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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
CBC HOLDING COMPANY
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(Exact name of registrant as specified in its charter)
GEORGIA APPLIED FOR
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
102 WEST ROANOKE DRIVE, FITZGERALD, GEORGIA 31750
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (912) 423-4321
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Securities to be registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on Which
Title of Each Class to be so Registered Each Class is to be Registered
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NOT APPLICABLE NOT APPLICABLE
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Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
THE COMPANY
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CBC Holding Company (the "Company") was incorporated as a Georgia
corporation on October 15, 1996 for the purpose of acquiring all of the issued
and outstanding shares of Common Stock of Community Banking Company of
Fitzgerald (the "Bank"). The Company became the holding company of the Bank
pursuant the Plan of Reorganization, dated October 25, 1996, by and among the
Company, the Bank and Interim Fitzgerald Company, a wholly-owned subsidiary of
the Company ("Interim"). Pursuant to the terms of the Plan of Reorganization,
Interim merged with and into the Bank and the shareholders of the Bank received
one share of Company Common Stock for each share of Bank Common Stock. The
merger became effective on March 31, 1997.
The purpose for creating a holding company structure was to facilitate the
Bank's ability to serve its customers' requirements for financial services. The
holding company structure also provides flexibility for expansion of the
Company's banking business through the possible acquisition of other financial
institutions and the provision for additional banking-related services that a
traditional commercial bank cannot provide under present laws.
Any additional future non-banking activities to be conducted by the
Company may include financial and other activities permitted by law, and such
activities could be conducted by subsidiary corporations that have not yet been
organized. Commencement of non-banking operations by the Company or by its
subsidiaries, if they are organized, will be contingent upon the appropriate
regulatory authority.
Except for two officers of the Bank who serve as officers of the Company,
the Company does not have any employees.
The Company's main office is located at 102 West Roanoke Drive,
Fitzgerald, Georgia. Other than opening a drive-through facility on Main Street
in Fitzgerald, Georgia, the Company does not have any immediate plans to
establish additional offices.
THE BANK
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GENERAL
The Bank was incorporated on January 19, 1996 and began operations on
April 19, 1996. The Bank purchased certain loans and assumed certain deposits
from Bank South N.A. (now known as NationsBank of Georgia, N.A.) ("Bank South")
pursuant to a Purchase and Assumption Agreement, dated October 18, 1995. The
Bank also purchased its current facilities from Bank South pursuant to the
Purchase and Assumption Agreement.
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The Bank is located in Fitzgerald, Georgia and its trade area includes all
of Ben Hill County, Georgia. Fitzgerald serves as the county seat of Ben Hill
County and is the center of banking in Ben Hill County.
The Bank was established in the Bank South branch located at 102 West
Roanoke Drive in Fitzgerald. Additionally, the Bank plans to operate a two-lane
drive through located on Main Street in downtown Fitzgerald, which the Bank
intends to open prior to the end of 1997.
LENDING ACTIVITIES
The Bank was established to support Ben Hill County and the immediately-
surrounding counties. The Bank's primary commercial lending function is to make
short-term loans to local business customers and the Bank has developed a strong
agribusiness portfolio. In addition to commercial loans, the Bank makes
installment loans, home equity loans, real estate loans and second mortgage
loans.
REAL ESTATE LOANS. The Bank makes and holds real estate loans, consisting
primarily of single-family residential construction loans for one-to-four unit
family structures. The Bank requires a first lien position on the land
associated with the construction project and will offer these loans to
professional building contractors and homeowners. Loan disbursements require
on-site inspections to assure the project is on budget and that the loan
proceeds are being used for the construction project and not being diverted to
another project. The loan-to-value ratio for such loans is predominantly 80% of
the lower of the as-built appraised value or project cost, and a maximum of 90%
if the loan is amortized. Loans for construction can present a high degree of
risk to the lender, depending upon, among other things, whether the builder can
sell the home to a buyer, whether the buyer can obtain permanent financing,
whether the transaction produces income in the interim and the nature of
changing economic conditions.
CONSUMER LOANS. The Bank makes consumer loans, consisting primarily of
installment loans to individuals for personal, family and household purposes,
including loans for automobiles, home improvements, education loans and
investments. Risks associated with consumer loans include, but are not limited
to, fraud, deteriorated or non-existing collateral, general economic downturn
and customer financial problems.
COMMERCIAL LOANS. Commercial lending is directed principally toward small
to mid-size businesses whose demand for funds fall within the legal lending
limits of the Bank. This category of loans includes loans made to individual,
partnership or corporate borrowers, and obtained for a variety of business
purposes. Risks associated with these loans can be significant and include, but
are not limited to, fraud, bankruptcy, economic downturn, deteriorated or non-
existing collateral and changes in interest rates.
The Bank also makes loans to small businesses with respect to which the
Small Business Administration ("SBA") guarantees repayment of up to 90% of the
loan amount, subject to certain other limitations. The Bank sells the
guaranteed portion of those loans to institutional investors in the secondary
market. On such loans, the Bank retains the servicing rights and
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obligations on the guaranteed portions sold. Risks associated with these loans
include, but are not limited to, credit risk, e.g., fraud, bankruptcy, economic
downturn, deteriorated or non-existing collateral and changes in interest rates,
and operational risk, e.g., failure to adhere to SBA funding and servicing
requirements in order to secure and maintain the SBA guarantees and servicing
rights.
AGRICULTURAL LOANS. The Bank makes loans to agriculture-related
businesses, including loans to farmers. Risks associated with such loans
include, but are not limited to, decline in commodity price, general economic
downturn, changes in market prices of the underlying commodities produced,
fraud, bankruptcy, deteriorated and non-existing collateral and changes in
interest rates.
INVESTMENTS
In addition to loans, the Bank makes other investments primarily in
obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable securities. No investment in
any of those instruments exceeds any applicable limitation imposed by law or
regulation.
DEPOSITS
The Bank offers core deposits, including checking accounts, money market
accounts, a variety of certificates of deposit, and IRA accounts. The Bank uses
an aggressive marketing plan in the overall service area, a broad product line,
and competitive services to attract deposits. The primary sources of deposits
are residents of, and businesses and their employees located in Ben Hill County,
obtained through personal solicitation by the Bank's employees, officers and
directors, direct mail solicitations and advertisements published in the local
media. Deposits are generated by offering a broad array of competitively priced
deposit services, including demand deposits, regular savings accounts, money
market deposits (transaction and investment), certificates of deposit,
retirement accounts, and other deposit or funds transfer services which may be
permitted by law or regulation and which may be offered to remain competitive in
the market.
ASSET AND LIABILITY MANAGEMENT
The Bank manages its assets and liabilities to provide an optimum and
stable net interest margin, a profitable after-tax return on assets and return
on equity, and adequate liquidity. These management functions are conducted
within the framework of written loan and investment policies. The Bank
maintains a balanced position between rate sensitive assets and rate sensitive
liabilities. Specifically, it charts assets and liabilities on a matrix by
maturity, effective duration, and interest adjustment period, and endeavors to
manage any gaps in maturity ranges.
EMPLOYEES
As of April 21, 1997 the Bank had 25 full-time employees and 2 part-time
employees.
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COMPETITION
Ben Hill County has offices of four commercial banks. The commercial
banks include branch offices of NationsBank and SouthTrust, and First State Bank
of Ocilla, as well as the locally owned Bank of Fitzgerald.
SUPERVISION AND REGULATION
The following discussion sets forth the material elements of the regulatory
framework applicable to banks and bank holding companies and provides certain
specific information related to the Company.
GENERAL. The Company is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). As such, the Company
is subject to the supervision, examination, and reporting requirements of the
BHC Act and the regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior approval
of the Federal Reserve before: (a) it may acquire direct or indirect ownership
or control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the
voting shares of the bank; (b) it or any of its subsidiaries, other than a bank,
may acquire all or substantially all of the assets of any bank; or (c) it may
merge or consolidate with any other bank holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy, which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the Riegle-
Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate
Banking Act"), which became effective on September 29, 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that the Company, and any other bank holding company located in
Georgia may now acquire a bank located in any other state, and any bank holding
company located outside Georgia may lawfully acquire any Georgia-based bank,
regardless of state law to the contrary, in either case subject to certain
deposit-percentage, aging
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requirements, and other restrictions. The Interstate Banking Act also generally
provides that, after June 1, 1997, national and state-chartered banks may branch
interstate through acquisitions of banks in other states. By adopting
legislation prior to that date, a state has the ability either to "opt in" and
accelerate the date after which interstate branching is permissible or "opt out"
and prohibit interstate branching altogether.
In February 1996, the Georgia Legislature adopted the "Georgia Interstate
Branching Act" effective June 1, 1997. The Georgia Interstate Branching Act
will permit Georgia-based banks and bank holding companies owning or acquiring
banks outside of Georgia and all non-Georgia banks and bank holding companies
owning or acquiring banks in Georgia to merge any lawfully acquired bank into an
interstate branch network. The Georgia Interstate Branching Act also allows
banks to establish de novo branches on a limited basis beginning July 1, 1996.
Beginning July 1, 1998, the number of de novo branches which may be established
will no longer be limited.
The BHC Act generally prohibits the Company from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act
does not place territorial limitations on permissible non-banking activities of
bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a holding company or its subsidiaries to terminate any activity
or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such ownership
or control constitutes a serious risk to the financial safety, soundness, or
stability of any bank subsidiary of that bank holding company.
The Bank is a member of the Federal Deposit Insurance Corporation (the
"FDIC"), and as such, its deposits are insured by the FDIC to the maximum extent
provided by law. The Bank is also subject to numerous state and federal
statutes and regulations that affect its business, activities, and operations,
and it is supervised and examined by one or more state or federal bank
regulatory agencies.
The FDIC and the Georgia Department of Banking and Finance (the "Georgia
Department") regularly examine the operations of the Bank and is given authority
to approve or
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disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The FDIC and the Georgia Department also have the power to
prevent the continuance or development of unsafe or unsound banking practices or
other violations of law.
PAYMENT OF DIVIDENDS. The Company is a legal entity separate and distinct from
its banking subsidiary. The principal sources of cash flow of the Company,
including cash flow to pay dividends to its shareholders, are dividends by the
Bank. There are statutory and regulatory limitations on the payment of
dividends by the Bank to the Company as well as by the Company to its
shareholders.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt
Corrective Action." Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At December 31, 1996, under dividend restrictions imposed under federal and
state laws, the Bank was not permitted to pay dividends.
The payment of dividends by the Company and the Bank may also be affected or
limited by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines.
CAPITAL ADEQUACY. The Company and the Bank are required to comply with the
capital adequacy standards established by the Federal Reserve and the
appropriate federal banking regulator in the case of Bank. There are two basic
measures of capital adequacy for bank holding companies that have been
promulgated by the Federal Reserve: a risk-based measure and a leverage
measure. All applicable capital standards must be satisfied for a bank holding
company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.
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The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio")
of total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%. At least
half of Total Capital must comprise common stock, minority interests in the
equity accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock, and a limited amount of cumulative perpetual preferred stock, less
goodwill and certain other intangible assets ("Tier 1 Capital"). The remainder
may consist of subordinated debt, other preferred stock, and a limited amount of
loan loss reserves ("Tier 2 Capital"). At December 31, 1996, the Company's
consolidated Total Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital
Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 16.3% and
14.9%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies generally are required to maintain a Leverage Ratio
of at least 3%, plus an additional cushion of 100 to 200 basis points. The
Company's Leverage Ratio at December 31, 1996 was 7.74%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
The Bank is subject to risk-based and leverage capital requirements adopted
by the FDIC, which are substantially similar to those adopted by the Federal
Reserve for bank holding companies.
The Bank was in compliance with applicable minimum capital requirements as
of December 31, 1996. The Company has not been advised by any federal banking
agency of any specific minimum capital ratio requirement applicable to it or its
subsidiary depository institution.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed upon FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "-- Prompt
Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve and the FDIC have, pursuant to
FDICIA, recently adopted final regulations, which will become mandatory on
January 1, 1998, requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off-balance-sheet position) in the
evaluation of a bank's capital adequacy. The bank
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regulatory agencies have concurrently proposed a methodology for evaluating
interest rate risk which would require banks with excessive interest rate risk
exposure to hold additional amounts of capital against such exposures. The
market risk rules will apply to any bank or bank holding company whose trading
activity equals 10% or more of its total assets, or whose trading activity
equals $1 billion or more.
SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy, the Company
is expected to act as a source of financial strength for, and to commit
resources to support, each of its banking subsidiaries. This support may be
required at times when, absent such Federal Reserve policy, the Company may not
be inclined to provide it. In addition, any capital loans by a bank holding
company to any of its banking subsidiaries are subordinate in right of payment
to deposits and to certain other indebtedness of such banks. In the event of a
bank holding company's bankruptcy, any commitment by the bank holding company to
a federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of a commonly controlled FDIC-insured depository institution or
(b) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally
as the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of shareholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
subsidiary depository institution of the Company is subject to these cross-
guarantee provisions. As a result, any loss suffered by the FDIC in respect of
the subsidiary would likely result in assertion of the cross-guarantee
provisions, the assessment of such estimated losses against the depository
institution's banking affiliates, and a potential loss of the Company's
investment in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION. FDICIA establishes a system of prompt corrective
action to resolve the problems of undercapitalized institutions. Under this
system, which became effective in December 1992, the federal banking regulators
are required to establish five capital categories (well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to
a narrow exception, FDICIA requires the banking regulator to appoint a receiver
or conservator for an institution that is critically undercapitalized. The
federal banking agencies have specified by regulation the relevant capital level
for each category.
The capital levels established for each of the categories are as follows:
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<TABLE>
<CAPTION>
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
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<S> <C> <C> <C> <C>
Well Capitalized 5% or more 10% or more 6% or more Not subject
to a capital
directive
Adequately 4% or more 8% or more 4% or more --
Capitalized
Undercapitalized less than 4% less than 8% less than 4% --
Significantly less than 3% less than 6% less than 3% --
Undercapitalized
Critically 2% or less -- -- --
Undercapitalized tangible equity
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</TABLE>
For purposes of the regulation, the term "tangible equity" includes core
capital elements counted as Tier 1 Capital for purposes of the risk-based
capital standards, plus the amount of outstanding cumulative perpetual preferred
stock (including related surplus), minus all intangible assets with certain
exceptions. A depository institution may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meets its capital restoration plan, subject to certain limitations.
The obligation of a controlling holding company under FDICIA to fund a capital
restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In
addition, the appropriate federal banking agency is given authority with respect
to any undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
At December 31, 1996, the Bank had the requisite capital levels to qualify
as well capitalized.
FDIC INSURANCE ASSESSMENTS. Pursuant to FDICIA, the FDIC adopted a new risk-
based assessment system for insured depository institutions that takes into
account the risks attributable to different categories and concentrations of
assets and liabilities. The new system, which went into effect on January 1,
1994, assigns an institution to one of three capital categories: (a) well
capitalized; (b) adequately capitalized; and (c) undercapitalized. These three
categories are substantially similar to the prompt corrective action categories
described above, with the "undercapitalized" category
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including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and information which
the FDIC determines to be relevant to the institution's financial condition and
the risk posed to the deposit insurance funds (which may include, if applicable,
information provided by the institution's state supervisor). An institution's
insurance assessment rate is then determined based on the capital category and
supervisory category to which it is assigned. Under the final risk-based
assessment system, as well as the prior transitional system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates for members of both the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF") for the first half of 1995, as they
had during 1994, ranged from 23 basis points (0.23% of deposits) for an
institution in the highest category (i.e., "well capitalized" and "healthy") to
31 basis points (0.31% of deposits) for an institution in the lowest category
(i.e., "undercapitalized" and "substantial supervisory concern"). These rates
were established for both funds to achieve a designated ratio of reserves to
insured deposits (i.e., 1.25%) within a specified period of time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC
reduced the assessment rate applicable to BIF deposits in two stages, so that,
beginning 1996, the deposit insurance premiums for 92% of all BIF members in the
highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.
Recognizing that the disparity between the SAIF and BIF premium rates had
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, on July 28, 1995, the FDIC,
the Treasury Department, and the Office of Thrift Supervision released
statements outlining a proposed plan to recapitalize the SAIF, the principal
feature of which was a special one-time assessment on depository institutions
holding SAIF-insured deposits, which was intended to recapitalize the SAIF at a
reserve ratio of 1.25%. This proposal contemplated elimination of the disparity
between the assessment rates on BIF and SAIF deposits following recapitalization
of the SAIF.
A variation of this proposal designated the Deposit Insurance Funds Act of
1996 (the "Funds Act") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by the Funds
Act, the FDIC implemented a special one-time assessment of approximately 65.7
basis points (0.657%) on a depository institution's SAIF-insured deposits held
as of March 31, 1995 (or approximately 52.6 basis points on SAIF deposits
acquired by banks in certain qualifying transactions).
In addition, the FDIC proposed a revision in the SAIF assessment rate
schedule that effected, as of October 1, 1996 (a) a widening in the assessment
rate spread among institutions in the different capital and risk assessment
categories, (b) an overall reduction of the assessment rate range assessable on
SAIF deposits of from 0 to 27 basis points, and (c) a special interim assessment
rate range for the
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last quarter of 1996 of from 18 to 27 basis points on institutions subject to
FICO assessments. Effective January 1, 1997, FICO assessments will be imposed
on both BIF- and SAIF-insured deposits in annual amounts presently estimated at
1.29 basis points and 6.44 basis points, respectively. Beginning in January,
2000, BIF- and SAIF- insured institutions will share the FICO interest costs at
equal rates currently estimated 2.43 basis points. The Funds Act further
provides that BIF and SAIF are to be merged, creating the "Deposit Insurance
Fund," on January 1, 1999, provided that bank and savings association charters
are combined by that date.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
PROPOSED LEGISLATION AND REGULATORY ACTION. New regulations and statutes are
regularly proposed which contain wide-ranging proposals for altering the
structures, regulations and competitive relationships of the nation's financial
institutions. It cannot be predicted whether or what form any proposed
regulation or statute will be adopted or the extent to which the business of the
Company may be affected by such regulation or statute.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
GENERAL
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The Bank was incorporated on January 19, 1996 (the "Inception Date"). From
the Inception Date to April 18, 1996, the Bank's principal activities related to
its organization, the conducting of its initial public offering, the pursuit of
approvals from the Georgia Department and the FDIC of its application to charter
the Bank.
On April 18, 1996, the Bank completed its offering of shares of the Bank's
common stock by receiving subscriber deposits for 664,097 shares at $5.00 per
share. The Bank was capitalized with $3,320,485 of common stock, par value
$10.00 per share and $3,154,461 of paid-in capital and a reserve for initial
operating losses of $166,024, as required by the DBF.
On April 19, 1996, the Bank commenced operations after receiving all
regulatory approvals and insurance on its deposits from the FDIC.
On October 25, 1996, the Bank entered into a Plan of Reorganization with the
Company and Interim Fitzgerald Company, a wholly-owned subsidiary of the Company
("Interim"). Pursuant to the terms of the Plan of Reorganization, Interim
merged with and into the Bank (the "Merger") and the shareholders of the Bank
exchanged their shares of Bank common stock for Company common stock. As a
result of the Merger, the Company became the sole shareholder of the Bank,
effective March 31, 1997.
Management's discussion which follows relates to the Bank.
-12-
<PAGE>
USE OF PROCEEDS
---------------
The following table sets forth the projected use of the net proceeds of the
Offering as was described in the Supplement to the Bank's Registration Statement
dated December 14, 1995, and compares the projected use of the net proceeds to
the actual use as of December 31, 1996.
<TABLE>
<CAPTION>
Amount Actual
Under DBF Maximum Proceeds
Condition Offering Use
------------------------------------
<S> <C> <C> <C>
Gross Proceeds from Offering $6,000,000 $7,000,000 $6,640,970 (a)
====================================
Use of Proceeds -
Organizational and Pre-Opening Expenses $ 134,700 $ 134,700 $ 199,237 (b)
Acquisition of Land, Building & Equipment 2,020,000 2,020,000 1,877,553
Working Capital 3,845,300 4,845,300 4,564,180 (c)
------------------------------------
Total $6,000,000 $7,000,000 $6,640,970
====================================
</TABLE>
(a) The Bank sold 664,097 shares, which produced gross proceeds of $6,640,970.
Offers and sales of the common stock were made on behalf of the Bank by its
officers and directors and they received no commissions or other
remuneration in connection with such activities, but were reimbursed for
their reasonable expenses incurred in the Offering.
(b) Includes organizational, stock offering, and pre-opening expenses. Amount
does not include interest earned from investment of the net proceeds from
the Offering during the pre-opening stage.
(c) The remaining proceeds have been used to provide working capital for the
Bank and fund the purchase of the assets and liabilities of the
Fitzgerald, Georgia branch of Nationsbank, N.A. (formerly Bank South,
N.A.). The following schedule is a summary of the acquisition
transaction:
-13-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES ASSUMED AND ASSETS ACQUIRED:
<S> <C>
Customer deposits assumed $43,698,774
Accrued interest payable on deposits 356,810
- -------------------------------------------------------------------------------
Total liabilities assumed 44,055,584
- -------------------------------------------------------------------------------
Less:
Loans purchased, net of estimated loan losses 21,424,166
Accrued interest receivable purchased 232,761
Real estate and equipment 1,877,553
Premium paid to seller on deposits assumed and loans purchased 2,692,939
- -------------------------------------------------------------------------------
Total assets acquired 26,227,419
- -------------------------------------------------------------------------------
Net cash received from acquisition $17,828,165
- -------------------------------------------------------------------------------
</TABLE>
The excess of the fair value of net liabilities assumed over net cash received
of $2,692,939, representing premiums paid for loans and deposits, has been
allocated to goodwill and is being amortized on the straight line method for 15
years.
FINANCIAL CONDITION
-------------------
At December 31, 1996, the Company had concluded eight months of banking
operations with $53,680,223 in total assets. At year end, total deposits had
grown to $46,661,100 and total loans had grown to $23,537,462. This represented
a loan to deposit ratio at year end of 50.4%.
CAPITAL
At December 31, 1996, the Bank's capital position was well in excess of FDIC
guidelines to meet the definition of "well capitalized". Based on the level of
the Bank's risk weighted assets at year end, the Bank had $1.7 million more
capital than necessary to satisfy the "well-capitalized" criteria. The Bank's
capital adequacy is monitored quarterly by the Bank's Asset/Liability Committee,
as asset and liability growth, mix and pricing strategies are developed.
LIQUIDITY
The Bank's internal and external liquidity resources are considered by
management to be adequate to handle expected growth and normal cash flow demands
from existing deposits and loans. At December 31, 1996, the securities
available for sale had grown from $0 at April 18, 1996 (date of acquisition) to
$17,900,701. The Bank had no securities classified as held to maturity as of
December 31, 1996. Federal funds sold were $5,050,000 at year-end, down from
$23,828,875 at April 18, 1996 due to investing of these funds in securities.
-14-
<PAGE>
Current deposits provide the primary liquidity resource for loan disbursements
and Bank working-capital. Despite the anticipated losses in the first years of
operations, the Bank expects earnings from loans and investments and other
banking services as well as the current loan to deposit position to provide
sufficient liquidity for both the short and long term. The Bank intends to
manage its loan growth such that deposit flows will provide the primary funding
for all loans as well as cash reserves for working capital and short to
intermediate term marketable investments.
