<PAGE>
Securities and Exchange Commission
on November 20, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
Amendment No. 2
to
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
-------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-2311557
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
102 WEST ROANOKE DRIVE, FITZGERALD, GEORGIA 31750
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (912) 423-4321
--------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class to be so Registered Name of Each Exchange on Which
--------------------------------------- ------------------------------
NOT APPLICABLE Each Class is to be Registered
-------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
-----------------------------
(Title of Class)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
THE COMPANY
-----------
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
--------
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 and property from Bank South pursuant
to the Purchase and Assumption Agreement.
<PAGE>
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.
In 1996, Fitzgerald, Georgia had a population of 9,461 and Ben Hill County
had a population of 17,676. The per capita income of Ben Hill County for 1996
is estimated by the Selig Center for Economic Growth to be $18,268, with a
growth rate from 1991 of 5.3%. The estimated per capita income for 2001 is
$22,846. Employment rates have increased at a rate of 4.4% since 1991, with
7,749 persons employed as of March 1996. As a regional commercial center,
Fitzgerald has over 100 retail shops and an 80-bed full service medical center.
There are over 40 manufacturing businesses in Ben Hill County with concentration
in apparel and timberwood products. Additionally, agriculture is a major
industry segment 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 portions of
immediately surrounding counties. It's primary lending function is to provide
short and intermediate term credit to individuals, local businesses, and
agricultural enterprises. The Bank mitigates credit risks by maintaining
conservative underwriting standards, continuing training of lenders and support
personnel, and constant management of its loan and collateral portfolio.
Interest rate risk is actively managed thru variable-rate pricing and/or
utilizing short amortizing terms (3-5 years) or balloon maturities to facilitate
loan rate adjustment. Occasionally, the bank may allow longer term (over 5
years) loans at fixed interest rates. These loans were granted only when the
interest rate is clearly advantageous to the bank or when the overall customer
relationship indicates that it is in the bank's best economic interest to
accommodate the customer.
REAL ESTATE LOANS. The Bank makes and holds Real Estate loans, including
construction loans, both residential and commercial permanent financing of
residential, commercial and agricultural real estate, equity line consumer loans
and occasional closed end junior mortgages. These loans constitute 28% of the
total loan portfolio, 81% of these dollars outstanding have a fixed interest
rate and 19% a variable rate. The weighted average rate for fixed rate real
estate loans having a final maturity over 60 months, is 8.58%. Presently longer
term fixed rate residential loans outstanding are slightly higher, as a
percentage of total, than might be considered optimal; however, virtually all of
these loans originated from the portfolio purchased from Bank South and long-
term financing is no longer considered a desirable product of the Bank. The
rate impact of these loans will continue to diminish as the bank expands it's
overall portfolio and as these loans amortize and/or pay out through other
means. Meanwhile they provide a quality source of income and an asset that may
be leveraged thru borrowing from FHLB should it become advantageous to do so.
Current real estate lending is provided on a 3 to 5 year balloon basis or, when
acceptable on variable rates.
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<PAGE>
Real estate loans are normally provided to customers with acceptable
credit and ability to repay the debt at 80% loan to value as determined by
outside evaluation. Commercial real estate may require higher margins depending
on the type and quality of property under consideration. Construction loans are
based on "as built" evaluations and funds are disbursed upon officer inspection.
Due to local market characteristics, requests for speculative construction are
rare.
Equity Line credits are generally underwritten to the same criteria as
other residential real estate loans. Due to the nature of these credits as
consumer products a loan/value ratio at 90% is often acceptable. Over 99% of
equity line credits bear a rate that is variable at some function of prime.
Real Estate loans approved under reasonable underwriting standards present
a relatively low level of risk, especially in the absence of speculative
lending. The most prominent risks in this market are those associated with
declining economic conditions resulting in loss of industrial employment. Such
conditions may diminish the ability of individuals and commercial enterprises to
service real estate debt.
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 improvement, education loans and
investments. Approximately 99% of the consumer loans are fixed rate loans
generally with maturity of 3 to 5 years. The Bank currently offers home equity
lines of credit (4.6% of total loans) a variable rate consumer product. The
Bank expects that most of its consumer loans will remain fixed rate loans with
maturities of 3 to 5 years. 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
businesses whose demand for funds fall within the legal lending limits of the
Bank. This category of loans includes loans to individual, partnership or
corporate borrowers, for a variety of business purposes. Approximately 77% of
the Bank's commercial loans are fixed rate loans with maturities of 3 years or
less. The Bank expects that a majority of its commercial loans will continue to
be fixed rate loans with maturities of 3 years or less. 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 businesses under programs administered by the
Small Business Administration ("SBA"). Generally SBA guarantees repayment of up
to 90% of the loan amount subject to certain limitations. Normally these loans
have a variable interest rate. The guaranteed portion of these loans may be
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<PAGE>
sold to investors in the secondary market or held by the Bank depending upon
income and liquidity needs. Risks associated with the loans include, but are
not limited to, credit risk, e.g., fraud, bankruptcy, economic downturn,
deteriorated or non-existing collateral and operational risk, e.g., failure to
adhere to SBA funding and servicing requirements in order to maintain the SBA
guarantees and servicing rights.
AGRICULTURAL LOANS. The Bank makes loans to agricultural producers and to
agriculture-related businesses. While approximately 87% of the agriculture-
related loans are fixed rate, terms are generally 12 months or less for
operating line and 3 to 5 years for all other debt. The Bank expects that it
will continue to have a majority of its agricultural loans with fixed rates and
maturities of 12 months or less for operating lines and 3 to 5 years for other
agricultural loans. Risks associated with such loans include, but are not
limited to inclement weather, general economic downturn, changes in market
prices of the underlying commodities produced, fraud, bankruptcy, deteriorated
and non-existing collateral and adverse fluctuations in interest
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 Untied 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.
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<PAGE>
EMPLOYEES
As of April 21, 1997 the Bank had 25 full-time employees and 2 part-time
employees.
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.
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<PAGE>
STATISTICAL DISCLOSURE
<TABLE>
<CAPTION>
I. DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
THREE MONTHS ENDED MARCH 31, 1997 PERIOD ENDED DECEMBER 31, 1996
Average Interest Tax-Equivalent Average Interest Tax-Equivalent
Balance Income/Expense Yield Balance Income/Expense Yield
-------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans 25,348,682 581,925 9.18% 23,806,046 1,537,091 9.22%
Taxable investment
securities 18,424,323 287,462 6.24% 15,894,325 703,077 6.32%
Tax-exempt investment
securities - - - -
Federal funds sold 2,923,231 37,872 5.18% 7,574,239 342,546 6.46%
-------------------------------------------- -----------------------------------------------
Average earning assets 46,696,236 907,259 7.77% 47,274,610 2,582,714 7.80%
-------------------------------------------- -----------------------------------------------
Cash & due from banks 1,386,805 1,363,146
Fixed assets 2,146,713 2,123,536
Other assets 3,037,820 3,140,019
---------- ----------
Average total assets 53,267,574 53,901,311
---------- ----------
Interest bearing demand
deposits 8,183,978 44,039 2.15% 7,421,015 114,325 2.20%
Savings and money market
deposits 6,023,386 47,475 3.15% 5,707,675 127,910 3.20%
Time deposits 27,490,702 403,952 5.88% 27,239,752 1,125,056 5.90%
Short term borrowings 73,736 1,727 9.37% 142,150 11,861 11.92%
-------------------------------------------- -----------------------------------------------
Average interest bearing
liabilities 41,771,802 497,193 4.76% 40,510,592 1,379,152 4.86%
-------------------------------------------- -----------------------------------------------
Non-interest bearing
deposits 4,664,217 6,507,751
Other liabilities 311,480 349,313
Stockholders' equity 6,520,075 6,533,655
---------- ----------
Average total liabilities
and equity 53,267,574 53,901,311
---------- ----------
Net interest income yield
on average earning assets 46,696,236 410,066 3.51% 47,274,610 1,203,562 3.64%
-------------------------------------------- -----------------------------------------------
Notes:
1. Non-accruing loans are included in the average balances. For March 31, 1997 and December 31, 1996, average non-accruing
loans were $5,214 and $0, respectively.
2. Loan Fees are included in the interest computation and were $17,344 and $37,793 as of March 31, 1997 and December 31, 1996,
respectively.
