corporate purposes.
The following table depicts the anticipated use of proceeds by the Bank
based on the sale of the minimum number and maximum number of shares in the
offering. All proceeds received by the Bank will be in the form of an investment
by the Company in the Bank's capital stock.
<TABLE>
<CAPTION>
Minimum Maximum
Offering (1) Offering(2)
------------ ------------
<S> <C> <C>
Investment by the Company in the Bank's Capital Stock.......... $8,000,000 $10,000,000
Reimbursement of the Company for amounts advanced for
organizational and pre-opening expenses of the Bank........... (250,000) (250,000)
Furniture, Fixtures and Equipment.............................. (250,000) (250,000)
Lease Expense (First Year)..................................... (160,000) (160,000)
Other Occupancy Expenses....................................... (80,000) (80,000)
---------- -----------
Remaining Proceeds(3).......................................... $7,260,000 $ 9,260,000
========== ===========
</TABLE>
____________________________
(1) Assumes that 1,600,000 shares of Common Stock are sold in this offering.
(2) Assumes that 2,400,000 shares of Common Stock are sold in this offering.
(3) This amount is to be used by the Bank for loans to customers, investments,
and other general corporate purposes.
Although the amounts set forth above provide an indication of the proposed
use of funds based on the plans and estimates of the Organizers of the Company
and the Bank, actual expenses may vary from the estimates. The Organizers
believe that the estimated minimum net proceeds of $7,960,000 from the offering,
together with $40,000 of existing capital of the Company, will satisfy the cash
requirements of the Company and the Bank for their respective first five years
of operations and that neither the Company nor the Bank will need to raise
additional funds for operations during this period, but there can be no
assurance that this will be the case.
16
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as of
October, 31, 1997, (ii) the pro forma capitalization of the Company as of
October, 31, 1997, to reflect the redemption of the shares of two former
organizers of the Company and the Bank, and (iii) the pro forma capitalization
of the Company at October, 31, 1997, as adjusted to give effect to the sale of
the minimum of 1,600,000 shares in this offering and the estimated pre-opening
expenses of the Company and the Bank. See "Use of Proceeds."
<TABLE>
<CAPTION>
Pro Forma
Shareholders' Equity Actual Pro Forma As Adjusted
-------------------- -------- --------- -----------
<S> <C> <C> <C>
Common Stock, par value $.01 per share; 10,000,000 shares
authorized; 70,000 shares issued and outstanding; 60,000
shares issued and outstanding pro forma; 1,660,000 shares
issued and outstanding pro forma as adjusted (minimum
offering)................................................. $ 700 $ 600 $ 16,000
Special Stock, no par value per share; 1,000,000 shares
authorized; no shares issued and outstanding.............. -- -- --
Additional paid-in capital(1).............................. 349,300 299,400 8,243,400
Deficit accumulated during the developmental stage......... (71,356) (71,356) (125,000)(2)
-------- -------- ----------
Total shareholders' equity(3).............................. $278,644 $278,644 $8,135,000
======== ======== ==========
</TABLE>
- --------------------
(1) The expenses of the offering will be charged against this account. These
expenses are estimated to be $40,000, and this amount has been used in the
calculation of the amount shown in the "As Adjusted" column.
(2) Represents the estimated pre-operating expenses of the Company and the Bank,
which include officers' and employees' salaries and benefits estimated at
$75,000 and estimated lease expenses of $26,000.
(3) The shareholders are likely to experience additional dilution due to
operating losses expected to be incurred during the initial years of the
Bank's operations.
17
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the Company for the period from
inception until October 31, 1997, is derived from the financial statements and
other data of the Company.
<TABLE>
<CAPTION>
Period Ended
October 31, 1997
----------------
<S> <C>
Income Statement Data:
Income, interest $ 6,829
Noninterest expense 78,185
Net (loss) (71,356)
Balance Sheet Data:
Assets 278,644
Cash and interest bearing deposits in banks 89,214
Deferred stock offering and organizational costs
capitalized 178,390
(Deficit) accumulated during development stage (71,356)
Stockholders' Equity 278,644
Per Share Data
Net (loss) per share (.95)
Weighted average number of shares outstanding 75,125
</TABLE>
DIVIDEND POLICY
The Board of Directors expects initially to follow a policy of retaining
any earnings to provide funds to operate and expand the business. Consequently,
it is unlikely that any cash dividends will be paid in the near future. The
Company's ability to pay any cash dividends to its shareholders in the future
will depend primarily on the Bank's ability to pay dividends to the Company. In
order to pay dividends to the Company, the Bank must comply with the
requirements of all applicable laws and regulations. See "Supervision and
Regulation - The Bank - Dividends" and "Supervision and Regulation - Capital
Regulations." In addition to the availability of funds from the Bank, the future
dividend policy of the Company is subject to the discretion of the Board of
Directors and will depend upon a number of factors, including future earnings,
financial condition, cash needs, and general business conditions.
PROPOSED BUSINESS
General
The Company was incorporated as a Georgia corporation on October 15, 1996,
primarily to own and control all of the capital stock of the Bank. The Company
initially will engage in no business other than owning and managing the Bank.
The Organizers have chosen a holding company structure under which the Company
will acquire all of the capital stock of the Bank because, in the judgment of
the Organizers, the holding company structure provides flexibility that would
not otherwise be available.
18
<PAGE>
The holding company structure can assist the Bank in maintaining its
required capital ratios because, subject to compliance with Federal Reserve
Board debt guidelines, the Company may borrow money and contribute the proceeds
to the Bank as primary capital. Moreover, a holding company may engage in
certain non-banking activities that the Federal Reserve Board has deemed to be
closely related to banking in which the Bank cannot engage directly. See
"Supervision and Regulation." Although the Company has no present intention of
engaging in any of these activities, if circumstances should lead the Company's
management to believe that there is a need for these services in the Bank's
market area and that such activities could be profitably conducted, management
of the Company would have the flexibility of commencing these activities upon
filing a notice or application with the Federal Reserve.
The Bank is being organized as a national banking association under the
laws of the United States, and, subject to regulatory approval, the Bank will
engage in a commercial banking business from its location in the Buckhead Area,
with deposits insured by the FDIC. By virtue of being a national bank, the Bank
will be a member of the Federal Reserve System. The Bank may not commence
business until the OCC issues a charter for the Bank and the FDIC grants deposit
insurance to the Bank. There is no assurance that the Bank will be successful in
receiving regulatory approval and satisfying any conditions that may be imposed
upon the Bank by the OCC or the FDIC prior to the commencement of its business.
Marketing Focus
Most of the banks in the Buckhead Area are local branches of large regional
banks. The Organizers believe that there is a void in the community banking
market in the Buckhead Area and believe that the Bank can successfully fill this
void. However, size gives the larger banks certain advantages in competing for
business from large corporations. These advantages include higher lending limits
and the ability to offer services in other areas of Atlanta and the region. As a
result, the Company generally will not attempt to compete for the banking
relationships of large corporations, but will concentrate its efforts on small
businesses and on professionals.
The Bank plans to emphasize the Company's local ownership, community bank
nature and ability to provide more personalized service than its competition.
The Organizers believe that the proposed community bank focus of the Bank is
likely to succeed in the Buckhead market. The Organizers believe that the area
will react favorably to the Bank's emphasis on service to small businesses and
professionals. However, no assurances in this respect can be given.
Location and Service Area
The Bank will be located on East Paces Ferry Road between Peachtree Road
and Piedmont Road. See "Facilities." The Bank will primarily serve the Buckhead
Area, which is in the northern part of the Atlanta city limits and the central
part of Fulton County. The Buckhead Area is generally bounded by the Atlanta
city limits and the DeKalb County line on the east, the Atlanta city limits line
on the north, the Atlanta city limits and Cobb County line on the west, and
Peachtree Creek from the Chattahoochee River to Interstate 75, Interstate 75 to
Interstate 85, and Interstate 85 to the DeKalb County line on the south. The
total area contains approximately 28 square miles and is about 5 miles from
Atlanta's central downtown.
The Buckhead Area is characterized by a large population base concentrated
in a relatively small area and a very high level of household and per capita
income. The resident population of the
19
<PAGE>
Buckhead Area exceeded 61,000 as of 1995, and its daytime population is at least
twice that number. The Buckhead Area has approximately 16,500 multi-family units
and 15,600 homes. In each category, it consistently experiences the highest
occupancy rates in the city. Most of the growth in population, employment and
housing in the city of Atlanta in the last 5 years has taken place in Buckhead.
Over 48 mid-rise high-rise apartments and condominiums, with nearly 9,000 units,
are located in Buckhead.
The two largest sources of employment in Buckhead are the services and
retail industries. There are an estimated 1,045 businesses in Buckhead and
nearly 1,400 professionals of various types. Total employment in 1995 was over
84,000, approximately 48.6% of which was in the services segment and
approximately 20.9% of which was in the retail segment. There is at least 12.5
million feet of office space in the Buckhead Area, with very low vacancy rates
in the "Class A" space market segment. Much of this space is concentrated within
two miles of the proposed bank site. The Buckhead Area has over 6.2 million
square feet of retail space spread among two large, well-known retail centers
(Lenox Square and Phipps Plaza) and over 70 additional multi-tenant locations.
The market also contains over 2.2 million square feet of industrial space.
Deposits
The Bank intends to offer a full range of deposit services that are
typically available in most banks and savings and loan associations, including
checking accounts, NOW accounts, savings accounts and other time deposits of
various types, ranging from daily money market accounts to longer-term
certificates of deposit. The transaction accounts and time certificates will be
tailored to the Bank's principal market area at rates competitive to those
offered in the Buckhead Area. In addition, the Bank intends to offer certain
retirement account services, such as Individual Retirement Accounts (IRAs). All
deposit accounts will be insured by the FDIC up to the maximum amount allowed by
law (generally, $100,000 per depositor subject to aggregation rules). The Bank
intends to solicit these accounts from individuals, businesses, associations and
organizations, and governmental authorities.
