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As Filed With the Securities and Exchange Commission December 19, 1997
Registration No. 333-07914
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20509
PRE-EFFECTIVE AMENDMENT NO. 2
S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CITIZENS EFFINGHAM BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
GEORGIA 6060 58-2357619
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(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification Number)
</TABLE>
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
(912) 754-0754
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
HARRY H. SHEAROUSE
802 South Laurel Street
P. O. Box 379
Springfield, Georgia 31329
(912) 754-0754
(Name, address and telephone number of agent for service)
---------------
With copy to:
J. WILEY ELLIS
Ellis, Painter, Ratterree & Bart LLP
2 E. Bryan Street, Suite 100
P. O. Box 9946
Savannah, Georgia 31412
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 512,000 $10.00 5,120,000 $1,552.42(1)
$1.00 par value ---------
====================================================================================================================================
</TABLE>
(1) Previously paid.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specially states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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CROSS REFERENCE SHEET
Pursuant to Item 501(b) of
Regulation S-K
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Form S-1 Item No. & Heading Caption or Location in
- --------------------------- ----------------------
Prospectus
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1. Forepart of the Registration Cover Page of Registration
Statement and Outside Front Statement; Cross Reference
Cover Page of Prospectus Sheet; and Cover Page of
Prospectus
2. Inside Front and Outside Back Inside front cover and
Cover Pages of Prospectus outside back cover of
Prospectus
3. Summary Information, Risk Prospectus Summary;
Factors and Ratio of Earnings Risk Factors and Other
to Fixed Charges Investment Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Risk Factors and Other
Investment Considerations
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution The Offering
9. Description of the Securities to Description of Capital Stock
be Registered
10. Interest of Named Experts and Counsel Management -- Certain
Transactions and
Relationships; Legal Matters
11. Information with Respect to Prospectus Summary; The
the Registrant Company and the Bank; Use of
Proceeds; Dividends; Business of the Company
and the Bank; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Management; Shareholders;
Description of Capital Stock
12. Disclosure of Commission Description of Capital Stock
Position on Indemnification -- Indemnification of
for Securities Act Liabilities Officers and Directors
</TABLE>
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Subject to Completion, Dated December 19, 1997
512,000 Shares
Common Stock
($1.00 par value)
CITIZENS EFFINGHAM BANCSHARES, INC.
A Proposed Bank Holding Company for
CITIZENS BANK OF EFFINGHAM
A Proposed Bank
Citizens Effingham Bancshares, Inc., a Georgia corporation (the
"Company"), is offering 512,000 shares of its common stock, par value $1.00 per
share (the "Common Stock") at a purchase price of $10.00 per share to be issued
in connection with the organization of Citizens Bank of Effingham, a proposed
Georgia bank (the "Bank") and the issuance of the Bank's capital stock to the
Company. The minimum subscription made by investors must be at least 100
Shares. No person, corporation, or related interest may purchase more than 20%
of the outstanding shares of stock of this Offering.
THE PURCHASE OF THESE SECURITIES INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS" on page 6.
The Company has been organized to hold, upon receipt of all regulatory
approvals, all of the capital stock of the Bank. On July 18, 1997, the Georgia
Department of Banking and Finance (the "Department") accepted for filing an
application from fourteen individuals (the "Organizers") to organize the Bank.
The Department granted preliminary approval of the application to organize the
Bank on October 17, 1997.
The Company filed an application with the Board of Governors of the
Federal Reserve System ("Federal Reserve Board") on October 1, 1997 and an
application with the Department for approval to become a bank holding company by
using approximately 98% of the net proceeds of this Offering to acquire all of
the capital stock of the Bank. See "Use of Proceeds."
The acquisition by the Company of the capital stock of the Bank is
subject to the above-described regulatory approvals. Until all of such approvals
have been received, all funds received by the Company from the Offering (net of
organization and pre-opening expenses and offering expenses in the case of the
Organizers' Account as described herein) will be held in escrow and invested in
deposit accounts or certificates of deposit which are fully insured by the
Federal Deposit Insurance Corporation or another agency of the United States
government, short-term securities issued or fully guaranteed by the United
States government, federal funds, or other investments as the Escrow Agent and
the Company shall agree.
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The Offering will terminate on April 1, 1998. If by April 1, 1998,
all 512,000 shares of the Common Stock have not been sold, all funds available
from escrow, consisting of the proceeds from the Offering less any expenses
associated with the Offering, plus any investment profits thereon (the "Refund
Amount"), will promptly be paid to the Subscribers on a pro rata basis. If by
October 1, 1998 all of the above-described regulatory approvals have not been
received, the Refund Amount shall be paid to the shareholders. See "Escrow of
Proceeds" and "The Offering."
THE COMPANY WILL ISSUE THE SHARES OFFERED HEREBY BEFORE IT HAS OBTAINED
ALL FINAL REGULATORY APPROVALS NECESSARY FOR IT TO ACQUIRE THE CAPITAL STOCK OF
THE BANK. AFTER SHARES ARE ISSUED, THE PROCEEDS OF THIS OFFERING, EVEN WHILE IN
ESCROW, MAY BE SUBJECT TO THE CLAIMS OF CREDITORS, WHICH MIGHT REDUCE OR DELAY
THE PAYMENT OF ESCROWED FUNDS TO SHAREHOLDERS SHOULD SUCH BECOME NECESSARY. See
"Risk Factors - Failure to Obtain Regulatory Approval."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE GEORGIA DEPARTMENT OF BANKING AND
FINANCE OR THE FEDERAL RESERVE BOARD NOR HAS ANY OF THESE AGENCIES PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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========================================================================================
Proceeds
Price to Underwriting to the
Offerees Discount Company (1)
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Per Share.... $ 10.00 $ N/A $ 10.00
Total........ $5,120,000 $ N/A $5,120,000
=========================================================================================
</TABLE>
(1) Before deducting expenses of this Offering which are estimated to be
$29,500. Total net proceeds to the Company from the sale of all 512,000
shares of Common Stock are estimated at $5,090,500. See "Use of
Proceeds."
The executive officers of the Company will receive no commission or
other compensation in connection with any sale of Common Stock but will be
reimbursed for expenses, if any, that they incur in connection with such sales,
including, but not limited to, expenses for printing, postage, stock
certificates, and accounting and legal expenses. See "Management."
The effective date of this Prospectus is , 1997,
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THE SHARES OF COMMON STOCK OF THE COMPANY OFFERED HEREBY AND THE SHARES
OF THE CAPITAL STOCK OF THE BANK TO BE PURCHASED BY THE COMPANY WITH THE
PROCEEDS OF THIS OFFERING ARE NOT DEPOSITS INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION.
NO AGENT OR OFFICER OF THE COMPANY OR THE BANK OR ANY OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE BANK.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL IN ANY
JURISDICTION OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OF THE
COMMON STOCK TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
The Company will furnish its shareholders with annual reports
containing audited financial information.
Prospective investors should only rely on information presented in this
Prospectus in making an investment decision. To the extent that other available
information not presented in this Prospectus, including information contained in
public files maintained by the Georgia Department of Banking and Finance and the
Federal Reserve Board, is inconsistent with information presented in this
Prospectus, such other information is superseded by the information presented in
this Prospectus.
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PROSPECTUS SUMMARY
The following Summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
The Company and the Bank
On March 31, 1997, twelve Effingham County residents, who are now all
of the Directors of the Company, formed the Citizens Effingham Partnership (the
"Partnership,") a partnership formed for the purposes of forming a bank under
the laws of the State of Georgia and a bank holding company to purchase all of
the shares of the bank and other acts necessary to effectuate such purposes.
See "Prospectus Summary - The Organizers."
Citizens Effingham Bancshares, Inc. (the "Company") was incorporated as
a Georgia corporation on October 29, 1997 to serve as a holding company for
Citizens Bank of Effingham (the "Bank"), a bank being organized under the laws
of the State of Georgia. On July 18, 1997, the Department accepted for filing an
Application for Approval of Charter and Articles of Incorporation (the
"Application") under the name "Citizens Bank of Effingham," prepared by the
Organizers. Preliminary approval to organize the Bank was granted on October 17,
1997. The issuance of a bank charter will depend upon the final approval of the
Department and the compliance with the conditions contained in the Department's
preliminary approval, including capital requirements.
The Company has filed an application with the Federal Reserve Board and
the Department for approval to become a bank holding company by using
approximately 98% of the net proceeds of the Offering to acquire the capital
stock of the Bank. On November 10, 1997, the Department granted approval for
the Company to become a bank holding company. On November 19, 1997, the Federal
Reserve Bank approved the Company's application to become a bank holding
company.
The primary activity of the Company will be the ownership and operation
of the Bank. The primary service area of the Bank will be the Municipalities of
Springfield, Rincon, and Guyton, and the contiguous areas of Effingham County,
Georgia. Its secondary service area will be portions of Chatham, Bulloch,
Screven, and Bryan Counties in Georgia. The Bank will engage in a general
community and commercial banking business targeting as its customers
individuals, professionals, and small to medium-sized businesses in the Bank's
primary service area, including small retail establishments and professional
service businesses. See "Business of the Company and the Bank".
The Company's office is located at 802 South Laurel Street, P.O. Box
379, Springfield, Georgia, 31329 and its telephone number is (912) 754-0754. The
Bank's main office will be at the same address. The Bank will also establish one
branch office at 600 Columbia Avenue, Rincon, Georgia, 31326.
Neither the Company, nor any principal of the Company, nor the Bank is
a party to any pending litigation or proceeding which could materially adversely
affect its business or assets, nor the business or assets of the affected
principal.
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The Offering
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Securities Offered .............. Common Stock, $1.00 par value
per share, of the Company
Offering Price .................. $ 10.00 per share
Number of Shares Offered ........ 512,000(1)
Use of Proceeds ................. To purchase 100% of the capital
stock of the Bank; to pay
organization and pre-opening
expenses; and to fund other
corporate purposes, primarily
future capital needs of the
Bank. See "Use of Proceeds."
</TABLE>
(1) The Company anticipates receiving gross proceeds of $5,120,000 (before
organization and pre-opening expenses and offering expenses).
Escrow of Proceeds
The proceeds of this Offering will be placed in escrow with The
Savannah Bank, N.A. (the "Escrow Agent") under an escrow agreement (the "Escrow
Agreement") which provides that such proceeds shall be placed in two separate
accounts: (1) The Organizers' Account; and (2) the Public Offering Account. The
Escrow Agent will pay the allocable offering expenses out of each account,
estimated to be: $8,850 ($.058 per share) for the Organizers' Account, and
$20,650 ($.058 per share) for the Public Offering Account. The Escrow Agent will
pay all organizational and pre-opening expenses and approved capital
expenditures (estimated to be no more than $2,166,004 in the aggregate) incurred
and to be incurred out of the Organizers' Account. The escrowed funds will be
invested in deposit accounts or certificates of deposit which are fully insured
by the Federal Deposit Insurance Corporation or another agency of the United
States government, short-term securities issued or fully guaranteed by the
United States government, federal funds, or other investments as the Escrow
Agent and the Company shall agree. In the event all of the regulatory approvals
described herein have not been received by October 1, 1998, or if by April 1,
1998, all 512,000 shares of the Common Stock have not been sold, the net amounts
in the Escrow Accounts (less any Offering expenses), plus allocable investment
earnings, if any, will promptly be returned to the initial investors or to the
personal representative of the estate of a deceased investor on a pro rata
basis.
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The Organizers
The following persons are the Organizers of the Bank. As indicated,
some of them are Directors of the Company and will serve as Directors of the
Bank:
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D. Guerry Burns *Harry H. Shearouse
*Jon G. Burns *Thomas C. Strickland
*Charles E. Hartzog *Mariben M. Thompson
*Philip M. Heidt *Thomas O. Triplett, Sr.
*W. Harvey Kieffer *J. Terrell Webb
*C. Murray Kight *H. Mitchell Weitman
William F. Rahn *Wendel H. Wilson
</TABLE>
* Indicates those persons who are Directors of the Company and will serve as
Directors of the Bank.
The Organizers will purchase a significant portion of the Common Stock
consisting of at least 153,250 shares for 29.95% of the Common Stock outstanding
after the completion of the Offering. See "Risk Factors and Other Investment
Considerations - Control." The Organizers believe that their activities in the
communities that the Bank will serve will enable them to pursue business
opportunities for the Bank.
Risk Factors
An investment in the Common Stock involves certain risks, including,
among others, the necessity to obtain regulatory approvals, the completion of
this Offering, the lack of an operating history, competition from established
financial institutions, dependence upon key executive officers, dependence on
economic conditions in the Bank's target market areas, absence of an established
trading market for the shares, and the lack of assurance of dividends. See "Risk
Factors and Other Investment Considerations."
RISK FACTORS AND OTHER INVESTMENT CONSIDERATIONS
An investment in the shares of Common Stock offered hereby involves a
substantial degree of risk. The shares will not be insured by the Federal
Deposit Insurance Corporation ("FDIC") or any other governmental agency. An
investment should be made only after careful consideration of the risk factors
and other investment considerations set forth below and elsewhere in this
Prospectus, and should be undertaken only by persons who can afford an
investment involving such risks.