3. Yield for Period Ended December 31, 1996 is calculated based on bank operations beginning April 18, 1996.
4. Changes in Interest Income and Interest Expense not presented as December 31, 1996 is the first year of operation.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
II. INVESTMENT PORTFOLIO
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AS OF MARCH 31, 1997
U. S. Treasury 3,512,228 - 9,402 3,502,826
U.S. Government Agencies 14,860,196 - 123,700 14,736,496
-
- -----------------------------------------------------------------------------------------------
Total 18,372,424 - 133,102 18,239,322
- -----------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- -----------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1996
U. S. Treasury 4,006,354 9,122 - 4,015,476
U.S. Government Agencies 13,857,211 28,014 - 13,885,225
- -----------------------------------------------------------------------------------------------
Total 17,863,565 37,136 - 17,900,701
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U.S. Treasury and Other
U.S. Government Agencies
Tax-Equivalent
Amortized Estimated Weighted
Cost Market Value Avg Yield
- -----------------------------------------------------------------------------------------------
AS OF MARCH 31, 1997
Due in one year or less 2,498,437 2,498,531 5.73%
Due after one year through five years 15,873,987 15,740,791 6.34%
Due after five years through ten years - -
Due after ten years - -
- -----------------------------------------------------------------------------------------------
Total 18,372,424 18,239,322 6.28%
- -----------------------------------------------------------------------------------------------
U.S. Treasury and Other
U.S. Government Agencies
Tax-Equivalent
Amortized Estimated Weighted
Cost Market Value Avg Yield
- -----------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1996
Due in one year or less 3,500,718 3,505,941 5.63%
Due after one year through five years 13,858,392 13,890,307 6.39%
Due after five years through ten years 504,455 504,453 7.11%
Due after ten years - -
- -----------------------------------------------------------------------------------------------
Total 17,863,565 17,900,701 6.26%
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
III. LOAN PORTFOLIO
As of As of
March 31, 1997 December 31, 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans secured by 1 to 4 family residential
properties 9,652,141 8,422,710
Loans secured by multi-family and
non-farm, non-residential properties 4,296,934 3,385,410
Other loans secured by real estate 1,196,129 1,205,876
Commercial and industrial loans 3,965,245 3,668,418
Loans to finance agricultural production 973,555 827,543
Consumer loans 5,644,479 5,976,108
Other loans 52,377 54,109
- ------------------------------------------------------------------------------
Subtotal 25,780,860 23,540,174
Less: Unearned income 2,978 2,712
- ------------------------------------------------------------------------------
Total 25,777,882 23,537,462
- ------------------------------------------------------------------------------
Due in one Due after one Due after
year or less through five years five years
---------------------------------------------------------------------------------
Fixed Rate Variable Rate Fixed Rate Variable Rate Fixed Rate Variable Rate
- -----------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 1997
Loans secured by 1 to 4 family residential
properties 1,451,433 943,569 2,922,341 - 4,334,798 -
Loans secured by multi-family and
non-farm, non-residential properties 774,830 1,791,935 1,193,214 - 536,955 -
Other loans secured by real estate 642,167 122,671 291,843 - 139,448 -
Commercial and industrial loans 889,734 1,637,097 1,257,882 - 180,532 -
Loans to finance agricultural production 468,176 267,707 237,672 - - -
Consumer loans 1,234,934 105,757 3,882,895 - 417,926 -
Other loans - - 52,366 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total 5,461,274 4,868,736 9,838,213 - 5,609,659 -
- -----------------------------------------------------------------------------------------------------------------------------------
Due in one Due after one Due after
year or less through five years five years
---------------------------------------------------------------------------------
Fixed Rate Variable Rate Fixed Rate Variable Rate Fixed Rate Variable Rate
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
Loans secured by 1 to 4 family residential
properties 916,493 658,151 2,525,527 - 4,322,539 -
Loans secured by multi-family and
non-farm, non-residential properties 665,451 1,657,685 578,862 - 483,412 -
Other loans secured by real estate 514,259 22,453 346,194 - 322,970 -
Commercial and industrial loans 902,118 1,321,390 1,288,897 - 156,013 -
Loans to finance agricultural production 173,520 390,142 263,881 - - -
Consumer loans 1,693,994 1,551,661 2,493,604 - 234,319 -
Other loans - - 53,927 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total 4,865,835 5,601,482 7,550,892 - 5,519,253 -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
RISK ELEMENTS
As of As of
Nonaccrual, Past Due and Restructured Loans March 31, 1997 December 31, 1996
- --------------------------------------------------------------------------------
Nonaccrual loans 7,821 -
Accruing loans contractually past due 90
days or more - -
Troubled debt restructurings - -
The amount of interest that would have been included in income on the above
nonaccrual loan if it had been current in accordance with its original term was
$743. The amount of interest that was included in interest on the above loan for
the Quarter Ended March 31, 1997 was $0.
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.
Potential Problem Loans
- -----------------------
Management expects to incur losses on loans from time to time when borrowers'
financial conditions deteriorate. Where feasible, loans charged down or charged
off will continue to be collected. Management considers the current allowance
adequate to cover potential losses in the loan portfolio.
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<PAGE>
<TABLE>
<CAPTION>
IV. SUMMARY OF LOAN LOSS EXPERIENCE
As of As of
March 31, 1997 December 31, 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Allowance for possible loan losses, beginning of period 359,146 385,000
Charge-offs:
Commercial - 5,270
Real estate - construction - -
Real estate - mortgage - -
Consumer loans 8,603 41,855
- ----------------------------------------------------------------------------------------------------
Total 8,603 47,125
- ----------------------------------------------------------------------------------------------------
Recoveries:
Commercial - -
Real estate - construction - -
Real estate - mortgage - -
Consumer loans 25 271
- ----------------------------------------------------------------------------------------------------
Total 25 271
Net charge-offs: 8,578 46,854
Additions charged to operations 10,500 21,000
Adjustments - -
--------------------------------------
Allowance for possible loan losses, end of period 361,068 359,146
--------------------------------------
Average loans outstanding, net of unearned income 25,348,682 23,806,046
--------------------------------------
Ratio of net charge-offs during the period to average loans
outstanding during the period 0.03% 0.20%
======================================
</TABLE>
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 quarterly 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 quarter. 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.
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<TABLE>
<CAPTION>
V. DEPOSITS
Average Average Average Average
Balance Rate Balance Rate
March 31, 1997 March 31, 1997 December 31, 1996 December 31, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-interest bearing deposits 4,664,217 6,507,751
Interest bearing demand deposits 8,183,978 2.00% 7,421,015 2.00%
Savings and money market deposits 6,023,386 3.24% 5,707,675 3.23%
Time deposits 27,490,702 5.95% 27,239,752 5.87%
- ----------------------------------------------------------------------------------------------------------------------------------
Total average deposits 46,362,283 4.30% 46,876,193 4.12%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1997 and December 31, 1996 the amount outstanding of time
certificates of deposit of $100,000 or more was $6,082,958 and $6,240,653,
respectively. Amounts by time remaining until maturity on time deposits of
$100,000 or more were:
As of As of
March 31, 1997 December 31, 1996
----------------------------------------
3 months or less 1,790,089 838,716
over 3 through 6 months 620,298 1,682,762
over 6 through 12 months 2,568,958 1,170,828
over 12 months 1,103,613 2,548,347
----------------------------------------
6,082,958 6,240,653
----------------------------------------
VI. RETURN ON EQUITY AND ASSETS
Ratio Ratio
Three Months Ended Period Ended
March 31, 1997 December 31, 1996
-------------------------------------------
Return on average assets 0.06% -0.29%
Return on average equity 0.47% -2.41%
Dividend payout ratio 0% 0%
Average equity to average asset ratio 12.24% 12.12%
VII. SHORT-TERM BORROWINGS
No category of short-term borrowings exceeds 30% of stockholders' equity.
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<PAGE>
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 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.
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<PAGE>
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 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
-12-
<PAGE>
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.
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
-13-
<PAGE>
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 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.
-14-
<PAGE>
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.