Lending Activities
General. The Bank intends to emphasize a range of lending services,
including commercial, real estate, and consumer loans, to small- to medium-sized
businesses and professional concerns and individuals that are located in or
conduct a substantial portion of their business in the Bank's market area.
Commercial Loans. The Organizers currently anticipate that loans for
commercial purposes in various lines of businesses will be one of the primary
components of the Bank's loan portfolio. Equipment loans will typically be made
for a term of five years or less at fixed or variable rates, with the loan fully
amortized over the term and secured by the financed equipment and with a loan-
to-value ratio of 80% or less. Working capital loans will typically have terms
not exceeding one year and will usually be secured by accounts receivable,
inventory, or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and in other cases
principal will typically be due at maturity. The principal economic risk
associated with each category of anticipated loans, including commercial loans,
is the creditworthiness of the Bank's borrowers, which in turn is affected by
general economic conditions and the strength of the services and retail market
segments. In addition, the quality of the borrower's management and its ability
to properly evaluate changes in the supply and demand characteristics affecting
its respective markets for products and services and to effectively respond to
such changes are significant factors in the creditworthiness of a commercial
borrower. General economic factors affecting a borrower's ability to repay
include interest, inflation and employment rates, as well as other factors
affecting a borrower's customers, suppliers and employees. Commercial loans are
generally the riskiest loans which will be made by the Bank and may require more
careful management in order to limit the risks associated with them. The well
established banks in the Buckhead Area will make proportionately more loans to
medium- to
20
<PAGE>
large-sized businesses than the Bank. Many of the Bank's anticipated commercial
loans will likely be made to small- to medium-sized businesses who may be less
able to withstand competitive, economic, and financial conditions than larger
borrowers.
Real Estate Loans. The Bank will make commercial real estate loans,
construction and development loans, and residential real estate loans in the
Buckhead Area. These loans include certain commercial loans where the Bank takes
a security interest in real estate out of an abundance of caution and not as the
principal collateral for the loan, but will exclude home equity loans, which are
classified as consumer loans. Loan terms generally will be limited to five years
or less, although payments may be structured on a longer amortization basis.
Interest rates may be fixed or adjustable, and will more likely be fixed in the
case of shorter term loans. The Bank will generally charge an origination fee.
Management will attempt to reduce credit risk in the commercial real estate
portfolio by emphasizing loans on owner-occupied office and retail buildings
where the loan-to-value ratio, established by independent appraisals, does not
exceed 80%. In addition, the Bank may require personal guarantees of the
principal owners of the property backed with a review by the Bank of the
personal financial statements of the principal owners. The principal economic
risk associated with each category of anticipated loans, including real estate
loans, is the creditworthiness of the Bank's borrowers. The risks associated
with real estate loans vary with many economic factors, including employment
levels and fluctuations in the value of real estate, new job creation trends,
tenant vacancy rates and the quality of the borrower's management. Real estate
loans, as a group, generally will prevent less risk to the Bank than
commercial loans, but more risk than consumer loans. The Bank will compete for
real estate loans with a number of bank competitors which are well established
in the Buckhead Area. Most of these competitors have substantially greater
resources and lending limits than the Bank. As a result, the Bank may have to
charge lower interest rates to attract borrowers. See "Competition" below.
The Bank may also originate loans for sale into the secondary market. The
Bank intends to limit interest rate risk and credit risk on these loans by
locking the interest rate for each loan with the secondary investor and
receiving the investor's underwriting approval prior to originating the loan.
Consumer Loans. The Bank will make a variety of loans to individuals for
personal and household purposes, including secured and unsecured installment and
term loans, home equity loans and lines of credit, and revolving lines of credit
such as credit cards. These loans typically will carry balances of less than
$25,000 and, in the case of non-revolving loans, be amortized over a period not
exceeding 48 months or be ninety-day term loans, in each case bearing interest
at a fixed rate. The revolving loans will typically bear interest at a fixed
rate and require monthly payments of interest and a portion of the principal
balance. The underwriting criteria for home equity loans and lines of credit
will generally be the same as applied by the Bank when making a first mortgage
loan, as described above, and home equity lines of credit will typically expire
ten years or less after origination. As with the other categories of loans, the
principal economic risk associated with consumer loans is the creditworthiness
of the Bank's borrowers. Borrower creditworthiness is affected by general
economic conditions, including unemployment rates, interest rates, consumer
bankruptcy rates and levels of consumer spending. Consumer loans, as a group,
are generally expected to present less risk to the Bank than commercial or real
estate loans. The principal competitors for consumer loans will be the
established banks in the Buckhead Area.
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Loan Approval and Review. The Bank's loan approval policies will provide for
various levels of officer lending authority. When the amount of aggregate loans
to a single borrower exceeds that individual officer's lending authority, the
loan request will be considered and approved by an officer with a higher lending
limit or the officers' loan committee. The Bank will establish an officers' loan
committee that has lending limits, and any loan in excess of this lending limit
will be approved by the directors' loan committee. The Bank will not make any
loans to any director, officer, or employee of the Bank unless the loan is
approved by the board of directors of the Bank and is made on terms not more
favorable to such person than would be available to a person not affiliated with
the Bank.
Lending Limits. The Bank's lending activities will be subject to a variety
of lending limits imposed by federal law. While differing limits apply in
certain circumstances based on the type of loan or the nature of the borrower
(including the borrower's relationship to the Bank), in general the Bank will be
subject to a loan-to-one-borrower limit of an amount equal to 15% of the Bank's
unimpaired capital and surplus, or 25% of the unimpaired capital and surplus if
the excess over 15% is approved by the board of directors of the Bank and is
fully secured by readily marketable collateral. Based on the proposed minimum
initial capitalization of the Bank and its projected pre-opening expenses, the
Bank's initial lending limit will be approximately $1,181,000 for loans not
fully secured plus an additional $788,000 (or an aggregate of approximately
$1,969,000) for loans for which the additional 10% is fully secured. The Bank
has not yet established any minimum or maximum loan limits other than the
statutory lending limits described above. These limits will increase or decrease
as the Bank's capital increases or decreases as a result of the Bank's earning
or losses, among other reasons. Unless the Bank is able to sell participations
in its loans to other financial institutions, the Bank will not be able to meet
all of the lending needs of loan customers requiring aggregate extensions of
credit above these limits.
Other Banking Services
Other anticipated bank services include cash management services, safe
deposit boxes, travelers checks, direct deposit of payroll and social security
checks, and automatic drafts for various accounts. The Bank plans to become
associated with a shared network of automated teller machines that may be used
by Bank customers throughout Georgia and other regions. The Bank plans to offer
annuities, mutual funds, and other financial services through a third party
which has not, as yet, been chosen by the Bank. The Bank also plans to offer
MasterCard and VISA credit card services through a correspondent bank as an
agent for the Bank. The Bank does not plan to exercise trust powers during its
initial years of operation. The Bank may in the future offer a full-service
trust department, but cannot do so without the prior approval of the OCC.
Competition
The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, and money market mutual funds operating in the
Atlanta area. As of August 1997, the Buckhead Area was served by 11 commercial
banks with a total of 35 offices and one credit union. A number of these
competitors are well established in the Buckhead Area. Most of them have
substantially greater resources and lending limits than the Bank and offer
certain services, such as extensive and established branch networks and trust
services, that the Bank either does not expect to provide or will not provide
initially. As a result of these competitive factors, the Bank may have to pay
higher rates of interest to attract deposits.
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Facilities
The Company leases space located at 415 East Paces Ferry Road, N.E.,
Atlanta, Georgia, for the Bank's office from Longpoint Investors, Ltd. The
space is being renovated by the landlord for use as a bank office. The lease
term commenced on November 1, 1997, and expired ten years thereafter, with
renewal rights. The property includes approximately 9,179 square feet of office
space. Annual rent for the first year of the lease is approximately $160,000,
and increases 3% per year during the initial lease term.
Employees
The Company anticipates that, upon commencement of operations, the Bank
will have approximately 11 full-time employees and 3 part-time employees. The
Company will not have any employees other than its officers, none whom will
initially receive any remuneration for their services to the Company. Marvin
Cosgray, the proposed President and Chief Executive officer of the Bank, is
currently employed by the Company to head the organizational effort for the
Bank. See "Management - Employment Agreement."
Legal Proceedings
There are no material legal proceedings to which the Company or the Bank or
any of their properties are subject.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of October, 31, 1997, the Company had total assets aggregating
approximately $278,644. These assets consisted principally of cash and interest
bearing deposits in banks of $89,214 and deferred offering expenses and
organizational costs of $178,390. The organizational costs relate to the
organization of the Company and the Bank and have been capitalized and will be
amortized over a five year period. The Company had shareholder's equity of
$278,644.
The Company had a net loss from October 15, 1996 (the Company's inception
date), through October, 31, 1997, of $71,356. This loss resulted from salary
and supply expenses incurred in support of activities related to the initial
organization of the Company and the Bank. These activities included (without
limitation) the preparation and filing of an application with the OCC for a
national bank charter and an application with the FDIC for federal deposit
insurance, and the preparation and filing of a registration statement for the
offering of the Common Stock.
Assuming that the offering is successfully completed, the Company's initial
activities will be devoted to organizing the Bank and opening and commencing the
business of the Bank. These organizational activities will include completing
all required steps for approval from the OCC for a national bank charter;
equipping the office of the Bank; hiring qualified personnel to work in the
various offices of the Bank; conducting public relations activities on behalf of
the Bank; developing prospective business contacts for the Bank and the Company;
and taking other actions necessary for a successful bank opening. The Company
has entered into a lease for the main office of the Bank of an initial rental
rate of $160,000 per year with 3% annual increases during the lease term.