REGULATORY APPROVALS
While the Company has received the approval of the Federal Reserve Board
and the Department to become the holding company for the Bank, the Organizers
must receive final approval of the Department before the Bank may begin
operations as a Georgia bank. In addition, the Department and the Federal
Reserve Board must approve
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each of the executive officers of the Bank. Such approvals are dependent upon
several factors outside the control of the Organizers, and therefore no
assurance can be given that approvals will be granted, or, if granted, that the
Organizers will be able to satisfy all conditions that may be imposed in orders
granting such approvals. Any significant delay in obtaining necessary approvals
may result in increased pre-opening expenses and may reduce the potential
revenues and income of the Company and the Bank.
In the event the above-described regulatory approvals are not received
by the Company and the Bank on or before October 1, 1998, the proceeds of this
Offering (less offering expenses) will be returned to the Company's
shareholders. See "The Offering -- Escrow Arrangements."
NECESSITY TO COMPLETE OFFERING
The Organizers believe that an initial total capitalization of
$5,120,000 is necessary for the success of the Bank. No assurances are given
that the Offering will be completed or that the indicated net proceeds will be
received by the Company. In the event all 512,000 shares of the Common Stock
have not been sold by April 1, 1998, the proceeds of this Offering (less
offering expenses) will be returned to the subscribers of such shares. See "The
Offering Escrow Arrangements."
LACK OF OPERATING HISTORY
The Company and the Bank are currently in the organization stage and
have no operating history. As a consequence, prospective purchasers of shares of
the Common Stock offered hereby necessarily have limited information on which to
base an investment decision. As a bank holding company with the Bank as its only
asset, the Company's initial profitability will depend upon the Bank's
operations. The Bank's proposed operations are subject to risks of a new
business and, specifically, of a new bank. It is anticipated that the Bank will
incur operating losses in its first year of operations. Although the Organizers
anticipate that the Bank will become profitable in its second year of operations
and that all of its initial losses will be recovered by its third year of
operations, there is no assurance that the Bank will become profitable. If the
Bank is ultimately unsuccessful, there is no assurance that shareholders will
recover all or any part of their investment in the Common Stock. Therefore,
persons should not subscribe to shares unless they are in a position to lose the
entire amount of their investment without a material adverse effect on their
respective financial conditions.
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HIGHLY COMPETITIVE INDUSTRY
The financial services industry in general is characterized by
significant competition in attracting and retaining deposits and in lending
funds. In one or more aspects of its business, the Bank will compete with other
commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, and brokerage and investment
banking firms operating in the Effingham and contiguous counties. Most of these
competitors have substantially greater resources and lending limits than the
Bank and may offer certain services, such as multi-branch banking and trust,
investment and international banking services that the Bank initially will not
provide. New and larger financial institutions may also enter the Bank's market
area and compete with the Bank for deposits and lending opportunities in the
future. The level of competition among financial institutions in Georgia is
expected to increase further as a result of additional consolidation in the
financial services industry. The Company cannot predict the effect that this
increased competition will have on the operations of the Company or the Bank in
its market area. See "Business of the Company and the Bank - Competition."
DEPENDENCE ON KEY PERSONNEL
The Bank is, and for the foreseeable future will be, dependent upon the
services of Harry H. Shearouse, who is the proposed President and Chief
Executive Officer of the Company and the Bank and who is a Director of the
Company. A failure to replace Mr. Shearouse promptly, should his services become
unavailable, could have a material adverse effect on the Company and the Bank.
The Partnership has entered into an employment agreement with Mr. Shearouse for
a term of three years commencing on the opening date of the Bank, which will be
assigned to the Bank upon its formation.
The Company and the Bank intend to hire additional competent employees
and Department-approved officers before commencing business. Any changes to the
positions of President, Chief Lending Officer, or Chief Operations Officer
during the first two years of operations will be subject to approval by the
Department. See "Business of the Company and the Bank" and "Management."
REGULATION
The potential success or failure of the Company and Bank also may be
affected by state and federal regulations affecting banks, savings and loan
associations and bank and savings and loan holding companies generally.
Non-banking financial institutions, such as securities brokerage firms,
insurance companies and money market mutual funds, are permitted to offer
services that compete directly with the services offered by banking
institutions. At the same time, the services that banking institutions are
permitted to offer have been expanded, and restrictions have been reduced on the
rate of interest that may be paid by banking institutions on deposits. The
Bank's profitability will be largely dependent upon the rate differential
between the interest earned by the Bank on loans to
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customers and its investments, and the interest paid by the Bank on deposits and
other liabilities. While increasing competition may result in the Bank's paying
higher interest rates to obtain deposits, a comparable increase in interest
rates on its loans and the rate of return on its investments may not be
attainable, the result of which would be reduced spreads and lower earnings or
higher losses.
ECONOMIC RISKS
Unlike most companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have a
significant impact on a financial institution's performance. Profitable
operation of the Company depends on numerous factors, some of which will be
beyond the control of the Company's management. These factors include, but are
not limited to, the general level of interest rates in national money markets,
national and local economic conditions, housing demand, lending risks and
federal, state, and local taxation of and regulations affecting savings
institutions.
Because the Company's operations will be concentrated in Effingham
County, (rather than diversified across a number of different geographic areas
as occurs in the operations of some larger financial institutions), the economic
conditions in that county will be particularly important in determining the
future performance of the Company. Although the Bank expects favorable economic
development in its primary and secondary market areas, there is no assurance
that favorable economic development will occur or that the Bank's expectation of
corresponding growth will be achieved.
MONETARY POLICIES
Like all regulated financial institutions, the Bank will be affected by
monetary policies implemented by the Board of Governors of the Federal Reserve
System and other federal agencies. A primary instrument of monetary policy
employed by the Federal Reserve Board is the restriction or expansion of the
money supply through open market operations. This instrument of monetary policy
frequently causes volatile fluctuation in interest rates and can have a direct,
adverse effect on the operating results of financial institutions. Borrowings by
the United States Government to finance the federal deficit may also cause
fluctuation in interest rates and have similar adverse effects on the operating
results of such institutions.
ABSENCE OF TRADING MARKET; OFFERING PRICE
While the Common Stock being offered hereby will be freely transferable
by all shareholders except the Organizers immediately upon issuance, it is not
anticipated that there will be an active
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market for the Common Stock in the immediate future. Although the Common Stock
may be traded in the over-the-counter market in the future, no assurance can be
given that an active trading market for the Common Stock will develop, and the
Company does not anticipate listing the Common Stock for sale in the
over-the-counter market in the foreseeable future.
Because the Company and the Bank are in the organizational stage, the
offering price of $10.00 per share has been determined by the Organizers without
particular reference to historical or projected earnings, book value or other
customary criteria. The price per share was set arbitrarily. No assurances can
be given that any of the Common Stock can be resold for the offering price or
any other amount.
CONTROL
Because the Organizers intend to purchase, in the aggregate, a
significant portion of the shares offered hereby, representing at least 29.95%
of the Common Stock, the ability of other investors as a group effectively to
exercise control over the election of directors of the Company and thereby
exercise control over the supervision of the management of the business of the
Company and the Bank may be diminished.
DIVIDENDS
It is anticipated that the Company will not distribute any cash
dividends to its shareholders in the foreseeable future. The availability of
funds for distributions to shareholders will depend principally on the earnings
of the Bank and its ability to pay dividends to the Company, which are
restricted under certain circumstances by the regulations of the Department even
if earnings are available. Earnings of the Bank, if any, are expected to be
retained by the Bank for the foreseeable future to enhance its capital.
POSSIBLE NEED FOR ADDITIONAL CAPITAL
The Company has no present intention to borrow any funds or issue
additional equity securities after the Offering but may attempt to do so in the
future if additional capital is required. There can be no assurance of the
availability of additional capital or the terms on which the Company may be able
to obtain such capital, and the effect thereof on existing stockholders of the
Company cannot presently be determined.
Because the Partnership anticipates that the monies presently in the
Organizers' Account will be insufficient to pay all pre-opening and
organizational expenses and capital expenditures, the Partners have agreed to
borrow the monies necessary to pay these. The Partnership estimates that it will
require a loan of $750,000 to completely finance the remaining capital
expenditures and pre-
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opening and organizational expenses, but there can be no assurance that the
Partners will be able to obtain such a loan. See "The Offering--Escrow and
Issuance of Stock" and "Use of Proceeds."
FAILURE TO OBTAIN REGULATORY APPROVAL OR RAISE ANTICIPATED PROCEEDS
Subscription payments received by the Company in this Offering and
stock purchase payments from purchasers in the Public Offering will be held by
The Savannah Bank, N.A. (the "Escrow Agent") in two escrow accounts (the "Escrow
Accounts"). The Public Offering Account will be held in escrow until such time
as the Department grants final approval to the Bank. The payments received in
the Organizers Account may be used to fund organizational and pre-opening
expenses and approved capital expenditures. The Escrow Accounts will be subject
to certain disbursements authorized in the Escrow Agreement by and between the
Company and the Escrow Agent. The funds in the Escrow Accounts will be invested
in deposit accounts or certificates of deposit which are fully insured by the
Federal Deposit Insurance Corporation or another agency of the United States
government, short-term securities issued or fully guaranteed by the United
States government, federal funds, or other investments as the Escrow Agent and
the Company shall agree. Unless the Company returns funds to the subscribers,
any profits accruing on the funds while in escrow will be the property of the
Company. Shares of stock subscribed and paid for in this Offering will be issued
within sixty (60) days following the completion of the offering. If by October
1, 1998, but after the issuance of the shares offered hereby, the Department has
not granted final approval to the Bank, funds available from the Escrow Accounts
will be paid promptly to shareholders on a pro rata basis. If by April 1, 1998,
all 512,000 shares of the Common Stock have not been sold, funds available from
the Escrow Accounts will be paid promptly to the investors on a pro rata basis.
CREDITOR CLAIMS
When the Company issues the shares of Common Stock offered hereby, the
offering proceeds may be considered part of general corporate funds and thus
may be subject to the claims of creditors of the Company, including claims
against the Company that may arise out of actions of the Company's officers,
directors, or employees. Because the approval of the Bank's charter is
conditioned on the Company's raising funds to capitalize the Bank at
$5,000,000, the Company expects to issue the shares of Common Stock before it
has obtained all final regulatory approvals for the Bank. It is possible,
therefore, that one or more creditors may seek to attach the proceeds of the
Offering while they are still in the Escrow Accounts. If such an attachment
occurred, and it became necessary to pay the escrowed funds to shareholders
because of failure to obtain all necessary regulatory approvals, the payment
process might be delayed, and if it became necessary to pay creditors from the
escrowed funds, the payments to shareholders might be substantially less than
the amounts described above.
ANTI-TAKEOVER PROVISIONS; DIRECTOR LIABILITY
The Company's Articles of Incorporation (the "Articles") and Bylaws
contain certain provisions which provide, among other things, (i) that the
Company shall not engage in any business combination (as defined in the
Articles) with a person who became an interested shareholder (as defined in the
Articles) within five years prior to such business combination unless certain
conditions are met; (ii) for the necessity of approval of certain business
combinations by all continuing directors (as defined in the Articles) or
two-thirds of the continuing directors and a majority of the shares (excluding
shares beneficially owned by the interested shareholder who is a party to the
business combination), except that such approval is not required if the
consideration
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offered in the business combination satisfies certain fair price tests; (iii)
that approval by the holders of 75% of the Common Stock is required for
amendment of the foregoing provisions and certain other provisions of the
Articles (and any amendment to (i) above would not take effect until 18 months
after such amendment); (iv) for the issuance of shares of Common and Preferred
stock upon the approval of the Company's Board of Directors without stockholder
approval; (v) for the election of directors to three-year staggered terms; (vi)
as permitted by applicable statute, for the elimination, with certain
exceptions, of personal liabilities of directors and officers to the Company or
its stockholders for monetary damages resulting from any alleged breach of their
fiduciary duty to the Company; and (vii) that the Board of Directors, in
determining the best interest of the Company, may consider, among other factors,
the interests of the Company's employees, customers, suppliers and creditors and
the community in which offices of the Company are located.
These provisions may discourage non-negotiated takeover attempts
through which certain stockholders may otherwise receive a substantial premium
for their Common Stock over the then current market price and may tend to
perpetuate existing management. See "Description of Capital Stock - Certain
Provisions of the Company's Articles and Bylaws."
THE COMPANY AND THE BANK
Citizens Effingham Bancshares, Inc. was incorporated under the laws of
Georgia on October 29, 1997. The Company was organized primarily for the purpose
of becoming a bank holding company to acquire all of the capital stock of the
Bank. Initially, the Company's sole activity will be the ownership and operation
of the Bank when the Bank has received the necessary approvals to engage in
business.
The Bank's primary service area will be the Municipalities of
Springfield, Rincon, and Guyton and the contiguous areas in Effingham County,
Georgia, and its secondary service area will be portions of Chatham, Bulloch,
Screven, and Bryan Counties, Georgia. Organizers believe that the Bank's primary
service area represents a growing market for the services the Bank will provide.
The Bank will engage in a general community and commercial banking
business, emphasizing the banking needs of individuals and small to medium-sized
businesses and professional concerns in its primary service area and of
individuals and businesses in the community, including those located outside the
Bank's primary service area. The Bank will offer private banking services to
individuals and businesses.