-15-
<PAGE>
The capital levels established for each of the categories are as follows:
<TABLE>
<CAPTION>
Total Tier 1 Risk-
Capital Category Tier 1 Capital Risk-Based Capital Based Capital Other
==========================================================================================
<S> <C> <C> <C> <C>
Well Capitalized 5% or more 10% or more 6% or more Not subject
to a capital
directive
- ------------------------------------------------------------------------------------------
Adequately
Capitalized 4% or more 8% or more 4% or more --
- ------------------------------------------------------------------------------------------
Undercapitalized less than 4% less than 8% less than 4% --
- ------------------------------------------------------------------------------------------
Significantly
Undercapitalized less than 3% less than 6% less than 3% --
- ------------------------------------------------------------------------------------------
Critically 2% or less -- -- --
Undercapitalized tangible equity
==========================================================================================
</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;
-16-
<PAGE>
(b) adequately capitalized; and (c) undercapitalized. These three categories
are substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category 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).
-17-
<PAGE>
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 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.
-18-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
GENERAL
-------
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 $10.00 per
share. The Bank was capitalized with $3,320,485 of common stock, par value
$5.00 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.
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 Maximum Actual
Under DBF Offering Proceeds
Condition Use
------------------------------------
<S> <C> <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>
-19-
<PAGE>
(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.
<TABLE>
<CAPTION>
LIABILITIES ASSUMED AND ASSETS ACQUIRED:
<S> <C>
Customer deposits assumed $43,698,774
Accrued interest payable on deposits 356,810
- -------------------------------------------------------------------------------
Total liabilities 44,055,584
assumed
- -------------------------------------------------------------------------------
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 26,227,419
acquired
- -------------------------------------------------------------------------------
Net cash $17,828,165
received from
acquisition
- -------------------------------------------------------------------------------
</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.
-20-
<PAGE>
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.
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.
-21-
<PAGE>
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.
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 owns the property on which its 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.
-22-
<PAGE>
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.
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
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of
Beneficial Owner/1/ Shares Percent of Class
------------------- --------- ----------------
<S> <C> <C>
L. Wayne Lowrey 1,000/9/ 0.15%
1072 Roanoke Drive Extension
Fitzgerald, Georgia 31750
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, as 182,600 27.6%
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
-24-
<PAGE>
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.
/5/ Consists of (i) 10,000 shares owned by ABCD Farms, Inc. of which Mr.
Dorminy is President; (ii) 7,500 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.
-25-
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The table below sets forth for each director and executive officer (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.
<TABLE>
<CAPTION>
NAME AGE OCCUPATION
- -------------------------------- --- -----------------------------------
<S> <C> <C>
Sidney S. (Buck) Anderson, Jr. 61 Chairman of the Board of the
Company and the Bank, General
Manager - Dixie Peanut Company
James Thomas Casper, III 41 Certified Public Accountant -
Worthington and Casper, CPA, PC
John T. Croley, Jr. 47 Secretary and Vice Chairman of the
Company and the Bank; Attorney -
sole practitioner
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, National Bank of
Fitzgerald and First State Bank of
Fitzgerald
Lee Phillip Liles 47 Agency Manager - Georgia Farm
Bureau Mutual Insurance Co.
L. Wayne Lowrey 40 President and CEO of the Company
and 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 - Jay, Sherrell & Smith
John Edward Smith, III 48 Attorney - Jay, Sherrell & Smith
</TABLE>
-26-
<PAGE>
Each of the directors serves a term of one year and is subject to reelection
at the Company's Annual Meeting of Shareholders.
Prior to becoming President and Chief Executive Officer of the Company and
the Bank, Mr. Lowrey was President of Bank South - Fitzgerald from April 1995
until 1996. He was employed by Bank South from 1986 until 1996.
Mr. Ray was employed as Executive Vice President and Senior Credit Officer
of the Bank of Villa Rica from June 1993 until February of 1996 when he came to
the Bank. From 1968 until 1993, Mr. Ray was employed by NationsBank of Georgia,
N.A. (and its predecessors) in various capacities.
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>
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.
-27-
<PAGE>
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 July 15, 1997,
the aggregate outstanding balance of all such loans was approximately
$1,848,906.75 or approximately 28% 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. 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
-28-
<PAGE>
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
-------------
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
-29-
<PAGE>
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 June 30, 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.
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, 1996,
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.
-30-
<PAGE>
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 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 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."
-31-
<PAGE>
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.
-32-
<PAGE>
CBC HOLDING COMPANY
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are provided for CBC Holding Company and the
subsidiary bank, Community Banking Company of Fitzgerald.
A. Consolidated Balance Sheets - June 30, 1997 and December 31, 1996.
B. Consolidated Statements of Income - For the Six Months Ended June 30,
1997 and the Period Ended June 30, 1996 and For the Three Months Ended
June 30, 1997.
C. Consolidated Statements of Cash Flows - For the Six Months Ended June
30, 1997 and the Period Ended June 30, 1996.
The consolidated financial statements furnished have not been examined by
independent certified public accountants, but reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations for the periods presented.
The results of operations for the six month period ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
Since the company began operations on April 18, 1996, the statement of income
for the period ended June 30, 1996 reflects operations from April 18, 1996 to
June 30, 1996. This period is provided in lieu of comparative statements for
the three month and six month periods ended June 30, 1996.
-2-
<PAGE>
CBC HOLDING COMPANY
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
As of June 30, As of December 31,
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,934,936 $ 1,955,359
Federal funds sold - 5,050,000
- -----------------------------------------------------------------------------------------------------
Total cash and cash equivalents 1,934,936 7,005,359
- -----------------------------------------------------------------------------------------------------
Securities available for sale, at fair value 17,406,176 17,900,701
Loans, net of unearned income 28,111,684 23,537,462
Allowance for loan losses (374,828) (359,146)
- -----------------------------------------------------------------------------------------------------
Loans, net 27,736,856 23,178,316
- -----------------------------------------------------------------------------------------------------
Bank premises and equipment, less accumulated depreciation 2,144,210 2,156,655
Accrued interest receivable 621,500 548,427
Intangible assets, net of amortization 2,656,290 2,565,772
Other assets and accrued income 185,415 324,993
- -----------------------------------------------------------------------------------------------------
TOTAL ASSETS $52,685,383 $53,680,223
=====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits $ 5,105,622 $ 5,148,136
Interest-bearing demand deposits 11,464,131 11,291,918
Savings deposits 2,529,428 2,490,421
Time deposits $100,000 or more 5,641,448 6,240,653
Other time deposits 20,514,000 21,489,972
- -----------------------------------------------------------------------------------------------------
Total deposits 45,254,629 46,661,100
Accrued interest payable 215,927 330,532
Federal funds purchased 460,000 -
Other liabilities and accrued expenses 159,128 133,549
Other borrowings 35,000 -
- -----------------------------------------------------------------------------------------------------
Total liabilities 46,124,684 47,125,181
- -----------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock, $1.00 par, authorized 10,000,000 shares, issued
and outstanding 664,097 shares 664,097 664,097
Paid-in capital surplus 5,976,873 5,976,873
Accumulated deficit (98,360) (110,439)
Unrealized holding losses on available for sale securities, net
of tax 18,089 24,511
- -----------------------------------------------------------------------------------------------------
Total shareholders' equity 6,560,699 6,555,042
- -----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $52,685,383 $53,680,223
=====================================================================================================
</TABLE>
-3-
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED) (Unaudited) (Unaudited)
Six Months Period Ended Three Months
Ended June 30, June 30, Ended June 30,
1997 1996 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,212,236 $411,586 $630,311
Interest on federal funds sold 57,184 200,158 19,312
Interest on securities - U. S. Governmental agencies 568,599 168,775 281,137
and corporations
- ------------------------------------------------------------------------------------------------------
Total interest income 1,838,019 780,519 930,760
- ------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on NOW and money market deposits 145,349 54,908 71,970
Interest on savings deposits 36,694 14,111 18,559
Interest on time deposits 804,733 311,895 400,781
Other interest expense 3,618 7,784 1,891
- ------------------------------------------------------------------------------------------------------
Total interest expense 990,394 388,698 493,201
- ------------------------------------------------------------------------------------------------------
Net interest income before loan losses 847,625 391,821 437,559
Less - provision for loan losses 21,000 - 10,500
- ------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 826,625 391,821 427,059
- ------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME:
Service charges on deposit accounts 117,362 33,024 56,954
Other service charges, commissions and fees 23,426 12,167 13,104
Other income 4,257 7,079 2,114
- ------------------------------------------------------------------------------------------------------
Total other operating income 145,045 52,270 72,172
- ------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries 341,873 154,542 170,438
Employee benefits 87,391 36,925 41,625
Net occupancy expenses 86,723 21,883 47,413
Equipment rental and depreciation of equipment 60,646 21,001 30,338
Amortization 110,282 43,727 55,142
Other expenses 266,453 141,160 147,713
- ------------------------------------------------------------------------------------------------------
Total other operating expenses 953,368 419,238 492,669
- ------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 18,302 24,853 6,562
Less - provision for income taxes 6,223 8,472 2,226
- ------------------------------------------------------------------------------------------------------
NET INCOME $ 12,079 $ 16,381 $ 4,336
======================================================================================================
INCOME PER SHARE - based on weighted average
outstanding shares of, 664,097 $ 0.02 $ 0.02 $ 0.01
======================================================================================================
</TABLE>
Note: Since the company began operations on April 18, 1996, the statement of
income for the period ended June 30, 1996 reflects operations from April
18, 1996 to June 30, 1996. Information for this period is provided as
comparative statements for both the three month and six month periods
ended June 30, 1996.