RESULTS OF OPERATIONS
The Bank had a net loss of $110,439 ($0.17 per share) from January 19, 1996
(date of inception) to December 31, 1996.
The 1996 loss represents the first eight months of operations of the Bank.
Interest income from loans and investments, including loan fees of $37,793, was
$2,582,714, representing a yield of 7.76% on average earning assets of
$47,274,609. Interest expense was $1,379,152, representing a cost of 4.85% on
average interest bearing liabilities of $40,377,951. Net interest income was
$1,203,562, producing a net yield of 3.64% on average earning assets.
The provision for loan losses in 1996 was $21,000. Total loan charge-offs
were $47,125 and were related to the Bank's consumer loan portfolio. At
December 31, 1996, the Bank had no loans past due 90 days or more and had no
non-accrual loans. The allowance for loan losses at year end was $359,146,
representing 1.53% of total loans.
Management takes a number of factors into consideration when determining the
additions to be made to the loan loss allowance. Since the Bank is approaching
the end of its first year of operations, it does not have a sufficient history
of portfolio performance on which to base additions. Accordingly, additions to
the reserve are primarily based on maintaining a ratio of the allowance for loan
losses to total loans in a range of 1.00% to 1.50%. This is based on national
peer group ratios and Georgia ratios which reflect average ratios of 0.99%
(national peer) and 1.50% (Georgia). Under this methodology, charge-offs will
increase the amount of additions to the allowance and recoveries will reduce
additions.
In addition, management performs an on-going loan review process. All new
loans are risk rated under loan policy guidelines. On a monthly basis, the
composite risk ratings are evaluated in a model which assesses the adequacy of
the current allowance for loan losses, and this evaluation is presented to the
Board of Directors each month. Large loans are reviewed periodically. Risk
ratings may be changed if it appears that new loans may not have received the
proper initial grading or, if on existing loans, credit conditions have improved
or worsened.
As the Bank matures, the additions to the loan loss allowance will be based
more on historical performance, the detailed loan review and allowance adequacy
evaluation.
The Bank's policy is to place loans on nonaccrual status when it appears that
the collection of principal and interest in accordance with the terms of the
loan is doubtful. Any loan which becomes 90 days past due as to principal or
interest is automatically placed on nonaccrual.
-15-
<PAGE>
Non-interest income in 1996 was $179,597. This consisted primarily of service
charges on deposit accounts which were $136,456 and credit life and disability
insurance premium income which was $14,054. Service charges on deposit accounts
are evaluated annually against service charges from other banks in the local
market and against the Bank's own cost structure in providing the deposit
services. This income should grow with the growth in the Bank's demand deposit
account base. The credit life and disability insurance premium income is sold
primarily on consumer installment debt and should grow with the growth in the
Bank's consumer loan portfolio.
Non-interest expense in 1996 was $1,530,367. This consisted primarily of
salaries and benefits which were $635,297. Other major expenses included in
non-interest expense included amortization of $153,706, supplies of $85,728,
data processing of $57,749, and professional fees of $85,121.
INTEREST RATE SENSITIVITY
Improvement in earnings of the Bank depend upon continued earning asset
growth, good asset quality and a relatively stable economic environment.
Management feels it is reasonable for the Bank to continue to experience steady
earning asset growth as long as interest rates remain relatively stable. The
Bank is asset sensitive (meaning that rising rates tend to be beneficial) in the
near and long term and is liability sensitive at the one year time horizon
(meaning that falling rates tend to be beneficial) to the Bank's net interest
margin. If interest rates were to rise in excess of 200 basis points, the Bank
could experience improved earnings in the near term, but such a rate increase
might significantly reduce the demand for loans in the Bank's local market, thus
diminishing the prospects for improved earnings. If interest rates were to fall
in excess of 200 basis points, the Bank could experience a short term decline in
net interest margin and may even have difficulty retaining maturing certificates
of deposit without having to pay above market rates.
ITEM 3. DESCRIPTION OF PROPERTY.
The Bank's main office is located in Fitzgerald, Georgia, at 102 West
Roanoke Drive. The two-story brick building contains approximately 11,152
square feet, with an attached drive-up canopy of approximately 1,400 square
feet. It is located on approximately 1.408 acres of land and contains 39
regular parking spaces and two handicap spaces. The building has seven teller
stations inside the building, three drive-up teller stations, and one ATM
station. The drive-up window is located behind the teller stations. The
banking platform, with four personal banker positions, is across the lobby area
from the teller stations, and behind this area are six offices for lending
functions. The facility contains a training room, operations space, and a board
room on the upper level, with significant room for expansion. The Bank plans to
open a drive-through facility located on South Main Street in Fitzgerald.
Other than normal real estate and commercial lending activities, the Company
does not invest in real estate, real estate mortgages, or securities of or
interest in entities primarily engaged in real estate activities.
-16-
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the Company's
Common Stock, $1.00 par value, owned as of April 4, 1997, (a) by each of the
Company's directors, and (b) by all of the Company's directors and executive
officers as a group. There are no non-director shareholders who own more than
5% of the outstanding 664,097 shares of the Company's Common Stock.
<TABLE>
<CAPTION>
Name and Address of Number of
Beneficial Owner/1/ Shares Percent of Class
- -------------------------------------- ---------- -----------------
<S> <C> <C>
Sidney S. (Buck) Anderson, Jr. 70,000/2/ 10.54%
701 South Grant Street
Fitzgerald, Georgia 31750
James Thomas Casper, III 10,000/3/ 1.51%
116 Cherokee Court
Fitzgerald, Georgia 31750
John T. Croley, Jr. 25,000/4/ 3.76%
132 Lakeview Drive
Fitzgerald, Georgia 31750
A.B.C. (Chip) Dorminy, III 28,500/5/ 4.29%
248 Lincoln Avenue
Fitzgerald, Georgia 31750
John S. Dunn 5,000/6/ 0.75%
619 Highway 129 South
Fitzgerald, Georgia 31750
William P. Herlovich 1,000/7/ 0.15%
104 Manassas Court
Fitzgerald, Georgia 31750
Lee Phillip Liles 5,000/8/ 0.75%
204 Meadowlark Lane
Fitzgerald, Georgia 31750
L. Wayne Lowrey 1,000/9/ 0.15%
1072 Roanoke Drive Extension
Fitzgerald, Georgia 31750
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of
Beneficial Owner/1/ Shares Percent of Class
- -------------------------------------- ---------- -----------------
<S> <C> <C>
Steven L. Mitchell 5,000/10/ 0.75%
1208 W. Roanoke Drive
Fitzgerald, Georgia 31750
James A. Parrott, II 7,600/11/ 1.14%
146 Franklin
Fitzgerald, Georgia 31750
Jack F. Paulk 11,200/12/ 1.69%
103 Cherokee Court
Fitzgerald, Georgia 31750
George M. Ray 2,300/13/ 0.35%
1046 West Roanoke Drive
Fitzgerald, Georgia 31750
Robert E. Sherrell 10,000/14/ 1.51%
815 West Magnolia
Fitzgerald, Georgia 31750
John Edward Smith, III 1,000/15/ 0.15%
141 Whispering Way
Fitzgerald, Georgia 31750
Directors and Executive Officers, 182,600 27.6%
as a group/16/
</TABLE>
/1/ Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them. The information shown above is based upon
information furnished to the Company by the named persons. Information
relating to beneficial ownership of the Shares is based upon "beneficial
ownership" concepts set forth in rules promulgated under the Securities
Exchange Act of 1934, as amended. Under such rules a person is deemed to be
a "beneficial owner" of a security if that person has or shares "voting
power," which includes the power to vote or to direct the voting of such
security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to
acquire beneficial ownership within 60 days. Under the rules, more than one
person may be deemed to be a beneficial owner of the same securities.
/2/ Consists of 70,000 shares owned directly by Mr. Anderson.
/3/ Consists of 10,000 shares owned jointly by Mr. Casper and his spouse.
/4/ Consists of 25,000 shares owned directly Mr. Croley.
-18-
<PAGE>
/5/ Consists of (i) 10,000 shares owned by ABCD Farms, Inc. of which Mr.
Dorminy is President; (ii) 75,000 shares owned directly by Mr. Dorminy;
(iii) 10,000 owned by Mr. Dorminy's wife, as to which beneficial ownership
is shared; (iv) 500 shares owned by Mr. Dorminy's son, as to which
beneficial ownership is shared; (v) 500 shares owned by Mr. Dorminy's
daughter, as to which beneficial ownership is shared.
/6/ Consists of 5,000 shares owned directly by Mr. Dunn.
/7/ Consists of 1,000 shares owned jointly by Mr. Herlovich and his wife.
/8/ Consists of 5,000 shares owned directly by Mr. Liles.
/9/ Consists of 1,000 shares owned jointly by Mr. Lowrey and his spouse.
/10/ Consists of (i) 3,000 shares owned directly by Mr. Mitchell; (ii) 1,000
shares held by Mr. Mitchell as custodian for his daughter, as to which
beneficial ownership is shared; and (iii) 1,000 shares held by Mr. Mitchell
as custodian for his son, as to which beneficial ownership is shared.
/11/ Consists of (i) 7,500 shares owned directly by Mr. Parrott and (ii) 100
shares owned by Mr. Parrott's spouse, as to which beneficial ownership is
shared.
/12/ Consists of (i) 10,000 shares owned directly by Mr. Paulk; (ii) 500 shares
owned by Mr. Paulk's spouse, as to which beneficial ownership is shared;
(iii) 700 shares owned by Mr. Paulk's daughters, as to which beneficial
ownership is shared.
/13/ Consists of 2,300 shares owned in an IRA account for Mr. Ray.
/14/ Consists of 10,000 shares owned directly by Mr. Sherrell.
/15/ Consists of 1,000 shares owned directly by Mr. Smith.
/16/ The following persons are executive officers of the Company: L. Wayne
Lowrey, President and Chief Executive Officer; John T. Croley,
Secretary/Treasurer.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The table below sets forth for each director (a) his name, (b) his age at
December 31, 1996, and (c) his position with the Company or the Bank and his
other business experience for the past five years.
-19-
<PAGE>
<TABLE>
<CAPTION>
NAME AGE OCCUPATION
---- --- ----------
<S> <C> <C>
Sidney S. (Buck) Anderson, Jr. 61 General Manager - Dixie Peanut
Company
James Thomas Casper, III 41 Certified Public Accountant
John T. Croley, Jr. 47 Attorney
A.B.C. (Chip) Dorminy, III 48 President ABCD Farms, Inc.
CEO - Farmers Quality Peanut Co.
and D&F Grain Co.
John S. Dunn 52 Owner - Shep Dunn Construction
William P. Herlovich 68 Retired Banker
Lee Phillip Liles 47 Agency Manager - Georgia Farm
Bureau Mutual Insurance Co.
L. Wayne Lowrey 40 President and CEO of the Bank
Steven L. Mitchell 39 President Mitchell Bros. Timber Co.
James A. Parrott, II 57 Owner - Standard Supply Co. &
Building Materials, Inc.
Jack F. Paulk 47 Agency Field Executive - State
Farm Insurance
George M. Ray 50 Executive Vice President & Senior
Credit Officer for the Bank
Robert E. Sherrell 60 Attorney
John Edward Smith, III 48 Attorney
</TABLE>
Each of the directors serves a term of one year and is subject to reelection
at the Company's Annual Meeting of Shareholders.
-20-
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Company or its subsidiary to or on behalf of
its President and Chief Executive Officer for the fiscal year ended December 31,
1996:
Annual Compensation
--------------------
<TABLE>
<CAPTION>
Long Term
Compensation
Name and Other Annual Options All Other
Principal Position Year Salary Bonus Compensation Granted (#) Compensation
- -------------------- --------- ------------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
L. Wayne Lowrey, 1996 $60,585* 0 0 0 0
President and
Chief Executive Officer
</TABLE>
* From April 19, 1996 through December 31, 1996.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's directors and executive officers, their immediate family
members and certain companies and other entities associated with them, have been
customers of and have had banking transactions with the Bank and are expected to
continue such relationships with the Bank in the future. As of March 31, 1997,
the aggregate outstanding balance of all such loans was approximately
$4,199,228, or 64.9% of shareholders' equity. In the opinion of the Company's
management, the extensions of credit made by the Bank to such individuals,
companies and entities since the Bank began operations (a) were made in the
ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and (c) did not involve more than a
normal risk of collectibility or present other unfavorable features.
ITEM 8. DESCRIPTION OF SECURITIES
GENERAL
-------
The Company is authorized to issue 10,000,000 shares of Common Stock,
$1.00 par value, the Company has 664,097 shares of Common Stock, which were held
by 636 shareholders of record.
-21-
<PAGE>
All outstanding shares of Common Stock are fully paid and nonassessable. The
following description of the Common Stock is qualified in its entirety by
reference to the Articles of Incorporation of the Company, filed as an Exhibit
to this Registration Statement on Form 10-SB. See "Part III - Index to
Exhibits."
DIVIDENDS
---------
Holders of Common Stock are entitled to receive dividends when and as
declared by the Board of Directors out of funds legally available therefor.
Dividends may be paid in cash, property or shares of Common Stock, unless the
Company is insolvent or the dividend payment would render it insolvent.
The Company's ability to pay dividends depends upon the earnings and
financial condition of the Bank and certain legal requirements. The Board of
Governors of the Federal Reserve System has stated that bank holding companies
should not pay dividends except out of current earnings and unless the
prospective rate of earnings retention by the Company appears consistent with
its capital needs, asset quality and overall financial condition. See "Part I -
Item 1 - Description of Business - Supervision and Regulation."
The Bank may pay dividends to the Company provided that the payment is not
prohibited by the Bank's Article of Incorporation and will not render the Bank
insolvent. In addition, the Georgia Financial Institutions Code and the
regulations promulgated thereunder by the Georgia Department further provide (a)
that dividends of cash or property may be paid only out of the Bank's retained
earnings; (b) that dividends may not be paid if the Bank's paid-in capital and
retained earnings which are set aside for dividend payment and other
distributions do not, in combination, equal at least 20% of the Bank's capital
stock, and (c) that dividends may not be paid without prior approval of the
Georgia Department if (i) the Bank's total classified assets at its most recent
examination exceed 80% of its equity capital, (ii) the aggregate amount of
dividends to be declared exceeds 50% of the Bank's net profits after taxes but
before dividends for the previous calendar year, or (iii) the ratio of the
Bank's equity capital to total adjusted assets is less than 6%.
The Bank is not currently permitted to pay dividends.
NO PREEMPTIVE RIGHTS
--------------------
The holders of Common Stock do not have preemptive rights. This permits
the Board of Directors of the Company to utilize the authorized and unissued
shares of the Common Stock as it determines to be in the best interests of the
Company and its shareholders. Since the Board could issue shares of Common
Stock to raise additional equity capital and for other proper corporate
purposes, the absence of preemptive rights could result in dilution of a
shareholder's interest in the Company. Any issuance of shares, however, would
have to be approved by the Company's Board.
VOTING RIGHTS
-------------
-22-
<PAGE>
The holders of Common Stock are entitled to one vote per share on all
matters presented for action by shareholders, including election of directors,
and do not have cumulative voting rights.
OTHER MATTERS
-------------
Upon the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Company, and after the payment in full of debts and other
liabilities, holders of the Common Stock are entitled to share ratably in all
remaining assets. The Common Stock is not subject to liability for further
calls or to assessments by the Company and is not subject to redemption, sinking
fund or conversion provisions.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED SHAREHOLDER MATTERS.
The Common Stock is not traded on an established trading market. As a
result, sales prices known to the Company do not necessarily reflect the price
that would be paid for the Common Stock in an active market. There have been no
trades in the Company's Common Stock since the Company exchanged shares of its
Common Stock with the shareholders of the Bank for Bank Common Stock. See "Part
I - Item 1 - Description of Business."
The Company had 636 shareholders of record on April 4, 1997.
To date, the Company has not paid any cash dividends. It is the current
policy of the Company to retain earnings to permit future expansion if deemed
desirable. As a result, the Company has no current plan to initiate the payment
of cash dividends, and its future dividend policy will depend on the Bank's
earnings, capital requirements, financial condition and other factors considered
relevant by the Board of Directors of the Company. See "Part I - Item 8 -
Description of Securities."
ITEM 2. LEGAL PROCEEDINGS.
There are no material pending proceedings to which the Company is a party
or of which any of its properties are subject; nor are there material
proceedings known to the Company to be contemplated by any governmental
authority; nor are there material proceedings known to the Company, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of the Company, or any associate of the foregoing, is a party or
has an interest adverse to the Company.
-23-
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the incorporation of the Company on October 15, 1997,
the Company issued one share of Common Stock to Wayne Lowrey, President and
Chief Executive of the Company. The Common Stock so issued was not registered
under the Securities Act of 1933, as amended (the "1993 Act"), nor under the
Georgia Securities Act of 1973, as amended (the "Georgia Securities Act"), in
reliance on exemptions thereunder provided by Section 4(2) of the 1933 Act and
Section 10-5-9(13) of the Georgia Securities Act. Such share was redeemed in
connection with the consummation of the Plan of Reorganization.
Pursuant to the Plan of Reorganization, dated October 25, 1996, by and
among the Company, the Bank and Interim, the shareholders of the Bank exchanged
their shares for Company Common Stock. Company Common Stock issued pursuant to
the Plan of Reorganization was not registered under the 1933 Act, nor under the
Georgia Securities Act, in reliance upon exemptions from registration thereunder
provided by Section 3(a)(12) of the 1933 Act and Section 10-5-9(12) of the
Georgia Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
LIMITATION OF LIABILITY
-----------------------
The Company's Articles of Incorporation, subject to certain exceptions,
eliminate the potential personal liability of a director for monetary damages to
the Company or its shareholders for breach of a duty as a director. There is no
elimination of liability for (a) a breach of duty involving appropriation of a
business opportunity of the Company; (b) an act or omission not in good faith or
involving intentional misconduct or a knowing violation of law; (c) a
transaction from which the director derives an improper personal benefit; or (d)
as to the types of liability set forth in Section 14-2-832 of the Georgia
Business Corporation Code dealing with unlawful distribution of corporate assets
to shareholders. The Company's Articles of Incorporation do not eliminate or
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving monetary damages.
The foregoing provision was included in the Company's Articles of
Incorporation to encourage qualified individuals to serve and remain as
directors of the Company. While the Company has not experienced any problems in
locating and retaining directors to date, it could experience difficulty in the
future if the Company's business activities increase and diversify. The
foregoing provision was included also to enhance the Company's ability to secure
liability insurance for its directors at a reasonable cost. The Board of
Directors believes that the limitation of liability provision enables the
Company to secure such insurance on terms more favorable than if such a
provision were not included in its Articles of Incorporation. The Articles of
Incorporation of the
-24-
<PAGE>
Company are filed as an Exhibit to this Registration Statement on Form 10-SB.
See "Part III - Index to Exhibits."
INDEMNIFICATION
---------------
The indemnification provisions in the Company's Bylaws provide that the
Company has the power to indemnify under certain circumstances persons who are
parties to any civil, criminal, administrative or investigative action, suit or
proceeding, by reason of the fact that such person was or is a director,
officer, employee or agent of the Company. Except as noted below, these persons
would be indemnified against expenses (including, but not limited to, attorney's
fees and court costs) and against any judgments, fines and amounts paid in
settlement, actually and reasonably incurred by them. These persons may also be
entitled to have the Company advance any such expenses prior to the final
disposition of the proceeding, provided they agree to repay the Company if it is
ultimately determined that they are not entitled to indemnification. In
general, the Company has the power to indemnify a director, officer, employee or
agent if the Board of Directors determines the individual acted in a manner he
or she believed in good faith to be in or not opposed to the best interests of
the Company and, in the case of a criminal proceeding, if he or she had no
reasonable cause to believe his or her conduct was unlawful. The Bylaws of the
Company are filed as an Exhibit to this Registration Statement on Form 10-SB.
See "Part III - Index to Exhibits."
The Company is not aware of any material pending or threatened action,
suit or proceeding involving any of its directors, officers, employees or agents
for which indemnification from the Company or the Bank may be sought.
-25-
<PAGE>
PART F/S
COMMUNITY BANKING COMPANY OF
FITZGERALD
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT..................................... F-1
FINANCIAL STATEMENTS:
Balance Sheet................................................. F-2
Statement of Changes in Shareholders' Equity.................. F-3
Statement of Income........................................... F-4
Statement of Cash Flows....................................... F-5
Notes to Financial Statements................................. F-6
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Community Banking Company of Fitzgerald
We have audited the accompanying balance sheet of Community Banking Company of
Fitzgerald, as of December 31, 1996, and the related statements of income,
changes in shareholders' equity, and cash flows for the year then ended. 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 Community Banking Company of
Fitzgerald at December 31, 1996, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/ Thigpen, Jones Seaton & Co. P.C.