12
<PAGE> 15
If and when all 512,000 shares of the Common Stock are sold, the
payments received in the Organizers' Account may be used to fund organizational
and pre-opening expenses and approved capital expenditures. If and when the
Company and the Bank receive all of the necessary regulatory approvals, the net
proceeds from this Offering in the Public Offering Account and the amounts
remaining in the Organizers' Account will be released to the Company, and the
Company will acquire all of the shares of capital stock of the Bank.
The Company's office is located at 802 South Laurel Street, P.O. Box
379, Springfield, Georgia, 31329 and its telephone number is (912) 754-0754. The
Bank's main office will be located at the same address. The Bank will also
establish one branch office at 600 Columbia Avenue, Rincon, Georgia, 31326.
THE OFFERING - ESCROW ARRANGEMENTS
The Company is hereby offering 512,000 shares of its Common Stock at a
price of $10.00 per share to the public at large.
METHOD OF SUBSCRIPTION
Offerees in this Offering may subscribe for stock by completing and
delivering a signed Subscription Form, which is enclosed with this Prospectus,
to Citizens Effingham Bancshares, Inc., P.O. Box 379, Springfield, Georgia,
31329, together with a check, bank draft or money order in the amount of the
subscription price drawn to the order of The Savannah Bank, N.A., as Escrow
Agent.
The Company reserves the right to reject any offer to subscribe in
whole or in part or to cancel acceptance of subscription offers in whole or in
part until the date the shares purchased through this Offering are issued. If a
subscription or any part thereof is not accepted by the Company, the unaccepted
portion, without interest, shall be promptly returned to the subscriber.
EXPIRATION DATE
Subscriptions will be accepted by the Company until 5:00 p.m.
Springfield, Georgia time on April 1, 1998 or until such earlier time as the
Company has received subscriptions to all 512,000 shares of its Common Stock.
HOW TO PURCHASE
Persons may purchase Shares of the Common Stock by completing and
signing the Subscription Agreement and delivering it, together with the purchase
price, to the Company. The purchase price of $10.00 per Share must accompany the
Subscription Agreement and must be paid in cash, or by check, bank draft, or
money order made
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<PAGE> 16
payable to The Savannah Bank, N.A., as Escrow Agent. A Subscription Agreement
will be binding on the subscriber, but will not be binding upon the Company
until it is accepted by the Company.
The minimum subscription made by investors must be at least 100 Shares.
No person, corporation, or related interest may purchase more than 20% of the
outstanding shares of stock of this Offering. After all shares have been
subscribed, details of any purchases of more than 5% of the Bank's stock and any
Organizer purchase which has been financed will be sent to the Department.
ESCROW AND ISSUANCE OF STOCK
If the Company fails to sell 512,000 shares of Common Stock at the
offering price of $10.00 per share as of the close of business on April 1, 1998,
or if 512,000 shares have been sold but the Company has not received the total
amount due by that time, the Company will abandon the Offering and promptly
refund to each purchaser the consideration paid for his or her shares, less a
pro rata portion of any expenses incurred as a result of the Offering.
The Company reserves the right to allow the Organizers, subject to
regulatory approval, to purchase additional shares of Common Stock in order to
meet the minimum requirement of 512,000 shares sold, provided that: (i) the
maximum amount of such additional purchases which may be made by the Organizers
is 50,000 shares; and (ii) such purchases shall be made for investment purposes.
Until all necessary regulatory approvals are obtained and the necessary
capital is raised, the net proceeds from this Offering will be held in two
Escrow Accounts at The Savannah Bank, N.A. and invested in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or other investments as the Escrow Agent and the Company shall agree. The
proceeds of this Offering received from the Organizers will be held in one
account (the "Organizers' Account"); and the proceeds of this Offering received
from non-Organizers will be held in a second account (the "Public Offering
Account"). The Escrow Agent will pay the allocable offering expenses out of each
account, estimated to be: $8,850 ($.058 per share) for the organizers' Account,
and $20,650 ($.058 per share) for the Public Offering Account; and the Escrow
Agent will pay all organizational and pre-opening expenses and capital
expenditures incurred prior to receipt of all necessary regulatory approvals out
of the Organizers' Account. Organizational and pre-opening expenses are
estimated to be $276,104 and capital expenditures are estimated to be less than
$1,890,000, assuming the Bank opens by October 1, 1998.
14
<PAGE> 17
If the Company receives gross proceeds of $5,120,000 in the aggregate
from this Offering and issues shares of Common Stock to subscribers but the
Company and the Bank do not obtain the requisite final regulatory approvals by
October 1, 1998, all funds available from each Escrow Account will be paid
promptly to all shareholders whose funds are held in that account on a pro rata
basis. As noted above, in such event, all losses resulting from organizational
and pre-opening expenses and capital expenditures incurred by the Company will
be borne by the twelve Directors.
Organizational and pre-opening expenses include, but are not limited
to, filing fees, costs of professional and consulting services, travel expenses,
printing, postage and telephone costs related to the organization of the Company
and the Bank and pre-opening salaries, rent, and insurance. Capital expenditures
include the purchase of two parcels of land upon which the main office and a
branch will be built, building improvements, office equipment, deposits on
banking furniture and equipment and prepaid forms, supplies, and promotional
materials. All such capital expenditures shall be expressly approved by the
Board of Directors before the Company requests the funds from the Escrow Agent,
and it is estimated that such capital expenditures will not exceed $1,890,000.
It is estimated that organizational and pre-opening expenses will be $276,104 if
the Bank commences operations by October 1, 1998.
It is anticipated that there will be insufficient funds in the
Organizers' Account to pay all organizational and pre-opening expenses and
approved capital expenditures that will be necessary before final approval from
the Department is obtained. Therefore, the Directors have agreed to borrow an
estimated additional $750,000 for this purpose. Upon receipt of final approval,
the Bank will repay said loan, including interest.
If it becomes necessary to return proceeds of this Offering to
subscribers, subscribers may receive less than the Offering price of $10.00 per
share because of the deduction of Offering expenses and possible investment
losses while the funds are in escrow. If, for example, the expenses of this
Offering are $29,500, as estimated, and there are no investment losses or
profits, each non-organizer shareholder who subscribed to shares in this
Offering will be paid $9.942 per share if it becomes necessary to return funds
after the shares of Common Stock have been issued, and each Organizer who
purchases in this Offering will be paid less because he or she will be charged
with his or her equal share of organizational and pre-opening expenses and
approved capital expenditures incurred by the Company through the date of the
refund. It is possible that this return may be further reduced by amounts paid
to satisfy claims of creditors, as discussed in the following paragraph.
When the Company issues the shares of Common Stock offered
15
<PAGE> 18
hereby, the offering proceeds may be considered part of general corporate funds
and thus may be subject to the claims of creditors of the Company, including
claims against the Company that may arise out of actions of the Company's
officers, directors, or employees. Because the approval of the Bank's charter is
conditioned on the Company's raising funds to capitalize the Bank at $5,000,000,
the Company expects to issue the shares of Common Stock before it has obtained
all final regulatory approvals for the Bank. It is possible, therefore, that one
or more creditors may seek to attach the proceeds of the Offering while they are
still in the Escrow Accounts. If such an attachment occurred, and it became
necessary to pay the escrowed funds to shareholders because of failure to obtain
all necessary regulatory approvals, the payment process might be delayed; and if
it became necessary to pay creditors from the escrowed funds, the payments to
shareholders might be less than the amounts described above.
While the proceeds of this Offering are held in escrow, the Escrow
Agreement provides that the Escrow Agent will release to the Company from the
Organizers' Account amounts certified by the Company to be organizational and
pre-opening expenses and approved capital expenditures as described above and
that the Escrow Agent will release to the Company from both Escrow Accounts on a
pro rata per share basis the allocated expenses of this Offering.
USE OF PROCEEDS
The aggregate net proceeds to the Company from this Offering are
expected to be $5,090,050. These amounts assume the payment of $29,500 as
expenses of the Offering. The payments received in the Organizers' Account may
be used to fund organizational and pre-opening expenses and approved capital
expenditures. The net proceeds from the Public Offering Account will be held
until the Department grants final approval to the Bank and the Federal Reserve
Board and the Department have approved the Company's applications to become a
bank holding company, except that, as described in "The Offering--Escrow and
Issuance of Stock," certain disbursements to the Company will be made from the
Escrow Accounts.
Funds in the Organizers' Account of the Escrow Accounts will be used to
pay the Company's organizational expenses and the Bank's organizational and
pre-opening expenses and approved capital expenditures. When all regulatory
approvals have been obtained, the funds in all Escrow Accounts will be used to
capitalize the Bank through the purchase of all capital stock of the Bank at
$5,000,000 and to the extent not needed for such purposes, for general corporate
purposes, principally to fund possible additional capital needs of the Bank.
The proceeds that the Bank receives in exchange for its capital stock
will be used primarily to provide funds for the
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<PAGE> 19
Bank's investment and loan portfolios, for constructing the Bank's headquarters
in Springfield, Georgia and the branch in Rincon, Georgia, for furnishing and
equipping the Bank and for working capital. The Department requires that all of
the capital stock of the Bank shall be paid in, in full, in cash and that
$500,000 of the total capital funds shall be common stock, $3,750,000 paid in
surplus, and $750,000 shall be set aside as an expense fund to cover pre-opening
expenses and potential losses in the first year of operation.
Any net proceeds remaining after payment of expenses and purchase of
all of the Bank's stock will be invested by the Company in deposit accounts or
certificates of deposit which are fully insured by the Federal Deposit Insurance
Corporation or another agency of the United States government, short-term
securities issued or fully guaranteed by the United States government, federal
funds, or other investments as the Escrow Agent and the Company shall agree
until a determination is made by management to invest such funds in the Bank or
in other projects. The Organizers and management have no present intentions as
to other projects.
The Company expects to incur approximately $276,104 in organization and
pre-opening expenses which will, provided all necessary regulatory approvals are
obtained, be payable from the net proceeds of the Offering. The Organizers
expect that this amount will partially be offset by investment income during the
pre-opening period. Of the total estimated $276,104 of organizational and
pre-opening expenses, approximately $186, 091 will be used to pay salaries and
benefits and the remainder will be used for miscellaneous expenses such as rent,
legal, consulting, accounting and other expenses associated with the
organization of the Bank. Approximately $92,574 in organizational and
pre-opening expenses have been incurred as of September 30, 1997.
The Directors have guaranteed a $300,000 loan to the Partnership from
the Savannah Bank, N.A. to partially fund organizational and pre-opening
expenses and capital expenditures. The loan will be repaid from funds in the
Organizers' Escrow Account as soon as this Offering is completed. The loan,
which established a $300,000 line of credit with The Savannah Bank, N.A., began
on March 31, 1997 and will be due on March 30, 1998. The loan has a floating
rate of interest set at the Prime Rate of The Savannah Bank, N.A.
In addition, the Directors have agreed to guarantee a new $750,000 loan
to the Partnership to fund any remaining organizational and pre-opening expenses
and capital expenditures. This loan began on December 4, 1997 and matures
September 4, 1998. This loan also has a floating rate of interest set at the
Prime Rate of The Savannah Bank, N.A.. $300,000 of the $750,000 will be used to
pay off the initial loan described above. Upon receipt of final approval from
the Department, the Bank will repay the second loan, including interest.
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<PAGE> 20
The following table sets forth the proposed sources and uses of the
proceeds from this Offering. The figures for organizational and pre-opening
expenses are based on the assumptions that the Bank will commence operations on
October 1, 1998 and that there will be no investment earnings on the proceeds of
the offerings while they are held in escrow.
<TABLE>
Sources
<S> <C>
Gross proceeds ...................................... $ 5,120,000
Less: Offering Expenses ............................. (29,500)
Total Sources .............................. $ 5,090,500
===========
Uses
Organization and pre-opening expenses of the Company $ 5,000
Purchase of Bank capital stock (1) .................. 5,000,000
Other corporate purposes ............................ 85,500
Total Uses ................................. $ 5,090,500
===========
</TABLE>
(1) An estimated $276,104 of Bank organizational and pre-opening expenses
and not more than $1,890,000 of capital expenditures will be disbursed
from the Organizers' Escrow Account on behalf of the Bank, prior to the
Company's investment in the capital stock of the Bank. The $5,000,000
used to purchase the Bank's capital stock will be net of disbursements
previously made on behalf of the Bank. The previously advanced funds
will be expensed and capitalized by the Bank as appropriate.
The figures in the preceding table and footnote are estimates which are
considered reasonable, but there can be no assurance that the estimates will be
accurate. Variations could occur for many reasons. For example, if the Bank
opens for business later than the projected date, additional pre-operating
expenses would be incurred.
DIVIDENDS
It is anticipated that the Company will not pay any cash dividends on
its Common Stock in the foreseeable future. Dividends may be paid only out of
earnings of the Company. The availability of funds for payment of any dividends
will depend primarily upon the earnings of the Bank and its ability to pay
dividends to the Company.
Under current Georgia law, the Bank may not pay dividends out of
capital. It may pay dividends only out of undivided profits then on hand, after
deducting expenses including losses and bad debts. The Department requires that
all start-up losses be recovered and a cumulative profit made before dividends
are paid. In addition, the Bank is required by the Department to maintain the
Bank's
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<PAGE> 21
Capital Ratio, as defined by the Department's Statement of Policies, at not less
than 8% during the first three years of operation commencing upon the effective
date of a permit to begin business issued by the Department, and further the
Bank must maintain the Capital Ratio thereafter at levels consistent with the
published policies of the Department of Banking and Finance.