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Because the Company is in the organizational stage, it has had no
operations from which to generate revenues and, until the Bank opens for
business, the Company's only source of revenues will be
interest earned on subscriptions. Because these revenues will be less than the
expenses incurred in connection with activities related to the initial
organization of the Company and the Bank, the Company will incur a net loss
through the date of the opening of the Bank. In addition, the Company
anticipates incurring continuing operating losses during the Bank's early stages
of operations.
At least $7,960,000 of the proceeds of this offering will be used to
capitalize the Bank and any remainder will be used to pay organizational
expenses of the Company and provide working capital, including additional
capital for investment in the Bank, if needed. See "Use of Proceeds." The
Company believes that this amount will be sufficient to fund the activities of
the Bank in its initial stages of operation and that the Bank will generate
sufficient income from operations to fund its activities on an on-going basis
for at least five years. In addition, the Company believes that income from the
operations of the Bank will be sufficient to fund the activities of the Company
on an on-going basis for at least five years. However, there can be no
assurance that either the Bank or the Company will achieve any particular level
of profitability.
SUPERVISION AND REGULATION
The Company and the Bank are subject to state and federal banking laws and
regulations which impose specific requirements or restrictions on and provide
for general regulatory oversight with respect to virtually all aspects of
operations. These laws and regulations are generally intended to protect
depositors, not shareholders. To the extent that the following summary
describes statutory or regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. Any change in
applicable laws or regulations may have a material effect on the business and
prospects of the Company. The operations of the Company and the Bank may be
affected by legislative changes and the policies of various regulatory
authorities. The Company is unable to predict the nature or the extent of the
effect on its business and earnings that fiscal or monetary policies, economic
control, or new federal or state legislation may have in the future.
The Company
Because it will own the outstanding capital stock of the Bank, the Company
will be a bank holding company within the meaning of the federal Bank Holding
Company Act of 1956 (the "BHCA") and the Georgia Financial Institutions Code
(the "Georgia Code"). The activities of the Company will also be governed by
the Glass-Steagall Act of 1933 (the "Glass-Steagall Act").
The BHCA. Under the BHCA, the Company will be subject to periodic
examination by the Federal Reserve and will be required to file periodic reports
of its operations and such additional information as the Federal Reserve may
require. The Company's activities are limited to managing or controlling banks,
furnishing services to or performing services for its subsidiaries, and engaging
in other activities that the Federal Reserve determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
Investments, Control, and Activities. With certain limited exceptions, the
BHCA requires every bank holding company to obtain the prior approval of the
Federal Reserve before (i) acquiring substantially all the assets of any bank,
(ii) acquiring direct or indirect ownership or control of any voting shares of
any bank if after such acquisition it would own or control more than 5% of the
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voting shares of such bank (unless it already owns or controls the majority of
such shares), or (iii) merging or consolidating with another bank holding
company.
In addition, and subject to certain exceptions, the BHCA and the Change in
Bank Control Act, together with regulations thereunder, require Federal Reserve
approval (or, depending on the circumstances, no notice of disapproval) prior to
any person or company acquiring "control" of a bank holding company, such as the
Company. Control is conclusively presumed to exist if an individual or company
acquires 25% or more of any class of voting securities of the bank holding
company. Control is rebuttably presumed to exist if a person acquires 10% or
more but less than 25% of any class of voting securities and either the Company
has registered securities under Section 12 of the Exchange Act (which the
Company would likely be required to do with respect to the Common Stock once it
has more that 500 shareholders of record) or no other person will own a greater
percentage of that class of voting securities immediately after the transaction.
The regulations provide a procedure for challenge of the rebuttable control
presumption.
Under the BHCA, a bank holding company is generally prohibited from
engaging in, or acquiring direct or indirect control of more than 5% of the
voting shares of any company engaged in, nonbanking activities, unless the
Federal Reserve Board, by order or regulation, has found those activities to be
so closely related to banking or managing or controlling banks as to be a proper
incident thereto. Some of the activities that the Federal Reserve Board has
determined by regulation to be proper incidents to the business of a bank
holding company include making or servicing loans and certain types of leases,
engaging in approved insurance and discount brokerage activities, performing
qualifying data processing services, acting in certain circumstances as a
fiduciary or investment or financial adviser, owning savings associations, and
making investments in qualifying corporations or projects designed primarily to
promote community welfare.
The Federal Reserve Board will impose certain capital requirements on the
Company under the BHCA, including a minimum leverage ratio and a minimum ratio
of "qualifying" capital to risk-weighted assets. These requirements are
described below under "Capital Regulations." Subject to its capital
requirements and certain other restrictions, the Company will be able to borrow
money to make a capital contribution to the Bank, and such loans may be repaid
from dividends paid from the Bank to the Company (although the ability of the
Bank to pay dividends will be subject to regulatory restrictions as described
below in "The Bank - Dividends"). The Company will also be able to raise
capital for contribution to the Bank by issuing securities without having to
receive regulatory approval, subject to compliance with federal and state
securities laws.
Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, the Company is expected to act as a source of financial strength
to the Bank and to commit resources to support the Bank in circumstances in
which the Company might not otherwise do so. Under the BHCA, the Federal Reserve
Board may require a bank holding company to terminate any activity or relinquish
control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon
the Federal Reserve Board's determination that such activity or control
constitutes a serious risk to the financial soundness or stability of any
subsidiary depository institution of the bank holding company. Further, federal
bank regulatory authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition.
The Georgia Code. All Georgia bank holding companies must register with the
Georgia Department under the Financial Institutions Code of Georgia (the
"Georgia Code"). A registered
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bank holding company must provide the Georgia Department with information with
respect to the financial conditions, operations, management, and inter-company
relationships of the holding company and its subsidiaries. The Georgia
Department may also require such other information as is necessary to keep
itself informed about whether the provisions of Georgia law and the regulations
and orders issued thereunder by the Georgia Department have been complied with,
and the Georgia Department may make examinations of any bank holding company and
its subsidiaries.
Under the Georgia Code, it is unlawful without the prior approval of the
Georgia Department (i) for any bank holding company to acquire direct or
indirect ownership or control of more than five percent of the voting shares of
any bank, (ii) for any bank holding company or subsidiary thereof, other than a
bank, to acquire all or substantially all of the assets of a bank, or (iii) for
any bank holding company to merge or consolidate with any other bank holding
company. It is also unlawful for any bank holding company to acquire direct or
indirect ownership or control of more than five percent of the voting shares of
any bank unless such bank has been in existence and continuously operating or
incorporated as a bank for a period of five years or more prior to the date of
application to the Georgia Department for approval of such acquisition. In
addition, in any such acquisition by an existing bank holding company, the
initial banking subsidiary of such bank holding company must have been
incorporated for not less than two years before the holding company can acquire
another bank.
The Georgia Code and federal law allow interstate banking by permitting
banking organizations in other states to acquire Georgia banking organizations.
As a result of these provisions, banking organizations in other states, most
significantly North Carolina, Florida, and Alabama, have entered the Georgia
market through acquisitions of Georgia institutions. Those acquisitions are
subject to federal and Georgia approval as described above.
Glass-Steagall Act. The Company will also be restricted in its activities
by the provisions of the Glass-Steagall Act, which will generally limit the
ability of the Company to own subsidiaries that are engaged principally in the
issue, flotation, underwriting, public sale, or distribution of securities. The
interpretation, scope, and application of the provisions of the Glass-Steagall
Act currently are being considered and reviewed by regulators and legislators,
and may be subject to significant revision as a result.
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The Bank
General. Subject to receipt of the necessary approvals of its pending
applications, the Bank will operate as a national banking association
incorporated under the laws of the United States and subject to examination by
the OCC. Deposits in the Bank will be insured by the FDIC up to a maximum amount
(generally $100,000 per depositor, subject to aggregation rules). The OCC and
the FDIC will regulate or monitor virtually all areas of the Bank's operations,
including security devices and procedures, adequacy of capitalization and loss
reserves, loans, investments, borrowings, deposits, mergers, issuances of
securities, payment of dividends, interest rates payable on deposits, interest
rates or fees chargeable on loans, establishment of branches, corporate
reorganizations, maintenance of books and records, and adequacy of staff
training to carry on safe lending and deposit gathering practices. The OCC will
require the Bank to maintain certain capital ratios and will impose limitations
on the Bank's aggregate investment in real estate, bank premises, and furniture
and fixtures. The Bank will be required by the OCC to prepare quarterly reports
on the Bank's financial condition and to conduct an annual audit of its
financial affairs in compliance with minimum standards and procedures prescribed
by the OCC.
All insured institutions must undergo regular on-site examinations by their
appropriate banking agency. The cost of examinations of insured depository
institutions and any affiliates may be assessed by the appropriate agency
against each institution or affiliate as it deems necessary or appropriate.
Insured institutions are required to submit annual reports to the FDIC and the
appropriate agency (and state supervisor when applicable). The federal banking
regulatory agencies have established regulatory standards for all insured
depository institutions and depository institution holding companies relating,
among other things, to: (i) internal controls, information systems, and audit
systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate
risk exposure; and (v) asset quality.
National banks and their holding companies which have been chartered or
registered or undergone a change in control within the past two years or which
have been deemed by the OCC or the Federal Reserve Board, respectively, to be
troubled institutions must give the OCC or the Federal Reserve Board,
respectively, thirty days prior notice of the appointment of any senior
executive officer or director. Within the thirty day period, the OCC or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment. The Company and the Bank will meet the criteria which trigger this
additional approval during the first two years after they are registered or
chartered, respectively.
Deposit Insurance. The FDIC establishes rates for the payment of premiums
by federally insured banks and thrifts for deposit insurance. A separate Bank
Insurance Fund ("BIF") and Savings Association Insurance Fund ("SAIF") are
maintained for commercial banks and thrifts, respectively, with insurance
premiums from the industry used to offset losses from insurance payouts when
banks and thrifts fail. Insured depository institutions like the Bank pay for
deposit insurance under a risk-based premium system. Under the premium system, a
depositor institution pays premiums to BIF or SAIF ranging from almost zero to
$.27 per $100 of insured deposits depending on its capital levels and risk
profile, as determined by its primary federal regulator on a semi-annual basis.