January 17, 1997
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKING COMPANY OF FITZGERALD
BALANCE SHEET
- -----------------------------------------------------------------------------------------------------------------------
As of December 31,
--------------------
1996
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Cash and due from banks $ 1,955,359
Federal funds sold 5,050,000
- -----------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 7,005,359
- -----------------------------------------------------------------------------------------------------------------------
Securities available for sale, at fair value 17,900,701
Loans, net of unearned income 23,537,462
Allowance for loan losses (359,146)
- -----------------------------------------------------------------------------------------------------------------------
Loans, net 23,178,316
- -----------------------------------------------------------------------------------------------------------------------
Bank premises and equipment, less accumulated depreciation 2,156,655
Accrued interest receivable 548,427
Intangible assets, net of amortization 2,565,772
Other assets and accrued income 324,993
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $53,680,223
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits $ 5,148,136
Interest-bearing demand deposits 11,291,918
Savings deposits 2,490,421
Time deposits $100,000 or more 6,240,653
Other time deposits 21,489,972
- -----------------------------------------------------------------------------------------------------------------------
Total deposits 46,661,100
Accrued interest payable 330,532
Other liabilities and accrued expenses 133,549
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities 47,125,181
- -----------------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock, $5.00 par, authorized 10,000,000 shares, issued and outstanding 664,097 shares 3,320,485
Paid-in capital surplus 3,320,485
Retained earnings (110,439)
Unrealized holding gains on available for sale securities, net of tax 24,511
- -----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 6,555,042
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $53,680,223
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements
F-2
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKING COMPANY OF FITZGERALD
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized
Additional Retained Holding
Paid-in Earnings Gains
Capital (Accumulated (Losses) on
Common Stock Surplus Deficit) Securities TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ - $ - $ - $ - $ -
Issuance of 664,097 shares of common stock 3,320,485 3,320,485 - - 6,640,970
Net loss - - (110,439) - (110,439)
Valuation allowance adjustment on securities
available for sale - - - 24,511 24,511
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 $3,320,485 $3,320,485 $(110,439) $24,511 $6,555,042
==================================================================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKING COMPANY OF FITZGERALD
STATEMENT OF INCOME
- -------------------------------------------------------------------------------------------
Year Ended
December 31,
---------------
1996
- -------------------------------------------------------------------------------------------
<S> <C>
INTEREST INCOME:
Interest and fees on loans $1,537,091
Interest on federal funds sold 342,546
Interest on securities - U. S. Governmental agencies and corporations 703,077
- -------------------------------------------------------------------------------------------
Total interest income 2,582,714
- -------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on NOW and money market deposits 192,993
Interest on savings deposits 49,242
Interest on time deposits 1,125,056
Interest on federal funds purchased 146
Interest on other borrowing 11,715
- -------------------------------------------------------------------------------------------
Total interest expense 1,379,152
- -------------------------------------------------------------------------------------------
Net interest income before loan losses 1,203,562
Less - provision for loan losses 21,000
- -------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,182,562
- -------------------------------------------------------------------------------------------
OTHER OPERATING INCOME:
Service charges on deposit accounts 136,456
Other service charges, commissions and fees 32,130
Other income 11,011
- -------------------------------------------------------------------------------------------
Total other operating income 179,597
- -------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries 510,458
Employee benefits 124,239
Net occupancy expenses 82,222
Equipment rental and depreciation of equipment 103,805
Amortization of goodwill 127,167
Other expenses 582,476
- -------------------------------------------------------------------------------------------
Total other operating expenses 1,530,367
- -------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (168,208)
Add - income tax benefit (57,769)
- -------------------------------------------------------------------------------------------
NET LOSS $ (110,439)
===========================================================================================
LOSS PER SHARE - based on weighted average outstanding shares of, 664,097 $(0.17)
===========================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKING COMPANY OF FITZGERALD
STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------------------------
Year Ended
December 31,
---------------
1996
- -----------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (110,439)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for loan losses 21,000
Depreciation 85,961
Amortization of intangible assets 127,167
Changes in accrued income and other assets (640,660)
Changes in accrued expenses and other liabilities 131,783
- -----------------------------------------------------------------------------------------------
Net cash used in operating activities (385,188)
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in loans made to customers (1,775,150)
Purchases of available for sale securities (19,400,701)
Proceeds from maturities of available for sale securities 1,500,000
Purchases of property and equipment (365,063)
- -----------------------------------------------------------------------------------------------
Net cash used in investing activities (20,040,914)
- -----------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 6,640,970
Assumption of deposits on acquisition, net of reduction for purchased assets 17,828,165
Net change in demand and savings accounts 2,293,341
Net change in other time deposits 668,985
- -----------------------------------------------------------------------------------------------
Net cash provided by financing activities 27,431,461
- -----------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,005,359
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR -
- -----------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 7,005,359
===============================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accounting and reporting policies of the Bank conform with generally
accepted accounting principles and practices within the banking industry. The
policies that materially affect financial position and the results of
operations are summarized as follows:
1. REPORTING ENTITY - The Bank was organized as Community Banking Company of
----------------
Fitzgerald and operates as a state chartered bank in Fitzgerald, Georgia.
The Bank received its charter from the Georgia Department of Banking and
Finance as of April 18, 1996.
2. SECURITIES - The classification of securities is determined at the date of
----------
purchase. Gains or losses on the sale of securities are recognized on a
specific identification basis.
Securities available for sale, primarily debt securities, are recorded at
fair value with unrealized gains or losses (net of tax effect) excluded
from earnings and reported as a component of shareholders' equity.
Securities available for sale will be used as a part of the Bank's
interest rate risk management strategy and may be sold in response to
changes in interest rates, changes in prepayment risk, and other factors.
Investment securities, primarily debt securities, are stated at cost, net
of the amortization of premium and the accretion of discount. The Bank
intends and has the ability to hold such securities on a long-term basis
or until maturity.
The market value of securities is generally based on quoted market prices.
If a quoted market price is not available, market value is estimated using
quoted market prices for similar securities.
3. LOANS AND INTEREST INCOME - Loans are stated at the amount of unpaid
-------------------------
principal, reduced by net deferred loan fees, unearned discount, and a
valuation allowance for possible loan losses. Interest on simple
interest installment loans and other loans is calculated by using the
simple interest method on daily balances of the principal amount
outstanding. The accrual of interest on impaired loans is discontinued
when, in management's opinion, the borrower may be unable to meet payments
as they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently recognized
only to the extent cash payments are received.
4. ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is available to
-------------------------
absorb losses inherent in the credit extension process. The entire
allowance is available to absorb losses related to the loan and lease
portfolio and other extensions of credit, including off-balance sheet
credit exposures. Credit exposures deemed to be uncollectible are charged
against the allowance for loan losses. Recoveries of previously charged-
off amounts are credited to the allowance for loan losses.
The adequacy of the allowance for loan losses is reviewed regularly by
management. Additions to the allowance for loan losses are made by
charges to the provision for loan losses. On a quarterly basis, a
comprehensive review of the adequacy of the allowance for loan losses is
performed. This assessment is made in the context of historical losses,
as well as existing economic conditions.
Management believes that the allowance for possible loan losses is
adequate. While management uses available information to recognize losses
on loans and other real estate, future additions to the allowance may be
necessary based on changes in economic conditions. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for possible loan losses. Such
agencies may require the Bank to recognize additions to the allowance
based on their judgement of information available to them at the time of
their examination.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses
for the period. Actual results could differ significantly from those
estimates. Material estimates that are particularly susceptible to
significant change in an operating cycle of one year relate to the
determination of the allowance for possible loan losses and the
See Accompanying Notes to Financial Statements
F-6
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the
allowance for possible loans losses and real estate owned, management
obtains independent appraisals for significant properties.
In 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" (SFAS 114), which was amended in 1994 by Statement
of Financial Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosure" (SFAS 118).
These standards address the accounting for certain loans when it is
probable that all amounts due pursuant to the contractual terms of the
loan will not be collected. Individually identified impaired loans are
measured based on the present value of payments expected to be received,
using the historical effective loan rate as the discount rate. Loans that
are to be foreclosed or that are solely dependent on the collateral for
repayment may alternatively be measured based on the fair value of the
collateral for such loans. Measurement may also be based on observable
market prices. If the recorded investment in the loan exceeds the measure
of fair value, a valuation allowance is established as a component of the
allowance for loan losses.
5. PREMISES AND EQUIPMENT - Premises and equipment are stated at cost, less
----------------------
accumulated depreciation. Depreciation is charged to operating expenses
over the estimated useful lives of the assets and is computed on the
straight-line method. Costs of major additions and improvements are
capitalized. Expenditures for maintenance and repairs are charged to
operations as incurred. Gains or losses from disposition of property are
reflected in operations and the asset account is reduced.
6. OTHER REAL ESTATE OWNED - Other real estate owned, acquired principally
-----------------------
through foreclosure, is stated at the lower of cost or net realizable
value. Loan losses incurred in the acquisition of these properties are
charged against the allowance for possible loan losses at the time of
foreclosure. Subsequent write-downs of other real estate owned are
charged against the current period's expense.
7. INCOME TAXES - The liability method of accounting is used for income
------------
taxes. Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of existing
differences between financial reporting and tax reporting bases of assets
and liabilities, as well as for operating losses and tax credit carry-
forwards, using enacted laws and rates. Deferred tax expense represents
the net change in the deferred tax asset or liability balance during the
year. This amount, together with income taxes currently payable or
refundable for the current year, represents the total income tax expense
for the year.
8. CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, cash and
-------------------------
cash equivalents include cash on hand, amounts due from banks, highly
liquid debt instruments purchased with an original maturity of three
months or less, and federal funds sold. Generally, federal funds are
purchased and sold for one-day periods. Interest bearing deposits in
other banks with original maturities of less than three months are
included.
9. EMPLOYEE RETIREMENT PLAN - The Bank has a profit sharing plan covering
------------------------
substantially all of its employees meeting age and length of service
requirements. Contribution to the plan are made at the discretion of the
Board of Directors.
10. USE OF ESTIMATES - The preparation of financial statements in conformity
----------------
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
See Accompanying Notes to Financial Statements
F-7
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
B. ACQUISITION ACTIVITY
--------------------
On April 18, 1996, the Bank purchased the assets and liabilities of the
Fitzgerald, Georgia branch of NationsBank, N.A. (formerly Bank South, N.A.) in
a transaction properly accounted for under the purchase method of accounting.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
LIABILITIES ASSUMED AND ASSETS ACQUIRED:
<S> <C>
Customer deposits assumed $43,698,774
Accrued interest payable on deposits 356,810
- -------------------------------------------------------------------------------
Total liabilities assumed 44,055,584
- -------------------------------------------------------------------------------
Less:
Loans purchased, net of estimated loan losses 21,424,166
Accrued interest receivable purchased 232,761
Real estate and equipment 1,877,553
Premium paid to seller on deposits assumed and loans purchased 2,692,939
- -------------------------------------------------------------------------------
Total assets acquired 26,227,419
- -------------------------------------------------------------------------------
Net cash received from acquisition $17,828,165
- -------------------------------------------------------------------------------
</TABLE>
The net cash received was less than the fair value of net liabilities assumed
by $3,332,326. Based on appraisal values, $425,929 was allocated to land and
$213,458 was allocated to building and equipment which will be depreciated
over the estimated remaining useful lives of the assets. The remainder of
$2,692,939, representing premiums paid for loans and deposits, has been
allocated to goodwill and is being amortized on the straight line method for
15 years.
C. INVESTMENT SECURITIES
---------------------
Debt and equity securities have been classified in the balance sheet according
to management's intent. The following table reflects the amortized cost and
estimated market values of investments in debt securities held at December 31,
1996. In addition, gross unrealized gains and gross unrealized losses are
disclosed as of December 31, 1996, in accordance with Statement of Position
90-11 of the American Institute of Certified Public Accountants, which is
effective for financial statements covering fiscal years ending after December
15, 1990.
The book value and market values of securities available for sale were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Unrealized Unrealized Estimated
Amortized Cost Gains Losses Market Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1996:
Non-mortgage backed debt securities of:
U.S. Treasury $ 4,006,354 $ 9,122 $ - $ 4,015,476
Other U.S. Government Agencies 13,857,211 28,014 - 13,885,225
- -------------------------------------------------------------------------------------------------
Total $17,863,565 $37,136 $ - $17,900,701
=================================================================================================
</TABLE>
The book and market values of pledged securities were $2,091,751 and
$2,094,690 respectively, at December 31, 1996.
The amortized cost and estimated market value of debt securities available for
sale at December 31, 1996, by contractual
See Accompanying Notes to Financial Statements
F-8
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
maturity, are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or repay obligations
with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale
- ------------------------------------------------------------------------------------
Amortized Cost Estimated Market Value
- ------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 3,500,718 $ 3,505,941
Due after one year through five years 13,858,392 13,890,307
Due after five years through ten years 504,455 504,453
Due after ten years - -
- ------------------------------------------------------------------------------------
Total $17,863,565 $17,900,701
====================================================================================
</TABLE>
The market value is established by an independent pricing service as of the
approximate dates indicated. The differences between the book value and
market value reflect current interest rates and represent the potential loss
(or gain) had the portfolio been liquidated on that date. Security losses (or
gains) are realized only in the event of dispositions prior to maturity.
At December 31, 1996, the Bank did not hold investment securities of any
single issuer, other than obligations of the U.S. Treasury and other U.S.
Government agencies, whose aggregate book value exceeded ten percent of
shareholders' equity.
D. LOANS
-----
The following is a summary of the loan portfolio by principal categories at
December 31, 1996:
<TABLE>
<CAPTION>
1996
- -----------------------------------------------------------------------------------------
<S> <C>
Loans secured by 1 to 4 -family residential properties $ 8,422,710
Loans secured by multi-family and non-farm, non-residential properties 3,385,410
Other loans secured by real estate 1,205,876
Commercial and industrial loans 4,495,961
Consumer loans 5,976,108
Other loans 54,109
- -----------------------------------------------------------------------------------------
Subtotal 23,540,174
Less: Unearned income (2,712)
- -----------------------------------------------------------------------------------------
Total $23,537,462
=========================================================================================
</TABLE>
E. ALLOWANCE FOR LOAN LOSSES
-------------------------
<TABLE>
<CAPTION>
A summary of changes in allowance for loan losses of the Bank for the year ended December
1996:
1996
- --------------------------------------------------------------------------------
<S> <C>
Balance allocated at inception on acquisition, April 18, 1996 $385,000
Add: Provision for possible loan losses 21,000
Less: Loans charged off 47,125
Recoveries on loans previously charged off (271)
Net loans charged off 46,854
- --------------------------------------------------------------------------------
Balance, end of year $359,146
================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-9
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
F. BANK PREMISES AND EQUIPMENT
---------------------------
The following is a summary of asset classifications and depreciable lives for
the Bank at December 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Useful Lives (Years) 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Land $ 552,175
Banking house and improvements 8-40 1,181,614
Equipment, furniture, and fixtures 5-10 367,738
Software and capitalized conversion costs 3 141,089
- -------------------------------------------------------------------------------
Total 2,242,616
Less - accumulated depreciation (85,961)
- -------------------------------------------------------------------------------
Bank premises and equipment, net $2,156,655
===============================================================================
</TABLE>
Depreciation included in operating expenses amounted to $85,961 in 1996.
G. DEPOSITS
--------
Interest-bearing deposit liabilities contained $7,494,483 in NOW accounts at
December 31, 1996.
H. SHORT-TERM BORROWINGS
----------------------
From time to time, short-term borrowings in the form of Federal funds
purchased may be used to meet liquidity needs. At December 31, 1996 the Bank
had lines of credit for federal funds purchased of $1,000,000 and $1,500,000
respectively, with corresponding institutions.
I. PROVISION FOR INCOME TAXES
--------------------------
The provision for income taxes for the years ended December 31, 1996 was
computed as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1996
- ------------------------------------------------------------------------
<S> <C>
Current tax expense $ 0
Deferred tax benefit (57,769)
- ------------------------------------------------------------------------
Net income tax benefit $(57,769)
========================================================================
</TABLE>
Deferred income taxes are reflected for certain timing differences between
book and taxable income and will be reduced in future years as these timing
differences reverse. The reasons for the difference between the actual tax
expense and tax computed at the federal income tax rate are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Years Ended December 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C>
Tax on pretax income at statutory rate, including effect of loss carryforwards $(57,191)
Tax-exempt interest income (1,882)
Non-deductible interest expense related to tax-exempt income 175
Non-deductible business entertainment 96
Other differences 1,033
- ---------------------------------------------------------------------------------------------
Total $(57,769)
=============================================================================================
Net effective tax rate (34.3)%
=============================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-10
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements
F-11
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
The sources and tax effects of temporary differences that give rise to
significant portions of deferred income tax assets (liabilities) are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
1996
- --------------------------------------------------------------------
<S> <C>
Deferred Income Tax Asset - Net operating loss carryover $ 74,521
Deferred Income Tax Liabilities:
Unrealized loss on available for sale securities (12,627)
Depreciation (7,962)
Provision for loan losses, net (8,790)
- --------------------------------------------------------------------
Net deferred tax asset $ 45,142
====================================================================
</TABLE>
The Bank has available at December 31, 1996, $219,182 of unused operating loss
carryforwards that may be applied against future taxable income and that
expire in 2011. No allowance was recorded against the deferred tax asset
because the Bank expects to generate sufficient future taxable income against
which its loss carryforward can be offset.
J. RETIREMENT PLAN
---------------
The Bank has a 401(k) plan covering substantially all of its employees meeting
age and length-of-service requirements. Matching contributions to the plan
are at the discretion of the Board of Directors. Retirement plan expenses
charged to operations amounted to $2,645 for 1996.
K. LIMITATION ON DIVIDENDS
-----------------------
The Board of Directors of any state-chartered bank in Georgia may declare and
pay cash dividends on its outstanding capital stock without any request for
approval of the Bank's regulatory agency if the following conditions are met:
1) Total classified assets at the most recent examination of the bank do not
exceed eighty (80) percent of equity capital.
2) The aggregate amount of dividends declared in the calendar year does not
exceed fifty (50) percent of the prior year's net income.
3) The ratio of equity capital to adjusted total assets shall not be less
than six (6) percent.
As of January 1, 1997, the Bank could not pay dividends without regulatory
consent.
L. FINANCIAL INSTRUMENTS
---------------------
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit risk and interest rate risk in excess of the amount recognized in the
balance sheet. The contract or notional amounts of those instruments reflect
the extent of involvement the Bank has in those particular financial
instruments.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual notional amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.
See Accompanying Notes to Financial Statements
F-12
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
The Bank does require collateral or other security to support financial
instruments with credit risk.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Contract or Notional Amount
- --------------------------------------------------------------------------------------------------
Financial instruments whose contract amounts represent credit risk:
<S> <C>
Commitments to extend credit $8,535,834
Standby letters of credit 165,000
- --------------------------------------------------------------------------------------------------
Total $8,700,834
==================================================================================================
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by the Bank upon extension of credit is based on
management's credit evaluation. Collateral held varies but may include
accounts receivable, inventory, property, plant, and equipment, and income-
producing commercial properties.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing, and similar transactions. All
letters of credit are due within one year of the original commitment date.
The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loan facilities to customers.
M. LEASE COMMITMENT
----------------
The Bank leases the equipment which processes and transmits all of the Bank's
daily transactions. The assets and liabilities under capital leases are
recorded at the lower of the present value of the minimum lease payments or
the fair value of the asset. The assets are depreciated over the lower of
their related lease terms or their estimated productive lives. Depreciation
of assets under capital leases is included in depreciation expense for 1996.
The minimum future lease payments under capital leases as of December 31,
1996, for each of the next five years and in the aggregate are:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
For Year Ended December 31,
- -------------------------------------------------------------------------
<S> <C>
1997 $11,148
1998 11,148
1999 11,148
2000 11,148
2001 1,858
- --------------------------------------------------------------------------
Total minimum lease payments $46,450
- -------------------------------------------------------------------------
</TABLE>
N. RELATED PARTY TRANSACTIONS
--------------------------
In the ordinary course of business, the Bank has direct and indirect loans
outstanding to or for the benefit of certain executive officers and directors.
These loans were made on substantially the same terms as those prevailing, at
the time made, for comparable loans to other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
The following is a summary of activity during 1996 with respect to such loans
to these individuals:
<TABLE>
<CAPTION>
<S> <C>
Related party loans acquired at inception, April 18, 1996 $ 1,847,213
New loans 943,167
Repayments (1,444,270)
- ------------------------------------------------------------------------
Balances at December 31, 1996 $ 1,346,110
========================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-13
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
O. DISCLOSURES RELATING TO STATEMENTS OF CASH FLOWS
------------------------------------------------
Interest - Cash paid during the years for interest was as follows:
---------
<TABLE>
<CAPTION>
- -------------------------------------------------------------
1996
- -------------------------------------------------------------
<S> <C>
Interest on deposits $1,391,884
- -------------------------------------------------------------
</TABLE>
Other Non-Cash Transactions - Other non-cash transactions relating to
---------------------------
investing and financing activities were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
1996
- -----------------------------------------------------------------------
<S> <C>
Increase in unrealized gain on available for sale securities $37,136
- -----------------------------------------------------------------------
</TABLE>
P. CREDIT RISK CONCENTRATION
-------------------------
The Bank grants agribusiness, commercial, and residential loans to its
customers. Although the Bank has a diversified loan portfolio, a substantial
portion of its debtors' ability to honor their contracts is dependent on the
area's economic stability. The primary trade area is generally that area
within fifty miles.
The distribution of commitments to extend credit approximates the distribution
of loans outstanding. Commercial and standby letters of credit were granted
primarily to commercial borrowers. The Bank, as a matter of policy, does not
extend credit in excess of the legal lending limit to any single borrower or
group of related borrowers.
Q. FAIR VALUES OF FINANCIAL INSTRUMENTS
------------------------------------
SFAS No. 107, Disclosures about Fair Value of Financial Instruments requires
-----------------------------------------------------
disclosure of fair value information about financial instruments, whether or
not recognized on the face of the balance sheets, for which it is practicable
to estimate that value. The assumptions used in the estimation of the fair
value of Bank's financial instruments are detailed below. Where quoted prices
are not available, fair values are based on estimates using discounted cash
flows and other valuation techniques. The use of discounted cash flows can be
significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. The following disclosures should not be
considered as representative of the liquidation value of the Bank, but rather
a good-faith estimate of the increase or decrease in value of financial
instruments held by the Bank since purchase, origination, or issuance.
CASH AND SHORT-TERM INVESTMENTS - For cash, due from banks, federal funds sold
-------------------------------
and interest-bearing deposits with other banks, the carrying amount is a
reasonable estimate of fair value.
INVESTMENT SECURITIES HELD TO MATURITY AND SECURITIES AVAILABLE FOR SALE -
------------------------------------------------------------------------
Fair values for investment securities are based on quoted market prices.
LOANS AND MORTGAGE LOANS HELD FOR SALE - The fair value of fixed rate loans is
--------------------------------------
estimated by discounting the future cash flows using the current rates at
which similar loans would be made to borrowers with similar credit ratings.
For variable rate loans, the carrying amount is a reasonable estimate of fair
value.
DEPOSIT LIABILITIES - The fair value of demand deposits, savings accounts and
-------------------
certain money market deposits are the amount payable on demand at the
reporting date. The fair value of fixed maturity certificates of deposit is
estimated by discounting the future cash flows using the rates currently
offered for deposits of similar remaining maturities.
FEDERAL FUNDS PURCHASED - The carrying value of federal funds purchased
-----------------------
approximates their fair value.
FHLB ADVANCES - The fair value of the Bank's fixed rate borrowings are
-------------
estimated using discounted cash flows, based on Bank's current incremental
borrowing rates for similar types of borrowing arrangements.
See Accompanying Notes to Financial Statements
F-14
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
LONG-TERM DEBT AND CONVERTIBLE SUBORDINATED DEBENTURES - Rates currently
------------------------------------------------------
available to the Bank for debt with similar terms and remaining maturities are
used to estimate fair value of existing debt.
COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT AND FINANCIAL
---------------------------------------------------------------------
GUARANTEES WRITTEN - Because commitments to extend credit and standby letters
------------------
of credit are made using variable rates, the contract value is a reasonable
estimate of fair value.
LIMITATIONS - Fair value estimates are made at a specific point in time, based
-----------
on relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Bank's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
the Bank's financial instruments, fair value estimates are based on many
judgements. These estimates are subjective in nature and involve
uncertainties and matters of significant judgement and therefore cannot be
determined with precision. Changes in assumptions could significantly affect
the estimates.
Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. Significant assets and liabilities that are not
considered financial instruments include the mortgage banking operation,
deferred income taxes, premises and equipment and goodwill. In addition, the
tax ramifications related to the realization of the unrealized gains and
losses can have a significant effect on fair value estimates and have not been
considered in the estimates.
The carrying amount and estimated fair values of the Banks' financial
instruments at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1996
- ---------------------------------------------------------------------------------------------------------------------
Carrying Amount Estimated
Fair
Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and short-term investments $ 7,005,359 $ 7,005,359
Securities available for sale 17,900,701 17,900,701
Loans 23,537,462 23,271,456
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES-
Deposits 46,661,100 52,144,150
- ---------------------------------------------------------------------------------------------------------------------
UNRECOGNIZED FINANCIAL INSTRUMENTS:
Commitments to extend credit 8,535,834 8,535,834
Standby letters of credit and financial guarantees written 165,000 165,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
R. REGULATORY MATTERS
------------------
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgements by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of December 31, 1996,
the Bank meets all capital adequacy requirements to which it is subject. As
of December 31, 1996, the most recent notification from the Office of the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as adequately capitalized the
Bank must maintain minimum total risk-based, and Tier I leverage ratios as set
forth
See Accompanying Notes to Financial Statements
F-15
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
in the table. There are no conditions or events since that notification that
management believes have changed the institution's category.