The Organizers anticipate that the earnings of the Bank will be
retained by the Bank during the foreseeable future and held for purposes of
enhancing the Bank's capital.
PRO FORMA CAPITALIZATION
The following table sets forth, as of the commencement of operations,
the expected capitalization of the Company, assuming all of the 512,000 shares
of Common Stock offered in this Offering are sold.
<TABLE>
<CAPTION>
Citizens Effingham Bancshares, Inc.
Shareholders' Equity:
- ---------------------
<S> <C>
Common Stock, $1.00 par
value, 20,000,000 shares
authorized, 512,000 issued and
outstanding ........................................ $ 512,000
Preferred Stock, $1.00 par
value, 10,000,000 shares
authorized, none outstanding ................... 0
Paid-in capital in
excess of par value (1) ............................ 4,608,000
Less Deficit Accumulated during
the development stage (2) .......................... (29,500)
Total shareholders' equity ......................... $5,090,500
==========
</TABLE>
- --------------------
(1) The expenses of this Offering, estimated at $29,500 in the aggregate,
will be charged against this account.
(2) Assuming no investment income. The cost incurred for the organization
of the Company has been expensed.
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<PAGE> 22
BUSINESS OF THE COMPANY AND THE BANK
GENERAL
The Company was incorporated as a Georgia corporation on October 29,
1997 to become a bank holding company by acquiring all the capital stock upon
the formation and chartering of the Bank. The primary activity of the Company
will be the ownership and operation of the Bank.
The proposed Bank will be organized as a bank under the laws of the
State of Georgia. Subject to regulatory approval, the Bank will engage in the
commercial banking business from its main office in Springfield, Georgia and its
branch office in Rincon, Georgia.
The Bank will engage in a general community and commercial banking
business, emphasizing the banking needs of individuals and small to medium-sized
businesses and professional service businesses in its primary service area and
of individuals and businesses in the community, including those located outside
the Bank's primary service area. The Bank will also offer private banking
services to individuals and businesses.
The Organizers believe the identified markets are not now adequately
served and that an opportunity exists for the Bank to penetrate these markets by
offering a variety of traditional and specialized banking services emphasizing
personal service, knowledge of local needs and accessibility of management.
BANKING SERVICES
The Bank intends to offer a full range of deposit services, including
checking accounts, savings accounts, and various time deposits ranging from
daily money market accounts to longer-term certificates of deposit. The
transaction accounts and time certificates will be tailored to the principal
market areas at rates competitive to those offered in the areas. In addition,
retirement accounts such as IRA (Individual Retirement Accounts) and SEP
(Simplified Employee Pension) accounts will be offered. All deposit accounts
will be insured by the FDIC up to the maximum amount (currently $100,000 per
account). The Bank intends to solicit these accounts from individuals,
businesses, foundations and organizations, and governmental authorities.
The Bank intends to offer a full range of short to medium-term
commercial and personal loans. The Organizers expect the Bank's primary lending
focus will be personal and business lending. Commercial loans will include both
secured and unsecured loans for working capital (including inventory and
receivables), business expansion and purchase of equipment and machinery.
Consumer loans will include secured and unsecured loans for financing
automobiles, home improvements, and personal investments. The Bank may originate
20
<PAGE> 23
fixed and variable rate mortgage loans and offer real estate construction and
acquisition loans.
The Bank intends to apply to join a network of automated teller
machines that may be used by Bank customers in other cities. The Bank also plans
to offer credit cards. The Bank does not intend to offer a full-service trust
department initially. Any exercise of trust powers will be contingent upon the
prior written approval of the Department and the Federal Deposit Insurance
Corporation.
LOCATION AND SERVICE AREA
The primary service area of the Bank will be the Municipalities of
Springfield, Rincon, and Guyton, Georgia and the contiguous areas of Effingham
County. Its secondary service area will include portions of Chatham, Bulloch,
Screven, and Bryan Counties, Georgia. The Bank's target markets are individuals
residing in the primary service area, small to medium-size businesses, including
retail shops and professional service businesses in the community.
The Bank's main office is located in the primary service area in
Springfield, the county seat for Effingham County, next to the new U.S. Post
Office on State Highway 21, a high-traffic area which serves as the entrance to
Springfield from the south. The branch office is also located in the primary
service area in Rincon. In recent years, all of the banks in the primary service
area have been acquired by banks with headquarters outside of Effingham County.
The Bank will emphasize that it is based in Effingham County and that the
Organizers and the executive officers are committed to the economic development
of the Effingham County area.
According to the Savannah Morning News article of March 22, 1997,
population in the primary service area grew 29.88% over the past six years, from
25,687 in 1990 to 33,363 on July 1 of 1996. The Georgia State Data Center
projects the population of Effingham County to reach 39,600 by the year 2000. An
estimated 85% of the county's population resides in the county's unincorporated
areas outside of Springfield, Rincon, and Guyton. In 1990, 73.8% of households
in the primary service area had a household income between $15,000-$75,000,
compared to the Georgia state population of 66.1% and the coastal Georgia region
population of 66.4%. However, only 3% of households in the primary service area
had incomes greater than $75,000 while the state and coastal region populations
were 8.4% and 5.8%, respectively. Households having income less than $15,000 was
23.2%, while it was 27.7% in the coastal region and 25.4% for the State of
Georgia.
ASSET AND LIABILITY MANAGEMENT
Assets of the Bank will consist primarily of loans and its investment
portfolio. In an effort to maintain adequate levels of
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<PAGE> 24
liquidity and minimize fluctuations in the net interest margin (the difference
between interest income and interest expense), the rate sensitivity of the loan
and investment portfolios will be similar to the rate sensitivity of the Bank's
liabilities.
The loan portfolio will be comprised principally of adjustable rate
loans with reasonable maturities. Substantially all fixed rate mortgage loans
may be sold in the secondary market.
The Bank will invest the majority of its investment portfolio in highly
marketable short term assets, such as Federal Funds and issues of the United
States government and its agencies. By pricing loans on a variable rate
structure, or by keeping the maturity of the investment and loan portfolios
relatively short-term, the Bank expects to be able to maintain loan interest, or
to reinvest securities proceeds, at prevailing market rates, thereby helping to
maintain a generally consistent spread over the interest rates paid by the Bank
on the deposits which are used to fund the investment and loan portfolios.
Deposit accounts will represent the majority of the liabilities of the
Bank. These are expected to include checking accounts and interest-bearing
accounts, time deposits and certificates of deposit. The Bank plans for most
time deposits to have short maturities, but the maturities may be extended based
on liquidity needs of the Bank. In managing its liabilities, the Bank will
attempt to attract deposits from customers who, assuming rates are competitive,
will be inclined to maintain an ongoing relationship with the Bank.
FACILITIES
The Bank's main office will be located at 802 South Laurel Street,
Springfield, Georgia in a two story building in Springfield. The lot, 225' x
309', is under contract for purchase by the Company for $110,000. The building,
a structure of about 5,387 square feet of heated area, and the related banking
equipment, furnishings and computer systems will cost approximately $925,000.
The first floor will have office space for four loan officers, a lobby area with
space for a receptionist and two customer service representatives, five teller
stations, the loan department and bookkeeping areas, a fireproof storage area
for loan documents, and the bank's vault. The second floor will house the Bank's
Board room and a large open area for future expansion.
The Rincon office will be located in a two story building at 600
Columbia Avenue, Rincon, Georgia. This lot is under contract for purchase for
$225,000 and measures 215' x 245'. The building, (about 3,310 square feet in
size) and the related banking equipment, furnishings and computer systems will
cost approximately $630,000. The first floor will have office space for three
loan officers, a lobby area with space for two customer service
22
<PAGE> 25
representatives, four teller stations, the loan workroom, and the bank's vault.
The second floor will be dedicated to attic storage.
EMPLOYEES
The Chief Executive Officer of the Bank will be Harry H. Shearouse. It
is anticipated that the Bank will employ eighteen full time employees during its
first year of operation, including the executive officers, a branch manager,
lending Officers, operations, credit personnel as well as tellers,
administrative assistants and customer service representatives. The Bank will
seek to hire people experienced in the banking field and familiar with the
Effingham County area market.
PRE-OPENING ACTIVITIES
In its pre-opening phase, the Bank will construct, occupy, and furnish
its facilities, hire and train its staff, purchase or lease and install
equipment and systems necessary for the transaction of business, establish
correspondent banking relationships and make other arrangements for necessary
services.
LACK OF PROFITABILITY IN THE EARLY PERIOD OF OPERATION
As a bank holding company with the Bank as its only asset, the
Company's initial profitability will depend upon the Bank's operations. The
Bank's proposed operations are subject to risks of a new business and,
specifically, of a new bank. It is anticipated that the Bank will incur
operating losses in its first year of operations. Although the Organizers
anticipate that the Bank will become profitable in its second year of
operations and that all of its initial losses will be recovered by its third
year of operations, there is no assurance that the Bank will become
profitable. Every reasonable effort will be made to reach a level of
profitability as quickly as possible; however, there can be no assurances that
the Bank will be profitable during its first few years of operation or at any
time thereafter. If the Bank is ultimately unsuccessful, there is no assurance
that the shareholders will recover all or any part of their investment in the
Common Stock. Therefore, persons should not subscribe to shares unless they
are in a position to lose the entire amount of their investment without a
material adverse effect on their respective financial conditions.
FEDERAL AND STATE LAWS AND REGULATION OF BANKS AND BANK HOLDING
COMPANIES
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. Any change in
applicable law or regulation may have a material effect on the business of the
Company and its subsidiaries.
On July 18, 1997, the Department accepted for filing a Georgia bank
charter application submitted by the Organizers. A charter application requires
substantial information about a bank's organizers, the bank's proposed capital
structure, its competitors and the proposed market service area. The application
and subsequent investigation conducted on behalf of the Department determined
that (a) the applicants have complied with all provisions of law; (b) the
convenience and needs of the public will be served by the proposed bank or trust
company; (c) there is a reasonable promise of adequate support for the bank or
trust
23
<PAGE> 26
company in the light of: (i) the competition offered by existing banks and trust
companies and other financial institutions, (ii) the previous financial history
of the community as to banks, trust companies, and other financial institutions,
and (iii) the opportunities for profitable employment of bank funds as indicated
by the average demand for credit, the number of potential depositors, the volume
of bank transactions, and the businesses and industries of the community with
particular regard to their stability, diversification, and size; (d) the
character and fitness of the incorporators, directors and proposed officers are
such as to command the confidence of the community and to warrant the belief
that the business of the proposed bank or trust company will be honestly and
efficiently conducted; (e) there has not been any material violation of Section
7-1-391 of the Official Code of Georgia Annotated, pertaining to the payment of
fees to the Bank's organizers, such that approving the articles would impair the
policy manifested by that provision; and (f) the capital structure of the
proposed bank is adequate in relation to the amount and character of the
anticipated business of the bank and the safety of prospective investors.
Approval of the application for the Bank's charter was obtained from the
Department on October 17, 1997. The Company has applied to the Federal Reserve
Board and the Department for approval of the Company becoming a bank holding
company.
If and when the Bank commences operations, it will be subject to
extensive supervision and regulation by the Department, the FDIC and the Federal
Reserve Board.
The Bank will be insured by the FDIC and be a non-member of the Federal
Reserve System. Therefore, the Bank will be subject to applicable provisions of
the Federal Reserve Act which restrict the ability of any bank to extend credit
to its parent holding company or to any of the parent's subsidiaries, to
purchase the assets thereof, to issue a guarantee, acceptance or letter of
credit (including an endorsement or standby letter of credit) to its parent
holding company or the parent's subsidiaries, or to invest in the stock or
securities thereof or to take such stock or securities as collateral for loans
to any borrower.
The dividends that may be paid by the Bank to the Company are subject
to legal limitations. Dividends may be paid only out of earnings of the Company.
No dividends may be paid until start-up losses are recovered and a cumulative
profit made. The Company does not anticipate that the Bank will declare any
dividends for the foreseeable future.
Under regulations issued by the Department, the Bank generally will be
required to have enough capital to maintain a capital-to-asset ratio of at least
eight (8%) percent for a projected three years. The Bank's total capital must be
sufficient to support the anticipated volume and character of operations for a
minimum of three years.
24
<PAGE> 27
The Federal Reserve Board enforces regulations that implement
risk-based rules for assessing bank and bank holding company capital adequacy.
The earnings of the Bank and, consequently of the Company, will be
affected significantly by the policies of the Federal Reserve Board, which
regulates the money supply in order to mitigate recessionary and inflationary
pressures. Among the techniques used to implement these objectives are open
market operations in United States Government securities, changes in the rate
paid by banks on bank borrowings, changes in reserve requirements against bank
deposits and limitations on interest rates that banks may pay on time and
savings deposits. These techniques are used in varying combinations to influence
overall growth and distribution of bank loans, investments and deposits, and
their use may also affect interest rates charged on loans or paid for deposits.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future. Also important in terms of
effect on banks are controls on interest rates paid by banks on deposits and the
types of deposits that may be offered by banks. Generally, governmental
regulation on deposit-rate accounts has been lessened in recent years. Since
March 31, 1986, the prohibition against the payment of interest on non-personal
demand deposits has been the only regulatory deposit-rate account constraint.