-4-
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED) (Unaudited)
SIX MONTHS ENDED Period Ended
June 30, June 30,
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,079 $ 16,381
Adjustments to reconcile net loss to net cash used in operating
activities:
Provision for loan losses 21,000 -
Depreciation 59,455 20,420
Amortization of intangible assets 110,282 43,727
Changes in accrued income and other assets (56,318) (467,590)
Changes in accrued expenses and other liabilities 36,116 7,036
- -----------------------------------------------------------------------------------------------------
Net cash used in operating activities 182,614 (380,026)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in loans made to customers (2,341,042) (2,558,173)
Net change in available for sale securities 833,146 (14,181,485)
Purchases of property and equipment (56,428) 314,787
Proceeds from issuance of short term borrowings and federal
funds purchased 470,000 -
- -----------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,094,324) (16,424,871)
- -----------------------------------------------------------------------------------------------------
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 694,744 2,254,260
Net change in other time deposits (1,271,916) 145,624
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (577,172) 26,869,019
- -----------------------------------------------------------------------------------------------------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (1,488,882) 10,064,122
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,423,818 -
- -----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,934,936 $ 10,064,122
=====================================================================================================
</TABLE>
-5-
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
- -------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accounting and reporting policies of CBC Holding Company 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 - 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.
On March 31, 1997, the Company acquired Community Banking Company of
Fitzgerald in a business combination accounted for as a pooling of
interests. Community Banking Company of Fitzgerald which engages in
banking, became a wholly owned subsidiary of the Company through the
exchange of 664,097 shares of the Company's common stock for all of the
outstanding stock of Community Banking Company of Fitzgerald. The
accompanying financial statements for the six months ended June 30, 1997
are based on the assumption that the companies were combined for the full
year, and the financial statements of prior years have been restated to
give effect to the combination.
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 Corporation'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
Company 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. Loans are generally placed on nonaccrual status when full
payment of principal or interest is in doubt, or when they are past due 90
days as to either principal or interest. Senior management may grant a
waiver from nonaccrual status if a past due loan is well secured and in
process of collection. A nonaccrual loan may be restored to accrual
status when all principal and interest amounts contractually due,
including arrearages, are reasonably assured of repayment within a
reasonable period, and there is a sustained period of performance by the
borrower in accordance with the contractual terms of the loan. 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
-6-
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
- -------------------------------------------------------------------------------
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 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. The Bank evaluates a loan for impairment when
it is placed on non-accrual status and all or a portion is internally risk
rated as substandard or doubtful. 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. These standards do not apply
to larger groups of smaller-balance, homogenous loans and therefore are
principally relevant to commercial loans. For purposes of applying these
standards, the Bank considers consumer loans and other collateral based
loans of less than $41,000 to be smaller-balance, homogeneous loans.
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
-7-
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
- -------------------------------------------------------------------------------
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. 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.
B. 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 June 30, 1997, the
Bank meets all capital adequacy requirements to which it is subject. As of
June 30, 1997, the most recent notification from the FDIC categorized the Bank
as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized the Bank must maintain minimum
total risk-based, and Tier I leverage ratios as set forth 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 June 30, 1997
Total Capital To
(Risk Weighted Assets) 4,446,000 13.9% 2,566,000 (equal to or greater than)8.0% 3,208,000 (equal to or greater than)10.0%
Tier I Capital To
(Risk-Weighted Assets) 4,071,000 12.7% 1,283,000 (equal to or greater than)4.0% 1,925,000 (equal to or greater than) 6.0%
Tier I Capital To
(Average Assets) 4,071,000 8.08% 2,016,000 (equal to or greater than)4.0% 2,520,000 (equal to or greater than) 5.0%
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
----------------- -------------------------------------- -----------------------------------------
Amount Ratio Amount Ratio Amount Ratio
--------- ----- --------- ----------------------------- --------- ------------------------------
As of June 30, 1996
Total Capital To
(Risk Weighted Assets) 4,323,000 16.3% 2,121,000 (equal to or greater than)8.0% 2,652,000 (equal to or greater than)10.0%
Tier I Capital To
(Risk-Weighted Assets) 3,964,000 14.9% 1,064,000 (equal to or greater than)4.0% 1,596,000 (equal to or greater than) 6.0%
Tier I Capital To
(Average Assets) 3,964,000 7.74% 2,048,000 (equal to or greater than)4.0% 2,560,000 (equal to or greater than) 5.0%
</TABLE>
-8-
<PAGE>
CBC HOLDING COMPANY
FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are provided for CBC Holding Company and the
subsidiary bank, Community Banking Company of Fitzgerald (the "Bank").
A. Consolidated Balance Sheets - September 30, 1997 and December 31,
1996.
B. Consolidated Statements of Income - For the Nine Months Ended
September 30, 1997 and the Period Ended September 30, 1996 and For
the Three Months Ended September 30, 1997 and the Three Months Ended
September 30, 1996.
C. Consolidated Statements of Cash Flows - For the Nine Months Ended
September 30, 1997 and the Period Ended September 30, 1996.
The consolidated financial statements furnished have not been examined by
independent certified public accountants, but reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations for the periods presented.
The results of operations for the nine month period ended September 30, 1997 are
not necessarily indicative of the results to be expected for the full year.
Since the Bank began operations on April 18, 1996, the statement of income for
the period ended September 30, 1996 reflects operations from April 18, 1996 to
September 30, 1996.