The Bank's actual capital amounts and ratios are also presented in the Table.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
--------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
--------- ------ ------------ -------------------- ------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996
Total Capital To (equal to or (equal to or
(Risk Weighted Assets) 4,323,000 16.3% 2,121,000 greater than)8.0% 2,652,000 greater than)10.0%
Tier I Capital To (equal to or (equal to or
(Risk-Weighted Assets) 3,964,000 14.9% 1,064,000 greater than)4.0% 1,596,000 greater than)6.0%
Tier I Capital To (equal to or (equal to or
(Average Assets) 3,964,000 7.74% 2,048,000 greater than)4.0% 2,560,000 greater than)5.0%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
The following documents are filed as exhibits hereto:
Exhibit No. Description
----------- -----------
2.1 Plan of Reorganization dated October 25, 1996 by and among CBC
Holding Company, Community Banking Company of Fitzgerald and
Interim Fitzgerald Company
3.1 Articles of Incorporation of CBC Holding Company
3.2 Bylaws of CBC Holding Company
4.1 Specimen Common Stock Certificate.
4.2 Articles of Incorporation of CBC Holding Company (filed as
Exhibit 3.1 hereto).
4.3 Bylaws of CBC Holding Company (filed as Exhibit 3.2 hereto).
21.1 List of subsidiaries of CBC Holding Company
27.1 Financial Data Schedule (for SEC use only)
99.1 CBC Holding Company Notice of Special Meeting and Proxy Statement
dated February 10, 1997.
-1-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
CBC HOLDING COMPANY
By: /s/ L. Wayne Lowrey
-------------------
Name: L. Wayne Lowrey
--------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
Date:
-2-
<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Exhibits
to
FORM 10-SB
General Form for Registration of Securities
Under
The Securities Act of 1934
____________________
CBC HOLDING COMPANY
(Exact name of registrant as specified in its charter)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
2.1 Plan of Reorganization dated October 25, 1996 by and among CBC
Holding Company, Community Banking Company of Fitzgerald and
Interim Fitzgerald Company
3.1 Articles of Incorporation of CBC Holding Company
3.2 Bylaws of CBC Holding Company
4.1 Specimen Common Stock Certificate.
4.2 Articles of Incorporation of CBC Holding Company (filed as
Exhibit 3.1 hereto).
4.3 Bylaws of CBC Holding Company (filed as Exhibit 3.2 hereto).
21.1 List of subsidiaries of CBC Holding Company
27.1 Financial Data Schedule (for SEC use only)
99.1 CBC Holding Company Notice of Special Meeting and Proxy
Statement dated February 10, 1997.
<PAGE>
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan"), made and entered into as of
the 25th day of October, 1996, among COMMUNITY BANKING COMPANY OF FITZGERALD
(the "Bank"), a bank organized under the laws of the State of Georgia, CBC
HOLDING COMPANY (the "Holding Company"), a Georgia corporation, and INTERIM
FITZGERALD COMPANY ("Interim"), a Georgia corporation and wholly-owned
subsidiary of the Holding Company;
WITNESSETH
==========
WHEREAS, the principal offices of the Bank, the Holding Company and
Interim are located at 102 West Roanoke Drive, Fitzgerald, Georgia 31750;
WHEREAS, the authorized capital stock of the Bank consists of
10,000,000 shares of common stock ("Bank Stock"), $5.00 par value, of which
664,097 shares are issued and outstanding;
WHEREAS, the authorized capital stock of the Holding Company consists
of 10,000,000 shares of common stock ("Holding Company Stock"), $1.00 par value,
of which one share is issued and outstanding;
WHEREAS, the authorized capital stock of Interim consists of
10,000,000 shares of common stock ("Interim Stock"), $1.00 par value, of which
one share is issued and outstanding;
WHEREAS, the respective Boards of Directors of the Bank and Interim
deem it advisable and in the best interests of the Bank and Interim and their
respective shareholders that Interim be merged with and into the Bank and, by
resolutions duly adopted, have approved and adopted this Plan and directed that
it be submitted to the respective shareholders of the Bank and Interim for their
approval; and
WHEREAS, the Board of Directors of the Holding Company has approved
and adopted this Plan, and the Holding Company has agreed to join in and be
bound hereby and to issue the shares of Holding Company Stock which shareholders
of the Bank will receive upon consummation of the Reorganization and merger as
herein provided;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of stating the method, terms
and conditions of the merger provided for herein, the mode of carrying the same
into effect, the manner and basis of converting and exchanging the shares of
Bank Stock and Interim Stock as hereinafter provided, and such other provisions
relating to the merger as the parties deem necessary or desirable, the parties
hereto agree as follows:
<PAGE>
SECTION 1
REORGANIZATION
--------------
Pursuant to the provisions of the Financial Institutions Code of
Georgia, as amended (the "Financial Institutions Code"), and other applicable
provisions of Georgia law, Interim shall be merged with and into the Bank. The
Bank shall be the survivor of the merger (the "Resulting Bank") continuing under
the charter of the Bank and with the name "Community Banking Company of
Fitzgerald."
SECTION 2
EFFECTIVE DATE OF THE REORGANIZATION
------------------------------------
The merger of Interim with and into the Bank and the reorganization of
the Bank into a holding company structure shall be effective as of the date (the
"Effective Date of the Reorganization") specified in the certificate of merger
to be issued by the Georgia Secretary of State in accordance with the applicable
provisions of the Financial Institutions Code, O.C.G.A. (S) 7-l-535(b).
Since the merger of Interim with and into the Bank will effect the
reorganization of the Bank into a holding company structure, such merger and
reorganization, collectively, shall hereinafter be referred to as the
"Reorganization."
SECTION 3
LOCATION, ARTICLES AND
----------------------
BYLAWS, MANAGEMENT AND CAPITAL
------------------------------
STRUCTURE OF THE RESULTING BANK
-------------------------------
On the Effective Date of the Reorganization:
(a) The principal office of the Resulting Bank shall be located at 102
West Roanoke Drive, Fitzgerald, Georgia 31750, or such other location where the
Bank is located immediately prior to the Effective Date of the Reorganization.
(b) The Articles of Incorporation and Bylaws of the Resulting Bank
shall be the same as the Articles of Incorporation and Bylaws of the Bank as in
effect immediately prior to the Effective Date of the Reorganization.
(c) The directors and officers of the Resulting Bank shall be the
directors and officers of the Bank immediately prior to the Effective Date of
the Reorganization. All such directors and officers of the Resulting Bank shall
serve until their respective successors are elected or appointed pursuant to the
Bylaws of the Resulting Bank.
-2-
<PAGE>
(d) The Resulting Bank will distribute to the Holding Company all of
the capital and surplus of Interim, so that the resulting capital structure of
the Resulting Bank shall be identical to the capital structure of the Bank
immediately prior to the Effective Date of the Reorganization. The capital
structure of the Bank shall not be altered or amended by the Reorganization and
shall continue in effect as that of the Resulting Bank.
SECTION 4
EXISTENCE, RIGHTS, DUTIES, ASSETS
---------------------------------
AND LIABILITIES OF THE RESULTING BANK
-------------------------------------
(a) As of the Effective Date of the Reorganization, the existence of
Interim as a separate entity shall cease, but its existence shall continue in
the Resulting Bank.
(b) As of the Effective Date of the Reorganization, the Resulting Bank
shall have, without further act or deed, all of the properties, rights, powers,
trusts, duties and obligations of the Bank and Interim.
(c) As of the Effective Date of the Reorganization, the Resulting Bank
shall have the authority to engage only in such businesses and to exercise only
such powers as are then permissible upon the original incorporation of a bank
under the Financial Institutions Code and as are provided for in the Articles of
Incorporation of the Resulting Bank, and the Resulting Bank shall be subject to
the same prohibitions and limitations to which it would be subject upon original
incorporation, except that the Resulting Bank may engage in any business and may
exercise any right that the Bank could lawfully have exercised or engaged in
immediately prior to the Effective Date of the Reorganization.
(d) No liability of the Bank or Interim or of any of their
shareholders, directors or officers shall be affected by the Reorganization, nor
shall any lien on any property of the Bank or Interim be impaired by the
Reorganization. Any claim existing or any action pending by or against the Bank
or Interim may be prosecuted to judgment as if the Reorganization had not taken
place, or the Resulting Bank may be substituted in place of the Bank or Interim.
SECTION 5
MANNER AND BASIS OF CONVERTING SHARES OF INTERIM STOCK
------------------------------------------------------
The manner and basis of converting and exchanging the shares of
Interim Stock into shares of Resulting Bank Stock shall be as follows:
As soon as practicable after the Effective Date of the Reorganization,
the Holding Company shall, upon presentation and surrender of a certificate
representing all of the issued and outstanding shares of Interim Stock to the
Bank, as exchange agent, be entitled to receive in exchange therefor a
certificate or certificates representing all of the then outstanding shares of
Resulting Bank Stock.
-3-
<PAGE>
SECTION 6
MANNER AND BASIS OF CONVERTING SHARES OF BANK STOCK
---------------------------------------------------
The manner and basis of converting shares of Bank Stock into shares of
Holding Company Stock, excluding those shares of Bank Stock held by shareholders
who have perfected dissenters' rights of appraisal under the applicable
provisions of the Financial Institutions Code, O.C.G.A. (S) 7-1-537, and the
Georgia Business Corporations Code, O.C.G.A. (S) 14-2-1301 et seq.
(collectively, the "Dissenters' Rights Provisions"), shall be as follows:
(a) Exchange Ratio. Each share of Bank Stock outstanding immediately
--------------
prior to the Effective Date of the Reorganization shall, by virtue of the
Reorganization and without any action on the part of the holder or holders
thereof, be converted into the right to receive one share of Holding Company
Stock.
(b) Rights of Former Bank Shareholders. As of the Effective Date of
----------------------------------
the Reorganization, each certificate theretofore representing one or more
outstanding shares of Bank Stock shall be deemed for all corporate purposes to
evidence only the right to receive a certificate representing shares of Holding
Company Stock in accordance with this Plan.
(c) Letter of Transmittal. As soon as practicable after approval of
---------------------
the Reorganization by the Bank's shareholders, a letter of transmittal shall be
mailed to each Bank shareholder as of the close of business on the date
immediately preceding the Effective Date of the Reorganization. Upon receipt of
the letter of transmittal, each holder of a certificate or certificates
theretofore representing shares of Bank Stock shall surrender such certificates
to Community Banking Company of Fitzgerald, as exchange agent, together with a
properly completed and signed letter of transmittal, and shall receive in
exchange therefor a certificate representing an equivalent number of shares of
Holding Company Stock, subject to the restrictions and conditions of this Plan.
(d) Failure to Surrender Bank Stock Certificates. Until the former
--------------------------------------------
Bank shareholder surrenders his or her Bank Stock certificate or certificates to
the Bank (or suitable arrangements are made to account for any lost, stolen or
destroyed certificates according to the Bank's usual procedures), the
shareholder:
(i) shall not be issued a certificate representing the shares of
Holding Company Stock or the cash which such Bank Stock
certificate may entitle the shareholder to receive;
(ii) shall not have any voting rights in respect of the shares of
Holding Company Stock which such Bank Stock certificate may
entitle the shareholder to receive; and
(iii) shall not be paid dividends or other distributions in respect of
the shares of Holding Company Stock which such Bank Stock
certificate may entitle the shareholder to receive; instead such
dividends or distributions shall be
-4-
<PAGE>
retained, without interest, for the shareholder's account until
surrender of such Bank Stock certificate.
SECTION 7
ACQUISITION OF DISSENTERS' BANK STOCK
-------------------------------------
Any shareholder of the Bank who fully complies with the Dissenters' Rights
Provisions shall be paid an amount of cash (as determined under such Provisions)
for his or her shares of Bank Stock by the Bank. Immediately upon the Bank's
acquisition of any of Bank Stock from its shareholders pursuant to the
Dissenters' Rights Provisions, the Holding Company shall acquire such shares
from the Bank for the same price as shall have been paid by the Bank to the
dissenting shareholders. The shares of Bank Stock so acquired by the Holding
Company shall be cancelled.
SECTION 8
REDEMPTION OF HOLDING COMPANY STOCK
-----------------------------------
As soon as practicable after the Effective Date of the Reorganization, the
Holding Company shall redeem any shares of Holding Company Stock which may have
been issued prior to the Effective Date of the Reorganization at a redemption
price equal to the same consideration paid for such shares, so that immediately
after such redemption the then outstanding shares of Holding Company Stock shall
consist solely of the shares to be issued by the Holding Company upon the
conversion of shares of Bank Stock as provided herein.
SECTION 9
FURTHER ACTIONS
---------------
From time to time, as and when requested by the Resulting Bank, or by its
successors or assigns, Interim shall execute and deliver or cause to be executed
and delivered all such deeds and other instruments, and shall take or cause to
be taken all such other actions, as the Resulting Bank, or its successors and
assigns, may deem necessary or desirable in order to vest in and confirm to the
Resulting Bank, and its successors and assigns, title to and possession of all
the property, rights, powers, trusts, duties and obligations referred to in
Section 4 hereof and otherwise to carry out the intent and purposes of this
Plan.
-5-
<PAGE>
SECTION 10
CONDITIONS PRECEDENT TO CONSUMMATION OF THE REORGANIZATION
----------------------------------------------------------
This Plan is subject to, and consummation of the Reorganization herein
provided for is conditioned upon, the fulfillment prior to the Effective Date of
the Reorganization of each of the following conditions:
(a) Approval of the Plan by the affirmative vote of the holders of at
least two-thirds of the outstanding voting shares of the Bank and Interim;
(b) The number of shares held by persons who have perfected dissenters'
rights of appraisal pursuant to the Dissenters' Rights Provisions shall not be
deemed by the parties hereto to make consummation of this Plan inadvisable and,
in any event, shall not exceed 10% of the Bank's outstanding shares (or 66,409
shares as of the date of this Agreement);
(c) Procurement of any action, consent, approval or ruling, governmental or
otherwise, which is, or in the opinion of counsel for the Bank may be, necessary
to permit or enable the Resulting Bank, upon and after the Reorganization, to
conduct all or any part of the business and activities conducted by the Bank
prior to the Reorganization; and
(d) The receipt by the Bank of a written opinion of special counsel to the
Bank that for federal income tax purposes no gain or loss will be recognized by
a Bank shareholder who exchanges his or her Bank Stock for Holding Company
Stock, as provided by this Plan.
SECTION 11
TERMINATION
-----------
In the event that:
(a) The number of shares of Bank Stock voted against the Reorganization
shall make consummation of the Reorganization inadvisable in the opinion of the
Board of Directors of the Bank, Interim or the Holding Company;
(b) Any action, suit, proceeding or claim has been instituted, made or
threatened relating to the proposed Reorganization which shall make consummation
of the Reorganization inadvisable in the opinion of the Board of Directors of
the Bank, Interim or the Holding Company;
(c) Any action, consent, approval, opinion, or ruling required to be
provided by Section 10 of this Plan shall not have been obtained; or
(d) For any other reason consummation of the Reorganization is deemed
inadvisable in the opinion of the Board of Directors of the Bank, Interim or the
Holding Company;
-6-
<PAGE>
then this Plan may be terminated at any time before consummation of the
Reorganization by written notice, approved or authorized by the Board of
Directors of the party wishing to terminate, to the other parties. Upon
termination by written notice as provided by this Section 11, this Plan shall be
void and of no further effect, and there shall be no liability by reason of this
Plan or the termination hereof on the part of the Bank, Interim, the Holding
Company or their directors, officers, employees, agents or shareholders.
SECTION 12
AMENDMENT; WAIVER
-----------------
(a) At any time before or after approval and adoption hereof by the
respective shareholders of the Bank, Interim and the Holding Company, this Plan
may be amended by agreement among the Bank, Interim and the Holding Company;
provided, however, that after the approval and adoption of this Plan by the
shareholders of the Bank, no amendment reducing the consideration payable to
Bank shareholders pursuant to Section 6(a) and (b) hereof shall be valid without
having been approved by the shareholders of the Bank in the manner required for
approval of this Plan.
(b) A waiver by any party hereto of any breach of a term or condition of
this Plan shall not operate as a waiver of any other breach of such term or
condition or of other terms or conditions, nor shall failure to enforce any term
or condition operate as a waiver or release of any other right, in law or in
equity, or claim which any party may have against another party for
anything arising out of, connected with or based upon this Plan. A waiver shall
be effective only if evidenced by a writing signed by the party who is entitled
to the benefit of the term or condition of this Plan which is to be waived. A
waiver of a term or condition on one occasion shall not be deemed to be a waiver
of the same or of any other term or condition on a future occasion.
SECTION 13
BINDING EFFECT; COUNTERPARTS; HEADINGS; GOVERNING LAW
-----------------------------------------------------
This Plan is binding upon the parties hereto and upon their successors and
assigns. This Plan may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Plan and the headings
herein set out are for convenience or reference only and shall not be deemed a
part of this Plan. This Plan shall be governed by and construed in accordance
with the laws of the State of Georgia.
-7-
<PAGE>
[Continued on next page]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Reorganization to be executed by their duly authorized officers and their bank
and corporate seals to be affixed hereto all as of the day and year first above
written.
COMMUNITY BANKING COMPANY OF FITZGERALD
[BANK SEAL] By: /s. L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
INTERIM FITZGERALD COMPANY
[INTERIM SEAL] By: /s/ L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
CBC HOLDING COMPANY
[CORPORATE SEAL] By: /s/ L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
-9-
<PAGE>
ARTICLES OF INCORPORATION
OF
CBC HOLDING COMPANY
Article 1
The name of the Company shall be CBC HOLDING COMPANY.
Article 2
The Company is organized pursuant to the provisions of the Georgia Business
Corporation Code.
Article 3
The object of the Company is pecuniary again and profit, and the Company is
formed for the purpose of becoming and operating as a bank holding company and
engaging in such related and permissible activities in connection therewith as
the Board of Directors may from time to time specify by resolution.
Article 4
The aggregate number of shares which the Company shall be authorized to
issue is ten million (10,000,000), all of which shall be common shares of the
same class, each such share having a par value of one dollar ($1.00).
Article 5
The initial registered office of the Company shall be at 102 West Roanoke
Drive, Fitzgerald, Georgia 31750. The initial registered agent of the Company
at such address shall be L. Wayne Lowrey.
Article 6
The mailing address of the initial principal office of the Company shall be
102 West Roanoke Drive, Fitzgerald, Georgia 31750.
<PAGE>
Article 7
The initial Board of Directors of the Company shall consist of 14 members,
who shall be and whose addressees are:
Name and Residence Address
--------------------------
Sidney S. (Buck) Anderson Jr. L. Wayne Lowrey
701 South Grant Street 1072 Roanoke Drive Extension
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
James Thomas Casper, III Steve Mitchell
116 Cherokee Court 1208 W. Roanoke Drive
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
John Croley James A. Parrott, II
132 Lakeview Drive 146 Franklin
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
A.B.C. (Chip) Dorminy, III Jack F. Paulk
248 Lincoln Avenue 103 Cherokee Court
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
John S. Dunn George M. Ray
619 Highway 129 South 1046 West Roanoke Drive
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
William Philip Herlovich Robert Sherrell
104 Manassas Court 815 West Magnolia
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
Lee Liles John Edward Smith, III
204 Meadowlark Lane 141 Whispering Way
Fitzgerald, Georgia 31750 Fitzgerald, Georgia 31750
Article 8
(a) A director of the Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages, for breach of any duty
as a director, except for liability for:
(i) any appropriation, in violation of his or her duties, of any
business opportunity of the Corporation;
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
2
<PAGE>
(iii) the types of liability set forth in Section 14-2-832 of
the Georgia Business Corporation Code dealing with unlawful
distributions of corporate assets to shareholders; or
(iv) any transaction from which the director derived in improper
material tangible personal benefit.
(b) Any repeal or modification of this Article by the shareholders of
the Corporation shall be prospective only and shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
Article 9
The preemptive right of any shareholder to acquire authorized and unissued
shares is denied.
Article 10
Should any provision of these Articles of Incorporation, or any clause
hereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clauses of these Articles of Incorporation shall
remain valid and fully enforceable.
Article 11
The name, place of residence and post office address of the Incorporator is
as follows:
L. Wayne Lowrey
102 West Roanoke Drive
Fitzgerald, Georgia 31750
IN WITNESS WHEREOF, the undersigned Attorney for the Incorporator has
executed these Articles of Incorporation this the 11th day of October, 1996.
/s/ Lynn M. Sumlin
-------------------------------
Lynn M. Sumlin
Attorney for
3
<PAGE>
BYLAWS
CBC HOLDING COMPANY
<PAGE>
BYLAWS
CBC HOLDING COMPANY
INDEX
PAGE
----
ARTICLE ONE - OFFICES................................................... 1
ARTICLE TWO - SHAREHOLDERS' MEETINGS.................................... 1
2.1 Annual Meeting......................................... 1
2.2 Special Meetings....................................... 1
2.3 Place.................................................. 1
2.4 Notice................................................. 1
2.5 Quorum................................................. 2
2.6 Proxies; Required Vote................................. 2
2.7 Presiding Officer and Secretary........................ 2
2.8 Shareholder List....................................... 2
2.9 Action in Lieu of Meeting.............................. 2
ARTICLE THREE - DIRECTORS............................................... 2
3.1 Management............................................. 2
3.2 Number of Directors.................................... 3
3.3 Vacancies.............................................. 3
3.4 Election of Directors.................................. 3
3.5 Removal................................................ 3
3.6 Resignation............................................ 3
3.7 Compensation........................................... 3
3.8 Honorary and Advisory Directors........................ 3
<PAGE>
ARTICLE FOUR - COMMITTEES............................................... 4
4.1 Executive Committee.................................... 4
4.2 Other Committees....................................... 5
4.3 Removal................................................ 5
ARTICLE FIVE - MEETINGS OF THE BOARD OF DIRECTORS....................... 5
5.1 Time and Place......................................... 5
5.2 Regular Meetings....................................... 5
5.3 Special Meetings....................................... 5
5.4 Content and Waiver of Notice........................... 6
5.5 Quorum; Participation by Telephone..................... 6
5.6 Action in Lieu of Meeting.............................. 6
5.7 Interested Directors and Officers...................... 6
ARTICLE SIX - OFFICERS, AGENTS AND EMPLOYEES............................ 7
6.1 General Provisions..................................... 7
6.2 Powers and Duties of the Chairman of the Board
Directors and the President............................ 7
6.3 Powers and Duties of Vice Presidents................... 8
6.4 Powers and Duties of the Secretary..................... 8
6.5 Powers and Duties of the Treasurer..................... 8
6.6 Appointment, Powers and Duties of Assistant Secretaries 9
6.7 Appointment, Powers and Duties of Assistant Treasurers. 9
6.8 Delegation of Duties................................... 9
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<PAGE>
ARTICLE SEVEN - CAPITAL STOCK........................................... 9
7.1 Certificates........................................... 9
7.2 Shareholder List....................................... 10
7.3 Transfer of Shares..................................... 10
7.4 Record Dates........................................... 10
7.5 Registered Owner....................................... 10
7.6 Transfer Agent and Registrars.......................... 11
7.7 Lost Certificates...................................... 11
7.8 Fractional Shares or Scrip............................. 11
ARTICLE EIGHT - BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS.............. 11
8.1 Inspection of Books and Records........................ 11
8.2 Seal................................................... 12
8.3 Annual Statements...................................... 12
ARTICLE NINE - INDEMNIFICATION.......................................... 13
9.1 Authority to Indemnify................................. 13
9.2 Mandatory Indemnification.............................. 13
9.3 Advances for Expenses.................................. 13
9.4 Court-ordered Indemnification and Advances for Expenses 13
9.5 Determination of Indemnification....................... 13
9.6 Authorization of Indemnification....................... 14
9.7 Other Rights........................................... 14
9.8 Insurance.............................................. 15
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<PAGE>
9.9 Continuation of Expenses............................... 15
ARTICLE TEN - NOTICES: WAIVERS OF NOTICE 15
10.1 Notices............................................... 15
10.2 Waivers of Notice..................................... 15
ARTICLE ELEVEN - EMERGENCY POWERS....................................... 15
11.1 Bylaws................................................ 15
11.2 Lines of Succession................................... 16
11.3 Head Office........................................... 16
11.4 Period of Effectiveness............................... 16
11.5 Notices............................................... 16
11.6 Officers as Directors Pro Tempore..................... 16
11.7 Liability of Officers, Directors and Agents........... 16
ARTICLE TWELVE - CHECKS, NOTES, DRAFTS, ETC............................. 17
ARTICLE THIRTEEN - AMENDMENTS........................................... 17
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<PAGE>
BYLAWS
OF
CBC HOLDING COMPANY
ARTICLE ONE
OFFICES
The corporation shall at all times maintain its principal office in
Fitzgerald, Georgia, its registered office in the State of Georgia and its
registered agent at that address, but it may have other offices located within
or outside the State of Georgia as the Board of Directors may determine.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 Annual Meeting. A meeting of shareholders of the corporation shall be
--------------
held annually, within six (6) months after the end of each fiscal year of the
corporation. The annual meeting shall be held at such time and place and on
such date as the Directors shall determine from time to time and as shall be
specified in the notice of the meeting.