The effect of deregulation of deposit interest rates has been to increase banks'
cost of funds and make them more sensitive to fluctuations in money market
rates.
In view of changing conditions in the national economy and money
markets, as well as the effect of actions by monetary and fiscal authorities, no
prediction can be made as to possible future changes in interest rates, deposit
levels, loan demand or the business and earnings of the Company and it
subsidiaries.
After acquiring the capital stock of the Bank, the Company will become
a bank holding company within the meaning of the Federal Bank Holding Company
Act of 1956 and Georgia law. As a Bank holding Company, the Company will be
required to file with both of these agencies annual reports and other
information regarding its business operations and those of its subsidiaries. It
will also be subject to examination by these two agencies and will be required
to obtain their approval before acquiring, directly or indirectly,
25
<PAGE> 28
ownership or control of any voting shares of a bank or bank subsidiary of the
bank holding company if, after such acquisition, it would own or control,
directly or indirectly, more than 5% of the voting stock of such bank or banking
subsidiary of the bank holding company. Furthermore, a bank holding company is,
with limited exceptions, prohibited from acquiring direct or indirect ownership
or control of any voting stock of any company which is not a bank or bank
holding company and must engage only in the business of banking or managing or
controlling banks or furnishing services to or performing services for its
subsidiary banks. One of the exceptions to this prohibition is the ownership of
shares of a company the activities of which the Federal Reserve Board has
determined to be so closely related to banking and managing or controlling banks
as to be a proper incident thereto.
A bank holding company and it subsidiaries are prohibited from engaging
in certain tie-in arrangements in connection with the extension of credit or
provision of any property or service. Thus, a bank may not extend credit, lease
or sell property or furnish any services or fix or vary the consideration for
such on the condition that (i) the customer obtain or provide some additional
credit, property or service from or to such bank (other than a loan, discount,
deposit or trust service related to and usually provided in connection with a
loan, discount, deposit or trust service), its bank holding company or any other
subsidiary of its bank holding company or (ii) the customer not obtain some
other credit, property or service from a competitor, except to the extent
reasonable conditions are imposed in a credit transaction to assure the
soundness of the credit extended.
The Federal Reserve Board has cease and desist powers over parent bank
holding companies and non-banking subsidiaries should their actions constitute a
serious threat to the safety, soundness or stability of a subsidiary bank.
Although the Company is not presently subject to any direct regulatory
restrictions on dividends (other than those of Georgia corporate law), the
Company's ability to pay cash dividends will depend on the amount of dividends
paid by the Bank, and any other subsequently acquired entities. See "Dividends."
The Company is also subject to certain restrictions with respect to engaging in
the business of issuing, underwriting and distributing securities.
The Company cannot predict what other legislation might be enacted or
what other regulations might be adopted, or if enacted or adopted, the effect
thereof on the Company's operations.
COMPETITION
The banking business is highly competitive. In one or more aspects of
its business the Bank, and consequently the Company, will compete with other
commercial banks, savings and loan
26
<PAGE> 29
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking companies operating in the
primary and secondary markets. All three commercial banks in the Effingham
County market are branches or affiliates of larger regional holding companies.
The Organizers believe that the dominance of these institutions has resulted in
a decline in responsiveness and personalized service in the local banking
industry. The Bank plans to promote its ability to make decisions locally and a
high level of personal service. There are no savings and loan institutions
operating in the primary market area.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements and notes thereto.
CAPITAL RESOURCES AND LIQUIDITY
The Company's organization and pre-opening expenses have been funded
through the borrowing, by the Citizens Effingham Partnership, of a $300,000 loan
from The Savannah Bank, N.A., guaranteed by the Directors. At August 31, 1997,
the Company had approximately $208,372.61 of cash available, $10,872.61 of which
was in the Partnership's bank account and $197,500.00 of which was remaining on
the Partnership's line of credit with the Savannah Bank, N.A. Management
believes that the amount available, when combined with an estimated $750,000
that the Directors have agreed to borrow, if necessary, will be adequate to fund
organizing activities through the date of receipt of the net proceeds from the
Offering. Upon final regulatory approval, the Company expects to use net
proceeds from the Offering in the Organizers' Account to repay the borrowings in
full.
ORGANIZATIONAL ACTIVITIES
The discussion below covers the organizing activities of the Citizens
Effingham Partnership from April 3, 1997 (date of inception) through August 31,
1997. The Partnership had only limited activity during its organization, and
there is no period comparable to that discussed below.
APRIL 3, 1997 (DATE OF INCEPTION) THROUGH AUGUST 31, 1997
For the period of April 3, 1997 (date of inception) through August 31,
1997, the Partnership was in the process of organizing. Accordingly, its
activities consisted of recruiting organizers and directors for the Company and
the proposed Bank, development of the Company's business plan, preparation of
applications for necessary regulatory approvals, preparation for the proposed
stock offerings,
27
<PAGE> 30
obtaining marketing and customer service studies and the administrative support
for these functions.
The Partnership incurred organization costs of $91,758 for the period
ended August 31, 1997. Of that amount, compensation expense totaled $38,223.00,
which consisted primarily of salaries, benefits and payroll taxes for the
Company's President. Legal fees totaled $3,530.00 and consulting fees totaled
$17,625.00, filing fees were $12,060.00, while interest expense totaled none
during the period. The other organizing expenses of $20,320.00 during the period
consisted of equipment, architectural fees, office supplies, travel, telephone
and other expenses.
EFFECTS OF INFLATION ON OPERATIONS
When the Company commences operations as a financial institution, the
majority of its assets and liabilities will be monetary in nature and,
therefore, will differ greatly from most industrial or commercial companies that
have significant investments in fixed assets. Due to this fact, the effects of
inflation on the Company's balance sheet will be minimal, meaning that there
will be no substantial increases or decreases in the Company's net purchasing
power over time. The most significant effect of inflation will be on other
expenses which tend to rise during periods of general inflation.
MANAGEMENT
ORGANIZERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
organizers, proposed directors, and executive officers of the Company and the
Bank. All of the Directors listed below are also Organizers of the Bank.
<TABLE>
<CAPTION>
Anticipated Amount of
Beneficial Ownership
of the Company's
Common Stock (1)
----------------
Position with % of Shares
the Company No. Outstanding
(Director's Position of After
Name (Age) Term Expires) with the Bank Shares Offering
- ---------- ------------- ------------- ------ --------
<S> <C> <C> <C> <C>
Harry H. President, Chief President, 10,000 1.95%
Shearouse Executive Officer Chief Executive
(50) and Director Officer and
(2000) Director
D. Guerry N/A Organizer 10,000 1.95%
Burns (80)
</TABLE>
28
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
Jon G. Burns Director (1999) Director 20,000 3.91%
(45)
Charles E. Director (1999) Director 12,500 2.44%
Hartzog
(61)
Philip M. Director (1999) Director 8,350 1.63%
Heidt
(49)
W. Harvey Director (1999) Director 7,500 1.46%
Kieffer
(55)
C. Murray Director (2000) Director 20,000 3.91%
Kight
(65)
William F. N/A Organizer 5,000 .98%
Rahn
(71)
Thomas C. Director (2000) Director 15,000 2.93%
Strickland, Jr.
(55)
Mariben M. Director (2000) Director 5,000 .98%
Thompson
(56)
Thomas O. Director (2001) Director 5,000 .98%
Triplett, Sr.
(62)
J. Terrell Director (2001) Director 20,000 3.91%
Webb
(67)
H. Mitchell Director (2001) Director 5,000 .98%
Weitman
(51)
Wendel H. Director (2001) Director 10,000 1.95%
Wilson
(53)
Total 153,350 29.95%
======= ======
</TABLE>
29
<PAGE> 32
(1) 15,850 of these shares will be held of record by family members, trusts for
the benefit of, or corporations or retirement accounts controlled by the
individuals listed. 137,500 of these shares will be held by the Organizers, and
the proceeds from the sale of these shares will be placed in the Organizers'
Account of the Escrow Agent.
HARRY H. SHEAROUSE was born in Chatham County but has resided in
Effingham County his entire life. After graduating from Effingham County High
School, Mr. Shearouse attended Georgia Southern University, where he received a
Bachelor of Business Administration Degree. Mr. Shearouse has been involved in
banking for over 29 years, most recently as a Vice President for the First
National Bank of Effingham, a position he held from 1992 until 1997. Prior to
that, he was employed by the C & S National Bank/NationsBank from 1968 through
1992. Mr. Shearouse served as a director of the C & S Bank of Effingham
County/NationsBank until 1992. Mr. Shearouse is actively involved in the
community and is a member of several civic organizations.
D. GUERRY BURNS has resided in Effingham County since his birth and was
educated in the Effingham County school system. Prior to his retirement several
years ago, Mr. Burns was self-employed in the timber business. From 1965 until
1989, Mr. Burns served as a Director/Advisory Board Member of the C & S Bank of
Effingham County/NationsBank.
JON G. BURNS was born in Savannah, Georgia but has been a life-long
resident of Effingham County. After graduating from Effingham County High
School, Mr. Burns attended Georgia Southern University, where in 1975 he
received a B.S. degree in Political Science. Mr. Burns is presently the owner
and operator of B & S Feed and Farm Supply. He is also involved, along with his
two brothers, in a local timber sales business. Mr. Burns served as
Director/Advisory Board Member of the C & S National Bank/NationsBank from 1989
until January, 1997. He is actively involved in several civic organizations.
CHARLES E. HARTZOG was born in Savannah, Georgia but has lived in
Effingham County for over 55 years. Mr. Hartzog graduated from Rincon High
School in 1954 and attended Newberry College, where he received a B.S. degree in
Commerce in 1959. That year, he went to work for the Citizens and Southern
National Bank in Savannah, Georgia, beginning a career in banking that would
span 33 years. In 1969, he transferred to the Citizens and Southern Bank of
Effingham County, where for 23 years he served as President of the Bank. During
that time, he also served as a Director, and he served as an Advisory Board
Member through that time up until January, 1997. Mr. Hartzog continues to be
active in civic and other organizations, some of which he has served or is
presently serving in leadership positions.
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<PAGE> 33
PHILIP M. HEIDT was born in Effingham County, where he has lived all
his life. He was educated in the Effingham County school system. Mr. Heidt is
presently the owner of Heidt Real Estate Services, Inc., which operates Century
21/Heidt Realty. In addition to his real estate sales business, Mr. Heidt is
involved in numerous real estate development and rental projects in the area.
Mr. Heidt served as an Advisory Board Member to NationsBank from February of
1996 until January of 1997. Mr. Heidt is involved in community organizations,
where he serves in various leadership roles.
W. HARVEY KIEFFER was born in Effingham County and has resided there
all of his life. He was educated in the Effingham County school system. Mr.
Kieffer, who has been in the construction business all of his life, owns a
construction company that he has operated since 1989. Mr. Kieffer is also
involved in various real estate rental and development projects in the Effingham
County area.
C. MURRAY KIGHT was born in Swainsboro, Georgia, but has been a
resident of Effingham County for approximately 52 years. A 1949 graduate of
Effingham Academy, Mr. Kight was President of Kight Ford, Inc., a local Ford
dealership, from 1962 until 1985. Since leaving the dealership, Mr. Kight has
been actively involved in several real estate development and rental projects in
Effingham County. Mr. Kight served as an Advisory Board Member of C & S Bank of
Effingham County/NationsBank from 1974 until January, 1997. Mr. Kight is
actively involved in the community.
WILLIAM F. RAHN was born in Effingham County, where he has resided his
entire life. He was educated in the Effingham County school system. Prior to his
retirement, Mr. Rahn was a farmer for over 35 years. For 24 years, he served as
a Director/Advisory Board Member of The Citizens and Southern Bank of Effingham
County/NationsBank, ending his tenure in 1995. He is active in the community,
serving in several civic organizations.
THOMAS C. STRICKLAND, JR. was born in Chatham County, Georgia, but
became a permanent resident of Effingham County in 1971. After completing high
school in Chatham County, Mr. Strickland received a Bachelor of Business
Administration degree from Georgia Southern University. From 1971 until the
present, Mr. Strickland has owned and managed Strickland Funeral Home, Inc. Mr.
Strickland is also involved in real estate rental and development. He served as
an Advisory Board Member for the C & S National Bank/NationsBank for 8 years
until January, 1997. Mr. Strickland is active in the Effingham County community
and is a member of several civic organizations.
31
<PAGE> 34
MARIBEN M. THOMPSON was born in Bulloch County and was educated in the
Bulloch County public school system. After graduating from high school, she
attended Georgia Southern University, where in 1962 she received a B.S. degree
in Education. Since 1963, when she became a permanent resident of Effingham
County, she began teaching in Effingham County. After teaching school for a
total of 25 years, she left the teaching profession to take advantage of several
business opportunities. For several years, Mrs. Thompson was owner and President
of Speak-Ezy Telephone Co., Inc., and she is presently active in assisting her
husband in the operations of several Effingham County businesses.