-2-
<PAGE>
CBC HOLDING COMPANY
BALANCE SHEETS
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
As of September 30, As of December 31,
1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 1,365,846 $ 1,955,359
Federal funds sold 940,000 5,050,000
- -------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 2,305,846 7,005,359
- -------------------------------------------------------------------------------------------------------------------
Securities available for sale, at fair value 12,477,967 17,900,701
Loans, net of unearned income 31,655,761 23,537,462
Allowance for loan losses (383,390) (359,146)
- -------------------------------------------------------------------------------------------------------------------
Loans, net 31,272,371 23,178,316
- -------------------------------------------------------------------------------------------------------------------
Bank premises and equipment, less accumulated depreciation 2,123,636 2,156,655
Accrued interest receivable 607,944 548,427
Intangible assets, net of amortization 2,573,032 2,565,772
Other assets and accrued income 95,274 324,993
- -------------------------------------------------------------------------------------------------------------------
Total Assets $ 51,456,070 $ 53,680,223
===================================================================================================================
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing demand deposits $ 5,136,640 $ 5,148,136
Interest-bearing demand deposits 10,792,875 11,291,918
Savings deposits 2,659,129 2,490,421
Time deposits $100,000 or more 6,491,079 6,240,653
Other time deposits 19,350,431 21,489,972
- -------------------------------------------------------------------------------------------------------------------
Total deposits 44,430,154 46,661,100
Accrued interest payable 235,109 330,532
Federal funds purchased -- --
Other liabilities and accrued expenses 123,305 133,549
Other borrowings 55,000 --
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 44,843,568 47,125,181
- -------------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock, $1.00 par value, authorized 10,000,000 shares,
issued and outstanding 664,097 shares 664,097 664,097
Paid-in capital surplus 5,976,873 5,976,873
Accumulated deficit (86,124) (110,439)
Unrealized holding losses on securities, net of tax 57,656 24,511
- -------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 6,612,502 6,555,042
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 51,456,070 $ 53,680,223
===================================================================================================================
</TABLE>
-3-
<PAGE>
CBC HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months Period Three Months Three Months
Ended Ended Ended Ended
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 1,919,307 $ 979,008 $ 707,071 $ 567,422
Interest on federal funds sold 66,725 263,880 9,541 63,722
Interest on securities - U.S. Governmental agencies
and corporations 800,405 430,654 231,806 261,879
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 2,786,437 1,673,542 948,418 893,023
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest on NOW and money market deposits 216,227 121,671 70,878 66,763
Interest on savings deposits 56,499 31,439 19,805 17,328
Interest on time deposits 1,183,861 715,854 379,128 403,959
Other interest expense 6,212 7,930 2,594 146
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense 1,462,799 876,894 472,405 488,196
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income before loan losses 1,323,638 796,648 476,013 404,827
Less - provision for loan losses 31,500 10,500 10,500 10,500
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 1,292,138 786,148 465,513 394,327
- ------------------------------------------------------------------------------------------------------------------------------------
Other Operating Income:
Service charges on deposit accounts 180,225 78,796 62,863 45,772
Other service charges, commissions and fees 34,526 18,653 11,100 6,486
Other income 18,497 9,095 14,240 2,016
- ------------------------------------------------------------------------------------------------------------------------------------
Total other operating income 233,248 106,544 88,203 54,274
- ------------------------------------------------------------------------------------------------------------------------------------
Other Operating Expenses:
Salaries 516,676 336,236 174,803 181,694
Employee benefits 129,797 80,472 42,406 43,547
Net occupancy expenses 134,388 61,755 47,665 39,872
Equipment rental and depreciation of equipment 94,163 47,641 33,517 26,640
Amortization 168,381 98,565 55,140 54,838
Other expenses 429,486 372,646 135,605 231,486
- ------------------------------------------------------------------------------------------------------------------------------------
Total other operating expenses 1,472,891 997,315 489,136 578,077
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 52,495 (104,623) 64,580 (129,476)
Less - provision (benefit) for income taxes 28,180 (36,125) 21,957 (44,597)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 24,315 $ (68,498) $ 42,623 $ (84,879)
====================================================================================================================================
Income Per Share - based on weighted average
outstanding shares of 664,097 $ 0.04 $ (0.10) $ 0.06 $ (0.13)
====================================================================================================================================
</TABLE>
-4-
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months Ended Period Ended
September 30, September 30,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) $ 24,315 $ (68,489)
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 31,500 10,500
Depreciation 92,363 47,641
Amortization of intangible assets 168,381 98,565
Changes in accrued income and other assets (5,439) (656,903)
Changes in accrued in expenses and other liabilities (105,667) (149,353)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 205,453 (718,039)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Net change in loans made to customers (8,125,555) (3,653,515)
Purchases of available for sale securities (2,508,672) (18,180,483)
Proceeds from sales and maturities of available for sale securities 7,964,551 500,000
Purchase of property and equipment (59,344) 276,294
Proceeds from issuance of short term borrowings and federal funds purchased 55,000 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,674,020) (21,057,704)
- -----------------------------------------------------------------------------------------------------------------------------------
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 (341,831) 1,887,362
Net change in other time deposits (1,889,115) 58,169
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (2,230,946) 26,414,666
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (4,699,513) 4,638,923
Cash and Cash Equivalents, Beginning of Period 7,005,359 --
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 2,305,846 $ 4,638,923
===================================================================================================================================
</TABLE>
-5-
<PAGE>
CBC HOLDING COMPANY
NOTES AND MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1997
================================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accounting and reporting policies of CBC Holding Company 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 - 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.
On March 31, 1997, the Company acquired Community Banking Company of
Fitzgerald in a business combination accounted for as a pooling of
interests. Community Banking Company of Fitzgerald which engages in
banking, became a wholly owned subsidiary of the Company through the
exchange of 664,097 shares of the Company's common stock for all of
the outstanding stock of Community Banking Company of Fitzgerald. The
accompanying financial statements are based on the assumption that
the companies were combined for the full year, and the financial
statements of prior years have been restated to give effect to the
combination.
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 Corporation'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 Company 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. Loans are generally placed on nonaccrual status when
full payment of principal or interest is in doubt, or when they are
past due 90 days as to either principal or interest. Senior
management may grant a waiver from nonaccrual status if a past due
loan is well secured and in process of collection. A nonaccrual loan
may be restored to accrual status when all principal and interest
amounts contractually due, including arrearages, are reasonably
assured of repayment within a reasonable period, and there is a
sustained period of performance by the borrower in accordance with
the contractual terms of the loan. 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
-6-
<PAGE>
CBC HOLDING COMPANY
NOTES AND MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1997
================================================================================
review the bank's allowance for possible loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on
their judgment 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 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. The Bank
evaluates a loan for impairment when it is placed on non-accrual
status and all or a portion is internally risk rated as substandard
or doubtful. 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. These
standards do not apply to larger groups of smaller-balance,
homogenous loans and therefore are principally relevant to commercial
loans. For purposes of applying these standards, the Bank considers
consumer loans and other collateral based loans of less than $41,000
to be smaller-balance, homogeneous loans.
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. 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.
-7-
<PAGE>
CBC HOLDING COMPANY
NOTES AND MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1997
================================================================================
B. 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 September 30 1997 and December 31, 1996. In addition,
gross unrealized gains and gross unrealized losses are disclosed as of
September 30 1997 and 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 and market values of securities available for sale were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
September 30, 1997:
Non-mortgage backed debt securities of:
U.S. Treasury $ 1,503,014 $ 5,901 $ -- $ 1,508,915
U.S. government agencies 10,887,593 81,459 -- 10,969,052
- ----------------------------------------------------------------------------------------------------------------
Total $12,390,607 $ 87,360 $ -- $12,477,967
================================================================================================================
December 31, 1996:
Non-mortgage backed debt securities of:
U.S. Treasury $ 4,006,354 $ 9,122 $ -- $ 4,015,476
U.S. government agencies 13,857,211 28,014 -- 13,885,225
- ----------------------------------------------------------------------------------------------------------------
Total $17,863,565 $ 37,136 $ -- $17,900,701
================================================================================================================
</TABLE>
The amortized cost and estimated market value of debt securities available for
sale at September 30, 1997 and December 31, 1996, by contractual 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
- ---------------------------------------------------------------------------------------
Estimated
September 30, 1997 Amortized Cost Market Value
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 997,328 $ 1,000,220
Due after one year through five years 10,893,384 10,976,977
Due after five years through ten years 499,895 500,770
Due after ten years -- --
- ---------------------------------------------------------------------------------------
Total $12,390,607 $12,477,967
=======================================================================================
<CAPTION>
Available for Sale
- ---------------------------------------------------------------------------------------
Estimated
December 31, 1996 Amortized Cost Market Value
- ---------------------------------------------------------------------------------------
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 September 30, 1997, the Company 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.