2.2 Special Meetings. Special meetings of the shareholders may be called at
----------------
any time by the corporation's Board of Directors, its President, and by the
corporation upon the written request of any one or more shareholders, owning an
aggregate of not less than twenty-five percent of the outstanding capital stock
of the corporation. Special meetings shall be held at such a time and place and
on such date as shall be specified in the notice of the meeting.
2.3 Place. Annual or special meetings of shareholders may be held within or
-----
without the State of Georgia.
2.4 Notice. Notice of annual or special shareholders meetings stating
------
place, day and hour of the meeting shall be given in writing not less than ten
nor more than sixty days before the date of the meeting, either mailed to the
last known address or personally given to each shareholder. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. The notice of any meeting at which amendments to or
restatements of the articles of incorporation, merger or share exchange of the
corporation, or the disposition of corporate assets requiring shareholder
approval are to be considered shall state such purpose, and shall further comply
with all requirements of law. Notice of a meeting may be waived by an
instrument in writing executed before or after the meeting. The waiver need not
specify the purpose of the meeting or the business transacted, unless one of the
purposes of the meeting concerns a plan of merger or share exchange, in which
event the waiver shall comply with the further requirements of law concerning
such waivers. Attendance at such meeting in person or by proxy shall constitute
a waiver of notice thereof.
2.5 Quorum. At all meetings of shareholders a majority of the outstanding
------
shares of stock shall constitute a quorum for the transaction of business, and
no resolution or business shall be transacted without the favorable vote of the
holders of a majority of the shares represented at the meeting and
<PAGE>
entitled to vote. A lesser number may adjourn from day to day, and shall
announce the time and place to which the meeting is adjourned.
2.6 Proxies; Required Vote. At every meeting of the shareholders, including
-----------------------
meetings of shareholders for the election of Directors, any shareholder having
the right to vote shall be entitled to vote in person or by proxy, but no proxy
shall be voted after eleven months from its date, unless said proxy provides for
a longer period. Each shareholder shall have one vote for each share of stock
having voting power, registered in his or her name on the books of the
corporation. If a quorum is present, the affirmative vote of the majority of
the shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, except as otherwise provided by law, by
the Articles of Incorporation or by these bylaws.
2.7 Presiding Officer and Secretary. At every meeting of shareholders, the
-------------------------------
Chairman or the President, or, if such officers shall not be present, then the
person appointed by one of them shall preside. The Secretary or an Assistant
Secretary, or if such officers shall not be present, the appointee of the
presiding officer of the meeting, shall act as secretary of the meeting.
2.8 Shareholder List. The officer or agent having charge of the stock
----------------
transfer books of the corporation shall produce for inspection of any
shareholder at, and continuously during, every meeting of the shareholders, a
complete alphabetical list of shareholders showing the address and share
holdings of each shareholder. If the record of shareholders readily shows such
information, it may be produced in lieu of such a list.
2.9 Action in Lieu of Meeting. Any action to be taken at a meeting of the
-------------------------
shareholders of the corporation, or any action that may be taken at a meeting of
the shareholders, may be taken without a meeting if a consent in writing setting
forth the action so taken shall be signed by those persons who would be entitled
to vote at a meeting those shares having voting power to cast not less than the
minimum number (or numbers, in the case of voting by class) of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote were present and voted.
ARTICLE THREE
DIRECTORS
3.1 Management. Subject to these bylaws, or any lawful agreement between
----------
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may exercise all of the powers that may be exercised or performed by the
corporation.
3.2 Number of Directors. The Board of Directors shall consist of not less
-------------------
than five (5) nor more than twenty-five (25) members. The number of Directors
may be fixed or changed from time to time, within the minimum and maximum, by
the shareholders by the affirmative vote of a majority of the issued and
outstanding shares of the corporation entitled to vote in an election of
Directors, or by the Board of Directors by the affirmative vote of a majority of
all Directors then in office.
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<PAGE>
3.3 Vacancies. The Directors, even though less than a quorum, may fill any
---------
vacancy on the Board of Directors, including a vacancy created by an increase in
the number of directors. Such appointment by the Directors shall continue until
the expiration of the term of the Director whose place has become vacant or, in
the case of an increase in the number of directors, until the next meeting of
the shareholders.
3.4 Election of Directors. The Directors shall be elected at each annual
---------------------
shareholders meeting and shall serve for a term of one year and until their
successors are elected or qualified.
3.5 Removal. Any Director may be removed from office, at a meeting with
-------
respect to which notice of such purpose is given (a) without cause, only upon
the affirmative vote of the holders of a majority of the issued and outstanding
shares of the corporation, and (b) with cause, only upon the affirmative vote of
the holders of a majority of the issued and outstanding shares of the
corporation represented at the meeting either in person or by proxy.
3.6 Resignation. Any Director may resign at any time either orally at any
-----------
meeting of the Board of Directors or by so advising the Chairman of the Board of
Directors or the President or by giving written notice to the corporation. A
Director who resigns may postpone the effectiveness of his or her resignation to
a future date or upon the occurrence of a future event specified in a written
tender of resignation. If no time of effectiveness is specified therein, a
resignation shall be effective upon tender. A vacancy shall be deemed to exist
at the time a resignation is tendered, and the Board of Directors or the
shareholders may, then or thereafter, elect a successor to take office when the
resignation by its terms becomes effective.
3.7 Compensation. Directors may be allowed such compensation for their
------------
services as Directors as may from time to time be fixed by resolution of the
Board of Directors.
3.8 Honorary and Advisory Directors. When a Director of the corporation
-------------------------------
retires under the retirement policies of the corporation as established from
time to time by the Board of Directors, such Director automatically shall become
an Honorary Director of the corporation following his or her retirement. The
Board of Directors of the corporation also may appoint any individual an
Honorary Director, Director Emeritus, or member of any advisory board
established by the Board of Directors. Any individual automatically becoming an
Honorary Director or appointed an Honorary Director, Director Emeritus, or
member of an advisory board as provided by this
-3-
<PAGE>
Section 3.8 may be compensated as provided in Section 3.7, but such individual
may not vote at any meeting of the Board of Directors or be counted in
determining a quorum as provided in Section 5.5 and shall not have any
responsibility or be subject to any liability imposed upon a Director, or
otherwise be deemed a Director.
ARTICLE FOUR
COMMITTEES
4.1 Executive Committee. (a) The Board of Directors may, by resolution
-------------------
adopted by a majority of the entire Board of Directors, designate an Executive
Committee consisting of one or more Directors. Each Executive Committee member
shall hold office until the first meeting of the Board of Directors after the
annual meeting of shareholders and until the member's successor is elected and
qualified, or until the member's death, resignation or removal, or until the
member shall cease to be a Director.
(b) During the intervals between the meetings of the Board of
Directors, the Executive Committee may exercise all the authority of the Board
of Directors; provided, however, that the Executive Committee shall not have the
power to amend or repeal any resolution of the Board of Directors that by its
terms shall not be subject to amendment or repeal by the Executive Committee,
and the Executive Committee shall not have the authority of the Board of
Directors in reference to (i) the amendment of the Articles of Incorporation or
bylaws of the corporation; (ii) the adoption of a plan of merger or
consolidation; (iii) the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the corporation; or (iv) a
voluntary dissolution of the corporation or the revocation of any such voluntary
dissolution.
(c) The Executive Committee shall meet from time to time on call of
the Chairman of the Board of Directors or the President or of any two or more
members of the Executive Committee. Meetings of the Executive Committee may be
held at such place or places, within or without the State of Georgia, as the
Executive Committee shall determine or as may be specified or fixed in the
respective notices or waivers of such meetings. The Executive Committee may fix
its own rules of procedure, including provision for notice of its meetings. It
shall keep a record of its proceedings and shall report these proceedings to the
Board of Directors at the meeting thereof held next after they have been taken,
and all such proceedings shall be subject to revision or alteration by the Board
of Directors except to the extent that action shall have been taken pursuant to
or in reliance upon such proceedings prior to any such revision or alteration.
(d) The Executive Committee shall act by majority vote of its members;
provided, however, that contracts or transactions of and by the corporation in
which officers or Directors of the corporation are interested shall require the
affirmative vote of a majority of the disinterested members of the Executive
Committee at a meeting of the Executive Committee at which the material facts as
to the interest and as to the contract or transaction are disclosed or known to
the members of the Executive Committee prior to the vote.
-4-
<PAGE>
(e) Members of the Executive Committee may participate in committee
proceedings by means of conference telephone or similar communications equipment
by means of which all persons participating in the proceedings can hear each
other, and such participation shall constitute presence in person at such
proceedings.
(f) The Board of Directors, by resolution adopted in accordance with
paragraph (a) of this section, may designate one or more Directors as alternate
members of the Executive Committee who may act in the place and stead of any
absent member or members at any meeting of said committee.
4.2 Other Committees. The Board of Directors, by resolution adopted by a
----------------
majority of the entire Board of Directors, may designate one or more additional
committees, each committee to consist of one or more of the Directors of the
corporation, which shall have such name or names and shall have and may exercise
such powers of the Board of Directors, except the powers denied to the Executive
Committee, as may be determined from time to time by the Board of Directors.
Such committees shall provide for their own rules of procedure, subject to the
same restrictions thereon as provided above for the Executive Committee.
4.3 Removal. The Board of Directors shall have power at any time to remove
-------
any member of any committee, with or without cause, and to fill vacancies in and
to dissolve any such committee.
ARTICLE FIVE
MEETINGS OF THE BOARD OF DIRECTORS
5.1 Time and Place. Meetings of the Board of Directors may be held at any
--------------
place either within or without the State of Georgia.
5.2 Regular Meetings. Regular meetings of the Board of Directors may be
----------------
held without notice at such time and place, within or without the State of
Georgia, as shall be determined by the Board of Directors from time to time.
5.3 Special Meetings. Special meetings of the Board of Directors may be
----------------
called by the Chairman of the Board of Directors or the President on not less
than one day's notice by mail, telegram, cablegram, personal delivery or
telephone to each Director and shall be called by the Chairman of the Board of
Directors or the President in like manner and on like notice on the written
request of any two or more Directors. Any such special meeting shall be held at
such time and place, within or without the State of Georgia, as shall be stated
in the notice of the meeting.
5.4 Content and Waiver of Notice. No notice of any meeting of the Board of
----------------------------
Directors need state the purposes thereof, except as may be otherwise provided
in these bylaws. Notice of any meeting may be waived by an instrument in
writing executed before or after the meeting. Attendance in person at any such
meeting shall constitute a waiver of notice thereof unless the director at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
-5-
<PAGE>
5.5 Quorum; Participation by Telephone. At all meetings of the Board of
----------------------------------
Directors, the presence of a majority of the authorized number of Directors
shall be necessary and sufficient to constitute a quorum for the transaction of
business. Directors may participate in any meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by means of such communications equipment shall constitute the presence in
person at such meeting. Except as may be otherwise specifically provided by
law, the Articles of Incorporation or these bylaws, all resolutions adopted and
all business transacted by the Board of Directors shall require the affirmative
vote of a majority of the Directors present at the meeting. In the absence of a
quorum, a majority of the Directors present at any meeting may adjourn the
meeting from time to time until a quorum is present. Notice of any adjourned
meeting need only be given by announcement at the meeting at which the
adjournment is taken.
5.6 Action in Lieu of Meeting. Any action required or permitted to be taken
-------------------------
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if a written consent thereto is signed by all members of
the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board of
Directors and upon compliance with any further requirements of law pertaining to
such consents.
5.7 Interested Directors and Officers. An interested Director or officer is
---------------------------------
one who is a party to a contract or transaction with the corporation or who is
an officer or Director of, or has a financial interest in, another corporation,
partnership or association which is a party to a contract or transaction with
the corporation. Contracts and transactions between the corporation and one or
more interested Directors or officers shall not be void or voidable solely
because of the involvement or vote of such interested persons as long as (a) the
contract or transaction is approved in good faith by the Board of Directors or
appropriate committee by the affirmative vote of a majority of disinterested
Directors, even if the disinterested Directors be less than a quorum, at a
meeting of the Board of Directors or committee at which the material facts as to
the interested person or persons and the contract or transaction are disclosed
or known to the Board of Directors or committee prior to the vote; or (b) the
contract or transaction is approved in good faith by the shareholders after the
material facts as to the interested person or persons and the contract or
transaction have been disclosed to them; or (c) the contract or transaction is
fair as to the corporation as of the time it is authorized, approved or ratified
by the Board of Directors, committee or shareholders. Interested Directors may
be counted in determining the presence of a quorum at a meeting of the Board of
Directors or committee which authorizes the contract or transaction.
ARTICLE SIX
OFFICERS, AGENTS AND EMPLOYEES
6.1 General Provisions. The officers of the corporation shall be a
------------------
President and a Secretary, and may include a Treasurer, Chairman of the Board of
Directors, one or more Vice Presidents, one or more Assistant Secretaries, and
one or more Assistant Treasurers. The officers shall be elected by the Board of
Directors at the first meeting of the Board of Directors after the annual
meeting of the shareholders in each year or shall be appointed as provided in
these bylaws. The Board of Directors may elect other officers, agents and
employees, who shall have such authority and perform such duties
-6-
<PAGE>
as may be prescribed by the Board of Directors. All officers shall hold office
until the meeting of the Board of Directors following the next annual meeting of
the shareholders after their election or appointment and until their successors
shall have been elected or appointed and shall have qualified. Any two or more
offices may be held by the same person. Any officer, agent or employee of the
corporation may be removed by the Board of Directors with or without cause.
Removal without cause shall be without prejudice to such person's contract
rights, if any, but the election or appointment of any person as an officer,
agent or employee of the corporation shall not of itself create contract rights.
The compensation of officers, agents and employees elected by the Board of
Directors shall be fixed by the Board of Directors or by a committee thereof,
and this power may also be delegated to any officer, agent or employee as to
persons under his or her direction or control. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his or her duties.
6.2 Powers and Duties of the Chairman of the Board of Directors and the
-------------------------------------------------------------------
President. The powers and duties of the Chairman of the Board of Directors and
- ---------
the President, subject to the supervision and control of the Board of Directors,
shall be those usually appertaining to their respective offices and whatever
other powers and duties are prescribed by these bylaws or by the Board of
Directors.
(a) The Chairman of the Board of Directors shall preside at all
----------------------------------
meetings of the Board of Directors and at all meetings of the shareholders. The
Chairman of the Board shall perform such other duties as the Board of Directors
may from time to time direct. The Vice-Chairman shall act as Chairman of the
Board of Directors unless another director is elected Chairman.
(b) The President shall, unless otherwise provided by the Board of
---------
Directors, be the chief executive officer of the corporation. The President
shall have general charge of the business and affairs of the corporation and
shall keep the Board of Directors fully advised. The President shall employ and
discharge employees and agents of the corporation, except such as shall be
elected by the Board of Directors, and he or she may delegate these powers. The
President shall have such powers and perform such duties as generally pertain to
the office of the President, as well as such further powers and duties as may be
prescribed by the Board of Directors. The President may vote the shares or other
securities of any other domestic or foreign corporation of any type or kind
which may at any time be owned by the corporation, may execute any shareholders'
or other consents in respect thereof and may in his or her discretion delegate
such powers by executing proxies, or otherwise, on behalf of the corporation.
The Board of Directors, by resolution from time to time, may confer like powers
upon any other person or persons.
6.3 Powers and Duties of Vice Presidents. Each Vice President shall have
------------------------------------
such powers and perform such duties as the Board of Directors or the President
may prescribe and shall perform such other duties as may be prescribed by these
bylaws. In the absence or inability to act of the President, unless the Board
of Directors shall otherwise provide, the Vice President who has served in that
capacity for the longest time and who shall be present and able to act, shall
perform all duties and may exercise any of the powers of the President. The
performance of any such duty by a Vice President shall be conclusive evidence of
his or her power to act.
-7-
<PAGE>
6.4 Powers and Duties of the Secretary. The Secretary shall have charge of
----------------------------------
the minutes of all proceedings of the shareholders and of the Board of Directors
and shall keep the minutes of all their meetings at which he or she is present.
Except as otherwise provided by these bylaws, the Secretary shall attend to the
giving of all notices to shareholders and Directors. He or she shall have
charge of the seal of the corporation, shall attend to its use on all documents
the execution of which on behalf of the corporation under its seal is duly
authorized and shall attest the same by his or her signature whenever required.
The Secretary shall have charge of the record of shareholders of the
corporation, of all written requests by shareholders that notices be mailed to
them at an address other than their addresses on the record of shareholders, and
of such other books and papers as the Board of Directors may direct. Subject to
the control of the Board of Directors, the Secretary shall have all such powers
and duties as generally are incident to the position of Secretary or as may be
assigned to the Secretary by the President or the Board of Directors.
6.5 Powers and Duties of the Treasurer. The Treasurer shall have charge of
----------------------------------
all funds and securities of the corporation, shall endorse the same for deposit
or collection when necessary and deposit the same to the credit of the
corporation in such banks or depositaries as the Board of Directors may
authorize. The Treasurer may endorse all commercial documents requiring
endorsements for or on behalf of the corporation and may sign all receipts and
all commercial documents requiring endorsements for or on behalf of the
corporation and may sign all receipts and vouchers for payments made to the
corporation. The Treasurer shall have all such powers and duties as generally
are incident to the position of Treasurer or as may be assigned to the Treasurer
by the President or by the Board of Directors.
6.6 Appointment, Powers and Duties of Assistant Secretaries. Assistant
-------------------------------------------------------
Secretaries may be appointed by the President or elected by the Board of
Directors. In the absence or inability of the Secretary to act, any Assistant
Secretary may perform all the duties and exercise all the powers of the
Secretary. The performance of any such duty shall be conclusive evidence of the
Assistant Secretary's power to act. An Assistant Secretary shall also perform
such other duties as the Secretary or the Board of Directors may assign to him
or her.
6.7 Appointment, Powers and Duties of Assistant Treasurers. Assistant
------------------------------------------------------
Treasurers may be appointed by the President or elected by the Board of
Directors. In the absence or inability of the Treasurer to act, an Assistant
Treasurer may perform all the duties and exercise all the powers of the
Treasurer. The performance of any such duty shall be conclusive evidence of the
Assistant Treasurer's power to act. An Assistant Treasurer shall also perform
such other duties as the Treasurer or the Board of Directors may assign to him
or her.
6.8 Delegation of Duties. In case of the absence of any officer of the
--------------------
corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors (or in the case of Assistant Secretaries or
Assistant Treasurers only, the President) may confer for the time being the
powers and duties, or any of them, of such officer upon any other officer or
elect or appoint any new officer to fill a vacancy created by death,
resignation, retirement or termination of any officer. In such latter event
such new officer shall serve until the next annual election of officers.
-8-
<PAGE>
ARTICLE SEVEN
CAPITAL STOCK
7.1 Certificates. (a) The interest of each shareholder shall be evidenced
------------
by a certificate or certificates representing shares of the corporation which
shall be in such form as the Board of Directors may from time to time adopt and
shall be numbered and shall be entered in the books of the corporation as they
are issued. Each certificate representing shares shall set forth upon the face
thereof the following:
(i) the name of this corporation;
(ii) that the corporation is organized under the laws of the
State of Georgia;
(iii) the name or names of the person or persons to whom the
certificate is issued;
(iv) the number and class of shares, and the designation of the
series, if any, which the certificate represents; and
(v) if any shares represented by the certificate are nonvoting
shares, a statement or notation to that effect; and, if the shares represented
by the certificate are subordinate to shares of any other class or series with
respect to dividends or amounts payable on liquidation, the certificate shall
further set forth on either the face or back thereof a clear and concise
statement to that effect.
(b) Each certificate shall be signed by the President or a Vice
President and the Secretary or an Assistant Secretary and may be sealed with the
seal of the corporation or a facsimile thereof. If a certificate is
countersigned by a transfer agent or registered by a registrar, other than the
corporation itself or an employee of the corporation, the signature of any such
officer of the corporation may be a facsimile. In case any officer or officers
who shall have signed, or whose facsimile signature or signatures shall have
been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the corporation, such certificate or certificates may nevertheless be delivered
as though the person or persons who signed such certificate or certificates or
whose facsimile signatures shall have been used thereon had not ceased to be
such officer or officers.
7.2 Shareholder List. The corporation shall keep or cause to be kept a
----------------
record of the shareholders of the corporation which readily shows, in
alphabetical order or by alphabetical index, and by classes or series of stock,
if any, the names of the shareholders entitled to vote, with the address of and
the number of shares held by each. Said record shall be presented and kept open
at all meetings of the shareholders.
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<PAGE>
7.3 Transfer of Shares. Transfers of stock shall be made on the books of
------------------
the corporation only by the person named in the certificate, or by power of
attorney lawfully constituted in writing, and upon surrender of the certificate,
or in the case of a certificate alleged to have been lost, stolen or destroyed,
upon compliance with the provisions of Section 7.7 of these bylaws.
7.4 Record Dates. For the purpose of determining shareholders entitled to
------------
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than seventy days and,
in case of a meeting of shareholders, not less than ten days, prior to the date
on which the particular action requiring such determination of shareholders is
to be taken.