During its initial months of operations, it is likely that the Bank's assessment
rate will be $.07 per $100 of insured deposits. Increases in deposit insurance
premiums will increase the Bank's cost of funds, and there can be no assurance
that such cost can be passed on to the Bank's customers. There is a bill pending
in Congress which would result in the merger of BIF and SAIF in 1999.
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Transactions With Affiliates and Insiders.The Bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on the
amount of loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the securities or obligations of affiliates. The aggregate of
all covered transactions is limited in amount, as to any one affiliate, to 10%
of the bank's capital and surplus and, as to all affiliates combined, to 20% of
the bank's capital and surplus. Furthermore, within the foregoing limitations as
to amount, each covered transaction must meet specified collateral requirements.
Compliance is also required with certain provisions designed to avoid the taking
of low quality assets.
The Bank is also subject to the provisions of Section 23B of the Federal
Reserve Act which, among other things, prohibit an institution from engaging in
certain transactions with certain affiliates unless the transactions are on
terms substantially the same, or at least as favorable to such institution or
its subsidiaries, as those prevailing at the time for comparable transactions
with non-affiliated companies. The Bank is subject to certain restrictions on
extensions of credit to executive officers, directors, certain principal
shareholders, and their related interests. Such extensions of credit (i) must
be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.
Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the OCC is required if the total of all dividends declared by a national bank
in any calendar year exceeds the total of its net profits for that year combined
with its retained net profits for the preceding two years, less any required
transfers to surplus. In addition, the Bank may not pay a dividend if, after
paying the dividend, the Bank would be undercapitalized. See "Capital
Regulations" below.
Branching. National banks are required by the National Bank Act to adhere
to branch office banking laws applicable to state banks in the states in which
they are located. Under current Georgia law, the Bank may establish branches
throughout Fulton and DeKalb counties with the prior approval of the OCC, and
may establish up to three branches in additional counties with the prior
approval of the OCC. After July 1, 1998, the Bank will be permitted to establish
branches throughout Georgia with the prior approval of the OCC. With prior
regulatory approval, the Company will be able to acquire other existing banking
operations in Georgia once the Bank has been incorporated for 24 months.
Furthermore, federal law permits out of state acquisitions by bank holding
companies, interstate merging by banks (subject to veto by new state law), and
de novo branching by banks if allowed by state law. These branching powers may
result in an increase in the number of competitors in the Bank's market,
although to date they have tended to trigger consolidations in the market. The
Organizers believe the Bank can compete effectively in the market despite any
impact of these branching powers, but there can be no assurance that future
competitive developments will not impact the Bank's ability to compete
effectively. The Organizers currently have no plans or agreements whereby the
Bank would acquire other banks or thrifts.
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Community Reinvestment Act. The Community Reinvestment Act requires that,
in connection with examinations of financial institutions within their
respective jurisdictions, the federal bank regulatory authorities evaluate the
record of the financial institutions in meeting the credit needs of their local
communities, including low and moderate income neighborhoods, consistent with
the safe and sound operation of those institutions. These factors are also
considered in evaluating mergers, acquisitions, and applications to open a
branch or facility.
Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as the federal
Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public officials to
determine whether a financial institution will be fulfilling its obligation to
help meet the housing needs of the community it serves; the Equal Credit
Opportunity Act, prohibiting discrimination on the basis of race, creed or other
prohibited factors in extending credit; the Fair Credit Reporting Act of 1978,
governing the use and provision of information to credit reporting agencies; the
Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; and the rules and regulations of the various
federal agencies charged with the responsibility of implementing such federal
laws. The deposit operations of the Bank also are subject to the Right to
Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act and Regulation E issued by the Federal Reserve Board to implement that act,
which governs automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of automated teller
machines and other electronic banking services.
Capital Regulations
The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profiles
among banks and bank holding companies and account for off-balance sheet items.
The guidelines are minimums, and the federal regulators have noted that banks
and bank holding companies contemplating significant expansion programs should
not allow expansion to diminish their capital ratios and should maintain in
excess of the minimums. Neither the Company nor the Bank has received any
notice indicating that either entity will be subject to higher capital
requirements. The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio
equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1 capital
includes common shareholders' equity, qualifying perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries, but excludes
goodwill and most other intangibles and excludes the allowance for loan and
lease losses. Tier 2 capital includes the excess of any preferred stock not
included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments, subordinated debt and intermediate term-preferred stock, and
general reserves for loan and lease losses up to 1.25% of risk-weighted assets.
Under these guidelines, banks' and bank holding companies' assets are given
risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance sheet
items are given credit conversion factors to convert them to asset equivalent
amounts to which an appropriate risk-weight will apply. These computations
result in the total risk-weighted assets. Most loans are assigned to the 100%
risk category, except for first mortgage loans fully secured by residential
property and, under certain
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circumstances, residential construction loans, both of which carry a 50%
rating. Most investment securities are assigned to the 20% category, except for
municipal or state revenue bonds, which have a 50% rating, and direct
obligations of or obligations guaranteed by the United States Treasury or United
States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a leverage
ratio, which is equal to Tier 1 capital as a percentage of average total assets
less intangibles, to be used as a supplement to the risk-based guidelines. The
principal objective of the leverage ratio is to place a constraint on the
maximum degree to which a bank holding company may leverage its equity capital
base. The minimum required leverage ratio for top-rated institutions is 3%, but
most institutions are required to maintain an additional cushion of at least 100
to 200 basis points.
Federal law and regulations establish a capital-based regulatory scheme
designed to promote early intervention for troubled banks and require the FDIC
to choose the least expensive resolution of bank failures. The capital-based
regulatory framework contains five categories of compliance with regulatory
capital requirements, including "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized." To qualify as a "well capitalized" institution, a bank must
have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less
than 6%, and a total risk-based capital ratio of no less than 10%, and the bank
must not be under any order or directive from the appropriate regulatory agency
to meet and maintain a specific capital level. Initially, the Organizers expect
the Bank to qualify as "well-capitalized."
Under the regulations, the applicable agency can treat an institution as if
it were in the next lower category if the agency determines (after notice and an
opportunity for hearing) that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice. The degree of
regulatory scrutiny of a financial institution will increase, and the
permissible activities of the institution will decrease, as it moves downward
through the capital categories. Institutions that fall into one of the three
undercapitalized categories may be required to (i) submit a capital restoration
plan; (ii) raise additional capital; (iii) restrict their growth, deposit
interest rates, and other activities; (iv) improve their management; (v)
eliminate management fees; or (vi) divest themselves of all or a part of their
operations. Bank holding companies controlling financial institutions can be
called upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans.
These capital guidelines can affect the Company in several ways. After
completion of this offering, the Company's capital levels will initially be more
than adequate. However, rapid growth, poor loan portfolio performance, or poor
earnings performance, or a combination of these factors, could change the
Company's capital position in a relatively short period of time, making an
additional capital infusion necessary. Failure to meet these capital
requirements would mean that a bank would be required to develop and file a plan
with its primary federal banking regulator describing the means and a schedule
for achieving the minimum capital requirements. In addition, such a bank would
generally not receive regulatory approval of any application that requires the
consideration of capital adequacy, such as a branch or merger application,
unless the bank could demonstrate a reasonable plan to meet the capital
requirement within a reasonable period of time.
Enforcement Powers
Federal law makes strong civil and criminal penalties available for use by
the federal regulatory agencies against depository institutions and certain
"institution-affiliated parties" (primarily
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including management, employees, and agents of a financial institution,
independent contractors such as attorneys and accountants and others who
participate in the conduct of the financial institution's affairs). These
practices can include the failure of an institution to timely file required
reports or the filing of false or misleading information or the submission of
inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such
violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators are provided with
considerable flexibility to commence enforcement actions against institutions
and institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, regulators have broad power to
issue cease and desist orders that may, among other things, require affirmative
action to correct any harm resulting from a violation or practice, including
restitution, reimbursement, indemnifications or guarantees against loss. A
financial institution may also be ordered to restrict its growth, dispose of
certain assets, rescind agreements or contracts, or take other actions as
determined by the ordering agency to be appropriate.
Future Legislative Developments
From time to time, various bills are introduced in the United States
Congress with respect to the regulation of financial institutions. Certain of
these proposals, if adopted, could significantly change the regulation of banks
and the financial services industry. The Company cannot predict whether any of
these proposals will be adopted or, if adopted, how these proposals would affect
the Company.
Effect of Governmental Monetary Policies
The earnings of the Bank will be affected by domestic economic conditions
and the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve Board's monetary policies have had, and will
likely continue to have, an important impact on the operating results of
commercial banks through its power to implement national monetary policy in
order, among other things, to curb inflation or combat a recession. The
monetary policies of the Federal Reserve Board have major effects upon the
levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or
impact of future changes in monetary and fiscal policies.
31
<PAGE>
MANAGEMENT
General
The following table sets forth the respective names, ages, positions with
the Company and the Bank, existing share ownership and anticipated subscriptions
of the Organizers. The Organizers may elect to purchase more than the shares
indicated below.
<TABLE>
<CAPTION>
Total Share Percentage Percentage
Ownership of of
Position With Existing Share Anticipated Post- Outstanding Outstanding
Name (Age) Company/Bank Ownership(1) Subscription(2) Offering Minimum(3) Maximum(4)
---------- ------------- ------------- --------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hugh C. Aldredge (69) Director 10,000 90,000 100,000 6.0% 4.1%
Marvin Cosgray (48) Director, -- 50,000 50,000 3.0% 2.0%
President and
Chief Executive
Officer
J. Rex Fuqua (48) Director 10,000 90,000 100,000 6.0% 4.1%
Julian LeCraw Sr. (67) Director 10,000 90,000 100,000 6.0% 4.1%
R. Charles Loudermilk, Sr. (70) Chairman of the 10,000 190,000 200,000 12.0% 8.1%
Board and Director
Larry P. Martindale (51) Vice Chairman of 10,000 90,000 100,000 6.0% 4.1%
the Board and
Director
William T. Towles (69) Director 10,000 90,000 100,000 6.0% 4.1%
------ ------- -------
TOTAL 60,000 690,000 750,000 45.2% 30.5%
</TABLE>
- ---------------
(1) All shares presently owned by the Organizers were purchased at a price
of $5.00 per share, the same price at which shares are being offered to
the public.