-8-
<PAGE>
CBC HOLDING COMPANY
NOTES AND MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1997
================================================================================
C. LOANS
-----
The following is a summary of the loan portfolio by principal categories at
September 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loans secured by 1 to 4-family residential properties $ 11,460,384 $ 8,422,710
Loans secured by multi-family and non-farm, non-residential properties 4,422,974 3,385,410
Other loans secured by real estate 2,229,322 1,205,876
Commercial and industrial loans 7,617,562 4,495,961
Consumer loans 5,634,995 5,976,108
Other loans 297,063 54,109
- ---------------------------------------------------------------------------------------------------------------
Subtotal 31,662,300 23,540,174
Less: Unearned income (6,539) (2,712
Total $ 31,655,761 $ 23,537,462
===============================================================================================================
</TABLE>
D. ALLOWANCE FOR LOAN LOSSES
-------------------------
A summary of changes in allowance for loan losses of the Company for the
nine months ended September 30, 1997 and the period ended September 30,
1996 is as follows:
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Allowance for possible loan losses, beginning of period 359,146 385,000
Charge-offs (13,436) (7,942)
Recoveries 6,180 221
- ----------------------------------------------------------------------------------------------------------
Net charge-offs (7,256) (7,721)
Additions charged to operations 31,500 10,500
- ----------------------------------------------------------------------------------------------------------
Allowance for possible loan losses, end of period 383,390 387,779
- ----------------------------------------------------------------------------------------------------------
Average loans outstanding, net of unearned income 27,454,084 23,730,800
- ----------------------------------------------------------------------------------------------------------
Ratio of net charge-offs during the period to average loans
outstanding during the period 0.03% 0.03%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Nonaccrual, Past Due and Restructured Loans as of September 30,
1997 and December 31, 1996 is as follows:
September 30, 1997 December 31, 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans 6,887 -
Accruing loans contractually past due 90 days or more - -
Troubled debt restructurings - -
</TABLE>
E. 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
-9-
<PAGE>
CBC HOLDING COMPANY
NOTES AND MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30, 1997
================================================================================
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 September 30, 1997,
the Bank meets all capital adequacy requirements to which it is subject. As
of September 30, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized the Bank
must maintain minimum total risk-based, and Tier I leverage ratios as set
forth 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
Actual For Capital Under Prompt Corrective
Adequacy Purposes: Action Provisions:
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of September 30, 1997
Total Capital To Greater Than Greater Than
(Risk Weighted Assets) 4,536,000 13.2% 2,750,880 or Equal to 8.0% 3,438,600 or Equal to 10.0%
-------------------------------------------------------------------------------------------------------------------------------
Tier I Capital To Greater Than Greater Than
(Risk-Weighted Assets) 4,153,000 12.1% 1,375,440 or Equal to 4.0% 2,063,160 or Equal to 6.0%
-------------------------------------------------------------------------------------------------------------------------------
Tier I Capital To Greater Than Greater Than
(Average Assets) 4,153,000 8.3% 2,001,280 or Equal to 4.0% 2,501,600 or Equal to 5.0%
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------------------------------------------------------------------
As of September 30, 1996
Total Capital To Greater Than Greater Than
(Risk Weighted Assets) 4,158,000 13.7% 2,428,400 or Equal to 8.0% 3,035,500 or Equal to 10.0%
-------------------------------------------------------------------------------------------------------------------------------
Tier I Capital To Greater Than Greater Than
(Risk-Weighted Assets) 3,778,000 12.5% 1,214,200> or Equal to 4.0% 1,821,300 or Equal to 6.0%
-------------------------------------------------------------------------------------------------------------------------------
Tier I Capital To Greater Than Greater Than
(Average Assets) 3,778,000 7.5% 2,028,320> or Equal to 4.0% 2,535,400 or Equal to 5.0%
</TABLE>
-10-
<PAGE>
CBC HOLDING COMPANY
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
<PAGE>
CBC HOLDING COMPANY
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
INDEPENDENT ACCOUNTANT'S REPORT................................. 1
FINANCIAL STATEMENTS:
Balance Sheets................................................ 2
Statements of Changes in Shareholders' Equity................. 3
Statements of Income.......................................... 4
Statements of Cash Flows...................................... 5
Notes to Financial Statements................................. 6
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
Board of Directors
CBC Holding Company, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of CBC Holding
Company, Inc. and Subsidiary as of December 31, 1996 and the related
consolidated statement 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 audits 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 audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CBC Holding
Company, Inc. and Subsidiary at December 31, 1996, and the consolidated results
of its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Thigpen, Jones, Seaton & Co., P.C.
January 17, 1997
Dublin, Georgia
<PAGE>
CBC HOLDING COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (As Restated) As of
AS OF MARCH 31, December 31,
1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,983,818 $ 1,955,359
Federal funds sold 1,440,000 5,050,000
- --------------------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 3,423,818 7,005,359
- --------------------------------------------------------------------------------------------------------------------------------
Securities available for sale, at fair value 18,239,322 17,900,701
Loans, net of unearned income 25,777,882 23,537,462
Allowance for loan losses (361,068) (359,146)
- --------------------------------------------------------------------------------------------------------------------------------
Loans, net 25,416,814 23,178,316
- --------------------------------------------------------------------------------------------------------------------------------
Bank premises and equipment, less accumulated depreciation 2,141,183 2,156,655
Accrued interest receivable 534,200 548,427
Intangible assets, net of amortization 2,520,890 2,565,772
Organization costs 23,218 -
Other assets and accrued income 346,720 324,993
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $52,646,165 $53,680,223
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing demand deposits $ 4,570,328 $ 5,148,136
Interest-bearing demand deposits 11,416,386 11,291,918
Savings deposits 2,417,723 2,490,421
Time deposits $100,000 or more 6,082,958 6,240,653
Other time deposits 21,344,406 21,489,972
- --------------------------------------------------------------------------------------------------------------------------------
Total deposits 45,831,801 46,661,100
Accrued interest payable 226,923 330,532
Other liabilities and accrued expenses 112,016 133,549
Other borrowings 25,000 -
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 46,195,740 47,125,181
- --------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock, $1.00 par, authorized 10,000,000 shares, issued and outstanding 664,097
shares 664,097 664,097
Paid-in capital surplus 5,976,873 5,976,873
Accumulated deficit (102,698) (110,439)
Unrealized holding losses on available for sale securities, net of tax (87,847) 24,511
- --------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 6,450,425 6,555,042
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $52,646,165 $53,680,223
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements
F-2
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Additional Retained Holding
Paid-in Earnings Gains
Common Capital (Accumulated (Losses) on
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
Issuance of 664,097 shares of CBC Holding
Company common stock 664,097 5,976,873 - - 6,640,970
Cancellation of 664, 097 shares of Community
Banking Company of Fitzgerald common stock
pursuant to merger effective March 31, 1997 (3,320,485) (3,320,485) - - (6,640,970)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 AS RESTATED 664,097 5,976,873 (110,439) 24,511 6,555,042
Net income - - 7,741 - 7,741
Valuation allowance adjustment on securities
available for sale - - - (112,358) (112,358)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1997 (UNAUDITED) $ 664,097 $ 5,976,873 $(102,698) $ (87,847) $ 6,450,425
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements
F-3
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(UNAUDITED) THREE (As Restated)
MONTHS ENDED Period Ended
MARCH 31, December 31,
1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $581,925 $1,537,091
Interest on federal funds sold 37,872 342,546
Interest on securities - U. S. Governmental agencies and corporations 287,462 703,077
- --------------------------------------------------------------------------------------------------------------
Total interest income 907,259 2,582,714
- --------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on NOW and money market deposits 73,379 192,993
Interest on savings deposits 18,135 49,242
Interest on time deposits 403,952 1,125,056
Other interest expense 1,727 11,861
- --------------------------------------------------------------------------------------------------------------
Total interest expense 497,193 1,379,152
- --------------------------------------------------------------------------------------------------------------
Net interest income before loan losses 410,066 1,203,562
Less - provision for loan losses 10,500 21,000
- --------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 399,566 1,182,562
- --------------------------------------------------------------------------------------------------------------
OTHER OPERATING INCOME:
Service charges on deposit accounts 60,408 136,456
Other service charges, commissions and fees 10,322 32,130
Other income 2,143 11,011
- --------------------------------------------------------------------------------------------------------------
Total other operating income 72,873 179,597
- --------------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries 171,435 510,458
Employee benefits 45,766 124,239
Net occupancy expenses 39,310 82,222
Equipment rental and depreciation of equipment 30,310 103,805
Amortization 55,140 153,706
Other expenses 118,740 555,937
- --------------------------------------------------------------------------------------------------------------
Total other operating expenses 460,701 1,530,367
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 11,738 (168,208)
Less - provision for income taxes 3,997 (57,769)
- --------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 7,741 $ (110,439)
- --------------------------------------------------------------------------------------------------------------
INCOME (LOSS) PER SHARE - based on weighted average outstanding shares of
664,097 $0.01 $(0.17)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements
F-4
<PAGE>
CBC HOLDING COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) THREE (As Restated)
MONTHS ENDED Period Ended
MARCH 31, December 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,741 $ (110,439)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for loan losses 10,500 21,000
Depreciation 29,727 85,961
Amortization of intangible assets 55,140 153,706
Changes in accrued income and other assets (20,874) (667,199)
Changes in accrued expenses and other liabilities (87,362) 131,783
- ------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (5,128) (385,188)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in loans made to customers (2,248,998) (1,775,150)
Purchases of available for sale securities 1,504,192 (19,400,701)
Proceeds from maturities of available for sale securities (2,013,053) 1,500,000
Purchases of property and equipment (14,255) (365,063)
Proceeds from issuance of short term borrowings 25,000 -
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (2,747,114) (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 (526,038) 2,293,341
Net change in other time deposits (303,261) 668,985
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (829,299) 27,431,461
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (3,581,541) 7,005,359
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 7,005,359 -
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 3,423,818 $ 7,005,359
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The accounting and reporting policies of CBC Holding Company 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 - 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 to 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.