7.5 Registered Owner. The corporation shall be entitled to treat the holder
----------------
of record of any share of stock of the corporation as the person entitled to
vote such share, to receive any dividend or other distribution with respect to
such share, and for all other purposes and accordingly shall not be bound to
recognize any equitable or other claim or interest in such share on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
7.6 Transfer Agent and Registrars. The Board of Directors may appoint one
-----------------------------
or more transfer agents and one or more registrars and may require each stock
certificate to bear the signature or signatures of a transfer agent or a
registrar or both.
7.7 Lost Certificates. Any person claiming a certificate of stock to be
-----------------
lost, stolen or destroyed shall make an affidavit or affirmation of the fact in
such manner as the Board of Directors may require and, if the Directors so
require, shall give the corporation a bond of indemnity in form and amount and
with one or more sureties satisfactory to the Board of Directors, whereupon an
appropriate new certificate may be issued in lieu of the certificate alleged to
have been lost, stolen or destroyed.
7.8 Fractional Shares or Scrip. The corporation may, when and if authorized
--------------------------
so to do by its Board of Directors, issue certificates for fractional shares or
scrip in order to effect share transfers, share distributions or
reclassifications, mergers, consolidations or reorganizations. Holders of
fractional shares shall be entitled, in proportion to their fractional holdings,
to exercise voting rights, receive dividends and participate in any of the
assets of the corporation in the event of liquidation. Holders of scrip shall
not, unless expressly authorized by the Board of Directors, be entitled to
exercise any rights of a shareholder of the corporation, including voting
rights, dividend rights or the right to participate in any assets of the
corporation in the event of liquidation. In lieu of issuing fractional shares
or scrip, the corporation may pay in cash the fair value of fractional interests
as determined by the Board of Directors; and the Board of Directors may adopt
resolutions regarding rights with respect to fractional shares or scrip as it
may deem appropriate, including without limitation the right for persons
entitled to receive fractional shares to sell such fractional shares or purchase
such additional fractional shares as may be needed to acquire one full share, or
sell such fractional shares or scrip for the account of such persons.
-10-
<PAGE>
ARTICLE EIGHT
BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS
8.1 Inspection of Books and Records. (a) Any person who shall be the holder
-------------------------------
of record of, or authorized in writing by the holders of record of, at least two
(2%) percent of the outstanding shares of any class or series of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine in person or by agent or attorney, at any reasonable time or
times, for any proper purpose, the books and records of account, minutes and
record of shareholders and to make extracts therefrom.
(b) A shareholder may inspect and copy the records described in the
immediately preceding paragraph only if (i) his or her demand is made in good
faith and for a proper purpose that is reasonably relevant to his or her
legitimate interest as a shareholder; (ii) the shareholder describes with
reasonable particularity his or her purpose and the records he or she desires to
inspect; (iii) the records are directly connected with the stated purpose; and
(iv) the records are to be used only for that purpose.
(c) If the Secretary or a majority of the corporation's Board of
Directors or Executive Committee members find that the request is proper, the
Secretary shall promptly notify the shareholder of the time and place at which
the inspection may be conducted.
(d) If said request is found by the Secretary, the Board of Directors
or the Executive Committee to be improper, the Secretary shall so notify the
requesting shareholder on or prior to the date on which the shareholder
requested to conduct the inspection. The Secretary shall specify in said notice
the basis for the rejection of the shareholder's request.
(e) The Secretary, the Board of Directors and the Executive Committee
shall at all times be entitled to rely on the corporate records in making any
determination hereunder.
8.2 Seal. The corporate seal shall be in such form as the Board of
----
Directors may from time to time determine. In the event it is inconvenient to
use such a seal at any time, the signature of the corporation followed by the
word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the
corporation.
8.3 Annual Statements. Not later than four months after the close of each
-----------------
fiscal year, and in any case prior to the next annual meeting of shareholders,
the corporation shall prepare:
(a) A balance sheet showing in reasonable detail the financial
condition of the corporation as of the close of its fiscal year, and
(b) A profit and loss statement showing the results of its operations
during its fiscal year. Upon written request, the corporation promptly shall
mail to any shareholder of record a copy of its most recent balance sheet and
profit and loss statement.
-11-
<PAGE>
ARTICLE NINE
INDEMNIFICATION
9.1 Authority to Indemnify. The corporation shall indemnify or obligate
----------------------
itself to indemnify an individual made a party to a proceeding because he or she
is or was a director, officer, employee or agent of the corporation (or was
serving at the request of the corporation as a director, officer or employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) for reasonable expenses, judgments, fines, penalties and amounts
paid in settlement (including attorneys' fees), incurred in connection with the
proceeding if the individual acted in manner he or she believed in good faith to
be in or not opposed to the best interests of the corporation and, in the case
of any criminal proceeding, he or she had no reasonable cause to believe his or
her conduct was unlawful. The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent
---- ----------
is not, of itself, determinative that the director, officer, employee or agent
did not meet the standard of conduct set forth above. Indemnification permitted
under this action in connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in connection with the
proceeding.
9.2 Mandatory Indemnification. The extent that a director, officer,
-------------------------
employee or agent of the corporation has been successful, on the merits or
otherwise, in the defense of any proceeding to which he or she was a party, or
in defense of any claim, issue, or matter therein , because he or she is or was
a director, officer, employee or agent of the corporation, the corporation shall
indemnify the director, employee or agent against reasonable expenses incurred
by him or her in connection therewith.
9.3 Advance for Expenses. The corporation shall pay for or reimburse the
--------------------
reasonable expenses incurred by a director, officer, employee or agent of the
corporation who is a party to a proceeding in advance of final disposition of
the proceeding if (a) he or she furnishes the corporation written affirmation of
his or her good faith belief that he or she has met the standard of conduct set
forth in Section 9.1 of this section, and (b) he or she furnishes the
corporation a written undertaking, executed personally or on his or her behalf,
to repay any advances if it is ultimately determined that he or she is not
entitled to indemnification. The undertaking required by this section must be
an unlimited general obligation but need not be secured and may be accepted
without reference to financial ability to make repayment.
9.4 Court-ordered Indemnification and Advances for Expenses. A director,
-------------------------------------------------------
officer, employee or agent of the corporation who is a party to a proceeding may
apply for indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction.
9.5 Determination of Indemnification. Except as provided in Section 9.2 and
--------------------------------
except as may be ordered by the court, the corporation may not indemnify a
director, officer, employee or agent under Section 9.1 unless authorized
thereunder and a determination has been made in the specific case that
indemnification of the director, officer, employee or agent is permissible in
the circumstances because he or she has met the standard of conduct set forth in
Section 9.1. The determination shall be made:
-12-
<PAGE>
(a) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceedings;
(b) If a quorum cannot be obtained, by majority vote of a committee
duly designated by the board of directors (in which designation directors who
are parties may participate), consisting solely of two or more directors not at
the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the board of directors or its committee in the
manner prescribed in paragraph (a) or (b) of this section; or
(ii) If a quorum of the board of directors cannot be obtained and
a committee cannot be designated, selected by majority vote of the full board of
directors (in which selection directors who are parties may participate); or
(d) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
9.6 Authorization of Indemnification. Authorization of indemnification or
--------------------------------
an obligation to indemnify and evaluation as the reasonableness of expenses
shall be made in the same manner as the determination that indemnification is
permissible, except that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to reasonableness of expenses
shall be made by those entitled under subsection (c) of Section 9.5 to select
counsel.
9.7 Other Rights. The indemnification and advancement of expenses provided
------------
by or granted pursuant to this Article Nine shall not be deemed exclusive of any
other rights, in respect of indemnification or otherwise, to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
resolution, agreement or contract either specifically or in general terms
approved by the affirmative vote of the holders of a majority of the shares
entitled to vote thereon taken at a meeting the notice of which specified that
such bylaw, resolution or agreement would be placed before the stockholders,
both as to action by a director, trustee, officer, employee or agent in his or
her official capacity and as to action in another capacity while holding such
office or position; except that no such other rights, in respect to
indemnification or otherwise, may be provided or granted to a director, trustee,
officer, employee, or agent pursuant to this Section 9.7 by the corporation for
liability for (a) any appropriation, in violation of his or her duties, of any
business opportunity of the corporation; (b) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (c) the
types of liability set forth in Section 14-2-832 of the Georgia Business
Corporation Code dealing with illegal or unauthorized distributions of corporate
assets, whether as dividends or in liquidation of the corporation or otherwise;
or (d) any transaction from which the director derived an improper material
tangible personal benefit.
9.8 Insurance. The corporation may purchase and maintain insurance on
---------
behalf of an individual who is or was a director, officer, employee, or agent of
the corporation or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a
-13-
<PAGE>
director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise against liability asserted against or incurred by him or her
in that capacity or arising from his or her status as a director, officer,
employee, or agent whether or not the corporation would have power to indemnify
him or her against the same liability under this Article Nine.
9.9 Continuation of Expenses. The indemnification and advancement of
------------------------
expenses provided by or granted pursuant to this Article Nine shall continue as
to a person who has ceased to be a director, trustee, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.
ARTICLE TEN
NOTICES: WAIVERS OF NOTICE
10.1 Notices. Except as otherwise specifically provided in these bylaws,
-------
whenever under the provisions of these bylaws notice is required to be given to
any shareholder, Director or officer, it shall not be construed to mean personal
notice, but such notice may be given by personal notice, by telegram or
cablegram, or by mail by depositing the same in the post office or letter box in
a postage prepaid sealed wrapper, addressed to such shareholder, Director or
officer at such address as appears on the books of the corporation, and such
notice shall be deemed to be given at the time when the same shall be thus sent
or mailed.
10.2 Waivers of Notice. Except as otherwise provided in these bylaws, when
-----------------
any notice is required to be given by law, by the Articles of Incorporation or
by these bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. In the case of a shareholder, such waiver of notice may
be signed by the shareholder's attorney or proxy duly appointed in writing.
ARTICLE ELEVEN
EMERGENCY POWERS
11.1 Bylaws. The Board of Directors may adopt emergency bylaws, subject to
------
repeal or change by action of the shareholders, which shall, notwithstanding any
provision of law, the Articles of Incorporation or these bylaws, be operative
during any emergency in the conduct of the business of the corporation resulting
from an attack on the United States or on a locality in which the corporation
conducts its business or customarily holds meeting of its Board of Directors or
its shareholders, or during any nuclear or atomic disaster, or during the
existence of any catastrophe, or other similar emergency condition, as a result
of which a quorum of the Board of Directors or a standing committee thereof
cannot readily be convened for action. The emergency bylaws may make any
provision that may be practical and necessary for the circumstances of the
emergency.
-14-
<PAGE>
11.2 Lines of Succession. The Board of Directors, either before or during
-------------------
any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all officers or
agents of the corporation shall for any reason be rendered incapable of
discharging their duties.
11.3 Head Office. The Board of Directors, either before or during any such
-----------
emergency, may (effective during the emergency) change the head office or
designate several alternative head offices or regional offices, or authorize the
officers to do so.
11.4 Period of Effectiveness. To the extent not inconsistent with any
-----------------------
emergency bylaws so adopted, these bylaws shall remain in effect during any such
emergency and upon its termination, the emergency bylaws shall cease to be
operative.
11.5 Notices. Unless otherwise provided in emergency bylaws, notice of any
-------
meeting of the Board of Directors during any such emergency may be given only to
such of the Directors as it may be feasible to reach at the time, and by such
means as may be feasible at the time, including publication, radio or
television.
11.6 Officers as Directors Pro Tempore. To the extent required to
---------------------------------
constitute a quorum at any meeting of the Board of Directors during any such
emergency, the officers of the corporation who are present shall, unless
otherwise provided in emergency bylaws, be deemed, in order of rank and within
the same rank in order of seniority, Directors for such meeting.
11.7 Liability of Officers, Directors and Agents. No officer, Director,
-------------------------------------------
agent or employee acting in accordance with any emergency bylaw shall be liable
except for willful misconduct. No officer, Director, agent or employee shall be
liable for any action taken by him or her in good faith in such an emergency in
furtherance of the ordinary business affairs of the corporation even though not
authorized by the bylaws then in effect.
ARTICLE TWELVE
CHECKS, NOTES, DRAFTS, ETC.
Checks, notes, drafts, acceptances, bills of exchange and other orders or
obligations for the payment of money shall be signed by such officer or officers
or person or persons as the Board of Directors by resolution shall from time to
time designate.
ARTICLE THIRTEEN
AMENDMENTS
The bylaws of the corporation may be altered or amended and new bylaws may
be adopted by the shareholders at any annual or special meeting of the
shareholders or by the Board of Directors at any regular or special meeting of
the Board of Directors; provided, however, that, if such action is to be taken
at a meeting of the shareholders, notice of the general nature of the proposed
change in the
-15-
<PAGE>
bylaws shall be given in the notice of meeting. The shareholders may provide by
resolution that any bylaw provision repealed, amended, adopted, or altered by
them may not be repealed, amended, adopted or altered by the Board of Directors.
Except as otherwise provided in the Articles of Incorporation, action by the
shareholders with respect to bylaws shall be taken by an affirmative vote of a
majority of all shares entitled to elect Directors, and action by the Board of
Directors with respect to bylaws shall be taken by an affirmative vote of a
majority of all Directors then holding office.
-16-
<PAGE>
COMMON STOCK COMMON STOCK
[LOGO OF CBC HOLDING COMPANY APPEARS HERE]
INCORPORATED UNDER THE LAWS OF SEE REVERSE FOR
THE STATE OF GEORGIA CERTAIN DEFINITIONS
CUSIP_________________
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $1.00 PAR VALUE, OF
============================= CBC HOLDING COMPANY ==============================
(hereinafter called the "Corporation"). The shares represented by this
certificate are transferable on the books of the Corporation by said owner or by
his or her duly authorized attorney, upon the surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers and its corporate seal to be hereunto
affixed.
Date:
----------------------- ----------------------
Secretary President
<PAGE>
CBC HOLDING COMPANY
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ..........Custodian..........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..........................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ____________________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
| |
| |
| |
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within names Corporation with
full power of substitution in the premises.
Dated ____________________________
________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
<PAGE>
EXHIBIT 21.1
Subsidiary of CBC Holding Company
Community Banking Company of Fitzgerald,
organized under the laws of the State of Georgia
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-19-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,955,359
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,050,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 17,900,701
<INVESTMENTS-MARKET> 17,900,701
<LOANS> 23,537,462
<ALLOWANCE> 359,146
<TOTAL-ASSETS> 53,680,223
<DEPOSITS> 46,661,100
<SHORT-TERM> 0
<LIABILITIES-OTHER> 464,081
<LONG-TERM> 0
0
0
<COMMON> 3,320,485
<OTHER-SE> 3,234,557
<TOTAL-LIABILITIES-AND-EQUITY> 53,680,223
<INTEREST-LOAN> 1,537,091
<INTEREST-INVEST> 703,077
<INTEREST-OTHER> 342,546
<INTEREST-TOTAL> 2,582,714
<INTEREST-DEPOSIT> 1,367,291
<INTEREST-EXPENSE> 1,379,152
<INTEREST-INCOME-NET> 1,203,562
<LOAN-LOSSES> 21,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,530,367
<INCOME-PRETAX> (168,208)
<INCOME-PRE-EXTRAORDINARY> (168,208)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110,439)
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<YIELD-ACTUAL> 7.76
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 389,935
<ALLOWANCE-OPEN> 385,000
<CHARGE-OFFS> 47,125
<RECOVERIES> 271
<ALLOWANCE-CLOSE> 359,146
<ALLOWANCE-DOMESTIC> 359,146
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
102 WEST ROANOKE DRIVE
FITZGERALD, GEORGIA 31750
(912) 423-4321
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD THURSDAY, MARCH 6, 1997
To the Shareholders of COMMUNITY BANKING COMPANY OF FITZGERALD:
Notice is hereby given that the Annual Shareholders' Meeting of Community
Banking Company of Fitzgerald will be held on Thursday, March 6, 1997, at 5:00
p.m., at the Charles Harris Learning Center, East Central Technical Institute
(formerly known as Ben Hill-Irwin Technical Institute), 667 Perry House Road,
Fitzgerald, Georgia 31750, for the following purposes:
1) To review the operations of the Bank since its organization;
2) To elect fourteen (14) persons to serve as directors for a one
year term; and
3) To consider and vote upon a Plan of Reorganization, a copy of
which is attached as Appendix A to the Proxy Statement accompanying this
----------
Notice, providing for the reorganization of the Bank into a holding company
structure by merging the Bank with Interim Fitzgerald Company, a wholly-
owned subsidiary of CBC Holding Company (both Interim Fitzgerald Company
and CBC Holding Company have been organized at the direction of the Bank).
If the Plan of Reorganization is consummated, shareholders dissenting from
the Plan are entitled to be paid the fair value of their shares if they comply
with the provisions of Section 7-1-537 of the Financial Institutions Code of
Georgia and Article 13 of the Georgia Business Corporation Code regarding the
rights of dissenting shareholders.
The Board of Directors has fixed the close of business on December 31,
1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
All shareholders are requested to mark, date, sign and return the enclosed
form of proxy as soon as possible. If you attend the meeting and wish to vote
your shares in person, you may do so at any time before the proxy is exercised.
By Order of the Board of Directors,
L. Wayne Lowrey
President
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MARCH 6, 1997
DATE, TIME AND PLACE OF SHAREHOLDERS' MEETING
The Shareholders' Meeting of Community Banking Company of Fitzgerald (the
"Bank") will be held on Thursday, March 6, 1997, at 5:00 p.m., at the Charles
Harris Learning Center, East Central Technical Institute (formerly known as Ben
Hill-Irwin Technical Institute), 667 Perry House Road, Fitzgerald, Georgia
31750.
PURPOSES OF SHAREHOLDERS' MEETING
The purposes of the Shareholders' Meeting of the Bank are to: (a) review
the initial operations of the Bank since its organization, (b) elect directors,
and (c) vote upon a proposal to approve the Plan of Reorganization (the
"Reorganization Plan"), dated October 25, 1996, by and among the Bank, CBC
Holding Company (the "Holding Company") and Interim Fitzgerald Company
("Interim").
SUMMARY OF REORGANIZATION
The following is a summary of certain important aspects of the
Reorganization, as defined below, and related information. The summary is
qualified in its entirety by reference to the more detailed information
appearing elsewhere in this Proxy Statement, including the appendices.
Shareholders are urged to review the entire Proxy Statement carefully.
THE REORGANIZATION
Consummation of the Reorganization Plan will result in the Bank's becoming
a wholly-owned subsidiary of the Holding Company, and Bank shareholders will
receive one share of Holding Company common stock ("Holding Company Stock"), $1
par value, for each of their shares of Bank common stock ("Bank Stock"), $5 par
value. For information concerning par value, see "Comparative Per Share
Information." To accomplish this result in conformity with applicable banking,
tax and securities laws, the Reorganization Plan provides that Interim, a
subsidiary corporation of the Holding Company, will merge into the Bank. Since
the merger of Interim into the Bank will effect the reorganization of the Bank
into a holding company structure, such merger and reorganization, collectively,
will be referred to in this Proxy Statement as the "Reorganization." The
illustration on the following page describes the structure of the
Reorganization.
2
<PAGE>
PARTIES TO THE REORGANIZATION PLAN
The Bank, chartered by the State of Georgia, is engaged in banking and
finance-related businesses. The Holding Company, a Georgia corporation, was
organized on October 15, 1996, at the direction of the Bank for the purpose of
acquiring all of the issued and outstanding Bank Stock pursuant to the
Reorganization Plan. Interim, a Georgia corporation, was organized on October
25, 1996, at the direction of the Bank. Interim is a wholly-owned subsidiary of
the Holding Company and was formed solely to facilitate the Reorganization of
the Bank. The principal executive offices of the Bank, the Holding Company and
Interim are located at 102 West Roanoke Drive, Fitzgerald, Georgia 31750,
telephone (912) 423-4321.
VOTE REQUIRED FOR REORGANIZATION
The proposal to be considered at the Shareholders' Meeting regarding the
Reorganization Plan must be approved by the affirmative vote of the holders of
two-thirds of the outstanding shares of Bank Stock. At December 31, 1996
directors and executive officers of the Bank and their affiliates owned,
directly or indirectly, 187,850 shares or 28.29% of the 664,097 outstanding
shares of Bank Stock.
BOARD RECOMMENDATION
The Board of Directors of the Bank has unanimously approved the
Reorganization and recommends that the shareholders vote in favor of the
Reorganization.
REGULATORY APPROVALS
Consummation of the Reorganization is subject to various conditions,
including approvals by federal and state bank regulatory authorities and the
shareholders of the Bank. Appropriate filings have been made with the various
bank regulatory authorities for all required approvals and are pending.
COMPARATIVE PER SHARE INFORMATION
Prior to consummation of the Reorganization, the Holding Company will
conduct no operations, and, if the Reorganization is consummated, each
outstanding share of Bank Stock will be converted into one share of Holding
Company Stock. Accordingly, pro forma combined book value per share, net income
per share and market value per share for the Holding Company are expected to be
equal to the respective historical per share amounts for the Bank. The
Reorganization will be accounted for under the pooling of interests method.
Pursuant to Georgia Banking Statutes, Banks are required to have a stated
par value of at least $5.00. Corporations, such as the Holding Company, are no
longer required to have a stated par value.
3
<PAGE>
The Board of Directors of the Bank set the Holding Company's par value at $1.00
to facilitate, among other things, the Holding Company's ability to pay
dividends to its shareholders. Par value is a historical accounting concept that
bears no relationship to the market value of the stock.
As you recall, the offering price of the Bank's common stock was $10.00 per
share. Based on the trades of which Management is aware, the Bank's common
stock since the offering has traded at $10.00 per share. In the short term, the
formation of the Holding Company should have no impact of the market value of
the stock. Over the long term, however, there is a possibility that the Holding
Company may enhance the market value of the common stock.
DISSENTERS' PROVISIONS
A shareholder who opposes the Reorganization may exercise certain statutory
rights under the Financial Institutions Code of Georgia and the Georgia Business
Corporation Code if he or she files a written objection to the proposed
Reorganization with the Bank either before the Shareholders' Meeting, or at the
meeting but before the vote on the proposed Reorganization is taken. Failure to
comply with this and all of the other statutory requirements (O.C.G.A. (S)(S) 7-
1-537 and 14-2-1301 et seq.) will constitute a waiver of the right to dissent.
(See "Statutory Provisions For Dissenting Shareholders" and Appendix B.)
----------
TAX CONSEQUENCES
The federal income tax consequences to Bank shareholders of the proposed
Reorganization will be as follows: (a) no gain or loss will be recognized by a
Bank shareholder whose Bank Stock is converted into Holding Company Stock; and
(b) if a Bank shareholder dissents to the Reorganization and receives cash in
exchange for his or her Bank Stock, such cash will be treated as received by the
shareholder as a distribution in redemption of his or her Bank Stock. (See "The
Proposed Reorganization - Tax Consequences.")
_________________________
4
<PAGE>
THE SHAREHOLDERS' MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Bank for use at the Annual
Shareholders' Meeting and at any adjournments thereof. The Shareholders'
Meeting will be held on Thursday, March 6, 1997, at 5:00 p.m., at the Charles
Harris Learning Center, East Central Technical Institute (formerly known as Ben
Hill-Irwin Technical Institute), 667 Perry House Road, Fitzgerald, Georgia
31750.
PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING
Shareholders will be asked to consider and vote on the following proposals
at the Annual Meeting:
1) To elect fourteen (14) persons as directors to serve for a term of one
year; and
2) To approve the Reorganization Plan.
PROXIES
The accompanying form of proxy is for use at the Annual Shareholders'
Meeting of the Bank. A shareholder may use this proxy if he or she is unable to
attend the meeting in person or wishes to have his or her shares voted by proxy
even if the shareholder does attend the meeting. Shareholders who sign proxies
have the right to revoke them at any time before they are voted either by
written notice of revocation which is received at the Bank's Main Office before
the meeting or by the Secretary at the meeting or by attending the meeting and
voting in person. All shares represented by valid proxies received pursuant to
this solicitation and not revoked before they are exercised will be voted as
directed, and where no direction is given, the shares represented by such
proxies will be voted in favor of the persons nominated to be elected as
directors and in favor of the Reorganization Plan. The Board of Directors of
the Bank is not aware of any other matters which may be presented for action at
the meeting, but if other matters do properly come before the meeting, it is
intended that shares represented by proxies will be voted by the persons names
in the proxies in accordance with their best judgment.
Solicitation of proxies may be made in person or by mail, telephone or
facsimile by directors, officers and regular employees of the Bank, who will not
be specially compensated for such solicitations. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward solicitation
materials to beneficial owners and to secure their voting instructions, if
necessary, and will be reimbursed for their expenses incurred in sending proxy
materials to beneficial owners. The Bank will bear the cost associated with
solicitation of proxies and other expenses associated with the Shareholders'
Meeting.
5
<PAGE>
RECORD DATE AND VOTING RIGHTS
Each shareholder of record of the Bank at the close of business on
December 31, 1996 (the "Record Date") is entitled to notice of and to vote at
the Shareholders' Meeting. As of the close of business on the Record Date, the
Bank had 10,000,000 shares of common stock, $5.00 par value, authorized, of
which 664,097 shares were issued and outstanding and held of record by 636
shareholders. Each such share is entitled to one vote on matters to be
presented at the meeting.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors proposes that the nominees listed below be re-
elected as directors of the Bank to serve a one-year term and until their
successors are duly elected and qualified.
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
NAME AGE OCCUPATION
---- --- ----------
<S> <C> <C>
S.S. (Buck) Anderson, Jr. 61 General Manager - Dixie Peanut Company
James T. Casper, III 41 Certified Public Accountant
John T. Croley, Jr. 47 Attorney
A.B.C. Dorminy, III 48 President ABCD Farms, Inc.
CEO - Farmers Quality Peanut Co.
and D&F Grain Co.
John S. Dunn 52 Owner - Shep Dunn Construction
William P. Herlovich 68 Retired Banker
Lee Phillip Liles 47 Agency Manager - Georgia Farm Bureau
Mutual Insurance Co.
L. Wayne Lowrey 40 President and CEO of the Bank
Steven L. Mitchell 39 President Mitchell Bros. Timber Co.
James A. Parrott, II 57 Owner - Standard Supply Co. & Building
Materials, Inc.
Jack F. Paulk 47 Agency Field Executive - State Farm
Insurance
George M. Ray 50 Executive Vice President & Senior
Credit
Officer for the Bank
Robert E. Sherrell 60 Attorney
John Edward Smith, III 48 Attorney
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 1.
6
<PAGE>
The following persons currently serve as officers of the Bank:
S.S. (Buck) Anderson, Jr. Chairman of the Board of Directors
L. Wayne Lowrey President and Chief Executive Officer
John T. Croley, Jr. Vice Chairman, Corporate Secretary
George M. Ray Executive Vice President, Senior Credit Officer
Becky Powell Vice President, Chief Operations Officer
Bill Marsh Assistant Vice President
Marianne Barrs Banking Officer
Corey Gibbs Banking Officer
PROPOSAL 2. THE PROPOSED REORGANIZATION
At the meeting, shareholders of the Bank will consider and vote upon the
Reorganization Plan which, if implemented, will result in the Bank's becoming a
wholly-owned subsidiary of the Holding Company. Reference is made to the copy
of the Reorganization Plan set forth in full as Appendix A to this Proxy
----------
Statement for a complete statement of the terms of the proposed Reorganization.
The statements contained herein with respect to the Reorganization Plan are
qualified in their entirety by the foregoing reference.
PARTIES TO THE REORGANIZATION PLAN
The Bank is a commercial bank company organized and operating pursuant to
the Financial Institutions Code of Georgia.
The Holding Company is a Georgia corporation organized at the direction of
the Bank. As of the close of business on the Record Date, the Holding Company
had 10,000,000 shares of common stock, $1 par value, authorized, of which one
share was issued and outstanding. At present, the Holding Company's sole
shareholder is L. Wayne Lowrey, but upon consummation of the Reorganization,
each present shareholder of the Bank will hold the same number of shares of
Holding Company Stock as he or she held of Bank Stock held prior to the
Reorganization.
Interim is also a Georgia corporation organized at the direction of the
Bank for the sole purpose of facilitating the Reorganization. At the close of
business on the Record Date, Interim had 10,000,000 shares of common stock, $1
par value, authorized, of which one share was issued and outstanding and held of
record by the Holding Company.
TERMS OF THE REORGANIZATION PLAN
The Reorganization of the Bank into a holding company structure is proposed
to be accomplished by merging Interim into the Bank pursuant to the terms of the
Reorganization Plan. The Bank will be the survivor of the merger (the
"Resulting Bank"), and Interim will cease to exist. The
7
<PAGE>
664,097 issued and outstanding shares of common stock, $5.00 par value
("Resulting Bank Stock"), of the Resulting Bank will be owned by the Holding
Company.
The Bank's officers and directors will not be changed as a result of the
Reorganization.
If the shareholders of the Bank approve the Reorganization Plan by the
necessary vote, the merger of Interim into the Bank will be effective and the
Reorganization will be consummated as of the date (the "Effective Date of the
Reorganization") specified in the certificate of merger which will be issued by
the Georgia Secretary of State in accordance with the provisions of Section 7-1-
535 of the Financial Institutions Code of Georgia.
CONVERSION OF STOCK
On the Effective Date of the Reorganization, each issued and outstanding
share of Bank Stock and Interim Stock will be converted into the consideration
described below:
(a) Each share of Bank Stock will be converted into one share of Holding
Company Stock.
(b) The one share of Interim Stock held of record by the Holding Company
will be converted into 664,097 shares of Resulting Bank Stock.
On the Effective Date of the Reorganization, the Resulting Bank will also
distribute an amount equal to the capital and surplus of Interim ($1) to the
Holding Company, and the Holding Company will use this distribution to redeem,
at cost, the one organization share of Holding Company Stock issued to L. Wayne
Lowrey.
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date of the Merger, the Holding Company will
mail a form of letter of transmittal (the "Letter of Transmittal") to
shareholders who did not perfect dissenters rights. The Letter of Transmittal
will include instructions for the exchange of stock certificates representing
Bank Stock for stock certificates representing Holding Company Stock. Upon
receipt of certificates for Bank Stock and a properly completed Letter of
Transmittal, the Holding Company will issue and mail to each holder of Bank
Stock who returns such items a certificate or certificates representing the
number of shares of Holding Company Stock to which such holder is entitled.
SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE
LETTER OF TRANSMITTAL.
After the Effective Date of the Reorganization, Bank shareholders of record
as of the Effective Date will be entitled to vote at any meeting of the
shareholders of the Holding Company regardless of whether such shareholders have
surrendered their Bank Stock certificates.
8
<PAGE>
REASONS FOR THE REORGANIZATION
The Board of Directors considered forming a bank holding company at the
same time the Bank was formed but were advised that forming a bank holding
company at that time could delay the organization process. The Agreement to
acquire the Bank South assets and liabilities in Fitzgerald had certain
deadlines that could have been jeopardized by any delay, so the Board of
Directors deferred formation of the holding company until the initial
organization of the Bank and acquisition of the Bank South branch had been
completed.
The Board of Directors of the Bank believes that the Reorganization is in
the best interests of the Bank for the following reasons:
. A holding company is a more modern corporate structure for a financial
institution.
. A holding company will have greater corporate flexibility than the
Bank, such as the ability, without regulatory approvals under certain
circumstances, to issue stock, borrow money and redeem stock.
. A holding company, subject to required approvals, can acquire
interests in and operate banks throughout Georgia and elsewhere in the
Southeast, if deemed appropriate.
. A holding company may, subject to existing laws, engage in nonbanking
activities and form nonbank subsidiaries.
. The Holding Company will have a large number of authorized shares of
Holding Company Stock available for issuance which can be issued from
time to time, if necessary, to raise additional capital, to make
acquisitions and for other proper corporate purposes without further
action by the shareholders of the Holding Company. (See "Comparative
Legal Rights of Shareholders - Authorization and Issuance of Shares.")
. The Holding Company will be able to borrow money for various corporate
purposes.
. The Holding Company will also have the authority to redeem shares of
Holding Company Stock without prior approval of the Board of Governors
of the Federal Reserve System (the "Federal Reserve") as long as (a)
its total and tier 1 risk-based capital ratios and its leverage
capital ratio exceed the thresholds for "well-capitalized" both before
and after the redemption; (b) it received a "1" or "2" rating on its
most recent examination; and (c) it is not the subject of any
unresolved supervisory issues. (See "Certain Effects of the
Reorganization -Redemption of Shares.")
. The Holding Company will be more competitive since many of the larger
banks in Georgia are already members of a multi-bank holding company
system, and many community banks in Georgia are now owned by a one-
bank holding company.
9
<PAGE>
Management believes that the power and flexibility of a holding company
structure will better enable the Bank and the Holding Company to compete with
other financial institutions and will place the Holding Company in a better
position for future growth.
At the present time, neither the Bank nor the Holding Company has any
understanding or commitments to make acquisitions or to engage in new
activities. However, management of the Holding Company believes that if the
Reorganization Plan is approved, there may be opportunities for acquisitions and
new activities for the Holding Company which the Board of Directors might
consider to be beneficial to the Holding Company and its shareholders.
REGULATORY APPROVALS AND CONDITIONS; AMENDMENT AND TERMINATION
The Board of Directors of the Bank has unanimously approved the terms of
the Reorganization and recommends that shareholders of the Bank vote in favor of
the Reorganization Plan. The directors of the Holding Company and Interim have
also unanimously approved the terms of the Reorganization.
Consummation of the Reorganization is subject to various conditions set
forth in the Reorganization Plan including the following: (a) approval of the
Reorganization Plan by the holders of at least two-thirds of the 664,097
outstanding shares of Bank Stock; (b) approval by the Federal Deposit Insurance
Corporation (the "FDIC"), the Federal Reserve and the Georgia Department of
Banking and Finance (the "Department of Banking"); and (c) shareholders who have
perfected dissenters' rights of appraisal holding no more than 66,409 shares of
Bank Stock. As of the date hereof, applications for approval have been filed
with the FDIC, the Federal Reserve and the Department of Banking and are
pending. The Bank and the Holding Company do not anticipate any difficulty in
securing the necessary regulatory approvals or in satisfying the other
conditions to consummation of the Reorganization.
The Reorganization Plan may be amended at any time before the
Reorganization becomes effective pursuant to a written agreement among the Bank,
the Holding Company and Interim; provided, however, no amendment reducing the
number of shares of Holding Company Stock to be received by shareholders of the
Bank will be valid without being approved by the shareholders of the Bank.
The Reorganization Plan may be terminated by any of the parties to the
Reorganization (a) if the number of shares of Bank Stock voted against the
Reorganization Plan makes the transaction inadvisable in the opinion of the
Board of Directors of any of the parties to the Reorganization, (b) if any
lawsuit has been instituted or threatened relating to the proposed
Reorganization which makes consummation of the Reorganization inadvisable in the
opinion of the Board of Directors of any of the parties to the Reorganization,
(c) if any of the conditions to consummation of the Reorganization have not been
satisfied or (d) if for any other reason consummation of the Reorganization is
deemed inadvisable in the opinion of the Board of Directors of any of the
parties to the Reorganization.
The review of the Bank's application by the Department of Banking does not
include an evaluation of the proposed transaction from the financial perspective
of the individual shareholders of the Bank. Further, no shareholder should
construe an approval of the application by the Department of
10
<PAGE>
Banking to be a recommendation that the shareholders vote to approve the
proposal. Each shareholder entitled to vote should evaluate the proposal to
determine the personal financial impact on him or her of the completion of the
proposed transaction. Shareholders not fully knowledgeable in such matters are
advised to obtain the assistance of competent professionals in evaluating all
aspects of the proposal including any determination that the completion of the
proposed transaction is in the best financial interest of the shareholder.
ACCOUNTING TREATMENT
The Reorganization, if completed as proposed, will be treated in the manner
of a "pooling of interests" for accounting purposes. Accordingly, under
generally accepted accounting principles, the assets and liabilities of the Bank
will be recorded on the books of the Holding Company at their respective values
on the books of the Bank at the Effective Date of the Reorganization.
TAX CONSEQUENCES
The proposed Reorganization will be treated as a reorganization under
Section 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986 (the
"Code"), or an exchange under Section 351 of the Code. In form, the merger of
-------
Interim with and into the Bank is structured to qualify as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. Since
Interim was formed solely for the purpose of participating in the
Reorganization, will engage in no other business activities, and will go out of
existence on the Effective Date of the Reorganization, special counsel to the
Bank believes that Interim's transitory existence may be disregarded for tax
purposes, and the transaction may be treated in substance as an exchange by Bank
-- ---------
shareholders of their Bank Stock for Holding Company Stock. In either case, the
federal income tax consequences of the proposed Reorganization will be as
follows:
(a) No gain or loss will be recognized by a Bank shareholder who
exchanges his or her Bank Stock for Holding Company Stock.
(b) The aggregate basis of the Holding Company Stock received by a
Bank shareholder will be the same as the aggregate basis of the Bank Stock
surrendered in exchange therefor.
(c) The holding period, if any, of the Holding Company Stock received
by a Bank shareholder will include the holding period of the Bank Stock
surrendered in exchange therefor, provided that such Bank Stock is held as a
capital asset on the Effective Date of the Reorganization.
(d) If a Bank shareholder dissents to the Reorganization and receives
cash in exchange for his or her Bank Stock (pursuant to dissenters' rights
provisions described in this Proxy Statement), such cash will be treated as
received by the shareholder as a distribution in redemption of his or her Bank
Stock, subject to the provisions and limitations of Section 302 of the Code.
The discussion does not address the tax consequences that may be relevant
to a particular shareholder, such as a shareholder who does not hold Bank Stock
as a capital asset. Each Bank
11
<PAGE>
shareholder should rely upon the shareholder's own tax advisor with respect to
the federal, state and local income tax consequences of the Reorganization.
COMPARATIVE LEGAL RIGHTS OF SHAREHOLDERS
GENERAL. At the present time, the Bank is a state-chartered commercial
bank and the rights of shareholders of the Bank are governed by the Articles of
Incorporation and Bylaws of the Bank and by the Financial Institutions Code of
Georgia and the regulations promulgated thereunder by the Department of Banking.
If the Reorganization is consummated, shareholders of the Bank will become
shareholders of the Holding Company and their rights will be governed by the
Articles of Incorporation and Bylaws of the Holding Company and by the Georgia
Business Corporation Code.
Summarized below are the material differences between the rights of
shareholders of the Bank and the rights of shareholders of the Holding Company.
AUTHORIZATION AND ISSUANCE OF SHARES. The Bank is authorized by its
Articles of Incorporation to issue a maximum of 10,000,000 shares of common
stock $5.00 par value. As of the Record Date, there were 664,097 shares of Bank
Stock issued and outstanding. The outstanding shares of Bank Stock are fully
paid and nonassessable.
The Holding Company is authorized by its Articles of Incorporation to issue
a maximum of 10,000,000 shares of common stock, $1 par value. As of the Record
Date, there was one share of Holding Company Stock issued and outstanding. Upon
consummation of the Reorganization, the Holding Company will issue 664,097
shares of Holding Company Stock to the former shareholders of the Bank, assuming
there are no dissenting shareholders. Upon their issuance, the outstanding
shares of Holding Company Stock issued pursuant to the Reorganization Plan will
be fully paid and nonassessable.
The Holding Company has a large number of authorized but unissued shares
solely as a matter of future convenience. The Holding Company intends to issue a
limited number of shares of its common stock after the Reorganization to repay
organizational expenses of the Holding Company.
Pursuant to Georgia Banking Statutes, Banks are required to have a stated
par value of at least $5.00. Corporations, such as the Holding Company, are no
longer required to have a stated par value. The Board of Directors of the Bank
set the Holding Company's par value at $1.00 to facilitate, among other things,
the Holding Company's ability to pay dividends to its shareholders. Par value
is a historical accounting concept that bears no relationship to the market
value of the stock.
As you recall, the offering price of the Bank's common stock was $10.00 per
share. Based on the trades of which Management is aware, the Bank's common
stock since the offering has traded at $10.00 per share. In the short term, the
formation of the Holding Company should have no impact of the market value of
the stock. Over the long term, however, there is a possibility that the Holding
Company may enhance the market value of the common stock.
12
<PAGE>
DIVIDENDS. Currently, the holders of shares of Bank Stock are entitled to
dividends and other distributions as and when declared by the Board of Directors
of the Bank out of the assets legally available therefor. The Bank may pay
dividends in cash, property or shares of Bank Stock provided that the payment
would not be prohibited by the Bank's Articles of Incorporation and would not
render the Bank insolvent. In addition, the Financial Institutions Code of
Georgia and the regulations promulgated thereunder by the Department of Banking
further provide (a) that dividends of cash or property may be paid only out of
the Bank's retained earnings, (b) that dividends may not be paid if the Bank's
paid-in capital and retained earnings which are set aside for dividend payment
and other distributions do not, in combination, equal at least 20% of the Bank's
capital stock, and (c) that dividends may not be paid without prior approval of
the Department of Banking if (a) the Bank's total classified assets at its most
recent examination exceed 80% of its equity capital, (b) the aggregate amount of
dividends to be declared exceeds 50% of the Bank's net profits after taxes but
before dividends for the previous calendar year or (c) the ratio of equity
capital to total adjusted assets is less than 6%. Also, the Federal Deposit
Insurance Act of 1991 (the "FDIC Act") prohibits any insured institution,
regardless of its level of capitalization, from paying any dividend if following
the payment the institution would be undercapitalized.
If the Reorganization is consummated, the holders of shares of Holding
Company Stock (the former shareholders of the Bank) will be entitled to
dividends and other distributions as and when declared by the Board of Directors
of the Holding Company out of assets legally available for dividends. Dividends
will be payable in cash, property or shares of Holding Company Stock, unless the
Holding Company is insolvent or the dividend payment would render it insolvent.
In the absence of other activities conducted by the Holding Company, its ability
to pay dividends will depend on the earnings of the Bank. Management cannot
predict with any greater certainty whether or to what extent dividends will be
paid to shareholders in the future if the Reorganization is consummated than it
could if the Reorganization were not consummated.
VOTING RIGHTS. The holders of Bank Stock and the holders of Holding
Company Stock are entitled to one vote per shares on all matters presented for
action by shareholders including elections of directors.
LIQUIDATION RIGHTS. Upon the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of either the Bank or the Holding
Company, after the payment in full of debts and other liabilities, the remaining
assets, if any, are to be distributed ratably among the shareholders.
NO PREEMPTIVE RIGHTS. Neither Bank Stock nor Holding Company Stock is
subject to preemptive rights. This means that upon a proposed sale of
additional shares of stock for cash, shareholders will not have the right to
acquire such shares in proportion to their present holdings of stock upon terms
no less favorable than those of the proposed sale. As is currently the case
with the Bank, this will permit the Board of Directors of the Holding Company to
utilize the authorized and unissued shares of Holding Company Stock as it
determines to be in the best interests of the institution and its shareholders.
REDEMPTION OF SHARES. The Bank is subject to certain regulatory
restrictions regarding the redemption of shares of Bank Stock. Under Federal
Reserve regulations, the Holding Company will have the authority to redeem
shares of Holding Company Stock without prior approval of the Federal
13
<PAGE>
Reserve System as long as (a) its total and tier 1 risk-based capital ratios and
its leverage capital ratio exceed the thresholds for "well-capitalized" both
before and after the redemption; (b) it received a "1" or "2" rating on its most
recent examination; and (c) it is not the subject of any unresolved supervisory
issues. At this time, the Holding Company does not have any plans to redeem
shares of Holding Company Stock following the Reorganization. If the Holding
Company does redeem shares of the Holding Company Stock, the methods of
redemption will be determined by the Board of Directors and may include, but
will not be limited to, pro rata selection, random selection and selection in
the discretion of the Board of Directors.
OTHER. Neither Bank Stock nor Holding Company Stock (a) is subject to
liability for further calls or to assessments by the Bank or the Holding
Company, respectively, or (b) is subject to redemption, sinking fund or
conversion provisions.
STATUTORY PROVISIONS FOR DISSENTING SHAREHOLDERS
The Reorganization Plan provides for certain dissenters rights for holders
of Bank Stock who object to the proposed Reorganization. Pursuant to Section 7-
1-537 of the Financial Institutions Code of Georgia, any holder of record of
Bank Stock who objects to the proposed Reorganization and who fully complies
with all of the provisions of Article 13 of the Georgia Business Corporation
Code (but not otherwise) shall be entitled to demand and receive payment for all
(but not less than all) of his or her shares of Bank Stock if the proposed
Reorganization is consummated.
Any shareholder of the Bank who objects to the Reorganization Plan and
desires to receive payment for his or her Bank Stock:
(a) Must file a written objection to the Reorganization Plan with the Bank
either prior to the meeting or at the meeting but before the vote is taken, and
the written objection must contain a statement that the shareholder intends to
demand payment for his or her shares if the Reorganization Plan is approved; AND
---
(b) Must either abstain from voting or vote against approval of the
Reorganization Plan; AND
---
(c) Must demand payment and deposit his or her Bank Stock certificate in
accordance with the terms of the dissenters' notice sent to the dissenting
shareholder by the Bank following approval of the Plan.
A vote against the Reorganization Plan alone will not constitute the
separate written notice and demand for payment referred to in (a) and (c) above;
dissenting shareholders must separately comply with all three conditions. Any
notice required to be given to the Bank must be forwarded to Community Banking
Company of Fitzgerald, 102 West Roanoke Drive, Fitzgerald, Georgia 31750.
Attention: L. Wayne Lowrey.
If the Reorganization Plan is approved, the Bank will mail no later than 10
days after the approval by certified mail to each shareholder who has complied
with conditions (a) and (b) above,
14
<PAGE>
written notice of such approval, addressed to the shareholder at such address as
the shareholder has furnished the Bank in writing, or, if none, at the
shareholder's address as it appears on the records of the Bank. The Bank will
set a date by which the Bank must receive the payment demand, which date may not
be fewer than 30 nor more than 60 days after the date the dissenters' notice is
delivered. The shareholder must make the written election to dissent and demand
for payment described in condition (c) above by the payment demand date as set
by the Bank.