(2) All of such purchases will be at a price of $5.00 per share, the same
price at which shares are being offered to the public. Organizers may
purchase up to 100% of the shares in the offering if necessary for the
Company to achieve the minimum capital requirement and also may decide
to purchase additional shares in the offering even if the minimum
offering is fully subscribed. Any shares purchased by the Organizers in
excess of their original commitment will be purchased for investment
and not with a view to the resale of such shares. Although each
Organizer has agreed with the other Organizers that he will subscribe
for the number of shares indicated above, neither the Organizers nor
any other subscriber will be obligated to purchase shares except
pursuant to a valid subscription agreement executed after receipt of
this Prospectus. This table includes shares which are expected to be
beneficially owned by the Organizers upon completion of the offering.
(3) Assumes that the minimum number of 1,600,000 shares are sold in this
offering.
(4) Assumes that the maximum number of 2,400,000 shares are sold in this
offering.
All of the Organizers will serve as directors of the Company and the Bank.
Biographical information concerning the Organizers is set forth below.
32
<PAGE>
Hugh C. Aldredge has over 45 years of experience in real estate
development, management and finance. Since 1950, he has been the owner of
Aldredge Properties, a real estate investment concern, and since 1967 he has
been President of Squire Inn, Inc., a hotel investment and management
corporation. He received his BBA degree in Marketing in 1949 from The University
of Georgia University. He is a member and serves on the Administrative Board of
Northside United Methodist Church. He is a member of the Board of Directors and
past President of the Atlanta Country Club, and a member of the Atlanta Classic
Foundation, a charitable organization which raises money through celebrity golf
tournaments. He is a past member of the Sandy Springs Revitalization Committee.
Marvin Cosgray is the President and Chief Executive Officer of the Company
and the proposed President and Chief Executive Officer of the Bank. He graduated
from the University of West Florida with a Bachelors degree and received a law
degree in 1979 from Woodrow Wilson College of Law in Atlanta, Georgia. He served
as President and Chief Executive Officer of Gwinnett National Bank from its
organization in 1988 until April 1997. He served as President and Chief
Executive Officer of First Colony Bank, Alpharetta, Georgia, and its parent bank
holding company, First Colony Bancshares, Inc., from February of 1986 until his
resignation on July 31, 1988. Immediately prior to his service with First Colony
Bank, Mr. Cosgray was President and Chief Executive Officer of Heritage Trust
Savings Bank, Conyers, Georgia. From 1972 until coming to Heritage Trust, Mr.
Cosgray served in various managerial and executive capacities with Gwinnett Bank
and Trust Company, Norcross, Georgia. Mr. Cosgray has chaired and been a member
of various committees of the Community Bankers Association of Georgia and the
Georgia Bankers Association since 1971. He has also been active in civic, social
and church activities throughout his career. He is currently a charter member of
the Norcross Rotary Club where he has served as President and a director. He has
been a director of the Alpharetta/North Fulton Rotary Club, a co-founder and a
director of the Alpharetta Business Alliance, and a two term Chairman of the
North Fulton District of the Boy Scouts of America. He has been a member of the
North Fulton and Gwinnett County Chambers of Commerce. He is an Elder of the
Alpharetta Presbyterian Church.
J. Rex Fuqua is President and Chief Executive Officer of Fuqua Capital
Corporation, a private investment and money management firm, a position he has
held since 1988. From 1982 to 1988 he was President of Signet Capital, Inc., and
from 1979 to 1982 he was President of Signet Communications Company. Prior to
that, he was President of Fuqua National, Inc. for five years. He received his
BBA degree in Finance in 1972 from The University of Georgia and his Masters
Degree in Clinical Psychology from the California School of Professional
Psychology. He is a director of Fuqua Enterprises, Inc., Aaron Rents, Inc., and
FNB Bancshares, Inc., Lakeland, Georgia, which is the holding company for
Farmers & Merchant's Bank, Lakeland, Georgia and The United Banking Company,
Nashville, Georgia. From 1974 to 1976 he was Director of First Georgia Bank,
Atlanta, Georgia.
He is a member of the Board of Trustees of Duke University, the Board of
Trustees of Duke University Graduate Business School, a former Trustee of The
Westminster School in Atlanta, Georgia, and is a Trustee of the Heritage School
in Newnan, Georgia. He is a member of the Board of Counselors of The Carter
Center, a Director of Camp Sunshine, and a member of the Board of Trustees, and
former Chairman, of the Atlanta Botanical Garden.
Julian LeCraw, Sr. has been the owner and principal of Julian LeCraw &
Company, a real estate development and management firm, since 1955. He received
his B.S. degree in Industrial Management in 1952 from the Georgia Institute of
Technology and a L.L.B. degree in 1958 from the
33
<PAGE>
Woodrow Wilson School of Law. From 1983 to 1994, he served as a director of
First National Bank of Cobb County and, following its acquisition by Barnett
Bank, of Barnett Bank in Atlanta, where he also served as a member of the
Problem Loan Committee. He is a former Chairman of the Buckhead Coalition, Vice
President of Georgia Tech Foundation, Inc., a member of the Board of Trustees of
The Westminster School in Atlanta, Georgia, and an Elder of North Avenue
Presbyterian Church.
R. Charles Loudermilk, Sr. is the founder, Chairman and Chief Executive
Officer of Aaron Rents, Inc., one of the leading furniture rental and sales
companies in the United States. He received his B.S. degree in Commerce in 1950
from The University of North Carolina. From 1985 to 1994 he served as director
and a member of the Executive Committee of The Buckhead Bank and The
Chattahoochee Bank.
He is Founder and past Chairman of the Buckhead Coalition, a member of the
Board of Directors of the Corporation for Olympic Development in Atlanta (CODA),
a member of the Board of Visitors of the University of North Carolina and a
member of the Rotary Club of Atlanta, the Atlanta Action Forum and the Executive
Committee of the Atlanta Convention and Visitors Bureau's Board of Directors.
He has served on the Piedmont Hospital Foundation Board, the Shepherd's Spinal
Center Steering Committee and the Archbold Hospital Foundation in Thomasville,
Georgia. He is former President of the National Rental Service Association,
former Chairman of the Board of Directors of the Metropolitan Atlanta Rapid
Transit Authority (MARTA), former Co-Chairman of Andrew Young's Atlanta mayoral
campaigns in 1981 and 1985, and is Treasurer of Guy Milner's United States
Senate campaign. He is Chairman of the Buckhead Club, and a member of the
Commerce Club, the Capital City Club and the Piedmont Driving Club.
Larry P. Martindale has been Vice Chairman of Ritz-Carlton Hotel Company
for over 20 years. He received his B.S. degree in Business Administration in
1969 from the University of Mississippi. He is a member of the Foundation Board
of the University of Mississippi, the Board of Directors of the Atlanta Country
Club and the Board of Directors of Junior Achievement. He is a member of Holy
Innocence's Episcopal Church.
William T. Towles is a builder, developer, manager and investor in
apartments, shopping centers and other real estate projects. He received his
B.S. degree in Architecture in 1950 from the Georgia Institute of Technology. He
is a former member of the Advisory Board of Shepherd's Spinal Center, a former
Trustee of the Georgia Tech Alumni Association, a former Chairman of the Board
of Trustees of St. James United Methodist Church, and a member of the Randolph
Macon Parents Council. He is a member of the Georgia Tech Athletic Hall of Fame
and a former Director of the Peachtree Golf Club.
Employment Agreement
Marvin Cosgray and the Company have entered into an Employment Agreement,
commencing November 1, 1997, pursuant to which Mr. Cosgray is the President and
Chief Executive Officer of the Company and will serve as the President and Chief
Executive Officer of the Bank. The Employment Agreement provides for a starting
salary of $115,000 per annum. In addition, Mr. Cosgray will be eligible to
receive annual performance bonuses, payable in cash or, at the election of Mr.
Cosgray, in stock, based on the return on average assets of the Bank. The
maximum performance bonus payable is 25% of Mr. Cosgray's base salary. Mr.
Cosgray will be eligible to participate in all retirement, welfare and other
benefit plans or programs of the Company applicable generally to employees of
the Company or to a class of employees that includes senior executives of the
Company.
34
<PAGE>
The Employment Agreement requires that the Company provide Mr. Cosgray with a
term life insurance policy providing for death benefits totaling $250,000. In
addition, the Company will provide Mr. Cosgray with an automobile allowance of
$500 per month and reimburse Mr. Cosgray for reasonable travel and other
expenses related to his position with the Company and the Bank, including
membership fees for business, civic and social organizations.
The Employment Agreement is terminable by the Company or the Bank
immediately for cause (as defined in the Employment Agreement) or upon the death
or complete disability of Mr. Cosgray. In addition, the Company may terminate
the Employment Agreement for any reason provided that it pays Mr. Cosgray his
base salary for a period of six months after the date of termination. Mr.
Cosgray may terminate his employment under the Employment Agreement upon sixty
days written notice to the Company and the Bank. For a period of one year
following termination of Mr. Cosgray's employment, Mr. Cosgray may not serve as
a director, officer at the Vice President level or higher, or organizer or
promoter of, or provide executive management services to, any entity engaged in
banking activities which are competitive with those which the Bank has engaged
in within the twelve months immediately preceding such termination at any
location within 15 miles of the boundary of the Bank's primary service area. In
addition, Mr. Cosgray may not use or divulge any confidential information of the
Company or the Bank, solicit any customers of the Company or the Bank for
competitive banking services, solicit for employment any employee of the Company
or the Bank, or pursue any business opportunity which came to his attention in
connection with his employment by the Company or the Bank (other than
opportunities which the Company and the Bank have declined to pursue).