THOMAS O. TRIPLETT, SR. was born in Boone, North Carolina. After
graduating from Chilhowie High School in Virginia, he attended Bluefield
College, also in Virginia. In 1959, Mr. Triplett began a career in banking with
The Citizens and Southern National Bank (later NationsBank) in Savannah,
Georgia, where he worked until his retirement in 1993. During his 34 years in
banking, Mr. Triplett served in various capacities, retiring from the Bank as a
Vice-President. A former mayor and councilman for the City of Port Wentworth,
Georgia, he also served 18 years in the Georgia House of Representatives.
Although Mr. Triplett is retired, he continues to remain active; he currently
serves on the Department of Transportation Board from the First Congressional
District. Mr. Triplett has been a resident of Effingham County for approximately
three years.
J. TERRELL WEBB was born in Cobbtown, Georgia and shortly thereafter
moved to Effingham County. Immediately after graduating from Effingham Academy,
he attended the University of Georgia, where in 1951 he received a B.S. degree
in Pharmacy. He was the owner and operator of Webb's Rexall Drugs in
Springfield, Georgia from 1954 until 1981, when he sold his business. After
1981, he worked part-time as a pharmacist. Mr. Webb served as a
Director/Advisory Board Member of the C & S Bank of Effingham County/NationsBank
from 1972 until 1992. For many years Mr. Webb has been actively involved in the
Effingham County community and has served in numerous leadership positions.
H. MITCHELL WEITMAN was born in Effingham County, where he has resided
his entire life. After graduating from Effingham County High School, Mr. Weitman
received a B.S. degree in Pharmacy from the University of Georgia. Since his
graduation in 1969, Mr. Weitman has been employed as a pharmacist, working for
several companies before buying his own business in 1981. He presently is the
owner and operator of Weitman Pharmacy, Inc. in Springfield.
WENDEL H. WILSON was born in Effingham County where he has resided his
entire life. After graduating from Effingham County High School, he attended
Georgia Southern University, where he received a Bachelor of Business
Administration degree in Accounting. Mr. Wilson is a Certified Public Accountant
who worked for the accounting firm of Haskins & Sells until 1974, when he
32
<PAGE> 35
opened his own practice in Effingham County. He is presently the managing
partner of Wilson & Kessler, C.P.A. Mr. Wilson is also involved in several other
ventures in the Effingham County area. He is very active in civic organizations
and continues to serve in numerous leadership positions.
ELECTION OF OFFICERS AND DIRECTORS
The Board of Directors of the Company is elected by its shareholders.
The officers of the Company are selected by the Company's Board of Directors.
The Board of Directors of the Bank will be elected by the Company as sole
shareholder of the Bank. The officers of the Bank will be selected by the Bank's
Board of Directors. The initial Chief Lending Officer and Chief Operations
Officer must be prior approved by the Department, and any changes to the
positions of President, Chief Lending Officer, or Chief Operations Officer
during the first two years of operation must also be approved by the Department.
No family relationships exist among the directors and executive officers of the
Company or the proposed directors and executive officers of the Bank.
EXECUTIVE COMPENSATION
Harry H. Shearouse is the proposed President and Chief Executive
Officer of the Company and the Bank. The Partnership entered into an employment
contract with Mr. Shearouse for a term of three years commencing on the date on
which the Bank opens. Under this Agreement, Mr. Shearouse will receive a base
salary of $80,000.00 per annum until 512,000 shares of the Common Stock are
sold, at which point his base salary will increase to $90,000 per annum.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Certain of the officers and directors of the Company will have deposit
accounts with the Bank and may have other transactions with the Company or the
Bank, including loans in the ordinary course of business. All loans or other
extensions of credit made by the Bank to officers, directors, or principal
shareholders of the Company and to affiliates of such persons will be made in
the ordinary course of business on terms, including interest rates and
collateral, deemed by the Bank to be substantially the same as those prevailing
at the time for comparable transactions with independent third parties and do
not involve more than the normal risk of collectability or present other
unfavorable features.
Through August 31, 1997, the Partnership has paid all costs and
disbursements associated with forming the Company and the Bank, including
application filing fees, attorneys fees, feasibility studies, market analysis
and other costs. Amounts disbursed by the Partnership through August 31, 1997
totalled $91,861.00. In order to fund these costs, the Partnership has borrowed
$300,000 from The
33
<PAGE> 36
Savannah Bank, N.A., payable with interest at the prime rate of a Georgia bank
upon the approval of the Bank by the Department and other governmental entities,
but in no event later than March 30, 1998, which has been guaranteed by the
Directors. The Escrow Agreement allows a disbursement from the Organizers'
Escrow Account after the shares are issued but before the regulatory approvals
are obtained to allow the Company to repay the Organizers the Principal amount
loaned to the Company and accrued interest.
On August 7, 1997, 21 Centre Partnership, a Georgia General Partnership
comprised of Bank Organizers, Philip M. Heidt, W. Harvey Kieffer, C. Murray
Kight, and Thomas C. Strickland, Jr., entered into a contract with the
Partnership to sell the parcel of land upon which the Rincon branch will be
constructed. Two independent appraisals of the parcel, one by Coastal Area
Appraisal Services done on June 23, 1997 and the other by Johnnie Ganem Realty &
Appraisal Co. on July 18, 1997, each valued the parcel at $225,000, the price
for which the land was sold. 21 Centre Partnership made no real estate
commission on the sale.
Since March 16, 1997, 21 Centre Partnership has leased office space to
the Partnership at a rate of $660.00 per month, pursuant to an oral contract
between the parties.
SHAREHOLDERS
Of the 20,000,000 shares of authorized Common Stock, 512,000 shares are
expected to be issued and outstanding at the completion of this Offering. The
amount and percent of such outstanding stock to be owned directly or
beneficially by the Directors/Organizers and by the purchasers in this Offering,
are expected to be as follows:
<TABLE>
<CAPTION>
Number of Shares Percent of Total Shares
Title of Group Beneficially Owned to be Outstanding
- -------------- ------------------ -----------------
<S> <C> <C>
Directors/Organizers 153,350 29.95%
Other Purchasers 358,650 70.05%
in this
Offering
TOTAL 512,000 100.0%
======= =====
</TABLE>
To the best of the Company's knowledge, no person will, upon the
completion of this Offering, own of record or beneficially, more than five
percent (5%) of the outstanding Common Stock. There are no known arrangements,
either formal or informal, between the Company and any Organizer, executive
officer of the Company, or any other person for the purchase of shares of Common
Stock which would
34
<PAGE> 37
result in any person owning, of record or beneficially, more than five percent
(5%) of the Common Stock.
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation authorize the Company to issue
up to 20,000,000 shares of Common Stock, par value of $1.00 per share and
10,000,000 shares of Preferred Stock, $1.00 par value per share.
COMMON STOCK
As of the date of this Prospectus there were no shares of Common Stock
issued and outstanding, and upon completion of this Offering there will be
512,000 shares issued and outstanding. The remaining authorized shares of Common
Stock may be issued from time to time in such amounts as the Board of Directors
determines.
All shares of Common Stock will be entitled to share equally in
dividends from funds legally available therefor, when, as and if declared by the
Board of Directors, and upon liquidation or dissolution of the Company, whether
voluntary or involuntary, to share equally in the assets of the Company
available for distribution to the shareholders. It is not anticipated that the
Company will pay any cash dividends on its Common Stock in the foreseeable
future. See "Dividends." Voting rights will be exclusively vested in the holders
of the Common stock, subject to any voting rights granted to holders of
Preferred Stock should any Preferred Stock be issued. Each holder of Common
Stock will be entitled to one vote for each share on all matters submitted to
the shareholders. Holders of Common Stock will not have pre-emptive rights to
acquire authorized but unissued capital stock of the Company. All shares of the
Common Stock issued in accordance with the terms of this Offering as described
in this Prospectus will be fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors, without shareholder approval, may issue
Preferred Stock with voting, conversion and liquidation rights which might
adversely affect the voting power and other rights of the holders of Common
Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 512,000 shares
of Common Stock outstanding. The shares sold in this Offering will be freely
tradeable without restriction or registration under the Securities Act of 1933,
as amended (the "1933 Act"), except for shares purchased by an affiliate of the
Company, which will be subject to resale restrictions under the
35
<PAGE> 38
1933 Act. These "restricted securities" and securities held by "affiliates" may
be eligible for sale in the open market in accordance with the provisions of
Rule 144 promulgated under the 1933 Act.
In general, under Rule 144, a person (including an affiliate of the
Company) who has beneficially owned restricted shares for at least two years
would be entitled to sell within any three month period a number of restricted
shares that does not exceed the greater of one percent (1%) of the then
outstanding shares of the Common Stock or the average weekly trading Volume of
the Common Stock during the four calendar weeks preceding such sale, whichever
is greater. Non-affiliates who have held restricted shares for at least three
years would be entitled to sell such shares under Rule 144 without regard to the
volume limitation. Affiliates may sell non-restricted shares under Rule 144
without regard to the length of their holding period. The Company anticipates
having no public market for its securities.
CERTAIN PROVISIONS OF THE COMPANY'S ARTICLES AND BYLAWS
A number of provisions of the Company's Articles of Incorporation
("Articles") and Bylaws concern matters of corporate governance and certain
rights of shareholders. The following discussion is a general summary of certain
provisions of the Articles and Bylaws relating to stock ownership and transfers,
the Board of Directors and business combinations which might be deemed to have a
potential "anti-takeover" effect. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by the Board of
Directors but which individual shareholders of the Company may deem to be in
their best interests or as a result of which shareholders might receive a
substantial premium for their shares over then current market prices. As a
result, shareholders who might desire to participate in such a transaction may
not have an opportunity to do so. Such provisions will also render the removal
of the current Board of Directors and management more difficult.
Board of Directors. The Board of Directors of the Company is divided
into three classes, each of which contains approximately one-third of the whole
number of the members of the Board. Each class serves a staggered term, with
approximately one-third of the total number of Directors being elected each
year. The Articles and By-Laws of the Company do not allow for cumulative voting
for the election of Directors.
A classified Board of Directors could make it more difficult for
shareholders, including those holding a majority of the outstanding shares, to
force an immediate change in the composition of a majority of the Board of
Directors. Since the terms of only one-third of the incumbent Directors expire
each year, it requires at least two annual elections for the shareholders to
change a
36
<PAGE> 39
majority, whereas a majority of a non-classified board may be changed in one
year. In the absence of the provisions of the Articles classifying the Board,
all of the Directors would be elected each year. The Organizers of the Company
believe that the staggered election of Directors tends to promote continuity of
management because only one-third of the Board of Directors is subject to
election each year. Staggered terms guarantee that in the ordinary course
approximately two-thirds of the Directors, or more, at any one time have had at
least one year's experience as Directors of the Company, and moderate the pace
of changes in the Board of Directors by extending the minimum time required to
elect a majority of Directors from one to two years.
The Articles allow the Company's Directors to consider not only the
Company and its shareholders in determining what is in the best interests of the
Company, but also the interests of employees, customers, suppliers and creditors
of the Company and the interests of the communities in which offices of the
Company are located. The Organizers believe that consideration of all such
factors gives the Board of Directors maximum flexibility in discharging its
duties.
Business Combination Provision. In addition to the Fair price
provisions described below, the Company's Articles and Bylaws incorporate
certain provisions of the Georgia Business Corporation Code, as amended (the
"Georgia Code"), which provide that the Company shall not engage in any business
combination (as defined in the Articles and in the Bylaws) with any person
acquiring direct or indirect beneficial ownership of 10% or more of the
outstanding shares of the Company's stock (an "interested shareholder") for a
period of five years following the date that such shareholder became an
interested shareholder unless (i) such business combination is approved by the
Board of Directors; (ii) such interested shareholder obtained at least 90% of
the Company's outstanding stock in the transaction which made such shareholder
an interested shareholder (excluding shares held by (a) directors, (b)
subsidiaries of the Company, or (c) employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer); or
(iii) prior to acquiring at least 90% of the Company's stock, the interested
shareholder received approval of a majority of the shareholders (excluding
shares held by Directors and officers) to effect the business combination. The
term "person" means an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
"Fair Price Provision". Under a "fair price provision" of the Articles
based on provisions of the Georgia Code, any business combination would require,
in addition to the vote otherwise required by law or the Articles, the unanimous
approval of the continuing directors (as defined in the Articles), provided that
37
<PAGE> 40
the continuing directors constitute at least three members of the Board of
Directors at the time of such approval, or the approval of at least two-thirds
of the continuing directors and the approval of the holders of a majority of the
shares outstanding and entitled to vote on the combination, other then voting
shares owned by the interested shareholder who is a party to the proposed
business combination. If, however, the interested shareholder has not ceased to
be an interested shareholder at any time within the three years prior to
consummation of the business combination and has not increased its share
ownership in the Company by more than one percent (1%) in any twelve-month
period, or if specified price criteria and other requirements are met, the
normal majority vote of shareholders would apply.
Unanimous continuing Director approval or approval by two-thirds of the
continuing Directors and the holders of a majority of the outstanding voting
shares of the Company, excluding all voting shares beneficially owned by the
interested shareholder involved in the proposed business combination, also is
not required if the interested shareholder is offering to pay a certain formula
price based upon the market value of the shares as of certain dates to ensure
that all shareholders of the Company receive a fair price for their shares.