On March 31, 1997, the Company acquired Community Banking Company of
Fitzgerald in a business combination accounted for as a pooling of
interests. Community Banking Company of Fitzgerald which engages in
banking, became a wholly owned subsidiary of the Company through the
exchange of 664,097 shares of the Company's common stock for all of the
outstanding stock of Community Banking Company of Fitzgerald. The
accompanying financial statements for the three months ended March 31,
1997 are based on the assumption that the companies were combined for the
full year, and the financial statements of prior years have been restated
to give effect to the combination.
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 Corporation'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
Company 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. Loans are generally placed on nonaccrual status when full
payment of principal or interest is in doubt, or when they are past due 90
days as to either principal or interest. Senior management may grant a
waiver from nonaccrual status if a past due loan is well secured and in
process of collection. A nonaccrual loan may be restored to accrual
status when all principal and interest amounts contractually due,
including arrearages, are reasonably assured of repayment within a
reasonable period, and there is a sustained period of performance by the
borrower in accordance with the contractual terms of the loan. 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.
F-6
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 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. The Bank evaluates a loan for impairment when
it is placed on nonaccrual status and all or a portion is internally risk
rated as substandard or doubtful. 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. These standards do not apply
to larger groups of smaller-balance, homogenous loans and therefore are
principally relevant to commercial loans. For purposes of applying these
standards, the Bank considers consumer loans and other collateral based
loans of less than $41,000 to be smaller-balance, homogeneous loans.
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
F-7
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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. 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.
B. 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 March 31,
1997. In addition, gross unrealized gains and gross unrealized losses are
disclosed as of March 31, 1997, 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>
MARCH 31, 1997:
Non-mortgage backed debt securities of:
U.S. Treasury $ 3,512,228 $ - $ 9,402 $ 3,502,826
Other U.S. Government Agencies 14,860,196 - 123,700 14,736,496
- ------------------------------------------------------------------------------------------------
Total $18,372,424 $ - $133,102 $18,239,322
- ------------------------------------------------------------------------------------------------
</TABLE>
<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 $3,975,637 and
$3,956,185 respectively, at March 31, 1997. 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 March 31, 1997 and December 31, 1996, by contractual
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.
F-8
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Available for Sale
MARCH 31, 1997: Amortized Cost Estimated Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 2,498,437 $ 2,498,531
Due after one year through five years 15,873,987 15,740,791
- ---------------------------------------------------------------------------------------------
Total $18,372,424 $18,239,322
- ---------------------------------------------------------------------------------------------
Available for Sale
DECEMBER 31, 1996: Amortized Cost Estimated Market Value
- ---------------------------------------------------------------------------------------------
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 March 31, 1997 and December 31, 1996, the Company 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:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loans secured by 1 to 4 -family residential properties $ 9,652,141 $ 8,422,710
Loans secured by multi-family and non-farm, non-residential properties 4,296,934 3,385,410
Other loans secured by real estate 1,196,129 1,205,876
Commercial and industrial loans 3,965,245 3,668,418
Loans to finance agricultural production 973,555 827,543
Consumer loans 5,644,479 5,976,108
Other loans 52,377 54,109
- ---------------------------------------------------------------------------------------------------------------------------
Subtotal 25,780,860 23,540,174
Less: Unearned income (2,978) (2,712)
- ---------------------------------------------------------------------------------------------------------------------------
Total $25,777,882 $23,537,462
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
E. ALLOWANCE FOR LOAN LOSSES
-------------------------
The following is a summary of changes in allowance for loan losses for:
<TABLE>
<CAPTION>
Three Months Ended Period Ended
March 31, 1997 December 31, 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of period $359,146 $385,000
Add: Provision for possible loan losses 10,500 21,000
Less: Loans charged off 8,603 47,125
Recoveries on loans previously charged off (25) (271)
- ----------------------------------------------------------------------------------------------------
Net loans charged off 8,578 46,854
- ----------------------------------------------------------------------------------------------------
Balance, end of period $361,068 $356,146
- ----------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Loans on which the accrual of interest has been discontinued or reduced
amounted to $7,821 and $-0- at March 31, 1997 and December 31, 1996,
respectively. If interest on these loans had been accrued, such income would
have approximated $743 and $-0- for the three months ended March 31, 1997 and
the period ended December 31, 1996, respectively. At March 31, 1997 and
December 31, 1996, the Bank had no loans which were classified as impaired.
F. BANK PREMISES AND EQUIPMENT
---------------------------
The following is a summary of asset classifications and depreciable lives for
the Bank at:
<TABLE>
<CAPTION>
Useful Lives March 31, December 31,
(Years) 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 565,000 $ 552,175
Banking house and improvements 8-40 1,181,614 1,181,614
Equipment, furniture, and fixtures 5-10 368,435 367,738
Software and capitalized conversion costs 3 141,822 141,089
- --------------------------------------------------------------------------------------------
Total 2,256,871 2,242,616
Less - accumulated depreciation (115,688) (85,961)
- --------------------------------------------------------------------------------------------
Bank premises and equipment, net $2,141,183 $2,156,655
- --------------------------------------------------------------------------------------------
</TABLE>
For the three months ended March 31, 1997 and the period ended December 31,
1996, depreciation included in operating expenses amounted to $29,727 and $85,
961, respectively.
G. DEPOSITS
--------
Interest-bearing deposit liabilities contained $11,418,153 and $7,494,483 in
NOW accounts as of March 31, 1997 and December 31, 1996, respectively.
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 March 31, 1997, the Bank
had lines of credit for federal funds purchased of $1,000,000 and $1,500,000
respectively, with corresponding institutions.
At March 31, 1997, the Company has a short term note payable to First State
Bank & Trust Co. in the amount of $25,000. This note bears interest at prime
and the rate may be adjusted daily. Interest and principal are due November
13, 1997.
F-10
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
I. PROVISION FOR INCOME TAXES
--------------------------
The provision for income taxes for the three months ended March 31, 1997 and
period ended December 31, 1996, were computed as follows:
<TABLE>
<CAPTION>
MARCH 31, December 31,
1997 1996
<S> <C> <C>
- ---------------------------------------------------------------------------
Current tax expense $ - $ -
Deferred tax expense (benefit) 3,997 (57,769)
- ---------------------------------------------------------------------------
Net income tax expense (benefit) 3,997 $(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>
MARCH 31, December 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tax on pretax income at statutory rate, including effect of loss carryforwards $2,632 $(57,191)
Tax-exempt interest income (471) (1,882)
Non-deductible interest expense related to tax-exempt income - 175
Non-deductible business entertainment - 96
Other differences 1,836 1,033
- -----------------------------------------------------------------------------------------------------------------------
Total $3,997 $(57,769)
- -----------------------------------------------------------------------------------------------------------------------
Net effective tax rate 51.6% (34.3)%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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>
MARCH 31, December 31,
1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
Deferred Income Tax Asset - Net operating loss carryover $72,515 $ 74,521
Deferred Income Tax Liabilities:
Unrealized (gain) loss on available for sale securities 45,255 (12,627)
Depreciation (9,953) (7,962)
Provision for loan losses, net (8,790) (8,790)
- ------------------------------------------------------------------------------------
Net deferred tax asset $99,027 $ 45,142
- ------------------------------------------------------------------------------------
</TABLE>
The Bank has available at March 31, 1997, $218,680 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.
F-11
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
J. RETIREMENT PLAN
---------------
The Company 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 $-0- and $2,645 for the three
months ended March 31, 1997 and the period ended December 31, 1996,
respectively.
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 April 1, 1997, the Bank could not pay dividends without regulatory
consent.
L. FINANCIAL INSTRUMENTS
---------------------
The Company 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 Company'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 Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.
The Bank does require collateral or other security to support financial
instruments with credit risk.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Contract or Notional Amount
- -----------------------------------------------------------------
MARCH 31,1997 December 31, 1996
----------------------------------
<S> <C> <C>
Commitments to extend credit $4,960,179 $8,535,834
Standby letters of credit 165,000 165,000
Total $5,125,179 $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 Company evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by the Company upon extension of credit is based
on
F-12
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 Company 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 1997.