Director Compensation
The Organizers do not intend for the Company or the Bank to pay directors'
fees in the initial years of operation.
Interests of Management and Others in Certain Transactions
For approximately four months during early 1997, the Company leased
temporary furniture from Aaron Rents, Inc., a public company affiliated with Mr.
Loudermilk, for use during its effort to organize the Bank. The rental rate,
which was approximately $670 per month, and other terms of the lease were no
less favorable to the Company than those available from other sources. The
Organizers have entered into an agreement with Malcolm Garland & Company to
assist it in the organization of the Company and the Bank in return for a fee of
$32,500. Malcolm C. Garland, the principal of Malcolm Garland & Company, served
as an unpaid officer of the Company during its organization but has no ongoing
position with or equity interest in the Company.
The Company and the Bank may have banking and other transactions in the
ordinary course of business with Organizers, directors, and officers of the
Company and the Bank and their affiliates, including members of their families
or corporations, partnerships, or other organizations in which such Organizers,
officers, or directors have a controlling interest, on substantially the same
terms (including price, or interest rates and collateral) as those prevailing at
the time for comparable transactions with unrelated parties. Such transactions
are not expected to involve more than the normal risk of collectability nor
present other unfavorable features to the Company and the Bank. The Bank is
subject to a limit on the aggregate amount it could lend to its and the
Company's directors and officers as a group equal to its unimpaired capital and
surplus (or, under a regulatory exemption available to banks with less than $100
million in deposits, twice that amount), loans to
35
<PAGE>
individual directors and officers must also comply with the Bank's lending
policies and statutory lending limits, and directors with a personal interest in
any loan application will be excluded from the consideration of such loan
application.
Exculpation and Indemnification
The Articles of Incorporation of the Company contain a conditional
provision which, subject to certain exceptions described below, eliminates the
liability of a director to the Company or its shareholders for monetary damages
for any breach of duty as a director. This provision does not eliminate such
liability to the extent the director (i) appropriated, in violation of his
duties, any business opportunity of the Company, (ii) engaged in willful
misconduct or a knowing violation of law, (iii) permitted any unlawful
distribution, or (iv) derived an improper personal benefit.
The Bylaws of the Company require the Company to indemnify any person who
was, is, or is threatened to be made defendant or respondent in any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of service by such person as a
director of the Company or the Bank or any other corporation which he served as
such at the request of the Company. Except as noted in the next paragraph,
directors are entitled to be indemnified against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding. Directors are also entitled to have the Company
advance any such expenses prior to final disposition of the proceeding, upon
delivery of a written affirmation by the director of his good faith belief that
the standard of conduct necessary for indemnification has been met and a written
undertaking to repay the amounts advanced if it is ultimately determined that
the standard of conduct has not been met.
Under the Bylaws, indemnification will be disallowed if it is established
that the director (i) appropriated, in violation of his duties, any business
opportunity of the Company, (ii) engaged in willful misconduct or a knowing
violation of law, (iii) permitted any unlawful distribution, or (iv) derived an
improper personal benefit. In addition to the Bylaws of the Company, Section
18-2-852 of the Georgia Business Corporation Act (the "Corporate Code") requires
that a corporation indemnify a director "who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because he or she was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding." The
Corporate Code also provides that upon application of a director a court may
order indemnification if it determines that the director is entitled to such
indemnification under the applicable standard of the Corporate Code.
The Board of Directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The Board of Directors
has extended or intends to extend indemnification rights to all of its executive
officers. The Company intends to enter into indemnity agreements with its
directors and officers.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Special
Stock, no par value per share (the "Special
36
<PAGE>
Stock"). The following summary describes the Company's capital stock. Reference
is made to the Articles of Incorporation of the Company, which are filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, for
a detailed description of the provisions thereof summarized below.
Common Stock
Holders of shares of the Common Stock are entitled to receive such
dividends as may from time to time be declared by the Board of Directors out of
funds legally available therefor. The Company does not plan to declare any
dividends in the immediate future. See "Dividend Policy." Holders of Common
Stock are entitled to one vote per share on all matters on which the holders of
Common Stock are entitled to vote and do not have any cumulative voting rights.
Holders of Common Stock have no preemptive, conversion, redemption or sinking
fund rights. In the event of a liquidation, dissolution or winding-up of the
Company, holders of Common Stock are entitled to share equally and ratably in
the assets of the Company, if any, remaining after the payment of all debts and
liabilities of the Company and the liquidation preference of any outstanding
Special Stock. The outstanding shares of Common Stock are, and the shares of
Common Stock offered by the Company hereby when issued will be, fully paid and
nonassessable. The rights, preferences and privileges of holders of Common
Stock are subject to any classes or series of Special Stock that the Company may
issue in the future.
There currently is no market for the shares, and, although the Company has
filed a registration statement with the SEC to register the issuance of the
Common Stock in the offering under the Securities Act of 1933, it is not likely
that any trading market will develop for the shares in the future. The Company
has no plans to list the Common Stock on any stock exchange or to cause the
Common Stock to be traded in the over-the-counter market.
Special Stock
The Articles provide that the Board of Directors is authorized, without
further action by the holders of the Common Stock, to provide for the issuance
of shares of the Special Stock in one or more classes or series and to fix the
preferences, limitations, and relative rights thereof, and to fix the number of
shares to be included in any such classes or series. Any Special Stock so
issued may rank senior to the Common Stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, any such shares of Special Stock may have class or series voting
rights. Upon completion of this offering, the Company will not have any shares
of Special Stock outstanding. Issuances of Special Stock, while providing the
Company with flexibility in connection with general corporate purposes, may,
among other things, have an adverse effect on the rights of holders of Common
Stock, and in certain circumstances such issuances could have the effect of
decreasing the market price of the Common Stock. The Company has no present
plan to issue any shares of Special Stock.
Certain Antitakeover Effects
The provisions of the Articles, the Bylaws and the Corporation Act
summarized in the following paragraphs may be deemed to have antitakeover
effects and may delay, defer or prevent a tender offer or takeover attempt that
a shareholder might consider to be in such shareholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by shareholders, and may make removal of management more
difficult.
37
<PAGE>
Authorized but Unissued Stock. The authorized but unissued shares of Common
Stock and Special Stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of Common Stock and Special Stock
may enable the Board of Directors to issue shares to persons friendly to current
management, which could render more difficult or discourage any attempt to
obtain control of the Company by means of a proxy contest, tender offer, merger
or otherwise, and thereby protect the continuity of the Company's management.
Advance Notice Requirements for Shareholder Proposals. The Bylaws establish
advance notice procedures with regard to proposals raised, other than by or at
the direction of the Board of Directors, at any meeting of the shareholders of
the Company. These procedures provide that the notice of shareholder proposals
must be in writing and be received by the Secretary of the Company on or before
the later to occur of (i) 14 days prior to the meeting or (ii) 5 days after
notice of the meeting is provided to the shareholders. The Company may reject a
shareholder proposal that is not made in accordance with such procedures.
Certain Nomination Requirements. Pursuant to the Bylaws, the Company has
established certain nomination requirements for an individual to be elected as a
director of the Company at any annual or special meeting of the shareholders,
including that the nominating party provide the Company within a specified time
prior to the meeting (i) notice that such party intends to nominate the proposed
director; (ii) the name and certain biographical information on the nominee; and
(iii) a statement that the nominee has consented to the nomination. The chairman
of any Shareholders' meeting may, for good cause shown, waive the operation of
these provisions. These provisions could reduce the likelihood that a third
party would nominate and elect individuals to serve on the Board of Directors.
Consideration of Other Constituencies in Mergers. The Corporation Act
grants the Board of Directors the discretion, when considering whether a
proposed merger or similar transaction is in the best interests of the Company
and its shareholders, to take into account the effect of the transaction on the
employees, customers, and suppliers of the Company and upon the communities in
which the offices of the Company are located.
Shares Eligible for Future Sale
Upon completion of this offering, the Company will have a minimum of
1,660,000 and a maximum of 2,460,000 shares of Common Stock outstanding. The
shares sold in this offering will be freely tradable, without restriction or
registration under the Securities Act, except for shares purchased by
"affiliates" of the Company, which will be subject to resale restrictions under
the Securities Act. An affiliate of the issuer is defined in Rule 144 under the
Securities Act as a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
issuer. Rule 405 under the Securities Act defines the term "control" to mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the person whether through the
ownership of voting securities, by contract or otherwise. Directors of the
Company and the Bank will likely be deemed to be affiliates. These securities
held by affiliates may be sold without registration in accordance with the
provisions of Rule 144 or another exemption from registration.
38
<PAGE>
In general, under Rule 144, an affiliate of the Company or a person holding
restricted shares may sell, within any three-month period, a number of shares no
greater than 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 the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the Securities
Act, and the person selling the securities may not solicit orders or make any
payment in connection with the offer or sale of securities to any person
other than the broker who executes the order to sell the securities. This
requirement may make the sale of the Common Stock by affiliates of the Company
pursuant to Rule 144 difficult if no trading market develops in the Common
Stock. Rule 144 also requires persons holding restricted securities to hold the
shares for at least one year prior to sale.
LEGAL MATTERS
The validity of the issuance of the shares of the Common Stock offered
hereby will be passed upon for the Company by Morris, Manning & Martin, L.L.P.,
Atlanta, Georgia.
EXPERTS
The financial statements of the Company at October, 31, 1997, and for the
period from October 15, 1996 (inception) until October 31, 1997, have been
audited by Mauldin & Jenkins, LLC, Atlanta, Georgia (the "Accountant"),
independent certified public accountants, as stated in the Accountant's report
appearing elsewhere herein, and have been so included in reliance on the report
of such firm given upon the Accountant's authority as an expert in accounting
and auditing.