If all conditions in (a), (b) and (c) above are complied with in full, the
Bank is required to make a written offer within ten days after receiving the
payment demand, or within ten days after the consummation of the Reorganization,
whichever is later, to each dissenting shareholder to purchase all of such
shareholder's shares of Bank Stock at a specific price. If the Bank and any
dissenting shareholder are unable to agree on the fair value of the shares
within sixty days, the Bank shall commence a proceeding in the Superior Court of
Ben Hill County, Georgia, to determine the rights of the dissenting shareholder
and the fair value of his or her shares. If the Bank does not commence the
proceeding within the sixty-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.
One of the conditions to the Reorganization Plan is that the holders of no
more than 66,409 shares of Bank Stock shall have filed notices of election to
dissent. If this condition is not satisfied, the parties to the Reorganization
Plan will not be required to consummate the Reorganization, in which event the
dissenters' rights described in this section would also terminate. However, it
is the intent of management of the Holding Company to accommodate those Bank
shareholders electing to dissent to the extent that funds may be obtained or
financing may be arranged to purchase their shares and to the extent that such
accommodation does not create tax or regulatory obstacles.
The foregoing does not purport to be a complete statement of the provisions
of Section 7-1-537 of the Financial Institutions Code of Georgia nor of Article
13 of the Georgia Business Corporation Code, and it is qualified in its entirety
by reference to said Sections, which are reproduced in full as Appendix B to
----------
this Proxy Statement.
Upon compliance with the statutory procedures, dissenting shareholders will
not have any rights as shareholders of the Bank or of the Holding Company,
including, among other things, the right to receive dividends and the right to
vote on matters submitted for shareholder consideration.
SHAREHOLDER PROPOSALS
Any Shareholder proposal intended for inclusion in the Holding Company's
proxy material for the 1998 Annual Meeting of Shareholders (assuming the Plan of
Reorganization is approved) must be received at the principal office of the
Holding Company no later than March 30, 1997.
February 10, 1997
15
<PAGE>
COMMUNITY BANKING COMPANY OF FITZGERALD
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MARCH 6, 1997
The undersigned hereby appoints L. Wayne Lowrey or S.S. (Buck) Anderson or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them or either of them to represent and to vote, as designated
below, all of the Common Stock of Community Banking Company of Fitzgerald (the
"Bank"), which the undersigned would be entitled to vote if personally present,
at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Charles Harris Learning Center, East Central Technical Institute (formerly known
as Ben Hill-Irwin Technical Institute), 667 Perry House Road, Fitzgerald,
Georgia 5:00 p.m, and at any adjournments thereof, upon the proposals described
in the accompanying Notice of the Annual Meeting and the Proxy Statement
relating to the Annual Meeting, receipt of which are hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE FOLLOWING
---
PROPOSALS.
PROPOSAL 1: To elect the fourteen (14) persons listed below to serve as
directors of the Bank for a term of one year:
S.S. (Buck) Anderson, Jr. William P. Herlovich Jack F. Paulk
James T. Casper, III Lee Phillip Liles George M. Ray
John T. Croley, Jr. L. Wayne Lowrey Robert E. Sherrell
A.B.C. Dorminy, III Steven L. Mitchell John Edward Smith, III
John S. Dunn James A. Parrott, II
[ ] FOR all nominees listed above (except as [ ] WITHHOLD authority to
indicated below). vote for all nominees
listed above.
INSTRUCTION: To withhold authority for any individual nominee, mark "FOR"
above, and write the nominee's name in this space ____________________________.
PROPOSAL 2: To reorganize the Bank pursuant to the Plan of Reorganization as
described in the Proxy Statement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION TO THE
CONTRARY IS INDICATED, IT WILL BE VOTED FOR THE PROPOSALS.
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER
MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING.
If stock is held in the name of more than one person, all holders should sign.
Signatures should correspond exactly with the name or names appearing on the
stock certificate(s). When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
----------------------------------------
Signature(s) of Shareholder(s)
---------------------------------------
Name(s) of Shareholder(s)
Date: , 1997
------------------------------
(Be sure to date your Proxy)
Please mark, sign and date this Proxy, and return it in the enclosed return-
addressed envelope. No postage necessary.
I WILL ______ WILL NOT ______ ATTEND THE ANNUAL SHAREHOLDERS MEETING.
PLEASE RETURN PROXY AS SOON AS POSSIBLE
---------------------------------------
<PAGE>
APPENDIX A
Plan of Reorganization
<PAGE>
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan"), made and entered into as of
the 25th day of October, 1996, among COMMUNITY BANKING COMPANY OF FITZGERALD
(the "Bank"), a bank organized under the laws of the State of Georgia, CBC
HOLDING COMPANY (the "Holding Company"), a Georgia corporation, and INTERIM
FITZGERALD COMPANY ("Interim"), a Georgia corporation and wholly-owned
subsidiary of the Holding Company;
WITNESSETH
==========
WHEREAS, the principal offices of the Bank, the Holding Company and
Interim are located at 102 West Roanoke Drive, Fitzgerald, Georgia 31750;
WHEREAS, the authorized capital stock of the Bank consists of
10,000,000 shares of common stock ("Bank Stock"), $5.00 par value, of which
664,097 shares are issued and outstanding;
WHEREAS, the authorized capital stock of the Holding Company consists
of 10,000,000 shares of common stock ("Holding Company Stock"), $1.00 par value,
of which one share is issued and outstanding;
WHEREAS, the authorized capital stock of Interim consists of
10,000,000 shares of common stock ("Interim Stock"), $1.00 par value, of which
one share is issued and outstanding;
WHEREAS, the respective Boards of Directors of the Bank and Interim
deem it advisable and in the best interests of the Bank and Interim and their
respective shareholders that Interim be merged with and into the Bank and, by
resolutions duly adopted, have approved and adopted this Plan and directed that
it be submitted to the respective shareholders of the Bank and Interim for their
approval; and
WHEREAS, the Board of Directors of the Holding Company has approved
and adopted this Plan, and the Holding Company has agreed to join in and be
bound hereby and to issue the shares of Holding Company Stock which shareholders
of the Bank will receive upon consummation of the Reorganization and merger as
herein provided;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of stating the method, terms
and conditions of the merger provided for herein, the mode of carrying the same
into effect, the manner and basis of converting and exchanging the shares of
Bank Stock and Interim Stock as hereinafter provided, and such other provisions
relating to the merger as the parties deem necessary or desirable, the parties
hereto agree as follows:
SECTION 1
REORGANIZATION
--------------
Pursuant to the provisions of the Financial Institutions Code of
Georgia, as amended (the "Financial Institutions Code"), and other applicable
provisions of Georgia law, Interim shall be merged with and into the Bank. The
Bank shall be the survivor of the merger (the "Resulting Bank") continuing under
the charter of the Bank and with the name "Community Banking Company of
Fitzgerald."
<PAGE>
SECTION 2
EFFECTIVE DATE OF THE REORGANIZATION
------------------------------------
The merger of Interim with and into the Bank and the reorganization of
the Bank into a holding company structure shall be effective as of the date (the
"Effective Date of the Reorganization") specified in the certificate of merger
to be issued by the Georgia Secretary of State in accordance with the applicable
provisions of the Financial Institutions Code, O.C.G.A. (S) 7-l-535(b).
Since the merger of Interim with and into the Bank will effect the
reorganization of the Bank into a holding company structure, such merger and
reorganization, collectively, shall hereinafter be referred to as the
"Reorganization."
SECTION 3
LOCATION, ARTICLES AND
----------------------
BYLAWS, MANAGEMENT AND CAPITAL
------------------------------
STRUCTURE OF THE RESULTING BANK
-------------------------------
On the Effective Date of the Reorganization:
(a) The principal office of the Resulting Bank shall be located at 102
West Roanoke Drive, Fitzgerald, Georgia 31750, or such other location where the
Bank is located immediately prior to the Effective Date of the Reorganization.
(b) The Articles of Incorporation and Bylaws of the Resulting Bank
shall be the same as the Articles of Incorporation and Bylaws of the Bank as in
effect immediately prior to the Effective Date of the Reorganization.
(c) The directors and officers of the Resulting Bank shall be the
directors and officers of the Bank immediately prior to the Effective Date of
the Reorganization. All such directors and officers of the Resulting Bank shall
serve until their respective successors are elected or appointed pursuant to the
Bylaws of the Resulting Bank.
(d) The Resulting Bank will distribute to the Holding Company all of
the capital and surplus of Interim, so that the resulting capital structure of
the Resulting Bank shall be identical to the capital structure of the Bank
immediately prior to the Effective Date of the Reorganization. The capital
structure of the Bank shall not be altered or amended by the Reorganization and
shall continue in effect as that of the Resulting Bank.
SECTION 4
EXISTENCE, RIGHTS, DUTIES, ASSETS
---------------------------------
AND LIABILITIES OF THE RESULTING BANK
-------------------------------------
(a) As of the Effective Date of the Reorganization, the existence of
Interim as a separate entity shall cease, but its existence shall continue in
the Resulting Bank.
(b) As of the Effective Date of the Reorganization, the Resulting Bank
shall have, without further act or deed, all of the properties, rights, powers,
trusts, duties and obligations of the Bank and Interim.
(c) As of the Effective Date of the Reorganization, the Resulting Bank
shall have the authority to engage only in such businesses and to exercise only
such powers as are then permissible
A-2
<PAGE>
upon the original incorporation of a bank under the Financial Institutions Code
and as are provided for in the Articles of Incorporation of the Resulting Bank,
and the Resulting Bank shall be subject to the same prohibitions and limitations
to which it would be subject upon original incorporation, except that the
Resulting Bank may engage in any business and may exercise any right that the
Bank could lawfully have exercised or engaged in immediately prior to the
Effective Date of the Reorganization.
(d) No liability of the Bank or Interim or of any of their
shareholders, directors or officers shall be affected by the Reorganization, nor
shall any lien on any property of the Bank or Interim be impaired by the
Reorganization. Any claim existing or any action pending by or against the Bank
or Interim may be prosecuted to judgment as if the Reorganization had not taken
place, or the Resulting Bank may be substituted in place of the Bank or Interim.
SECTION 5
MANNER AND BASIS OF CONVERTING SHARES OF INTERIM STOCK
------------------------------------------------------
The manner and basis of converting and exchanging the shares of
Interim Stock into shares of Resulting Bank Stock shall be as follows:
As soon as practicable after the Effective Date of the Reorganization,
the Holding Company shall, upon presentation and surrender of a certificate
representing all of the issued and outstanding shares of Interim Stock to the
Bank, as exchange agent, be entitled to receive in exchange therefor a
certificate or certificates representing all of the then outstanding shares of
Resulting Bank Stock.
SECTION 6
MANNER AND BASIS OF CONVERTING SHARES OF BANK STOCK
---------------------------------------------------
The manner and basis of converting shares of Bank Stock into shares of
Holding Company Stock, excluding those shares of Bank Stock held by shareholders
who have perfected dissenters' rights of appraisal under the applicable
provisions of the Financial Institutions Code, O.C.G.A. (S) 7-1-537, and the
Georgia Business Corporations Code, O.C.G.A. (S) 14-2-1301 et seq.
(collectively, the "Dissenters' Rights Provisions"), shall be as follows:
(a) Exchange Ratio. Each share of Bank Stock outstanding immediately
--------------
prior to the Effective Date of the Reorganization shall, by virtue of the
Reorganization and without any action on the part of the holder or holders
thereof, be converted into the right to receive one share of Holding Company
Stock.
(b) Rights of Former Bank Shareholders. As of the Effective Date of
----------------------------------
the Reorganization, each certificate theretofore representing one or more
outstanding shares of Bank Stock shall be deemed for all corporate purposes to
evidence only the right to receive a certificate representing shares of Holding
Company Stock in accordance with this Plan.
(c) Letter of Transmittal. As soon as practicable after approval of
---------------------
the Reorganization by the Bank's shareholders, a letter of transmittal shall be
mailed to each Bank shareholder as of the close of business on the date
immediately preceding the Effective Date of the Reorganization. Upon receipt of
the letter of transmittal, each holder of a certificate or certificates
theretofore representing shares of Bank Stock shall surrender such certificates
to Community Banking Company of Fitzgerald, as exchange agent, together with a
properly completed and signed letter of transmittal, and shall receive in
exchange therefor a certificate representing an equivalent number of shares of
Holding Company Stock, subject to the restrictions and conditions of this Plan.
A-3
<PAGE>
(d) Failure to Surrender Bank Stock Certificates. Until the former
--------------------------------------------
Bank shareholder surrenders his or her Bank Stock certificate or certificates to
the Bank (or suitable arrangements are made to account for any lost, stolen or
destroyed certificates according to the Bank's usual procedures), the
shareholder:
(i) shall not be issued a certificate representing the shares of
Holding Company Stock or the cash which such Bank Stock
certificate may entitle the shareholder to receive;
(ii) shall not have any voting rights in respect of the shares of
Holding Company Stock which such Bank Stock certificate may
entitle the shareholder to receive; and
(iii) shall not be paid dividends or other distributions in respect of
the shares of Holding Company Stock which such Bank Stock
certificate may entitle the shareholder to receive; instead such
dividends or distributions shall be retained, without interest,
for the shareholder's account until surrender of such Bank Stock
certificate.
SECTION 7
ACQUISITION OF DISSENTERS' BANK STOCK
-------------------------------------
Any shareholder of the Bank who fully complies with the Dissenters' Rights
Provisions shall be paid an amount of cash (as determined under such Provisions)
for his or her shares of Bank Stock by the Bank. Immediately upon the Bank's
acquisition of any of Bank Stock from its shareholders pursuant to the
Dissenters' Rights Provisions, the Holding Company shall acquire such shares
from the Bank for the same price as shall have been paid by the Bank to the
dissenting shareholders. The shares of Bank Stock so acquired by the Holding
Company shall be cancelled.
SECTION 8
REDEMPTION OF HOLDING COMPANY STOCK
-----------------------------------
As soon as practicable after the Effective Date of the Reorganization, the
Holding Company shall redeem any shares of Holding Company Stock which may have
been issued prior to the Effective Date of the Reorganization at a redemption
price equal to the same consideration paid for such shares, so that immediately
after such redemption the then outstanding shares of Holding Company Stock shall
consist solely of the shares to be issued by the Holding Company upon the
conversion of shares of Bank Stock as provided herein.
SECTION 9
FURTHER ACTIONS
---------------
From time to time, as and when requested by the Resulting Bank, or by its
successors or assigns, Interim shall execute and deliver or cause to be executed
and delivered all such deeds and other instruments, and shall take or cause to
be taken all such other actions, as the Resulting Bank, or its successors and
assigns, may deem necessary or desirable in order to vest in and confirm to the
Resulting Bank, and its successors and assigns, title to and possession of all
the property, rights, powers, trusts, duties and obligations referred to in
Section 4 hereof and otherwise to carry out the intent and purposes of this
Plan.
A-4
<PAGE>
SECTION 10
CONDITIONS PRECEDENT TO CONSUMMATION OF THE REORGANIZATION
----------------------------------------------------------
This Plan is subject to, and consummation of the Reorganization herein
provided for is conditioned upon, the fulfillment prior to the Effective Date of
the Reorganization of each of the following conditions:
(a) Approval of the Plan by the affirmative vote of the holders of at
least two-thirds of the outstanding voting shares of the Bank and Interim;
(b) The number of shares held by persons who have perfected dissenters'
rights of appraisal pursuant to the Dissenters' Rights Provisions shall not be
deemed by the parties hereto to make consummation of this Plan inadvisable and,
in any event, shall not exceed 10% of the Bank's outstanding shares (or 66,409
shares as of the date of this Agreement);
(c) Procurement of any action, consent, approval or ruling, governmental or
otherwise, which is, or in the opinion of counsel for the Bank may be, necessary
to permit or enable the Resulting Bank, upon and after the Reorganization, to
conduct all or any part of the business and activities conducted by the Bank
prior to the Reorganization; and
(d) The receipt by the Bank of a written opinion of special counsel to the
Bank that for federal income tax purposes no gain or loss will be recognized by
a Bank shareholder who exchanges his or her Bank Stock for Holding Company
Stock, as provided by this Plan.
SECTION 11
TERMINATION
-----------
In the event that:
(a) The number of shares of Bank Stock voted against the Reorganization
shall make consummation of the Reorganization inadvisable in the opinion of the
Board of Directors of the Bank, Interim or the Holding Company;
(b) Any action, suit, proceeding or claim has been instituted, made or
threatened relating to the proposed Reorganization which shall make consummation
of the Reorganization inadvisable in the opinion of the Board of Directors of
the Bank, Interim or the Holding Company;
(c) Any action, consent, approval, opinion, or ruling required to be
provided by Section 10 of this Plan shall not have been obtained; or
(d) For any other reason consummation of the Reorganization is deemed
inadvisable in the opinion of the Board of Directors of the Bank, Interim or the
Holding Company;
then this Plan may be terminated at any time before consummation of the
Reorganization by written notice, approved or authorized by the Board of
Directors of the party wishing to terminate, to the other parties. Upon
termination by written notice as provided by this Section 11, this Plan shall be
void and of no further effect, and there shall be no liability by reason of this
Plan or the termination hereof on the part of the Bank, Interim, the Holding
Company or their directors, officers, employees, agents or shareholders.
A-5
<PAGE>
SECTION 12
AMENDMENT; WAIVER
-----------------
(a) At any time before or after approval and adoption hereof by the
respective shareholders of the Bank, Interim and the Holding Company, this Plan
may be amended by agreement among the Bank, Interim and the Holding Company;
provided, however, that after the approval and adoption of this Plan by the
shareholders of the Bank, no amendment reducing the consideration payable to
Bank shareholders pursuant to Section 6(a) and (b) hereof shall be valid without
having been approved by the shareholders of the Bank in the manner required for
approval of this Plan.
(b) A waiver by any party hereto of any breach of a term or condition of
this Plan shall not operate as a waiver of any other breach of such term or
condition or of other terms or conditions, nor shall failure to enforce any term
or condition operate as a waiver or release of any other right, in law or in
equity, or claim which any party may have against another party for anything
arising out of, connected with or based upon this Plan. A waiver shall be
effective only if evidenced by a writing signed by the party who is entitled to
the benefit of the term or condition of this Plan which is to be waived. A
waiver of a term or condition on one occasion shall not be deemed to be a waiver
of the same or of any other term or condition on a future occasion.
SECTION 13
BINDING EFFECT; COUNTERPARTS; HEADINGS; GOVERNING LAW
-----------------------------------------------------
This Plan is binding upon the parties hereto and upon their successors and
assigns. This Plan may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The title of this Plan and the headings
herein set out are for convenience or reference only and shall not be deemed a
part of this Plan. This Plan shall be governed by and construed in accordance
with the laws of the State of Georgia.
[Continued on next page]
A-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Reorganization to be executed by their duly authorized officers and their bank
and corporate seals to be affixed hereto all as of the day and year first above
written.
COMMUNITY BANKING COMPANY OF FITZGERALD
[BANK SEAL] By: /s/ L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
INTERIM FITZGERALD COMPANY
[INTERIM SEAL] By: /s/ L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
CBC HOLDING COMPANY
[CORPORATE SEAL] By: /s/ L. Wayne Lowrey
-------------------
L. Wayne Lowrey
President
ATTEST:
/s/ John T. Croley, Jr.
- -----------------------
Secretary
A-7
<PAGE>
APPENDIX B
Statutory Provisions for Dissenting Shareholders
<PAGE>
GEORGIA FINANCIAL INSTITUTIONS CODE
SECTION 7-1-537
RIGHT OF SHAREHOLDER TO DISSENT
AND
GEORGIA BUSINESS CORPORATION CODE
ARTICLE 13
DISSENTERS' RIGHTS
7-1-537. RIGHT OF SHAREHOLDER TO DISSENT.
(a) A shareholder of a bank or trust company which is a party to a plan of
proposed merger or consolidation under this part who objects to the plan shall
be entitled to the rights and remedies of a dissenting shareholder as determined
under Chapter 2 of Title 14, known as the "Georgia Business Corporation Code."
[PART (B) OMITTED.]
14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his or her shares in the event of, any
of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is
required for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger;
or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholder within one year after the date of sale;
<PAGE>
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the rights of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this article may not challenge the corporate action creating his or
her entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national
<PAGE>
securities exchange or held of record by more than 2000 shareholders,
except for scrip or cash payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his or her name only if dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which dissents and his or her
other shares were registered in the names of different shareholders.
14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code Section 14-
2-1302 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Code Section 14-2-
1322.
14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his or her intent to demand payment for his or her shares if the
proposed action is effectuated; and
(2) Must not vote his or her shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his or her
shares under this article.
<PAGE>
14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his or her certificates in
accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his or her shares
under subsection (a) of this Code section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(c) A record shareholder who does not demand payment or deposit his or her
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his or her shares under this article.
<PAGE>
14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall offer to pay each dissenter who complied with Code
Section 14-2-1323 the amount the corporation estimates to be the fair value of
his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer, payment for his or
her shares shall be made within 60 days after the making of the offer or the
taking of the proposed corporate action, whichever is later.
<PAGE>
14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1422 and repeat the payment demand
procedure.
14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his or her own
estimate of the fair value of his or her shares and amount of interest due, and
demand payment of his or her estimate of the fair value of his or her shares and
interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his or her shares or that the
interest due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section unless he notifies the corporation of his or her demand in writing under
subsection (a) of this Code section within 30 days after the corporation made or
offered payment for his or her shares.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his or her own
estimate of the fair value of his or her shares and the amount of interest
due and demand payment of his or her estimate of the fair value of his or
her shares and interest due.
<PAGE>
14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the 60 day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail and publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to it. Except as
otherwise provided in this chapter, Chapter 11 of the Title 9, known as the
"Georgia Civil Practice Act," applies to any proceeding with respect to
dissenters' rights under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his or her shares,
plus interest to the date of judgment.
14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section 14-2-
1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section 14-2-
1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
<PAGE>
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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COMMUNITY BANKING COMPANY OF FITZGERALD
BALLOT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
HELD ON THURSDAY, MARCH 6, 1997
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE FOLLOWING
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PROPOSALS.
PROPOSAL 1: To elect the fourteen (14) persons listed below to serve as
directors of the Bank for a term of one year:
S.S. (Buck) Anderson, Jr. William P. Herlovich Jack F. Paulk
James T. Casper, III Lee Phillip Liles George M. Ray
John T. Croley, Jr. L. Wayne Lowrey Robert E. Sherrell
A.B.C. Dorminy, III Steven L. Mitchell John Edward Smith, III
John S. Dunn James A. Parrott, II
[ ] FOR all nominees listed above (except as [ ] WITHHOLD authority to
indicated below). vote for all nominees
listed above.
INSTRUCTION: To withhold authority for any individual nominee, mark "FOR"
above, and write the nominee's name in this space ___________________________.
PROPOSAL 2: To reorganize the Bank pursuant to the Plan of Reorganization as
described in the Proxy Statement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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Name of Shareholder*
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Street Address
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City/State/Zip
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No. of Shares Owned of Record
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Signature of Shareholder*
_________________________
* Must appear exactly as it appears on your stock certificate. If the shares
are held jointly, both owners must sign. Forms representing shares held by a
Signature of Shareholder* Signature of Shareholder* corporation, partnership or
other business entity must be signed by an officer, general partner or other
duly authorized party.