The minimum future lease payments under capital leases, for each of the next
five years and in the aggregate are:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
THREE MONTHS ENDED Period Ended
For Year Ended December 31, MARCH 31, 1997 December 31, 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
1997 $ 6,816 $11,148
1998 9,660 11,148
1999 9,660 11,148
2000 9,660 11,148
2001 - 1,858
- -----------------------------------------------------------------------------------------
Total minimum lease payments $35,796 $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 with respect to such loans to these
individuals:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
THREE MONTHS Period Ended
ENDED MARCH 31, December 31,
1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Related party loans, beginning of period $1,502,965 $ 1,847,213
New loans 360,734 1,100,022
Repayments (61,571) (1,444,270)
- ----------------------------------------------------------------------------
Balances, end of period $1,802,128 $ 1,502,965
- ----------------------------------------------------------------------------
</TABLE>
In addition to the above outstanding balances, there are loan commitments of
$1,533,235 available to certain executive officers and directors that were
unused as of March 31, 1997.
F-13
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
O. DISCLOSURES RELATING TO STATEMENTS OF CASH FLOWS
------------------------------------------------
Interest - Cash paid during the years for interest was as follows:
---------
<TABLE>
<CAPTION>
THREE MONTHS Period Ended
ENDED MARCH 31, December 31,
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
Interest on deposits $600,802 $1,391,884
- ----------------------------------------------------------------------
</TABLE>
Other Non-Cash Transactions - Other non-cash transactions relating to
---------------------------
investing and financing activities were as follows:
<TABLE>
<CAPTION>
THREE MONTHS Period Ended
ENDED MARCH 31, December 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in unrealized gain on available for sale securities $ 170,238 $37,136
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of 664,097 shares of CBC Holding Company common stock in exchange for Community Banking
Company of Fitzgerald common stock $ 6,640,970 $ -
Cancellation of 664,097 shares of Community Banking Company of Fitzgerald common stock pursuant
to merger effective March 31, 1997 $(6,640,970) $ -
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
F-14
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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.
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 are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1997 December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
CARRYING ESTIMATED Carrying Estimated
AMOUNT FAIR VALUE Amount Fair Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and short-term investments $ 3,423,818 $ 3,423,818 $ 7,005,359 $ 7,005,359
Securities available for sale 18,239,322 18,239,322 17,900,701 17,900,701
Loans 25,777,882 25,486,556 23,537,462 23,271,456
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES-
Deposits 45,831,801 51,217,402 46,661,100 52,144,150
- ---------------------------------------------------------------------------------------------------------------------
UNRECOGNIZED FINANCIAL INSTRUMENTS:
Commitments to extend credit 4,960,179 4,960,179 8,535,834 8,535,834
Standby letters of credit and financial guarantees written 165,000 165,000 165,000 165,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
F-15
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 March 31, 1997, the
Bank meets all capital adequacy requirements to which it is subject. As of
March 31, 1997, the most recent notification from the FDIC categorized the
Bank as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized the Bank must maintain minimum
total risk-based, and Tier I leverage ratios as set forth 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 MARCH 31, 1997
Total Capital To greater than greater than
(Risk Weighted Assets) 4,362,000 15.8% 2,205,000 or equal to 8.0% 2,755,800 or equal to 10.0%
Tier I Capital To greater than greater than
(Risk Weighted Assets) 4,017,000 14.6% 1,102,000 or equal to 4.0% 1,653,480 or equal to 6.0%
Tier I Capital To greater than greater than
(Average Assets) 4,017,000 7.92% 2,028,000 or equal to 4.0% 2,534,850 or equal to 5.0%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
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 greater than greater than
(Risk Weighted Assets) 4,323,000 16.3% 2,121,000 or equal to 8.0% 2,652,000 or equal to 10.0%
Tier I Capital To greater than greater than
(Risk Weighted Assets) 3,964,000 14.9% 1,064,000 or equal to 4.0% 1,596,000 or equal to 6.0%
Tier I Capital To greater than greater than
(Average Assets) 3,964,000 7.74% 2,048,000 or equal to 4.0% 2,560,000 or equal to 5.0%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
S. CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)
----------------------------------------------------
Condensed parent company financial information on CBC Holding Company, is as
follows:
BALANCE SHEET
<TABLE>
<CAPTION>
AS OF MARCH 31,
1997
- ------------------------------------------------------------------------------------------
ASSETS:
<S> <C>
Cash in subsidiary 1,767
Investment in subsidiary, at equity in underlying net assets 6,450,440
Organization costs 23,218
- ------------------------------------------------------------------------------------------
Total Assets $6,475,425
- ------------------------------------------------------------------------------------------
LIABILITIES:
Note payable - First State Bank & Trust Company 25,000
- ------------------------------------------------------------------------------------------
Total liabilities 25,000
- ------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, authorized 10,000,000 shares; issued and
outstanding 664,097 shares 664,097
Additional paid-in capital surplus 5,976,873
Accumulated deficit (102,698)
Unrealized holding losses on securities (87,847)
- ------------------------------------------------------------------------------------------
Total shareholders' equity 6,450,425
- ------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $6,475,425
- ------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997
- --------------------------------------------------------------------------------
<S> <C>
REVENUES:
Interest income $ -
OPERATING INCOME -
- --------------------------------------------------------------------------------
OPERATING EXPENSES:
Registration fees 15
- --------------------------------------------------------------------------------
LOSS BEFORE TAXES AND EQUITY INCOME OF SUBSIDIARY (15)
Income tax benefit -
- --------------------------------------------------------------------------------
LOSS BEFORE EQUITY INCOME OF SUBSIDIARY (15)
Equity in undistributed income of subsidiary 7,756
- --------------------------------------------------------------------------------
NET INCOME 7,741
ACCUMULATED DEFICIT, BEGINNING -
Bank subsidiary, December 31, 1996, Accumulated deficit (110,439)
- --------------------------------------------------------------------------------
ACCUMULATED DEFICIT, ENDING $(102,698)
- --------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE>
CBC HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
YEAR END DECEMBER 31, 1996
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $ 7,741
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in organization costs (23,218)
Equity in undistributed income of subsidiary (7,756)
Net cash used in operating activities (23,233)
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of short term borrowings 25,000
- -----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 25,000
- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,767
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR -
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,767
- -----------------------------------------------------------------------------------------------------------
</TABLE>
As mentioned in Note A, CBC Holding Company was incorporated as a Georgia
corporation on October 15, 1996 for the purpose of acquiring all of the issued
and outstanding shares of Community Banking Company of Fitzgerald. As of
December 31, 1996, CBC Holding Company had not acquired the common stock of
Community Banking Company of Fitzgerald and thus was not consolidated with the
Bank financial statements as of December 31, 996. The holding company's
operations as of December 31, 1996 were minimal and there were no material
transactions or balances. Thus, we have not shown any financial information
for CBC Holding Company as of December 31, 1996 in the above parent only
financial statements.
T. 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 property 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:
Loan 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.
F-18
<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 of CBC Holding Company (filed as Exhibit 3.2 hereto).*
10.1 Description of Compensation of L. Wayne Lowrey, President and Chief
Executive Officer of CBC Holding Company
21.1 List of subsidiaries of CBC Holding Company*
23.1 Consent of Thigpen, Jones, Seaton & Co., P.C.
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.*
________________
* Filed previously with Registration Statement on Form 10, filed with the
Securities and Exchange Commission on April 30, 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: November 20, 1997
1
<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).*
10.1 Description of Compensation of L. Wayne Lowrey, President and Chief
Executive Officer of CBC Holding Company
21.1 List of subsidiaries of CBC Holding Company*
23.1 Consent of Thigpen, Jones, Seaton & Co., P.C.
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.*
________________
* Filed previously with Registration on Form 10, filed with the Securities and
Exchange Commission on April 30, 1997.
<PAGE>
EXHIBIT 10.1
DESCRIPTION OF COMPENSATION OF
L. WAYNE LOWREY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF CBC HOLDING COMPANY
Mr. Lowrey receives an annual salary of $86,000 and an annual travel allowance
of $3,000. Mr. Lowrey's salary is reviewed annually by the Board of Directors
of the Company with any increases being made soley in the dicretion of the
Board. Mr. Lowrey participates in the Company's health and life insurance plans
on the same basis as other officers of the Company. The Company also pays Mr.
Lowrey's membership dues at a local country club and membership dues for the
local rotary club. The Company does not currently have any stock option plans.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement on
Form 10 of CBC Holding Company of our report dated January 17, 1997.
Thigpen, Jones, Seaton & Co., P.C.
Dublin, Georgia
November 20, 1997