39
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
INDEPENDENT AUDITOR'S REPORT............................................... F-2 AND F-3
Balance Sheet, OCTOBER 31, 1997............................................ F-4
Statement of Loss, Period from October 15, 1996, Date of Inception,
to OCTOBER 31, 1997...................................................... F-5
Statement of Stockholders' Equity, Period from October 15, 1996,
Date of Inception, to OCTOBER 31, 1997................................... F-6
Statement of Cash Flows, Period from October 15, 1996, Date of Inception,
to OCTOBER 31, 1997...................................................... F-7
Notes to Financial Statements.............................................. F-8
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
- -------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS
BUCKHEAD COMMUNITY BANCORP, INC.
ATLANTA, GEORGIA
We have audited the accompanying balance sheet of BUCKHEAD COMMUNITY
BANCORP, INC., a development stage company, as of October 31, 1997, and the
related statements of loss, stockholders' equity and cash flows for the period
from October 15, 1996, date of inception, to October 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Buckhead Community Bancorp,
Inc. as of October 31, 1997, and the results of its operations and its cash
flows for the period from October 15, 1996, date of inception, to October 31,
1997, in conformity with generally accepted accounting principles.
F-2
<PAGE>
- --------------------------------------------------------------------------------
The accompanying financial statements have been prepared assuming that
Buckhead Community Bancorp, Inc., will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company is in the
organization stage and has not commenced operations. Also, as discussed in Note
2, the Company's future operations are dependent on obtaining capital through an
initial stock offering and obtaining the necessary final regulatory approvals to
operate under a commercial bank charter. These factors and the expense
associated with development of a new banking institution raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are described in Note 2. The financial statements do
not include any adjustments relating to the recoverability of reported asset
amounts or the amount of liabilities that might result from the outcome of this
uncertainty.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
November 18, 1997
F-3
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A Development Stage Company)
BALANCE SHEET
OCTOBER 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Cash $ 14,214
Interest-bearing deposits in banks 75,000
Accrued interest receivable and other assets 11,040
Deferred organization and stock offering costs 178,390
--------
$278,644
========
COMMITMENTS
STOCKHOLDERS' EQUITY
Special stock, no par value; 1,000,000 shares authorized; none issued $ -
Common stock, $.01 par value; 10,000,000 shares authorized;
70,000 shares issued and outstanding 700
Capital surplus 349,300
Deficit accumulated during the development stage (71,356)
--------
278,644
--------
$278,644
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A Development Stage Company)
STATEMENT OF LOSS
PERIOD FROM OCTOBER 15, 1996, DATE OF INCEPTION,
TO OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Income, interest $ 6,829
----------
Expenses
Salaries and employee benefits 46,805
Other expenses 31,380
----------
78,185
----------
Net loss $ (71,356)
==========
Losses per share $ (0.95)
==========
SEE NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM OCTOBER 15, 1996, DATE OF INCEPTION,
TO OCTOBER 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock During the Total
--------------------- Capital Development Stockholders'
Shares Par Value Surplus Stage Equity
------ --------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, October 15, 1996
(date of inception) - $ - $ - $ - $ -
Issuance of common stock 80,200 802 400,198 - 401,000
Redemption of common stock (10,200) (102) (50,898) - (51,000)
Net loss - - - (71,356) (71,356)
------ ------ ---------- ---------- ----------
Balance, October 31, 1997 70,000 $ 700 $ 349,300 $ (71,356) $ 278,644
====== ====== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM OCTOBER 15, 1996, DATE OF INCEPTION,
TO OCTOBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (71,356)
Adjustment to reconcile net loss to net cash used in
operating activities:
Increase in accrued interest receivable and other assets (11,040)
-----------
Net cash used in operating activities (82,396)
-----------
INVESTING ACTIVITIES
Increase in deferred organization and stock offering costs (143,237)
Increase in interest-bearing deposits in banks (75,000)
-----------
Net cash used in investing activities (218,237)
-----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 401,000
Redemption of common stock (51,000)
Increase in stock offering costs (35,153)
-----------
Net cash provided by financing activities 314,847
-----------
Net increase in cash 14,214
Cash at beginning of period -
-----------
$ 14,214
===========
</TABLE>
See Notes to Financial Statements.
F-7
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Buckhead Community Bancorp, Inc. (the "Company") was incorporated to
operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended, and the Georgia Bank
Holding Company Act, and to purchase 100% of the issued and
outstanding capital stock of The Bank of Buckhead, N.A. (the
"Bank"), an association to be organized under the laws of the United
States, which will conduct a general banking business in Atlanta,
Georgia. The Organizers have filed a joint application with the
Office of the Comptroller of the Currency (the "OCC") and the
Federal Deposit Insurance Corporation (the "FDIC") to charter the
proposed Bank and for FDIC insurance of the Bank's deposits. Upon
receipt of preliminary approval from the OCC, the Company will file
an application to become a bank holding company with the Federal
Reserve Board (the "FRB") and the Georgia Department of Banking and
Finance (the "DBF"). Upon obtaining regulatory approval, the
Company will be a registered bank holding company subject to
regulation by the FRB and the DBF.
Activities since inception have consisted of the Company's and the
Bank's organizers engaging in organizational and preopening
activities necessary to obtain regulatory approvals and to prepare
to commence business as a financial institution.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED ORGANIZATION AND STOCK OFFERING COSTS
Deferred organization costs will be amortized in accordance with
applicable regulations and accounting policies over a period not to
exceed five years from the commencement of operations. Stock
offering costs will be charged to capital surplus upon completion
of the stock offering. Additional costs are expected to be
incurred for organization costs and stock offering costs.
Following is a summary of these costs:
<TABLE>
<CAPTION>
STOCK
ORGANIZATION OFFERING
COSTS COSTS TOTAL
------------ -------- --------
<S> <C> <C> <C>
Consulting $ 42,275 $ - $ 42,275
Legal 77,162 17,747 94,909
Filing fees 14,300 13,506 27,806
Other 9,500 3,900 13,400
-------- ------- --------
$143,237 $35,153 $178,390
======== ======= ========
</TABLE>
INCOME TAXES
The Company will be subject to Federal and state income taxes when
taxable income is generated. No income taxes have been accrued
because of operating losses incurred during the preopening period.
LOSSES PER SHARE
Losses per share are computed by dividing net loss by the weighted
average number of common shares outstanding.
FISCAL YEAR
The Company will adopt a calendar year for both financial reporting
and tax reporting purposes.
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 2. LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $71,356 for the period from
inception (October 15, 1996) to October 31, 1997.
At October 31, 1997, the Company is totally funded by stock sales from
the organizers. Management believes that the current level of
expenditures is well within the financial capabilities of the
organizers and adequate to meet existing obligations and fund current
operations, but obtaining final regulatory approvals and commencing
banking operations is dependent on successfully completing the stock
offering and obtaining regulatory approval.
To provide permanent funding for its operation, the Company is
currently anticipating offering a minimum of 1,600,000 and a maximum
of 2,400,00 shares of its common stock, $.01 par value, at $5 per
share in an initial public offering. Costs related to the
organization and registration of the Company's common stock will be
paid from the gross proceeds of the offering. Should subscriptions
for the minimum offering not be obtained, amounts paid by subscribers
with their subscriptions will be returned and the offer withdrawn.
NOTE 3. COMMITMENTS AND SUBSEQUENT EVENTS
The Company has entered into an employment agreement with its
President and Chief Executive Officer with an effective date of
October 1, 1997. The agreement continues to December 31, 2000 and
provides for an initial annual base salary of $115,000, increasing
$5,000 per year through 2000.
The Company has entered into a ten-year lease agreement for facilities
to house the Bank's office. The lease term is expected to commence on
November 1, 1997. Annual rent for the first year of the lease is
approximately $160,000 with increases of 3% per year during the lease
term.
Note 4. RELATED PARTY TRANSACTION
During its organizational period, the Company leased office furniture
from a company affiliated with one of its directors. The lease period
was approximately four months and the Company incurred total rental
expense of $2,680. As of October 31, 1997, the lease has been
terminated.
F-10
<PAGE>
EXHIBIT A
BUCKHEAD COMMUNITY BANCORP, INC.
SUBSCRIPTION AGREEMENT
Buckhead Community Bancorp, Inc.
P.O. Box 53299
Atlanta, Georgia 30355
(404) 812-0440
Ladies and Gentlemen:
You have informed me that Buckhead Community Bancorp, Inc., a Georgia
corporation (the "Company"), is offering up to 2,400,000 shares of its Common
Stock, par value $.01 per share (the "Common Stock"), at a price of $5.00 per
share payable as provided herein and as described in and offered pursuant to the
Prospectus furnished with this Subscription Agreement to the undersigned (the
"Prospectus").
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with payment in United
States currency by check, bank draft, or money order payable to "SunTrust Bank,
Atlanta, Escrow Account for Buckhead Community Bancorp, Inc." the amount
indicated below (the "Funds"), representing the payment of $5.00 per share for
the number of shares of Common Stock indicated below. The total subscription
price must be paid at the time the Subscription Agreement is executed.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company may reduce the number of shares
for which the undersigned has subscribed, indicating acceptance of less than all
of the shares subscribed on its written form of acceptance.
3. ACKNOWLEDGMENTS. The undersigned hereby acknowledges that he or she
has received a copy of the Prospectus. This Subscription Agreement creates a
legally binding obligation and the undersigned agrees to be bound by the terms
of this Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is tendered to the Company, it may not be withdrawn and that this
Agreement shall survive the death or disability of the undersigned.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<PAGE>
Please indicate in the space provided below the exact name or names and
address in which the stock certificate representing shares subscribed for
hereunder should be registered.
<TABLE>
<S> <C>
_____________________________________ _____________________________________________
Number of Shares Subscribed for Name or Names of Subscribers (Please Print)
(minimum 2,000 shares)
$____________________________________ _____________________________________________
Total Subscription Price at $5.00 Please indicate form of ownership desired
per share (funds must be enclosed) (individual, joint tenants with right of
survivorship, tenants in common, trust,
corporation, partnership, custodian, etc.)
Date: _______________________________ _____________________________________________
Signature of Subscriber(s)*
_____________________________________ _____________________________________________
Social Security Number or Federal Signature of Subscriber(s)*
Taxpayer Identification Number
Street (Residence) Address:
_____________________________________________
_____________________________________________
_____________________________________________
City, State and Zip Code
</TABLE>
*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 the case of joint tenants or
tenants in common, each owner must sign.
FEDERAL INCOME TAX BACKUP WITHHOLDING
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the Escrow Agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9, which is set forth below.
Under federal income tax law, any person who is required to furnish his or
her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the IRS.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund
may be obtained from the IRS. Certain taxpayers, including all corporations,
are not subject to these backup withholding and reporting requirements.
A-2
<PAGE>
If the shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, "Applied For" should be written
in the space provided for the TIN on the Substitute Form W-9.
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (i) The number shown on this
form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject to
backup withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue Service ("IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to backup
withholding.
You must cross out item (ii) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from
the IRS that you are not longer subject to backup withholding, do not cross out
item (ii).
Each subscriber should complete this section.
_____________________________________ _____________________________________
Signature of Subscriber Signature of Subscriber
_____________________________________ _____________________________________
Printed Name Printed Name
_____________________________________ _____________________________________
Social Security or Employer Social Security or Employer
Identification No. Identification No.
TO BE COMPLETED BY THE COMPANY:
Accepted as of ___________, 199__, as to _________ shares.
BUCKHEAD COMMUNITY BANCORP, INC.
By:____________________________________
Marvin Cosgray
President and Chief Executive Officer
A-3
<PAGE>
==============================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby. If given or made, such
information and representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder at any time shall under any circumstances create any implication that
the information herein is correct at any time after the date hereof.
<TABLE>
<CAPTION>
---------------------
TABLE OF CONTENTS
Page
----
<S> <C>
Reports to Shareholders..................................................2
Additional Information...................................................2
Prospectus Summary.......................................................3
Risk Factors.............................................................7
The Company and The Bank................................................11
The Offering............................................................12
Use of Proceeds.........................................................15
Capitalization..........................................................17
Selected Financial Data.................................................18
Dividend Policy.........................................................18
Proposed Business.......................................................18
Management's Discussion and Analysis of
Financial Condition and Results of Operations..........................23
Supervision and Regulation..............................................23
Management..............................................................31
Description of Capital Stock of the Company.............................35
Legal Matters...........................................................38
Experts.................................................................38
Financial Statements...................................................F-1
Subscription Agreement.................................................A-1
-----------------------
</TABLE>
Until __________, 1998, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a Prospectus. This is in addition to the obligation of dealers to
celiver a Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
===============================================================================
2,400,000 Shares
BUCKHEAD COMMUNITY BANCORP., INC.
A Proposed Holding Company For
[THE BUCKHEAD COMMUNITY
BANK, N.A. LOGO]
(Proposed)
Common Stock
_________________________
PROSPECTUS
_________________________
January 20, 1998
===============================================================================
<PAGE>
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 13. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale of the
shares of Common Stock are as follows:
<TABLE>
<S> <C>
Registration Fee............................................................... $ 3,540.00
Blue Sky Fees and Expenses..................................................... 1,000.00
Printing and Engraving......................................................... 10,000.00
Legal Fees and Expenses........................................................ 20,000.00
Accounting Fees and Expenses................................................... 3,500.00
Miscellaneous Disbursements.................................................... 1,960.00
----------
TOTAL $40,000.00
==========
</TABLE>
Item 14. Indemnification of Directors and Officers.
The bylaws of the Company require the Company to indemnify any person who
was, is, or is threatened to be made a named defendant or respondent in any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of service by such person
as a director of the Company or the Bank or any other corporation which he
served as such at the request of the Company. Except as noted in the next
paragraph, directors are entitled to be indemnified against judgments,
penalties, fines, settlements, and reasonable expenses actually incurred by the
director in connection with the proceeding. Directors are also entitled to have
the Company advance any such expenses prior to final disposition of the
proceeding, upon delivery of a written affirmation by the director of his good
faith belief that the standard of conduct necessary for indemnification has been
met and a written undertaking to repay the amounts advanced if it is ultimately
determined that the standard of conduct has not been met.
Under the Bylaws, indemnification will be disallowed if it is established
that the director (i) appropriated, in violation of his duties, any business
opportunity of the Company, (ii) engaged in willful misconduct or a knowing
violation of law, (iii) permitted any unlawful distribution, or (iv) derived an
improper personal benefit. In addition to the Bylaws of the Company, Section
18-2-852 of the Georgia Business Corporation Code (the "Corporate Code")
requires that a corporation indemnify a director who is wholly successful, on
the merits or otherwise, in the defense of any proceeding to which he or she was
a party because he or she is or was a director of the corporation against
reasonable expenses incurred by the director in connection with the proceeding.
The Corporate Code also provides that upon application of a director a court may
order indemnification if it determines that the director is entitled to such
indemnification under the applicable standard of the Corporation Act.
The Board of Directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The Board of Directors
has extended or intends to extend indemnification rights to all of its executive
officers.
The Company has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Company
against any liability asserted
II-I
<PAGE>
against him or incurred by him in any such capacity, whether or not the Company
would have the power to indemnify him against such liability under the bylaws.
Item 15. Recent Sales of Unregistered Securities.
On October 15, 1996, the Company sold 200 shares to R. Charles Loudermilk,
Sr. in a limited offering exempt under Section 4(2) of the Securities Act for an
aggregate consideration of $1,000. No underwriters were involved in the sale
and no underwriting discounts or commissions were paid. These shares were
redeemed by the Company, on October 28, 1996, for $1,000.
On October 28, 1996, the Company sold 80,000 shares to the Organizers in a
limited offering exempt under Rule 506 of Regulation D and Section 4(2) of the
Securities Act for an aggregate consideration of $400,000. Each organizer
purchase 10,000 of such shares. No underwriters were involved and no
underwriting commissions or discounts were paid.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
--------
<TABLE>
<S> <C>
3.1. Articles of Incorporation.*
3.2. Bylaws.*
4.1. Provisions in the Company's Articles of Incorporation and Bylaws
defining the rights of holders of the Common Stock.*
5.1. Opinion Regarding Legality.*
10.1. Form of Employment Agreement between Marvin Cosgray and the Company.*
10.2. Form of Escrow Agreement between SunTrust Bank, Atlanta and the
Company.*
10.3. Office Lease between Longpoint Investors, Ltd. and the Company dated
August 7, 1997.*
23.1. Consent of Mauldin & Jenkins, LLC.
23.2. Consent of Morris, Manning & Martin, L.L.P. (appears in its opinion
filed as Exhibit 5.1).*
24.1. Power of Attorney (appears on page II-4).*
27.1. Financial Data Schedule.
</TABLE>
- ----------
* Previously filed.
(b) Financial Statement Schedules.
-----------------------------
None.
Item 17. Undertakings.
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 Company pursuant to the provisions described in Item 14 above or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "SEC") 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 Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the questions 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-2
<PAGE>
The undersigned Company hereby undertakes as follows:
(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 Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on
BUCKHEAD COMMUNITY BANCORP, INC.
By: /s/ Marvin Cosgray
----------------------------------------
Marvin Cosgray, President and Chief and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* Chairman of the Board and Director
- ------------------------------
R. Charles Loudermilk, Sr.
/s/ Marvin Cosgray President, Chief Executive Officer,
- ------------------------------ Principal Financial Officer,
Marvin Cosgray Principal Accounting Officer and
Director
* Director
- ------------------------------
Hugh C. Aldredge
* Director
- ------------------------------
J. Rex Fuqua
* Director
- ------------------------------
Julian LeCraw, Sr.
* Vice Chairman of
- ------------------------------ the Board and Director
Larry P. Martindale
* Director
- ------------------------------
William T. Towles
*By: /s/ Marvin Cosgray
-------------------------
Marvin Cosgray, Attorney in Fact
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.1. Articles of Incorporation*................................................
3.2. Bylaws*...................................................................
4.1. Provisions in the Company's Articles of Incorporation and Bylaws
defining the rights of holders of the Common Stock*.......................
5.1. Opinion Regarding Legality*...............................................
10.1. Form of Employment Agreement between Marvin Cosgray and the Company*......
10.2. Form of Escrow Agreement between SunTrust Bank, Atlanta and the Company*..
10.3 Office Lease between Longpoint Investors, Ltd. and the Company dated
August 7, 1997*...........................................................
23.1. Consent of Mauldin & Jenkins, LLC.........................................
23.2. Consent of Morris, Manning & Martin, L.L.P. (appears in its opinion
filed as Exhibit 5.1)*....................................................
24.1. Power of Attorney (appears on page II-4)*.................................
27.1 Financial Data Schedule...................................................
</TABLE>
__________________
* Previously filed.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated November 18, 1997, accompanying the
financial statements of Buckhead Community Bancorp, Inc. as of and for the
period ending June 30, 1997, contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts".
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 14, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL REPORT OF THE COMPANY PREPARED BY MAULDIN & JENKINS, LLC, AND DATED AS
OF OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> OCT-15-1996
<PERIOD-END> OCT-31-1996
<CASH> 89,214
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 89,214
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 278,644
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 700
<OTHER-SE> 277,944
<TOTAL-LIABILITY-AND-EQUITY> 277,944
<SALES> 0
<TOTAL-REVENUES> 6,829
<CGS> 0
<TOTAL-COSTS> 46,805
<OTHER-EXPENSES> 31,390
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (71,356)
<INCOME-TAX> 0
<INCOME-CONTINUING> (71,356)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71,356)
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
</TABLE>