Authorized Shares. The Articles authorize the issuance of 20,000,000
shares of Common Stock and 10,000,000 shares of Preferred stock. The shares of
Common Stock and Preferred Stock were authorized to provide the Company's Board
of Directors as much flexibility as possible in using such shares for purposes
including financings, acquisitions' stock dividends, stock splits, employee
stock options and other similar purposes. However, these additional authorized
shares may also be used by the Board of Directors to deter future attempt to
gain control of the Company. The Board of Directors has sole authority to
determine the terms of any one or more series of the Preferred Stock, including
voting rights, conversion rates and liquidation preferences. As a result of the
ability to fix voting rights for a series of preferred Stock, the Board of
Directors has the power to issue a series of Preferred Stock to persons friendly
to management in order to attempt to block a post-tender offer merger or other
transaction by which a third party seeks control, and thereby assist management
in retaining its position. There are currently no plans for the issuance of
Preferred Stock.
Indemnification of Officers and Directors. As permitted by the Georgia
Code, the Articles contain provisions which eliminate the personal liability of
Directors and officers for monetary damages to the Company or its shareholders
for breach of their fiduciary duties as Directors, except to the extent such
elimination of liability is prohibited by the Georgia Code. In accordance with
the Georgia Code, these provisions do not limit the liability of any
38
<PAGE> 41
Director (a) for any appropriation, in violation of duties, of any business
opportunity for the Company, (b) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (c) for any type of liability set
forth in Section 14-2-832 of the Official Code of Georgia Annotated, and (d) for
any transaction from which the director or officer derived any improper personal
benefit. The provisions do not limit or eliminate the rights of the Company or
any shareholder to seek an injunction or any other non-monetary relief in the
event of a breach of a Director's fiduciary duty. In addition, these provisions
apply only to claims against a Director arising out of his role as a Director
and do not relieve a Director from liability for violations of statutory law
such as certain liabilities imposed on a Director under the federal securities
law.
The Bylaws of the Company and provisions of the Georgia Code further
provide that the Company may indemnify litigation expenses of Directors'
officers, employees and agents of the Company if these expenses were incurred as
a result of a legal proceeding brought against such person for acts undertaken
in his official capacity if such person acted in good faith or not opposed to
the best interests of the Company and, in the case of any criminal proceeding,
he or she had no reasonable cause to believe his or her conduct was unlawful.
The purpose of those provisions is to assist the Company in retaining
qualified individuals to serve as Directors and officers by limiting their
exposure to personal liability for serving as such.
The Company is not aware of any pending of threatened action, suit or
proceeding involving any of its Directors, officers, employees or agents for
which indemnification from the Company may be sought. Insofar as indemnification
for liabilities (primarily relating to public distribution of securities)
arising under the 1933 Act may be permitted to Directors, officers and
controlling persons of the Company, or of any affiliate of the Company pursuant
to the Articles of Incorporation or otherwise, the Board of Directors has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. Accordingly, it is possible that the indemnification
provisions of the Articles may not apply to liabilities arising under the 1933
Act unless the prospective indemnitee is successful in the proceeding in
question.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for
the Company by Ellis, Painter, Ratterree & Bart, L.L.P., Savannah, Georgia.
39
<PAGE> 42
EXPERTS
The financial statements as of August 31, 1997 and for the period April
3, 1997 through August 31, 1997 included in this Prospectus have been so
included in reliance on the report of Thigpen, Jones, Seaton & Co. independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the registration Statement. For
further information with respect to the Company and the Common Stock, reference
is hereby made to the Registration Statement and the exhibits thereto. Each
summary herein of additional information included in the Registration Statement
or any exhibit thereto is qualified in its entirety by reference to such
information or exhibit. The Registration Statement may be obtained from the
Commission upon payment of the prescribed fees therefor, or may be examined at
the Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web Site containing the
Registration Statement and all exhibits and schedules thereto which can be
accessed at http://www.sec.gov.
40
<PAGE> 43
CITIZENS EFFINGHAM
PARTNERSHIP
FINANCIAL STATEMENTS
PERIOD OF APRIL 3, 1997 (DATE OF INCEPTION)
TO AUGUST 31, 1997
F-1
<PAGE> 44
CITIZENS EFFINGHAM PARTNERSHIP
FINANCIAL STATEMENTS
PERIOD OF APRIL 3, 1997 (DATE OF INCEPTION) TO AUGUST 31, 1997
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT....................................... F-3
FINANCIAL STATEMENTS:
Balance Sheet ................................................. F-4
Statement of Income.............................................. F-5
Statement of Cash Flows.......................................... F-6
Notes to Financial Statements.................................... F-7
</TABLE>
F-2
<PAGE> 45
[THIGPEN, JONES, SEATON & CO., P.C. LETTERHEAD]
CERTIFIED PUBLIC ACCOUNTANTS Robert E. Thigpen, Jr., CPA
Scotty C. Jones, CPA
211 North Franklin Street - P.O. Box 400 Frank W. Seaton. Jr., CPA
Dublin, Georgia 31040-0400
Tel: 912-272-2030 - Fax: 912-272-3318
INDEPENDENT AUDITORS' REPORT
Partners
Citizens Effingham Partnership
We have audited the accompanying balance sheet of Citizens Effingham
Partnership as of August 31, 1997, and the related statements of income and cash
flows for the period of April 3, 1997 (Date of Inception) to August 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Citizens Effingham
Partnership as of August 31, 1997, and the results of its operations and its
cash flows for the period of April 3, 1997 (Date of Inception) to August 31,
1997 in conformity with generally accepted accounting principles.
/s/ THIGPEN, JONES, SEATON & CO., P.C.
October 20, 1997
F-3
<PAGE> 46
CITIZENS EFFINGHAM PARTNERSHIP
BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
AS OF AUGUST 31,
-----------------------
1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Current Assets-
Cash and cash equivalents $ 10,873
- -----------------------------------------------------------------------------------------------------------------------
Property, at cost:
Land 2,260
Furniture and fixtures 253
Construction in process 9,300
- -----------------------------------------------------------------------------------------------------------------------
Total 11,813
Less - accumulated depreciation -
- -----------------------------------------------------------------------------------------------------------------------
Property, net 11,813
- -----------------------------------------------------------------------------------------------------------------------
Other Asset-
Organization costs 33,215
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 55,901
=======================================================================================================================
LIABILITIES AND EQUITY
Current Liabilities:
Short-term notes payable $ 102,500
Payroll tax liabilities 131
- -----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities $ 102,631
- -----------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Deficit accumulated during organization (46,730)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 55,901
=======================================================================================================================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
F-4
<PAGE> 47
CITIZENS EFFINGHAM PARTNERSHIP
STATEMENT OF INCOME
================================================================================
<TABLE>
<CAPTION>
Period of
April 3, 1997 (Date of Inception)
to August 31,
1997
- --------------------------------------------------------------------------------------------------------
<S> <C>
Revenues $
Less Expenses:
Salaries 33,333
Rent 4,455
Payroll Taxes 2,806
Employee Insurance 2,621
Office Supplies 1,402
Telephone 1,069
Utilities 621
Mileage 233
Printing and Reproduction 169
Postage and Delivery 21
Total Expenses 46,730
Net Loss (46,730)
Beginning Deficit -
Ending Deficit $ (46,730)
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE> 48
CITIZENS EFFINGHAM PARTNERSHIP
STATEMENT OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Period Ended August 31,
------------------------
1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (46,730)
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in assets and liabilities attributable to operations: -
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities (46,730)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (11,813)
Organization costs (33,215)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (45,028)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 102,500
Accrued liabilities 131
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 102,631
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,873
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR -
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 10,873
==================================================================================================================
</TABLE>
See Accompanying Notes to Financial Statements
F-6
<PAGE> 49
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD OF APRIL 3, 1997 (DATE OF INCEPTION) TO AUGUST 31, 1997
================================================================================
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. REPORTING ENTITY - The Citizens Effingham Partnership began with a
group of twelve partners in the Spring of 1997 and plans to
charter a State Bank in Springfield, Georgia. The partnership
received regulatory approval of their application to charter this
bank from the State Department of Banking and Finance on October
17, 1997 and is pending approval from the Federal Deposit
Insurance Corporation. Citizens Effingham Partnership intends to
form a holding company (Citizens Effingham Bancshares, Inc.) that
will own 100% of the shares of the proposed state chartered bank,
Citizens Bank of Effingham.
The reporting period for the statements of income and cash flows
is from April 3, 1997 (Date of Inception), when the first
activity occurred, to August, 1997.
2. PROPERTY AND DEPRECIATION - The cost of property, plant, and
equipment will be depreciated over the estimated useful lives of
the related assets. The cost of leasehold improvements will be
depreciated (amortized) over the lesser of the length of the
related leases or the estimates useful lives of the assets.
Depreciation is computed on the straight line method for financial
reporting purposes and on the accelerated basis for income tax
purposes.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
CLASSIFICATION LIFE
----------------------------------------------------------------------------------
<S> <C>
Furniture and fixtures 7-15 Years
----------------------------------------------------------------------------------
</TABLE>
Expenditures for maintenance, repairs, and minor renewals are
charged to expense when incurred. Expenditures for improvements,
replacements, and major renewals are capitalized. Assets retired
or otherwise disposed of are eliminated from the asset accounts
along with related amounts of accumulated depreciation. Any gains
or losses from disposals are included in income.
Citizens Bank of Effingham (In Organization) is currently in
organization status, therefore normal business activities have not
yet begun. Accordingly, all property purchased has been
capitalized and depreciation will not be recorded until the assets
are placed into service.
3. CASH AND CASH EQUIVALENTS - For the purposes of the statement of
cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to
be cash equivalents. This includes money market deposit accounts
and short-term certificates of deposit.
4. MANAGEMENT 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 at August 31, 1997 and
revenues and expenses during the period then ended. Actual results
could differ from those estimates.
5. ORGANIZATION COST - All cost associated with the application
process up to the point of final regulatory approval will be
capitalized. At the beginning of operation these will start being
amortized on the straight line method over 60 months.
F-7
<PAGE> 50
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD OF APRIL 3, 1997 (DATE OF INCEPTION) TO AUGUST 31, 1997
================================================================================
B. SHORT-TERM NOTES PAYABLE
Short-term notes payable consisted of the following at August 31, 1997:
<TABLE>
<CAPTION>
1997
- ----------------------------------------------------------------------------------------
<S> <C>
The Savannah Bank $ 102,500
- ----------------------------------------------------------------------------------------
</TABLE>
These borrowings are against a line of credit that has been established
with The Savannah Bank, N.A. for a total of $300,000 with interest at
the prime rate as established by The Savannah Bank, N.A. The current
rate is 8.25% with interest payable at maturity. Principal and accrued
interest will be due at maturity on March 30, 1998.
C. RELATED PARTY TRANSACTIONS
The note payable at The Savannah Bank, N.A. is fully guaranteed by the
twelve organizers. Each organizer individually guarantees amounts not
to exceed $34,000.
An agreement to purchase the proposed branch site has been contracted
with 21 Centre Partnership of which the partners are organizers of the
Bank. See Note D for further information on these proposed
transactions.
Presently, the partnership is renting an office from 21 Centre
Partnership of which several of the organizers are partners.
D. COMMITMENTS
Citizens Effingham Partnership, the organizers of the proposed Citizens
Bank of Effingham, have entered into an agreement with Harry Shearouse
as Chief Executive Officer and President of the proposed bank. This
agreement obligates Citizens Effingham Partnership to pay Mr. Shearouse
an annual salary of $80,000, payable bi-monthly beginning March 16,
1997, and increasing to $90,000 once all stock has been sold.
Additional provisions of the contract provide for family medical
insurance and contains a severance provision for termination without
cause after operations have commenced.
Citizens Effingham Partnership, the organizers of Citizens Bank of
Effingham, has entered into a tax-free land exchange agreement with
three individuals to acquire a site for the Bank in Springfield,
Georgia. The partnership has also entered into a contract with 21
Centre Partnership to purchase real estate for the Rincon branch site.
Century 21 Heidt Realty is handling both transactions and is owned by
Philip M. Heidt (an organizer).
The organizers have also entered into an agreement with Blewett
Consulting Engineers and Richmod Hill Design Center, Inc. for the
purpose of engineering and architectural design services for two bank
buildings to be located in Springfield, Georgia and the other to be
located in Rincon, Georgia.
F-8
<PAGE> 51
CITIZENS EFFINGHAM PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
PERIOD OF APRIL 3, 1997 (DATE OF INCEPTION) TO AUGUST 31, 1997
================================================================================
E. DISCLOSURES RELATING TO STATEMENT OF CASH FLOWS
CASH FLOWS RELATING TO INTEREST AND INCOME TAXES - Cash paid during the
period for interest and income taxes was as follows:
<TABLE>
<CAPTION>
Period Ended August 31, 1997
----------------------------------------------------------------------------------------------------
<S> <C>
Interest (net of amount capitalized) $ -
----------------------------------------------------------------------------------------------------
Income Taxes $ -
----------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE> 52
==============================================================================
NO DEALER, SALESMAN OR OTHER
PERSON HAS BEEN AUTHORIZED TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF
GIVEN OR MADE, SUCH INFORMATION AND
REPRESENTATIONS SHOULD NOT BE RELIED
UPON. THIS PROSPECTUS DOES NOT 512,000 SHARES
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OF
SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS CITIZENS EFFINGHAM
NOR ANY SALE HEREUNDER SHALL, UNDER ANY BANCSHARES, INC.
CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
-------------------
COMMON STOCK
TABLE OF CONTENTS
PAGE
----
Prospectus Summary .............. 4 ----------
Risk Factors and Other PROSPECTUS
Investment Considerations ..... 6 ----------
The Company and the Bank ........ 12
Use of Proceeds ................. 16
Dividends ....................... 18
Pro Forma Capitalization ........ 19
Business of the Company and
the Bank ...................... 20
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations .................... 27
Management ...................... 28
Shareholders .................... 34
Description of Capital Stock .... 35
Legal Matters ................... 39
Experts ......................... 40
Additional Information .......... 40
Audited Financial Statements NOVEMBER , 1997
for the Citizens Effingham -----
Partnership for Period
Ended August 31, 1989 .........F-1
===============================================================================
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized statement of all expenses
in connection with the issuance and distribution of the securities being
registered:
<TABLE>
<CAPTION>
Public
------
<S> <C>
Filing Fee - Securities and Exchange
Commission $ 1,552
Printing, Postage and Engraving Expenses 2,000
Legal Fees 12,000
Escrow Agent's Fees 1,500
Accounting Fees 7,500
"Blue Sky" Fees and Expenses 2,955
Miscellaneous 2,003
-------
TOTAL $29,510
=======
</TABLE>
Item 14. Indemnification of Directors and Officers
(A) The Articles of Incorporation of the Registrant provide for
the limitation of a Director's liability to the full extent permitted by
Section 14-2-202(b)(4), Official Code of Georgia, as amended, as follows:
A director or officer of this Corporation shall not be personally
liable to the Corporation or its shareholders for monetary damages for
breach of the duty of care or other duty as a director or officer,
except: (a) for any appropriation, in violation of duties, of any
business opportunity for the Corporation, (b) for acts or omissions
which involve intentional misconduct or a knowing violation of law,
(c) for any type of liability set forth in Section 14-2-832 of the
Official Code of Georgia Annotated, or (d) for any transaction from
which the director or officer derived any improper personal benefit.
If the Official Code of Georgia Annotated is amended after approval
by the shareholders of this Article XI to further eliminate or limit
the personal liability of directors, then the liability of a director
or officer of the Corporation shall be eliminated or limited to the
fullest
II-1
<PAGE> 54
extent permitted by the Official Code of Georgia Annotated, as so
amended.
Any repeal or modification of the foregoing paragraph by the
shareholders of the Corporation shall not adversely affect any right or
protection of a director of officer of the Corporation existing at the time of
such repeal or modification.
(B) The By-Laws of the Registrant provide for the indemnification
of directors, officers and other persons as follows:
8.4 EXPENSES. Expenses incurred by any person who was or is a
party or who is threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or
informal, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust or other
enterprise, in defending any civil, criminal, administrative or
investigative action, suit or proceeding, may be paid by the
Corporation in advance of the final disposition of such action, suit
or proceeding, as authorized by the Board of Directors generally or as
to a specific case or as to a specific person or persons (designated
by name, title or class of persons) upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such
amount if it shall be ultimately determined that he is not entitled to
be indemnified by the Corporation as authorized under the applicable
provisions of the Georgia Business Corporation Code and upon
compliance with any further requirements of law pertaining to such
advances.
8.5 NON EXCLUSIVITY. The indemnification provided by Section 8.4
shall not be deemed exclusive of any other rights, in respect of
indemnification or otherwise, to which those seeking indemnification
may be entitled under any bylaw or resolution approved by the
affirmative vote of the holders of the majority of the shares entitled
to vote thereon taken at a meeting the notice of which specified that
such bylaw or resolution would be placed before the shareholders, both
as to action by a director, officer, employee or agent in his official
capacity and as to action in another capacity while holding such
office or position, provided such indemnification does not exceed
the powers of indemnity permitted to corporations under the provisions
of the Georgia Business Corporation Code, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators
of such person.
II-2
<PAGE> 55
(C) The following sections of Georgia law concern indemnification
of officers, directors and other persons by corporations:
O.C.G.A. 14-2-850. PART DEFINITIONS.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" or "officer" means an individual who is or was
a director or officer, respectively, of a corporation or who, while a
director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign corporation,
partnership, joint venture, trust, employee benefit plan, or other
entity. A director or officer is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by,
the director or officer to the plan or to participants in or
beneficiaries of the plan. Director or officer includes, unless the
context otherwise requires, the estate or personal representative of a
director or officer.
(3) "Disinterested director" means a director who at the time
of a vote referred to in subsection (c) of Code Section 14-2-853 or a
vote or selection referred to in subsection (b) or (c) of Code Section
14-2-855 or subsection (a) of Code Section 14-2-856 is not:
(A) A party to the proceeding; or
(B) An individual who is a party to a proceeding having
a familial, financial, professional, or employment relationship with
the director whose indemnification or advance for expenses is the
subject of the decision being made with respect to the proceeding,
which relationship would, in the circumstances, reasonably be expected
to exert an influence on the director's judgment when voting on the
decision being made.
(4) "Expenses" includes counsel fees.
(5) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expenses incurred
with respect to a proceeding.
II-3
<PAGE> 56
(6) "Official capacity" means:
(A) When used with respect to a director, the office or
director in a corporation; and
(B) When used with respect to an officer, as contemplated
in Code Section 14-2-857, the office in a corporation held by
the officer.
Official capacity does not include service for any other domestic or
foreign corporation or any partnership, joint venture, trust, employee
benefit plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative and whether formal or informal.
O.C.G.A. 14-2-851. AUTHORITY TO INDEMNIFY.
(a) Except as otherwise provided in this Code section, a
corporation may indemnify an individual who is a party to a proceeding
because he or she is or was a director against liability incurred in
the proceeding if:
(1) Such individual conducted himself or herself in
good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her
official capacity, that such conduct was in the best
interests of the corporation;
(B) In all other cases, that such conduct was
at least not opposed to the best interests of the
corporation; and
(C) In the case of any criminal proceeding,
that the individual had no reasonable cause to
believe such conduct was unlawful.
(b) A director's conduct with respect to an employee benefit
plan for a purpose he or she believed in good faith to be in the
interests of the participants in and beneficiaries of the plan is
conduct that satisfies the requirement of subparagraph (a)(2)(B) of
this Code section.
II-4
<PAGE> 57
(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not
meet the standard of conduct described in this Code section.
(d) A corporation may not indemnify a director under this
Code section:
(1) In connection with a proceeding by or in the
right of the corporation, except for reasonable expenses
incurred in connection with the proceeding if it is determined
that the director has met the relevant standard of conduct
under this Code section; or
(2) In connection with any proceeding with respect to
conduct for which he or she was adjudged liable on the basis
that personal benefit was improperly received by him or her,
whether or not involving action in his or her official
capacity.
O.C.G.A. 14-2-852. MANDATORY INDEMNIFICATION.
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because he or she was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding.
O.C.G.A. 14-2-853. ADVANCE FOR EXPENSES.
(a) A corporation may, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding because
he or she is a director if he or she delivers to the corporation:
(1) A written affirmation of his or her good faith
belief that he or she has met the relevant standard of conduct
described in Code Section 14-2-851 or that the proceeding
involves conduct for which liability has been eliminated under
a provision of the articles of incorporation as authorized by
paragraph (4) of subsection (b) of Code Section 14-2-202; and
(2) His or her written undertaking to repay any funds
advanced if it is ultimately determined that the director is
not entitled to indemnification under this part.
II-5
<PAGE> 58
(b) The undertaking required by paragraph (2) of subsection
(a) of this Code section must be an unlimited general obligation of
the director but need not be secured and may be accepted without
reference to the financial ability of the director to make repayment.
(c) Authorizations under this Code section shall be made:
(1) By the board of directors:
(A) When there are two or more disinterested
directors, by a majority vote of all the disinterested
directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of
a committee of two or more disinterested directors
appointed by such a vote; or
(B) When there are fewer than two disinterested
directors, by the vote necessary for action by the board
in accordance with subsection (c) of Code Section
14-2-824, in which authorization directors who do not
qualify as disinterested directors may participate; or
(2) By the shareholders, but shares owned or voted
under the control of a director who at the time
does not qualify as a disinterested director
with respect to the proceeding may not be voted
on the authorization.
O.C.G.A. 14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR
EXPENSES.
(a) A director who is a party to a proceeding because he or
she is a director may apply for indemnification or advance for
expenses to the court conducting the proceeding or to another court of
competent jurisdiction. After receipt of an application and after
giving any notice it considers necessary, the court shall:
(1) Order indemnification or advance for expenses if it
determines that the director is entitled to indemnification
under this part; or
(2) Order indemnification or advance for expenses if it
determines, in view of all the relevant circumstances, that it
is fair and reasonable to indemnify the director or to advance
expenses to the director, even if the director has not met the
relevant standard of conduct set
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forth in subsections (a) and (b) of Code Section 14-2-851,
failed to comply with Code Section 14-2-853, or was adjudged
liable in a proceeding referred to in paragraph (1) or (2) of
subsection (d) of Code Section 14-2-851, but if the director
was adjudged so liable, the indemnification shall be limited
to reasonable expenses incurred in connection with the
proceeding.
(b) If the court determines that the director is entitled to
indemnification or advance for expenses under this part, it may also
order the corporation to pay the director's reasonable expenses to
obtain court-ordered indemnification or advance for expenses.
O.C.G.A. 14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director under Code
Section 14-2-851 unless authorized thereunder and a determination has
been made for a specific proceeding that indemnification of the
director is permissible in the circumstances because he or she has met
the relevant standard of conduct set forth in Code Section 14-2-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors,
by the board of directors by a majority vote of all the
disinterested directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members
of a committee of two or more disinterested directors
appointed by such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph
(1) of this subsection; or
(B) If there are fewer than two disinterested
directors, selected by the board of
directors (in which selection directors
who do not qualify as disinterested
directors may participate); or
(3) By the shareholders, but shares owned by or voted
under the control of a director who at the time does not
qualify as a disinterested director may not be voted on the
determination.
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(c) Authorization of indemnification or an obligation to
indemnify and evaluation as to reasonableness of expenses shall be
made in the same manner as the determination that indemnification is
permissible, except that if there are fewer than two disinterested
directors or if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to reasonableness
of expenses shall be made by those entitled under subparagraph (b) (2)
(B) of this Code section to select special legal counsel.
O.C.G.A. 14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.
(a) If authorized by the articles of incorporation or a
bylaw, contract, or resolution approved or ratified by the
shareholders by a majority of the votes entitled to be cast, a
corporation may indemnify or obligate itself to indemnify a director
made a party to a proceeding including a proceeding brought by or in
the right of the corporation, without regard to the limitations in
other Code sections of this part, but shares owned or voted under the
control of a director who at the time does not qualify as a
disinterested director with respect to any existing or threatened
proceeding that would be covered by the authorization may not be voted
on the authorization.
(b) The corporation shall not indemnify a director under this
Code section for any liability incurred in a proceeding in which the
director is adjudged liable to the corporation or is subjected to
injunctive relief in favor of the corporation:
(1) For any appropriation, in violation of the director's
duties, of any business opportunity of the corporation;
(2) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
(3) For the types of liability set forth in Code Section
14-2-832; or
(4) For any transaction from which he or she received
an improper personal benefit.
(c) Where approved or authorized in the manner described in
subsection (a) of this Code section, a corporation may advance or
reimburse expenses incurred in advance of final disposition of the
proceeding only if:
(1) The director furnishes the corporation a written
affirmation of his or her good faith belief that his or
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<PAGE> 61
her conduct does not constitute behavior of the kind described
in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written
undertaking, executed personally or on his or her behalf, to
repay any advances if it is ultimately determined that the
director is not entitled to indemnification under this Code
section.
O.C.G.A 14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.
(a) A corporation may indemnify and advance expenses under
this part to an officer of the corporation who is a party to a
proceeding because he or she is an officer of the corporation:
(1) To the same extent as a director; and
(2) If he or she is not a director, to such further
extent as may be provided by the articles of incorporation,
the bylaws, a resolution of the board of directors, or
contract except for liability arising out of conduct that
constitutes:
(A) Appropriation, in violation of his or her
duties, of any business opportunity of the corporation;
(B) Acts or omissions which involve intentional
misconduct or a knowing violation of law;
(C) The types of liability set forth in Code Section
14-2-832; or
(D) Receipt of an improper personal benefit.
(b) The provisions of paragraph (2) of subsection (a) of this
Code section shall apply to an officer who is also a director if the
sole basis on which he or she is made a party to the proceeding is an
act or omission solely as an officer.
(c) An officer of a corporation who is not a director is
entitled to mandatory indemnification under Code Section 14-2-852, and
may apply to a court under Code Section 14-2-854 for indemnification
or advances for expenses, in each case to the same extent to which a
director may be entitled to indemnification or advances for expenses
under those provisions.
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(d) A corporation may also indemnify and advance expenses to
an employee or agent who is not a director to the extent, consistent
with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of
directors, or contract.
O.C.G.A. 14-2-858. INSURANCE.
A corporation may purchase and maintain insurance on behalf of
an individual who is a director, officer, employee, or agent of the
corporation or who, while a director, officer, employee, or agent of
the corporation, serves at the corporation's request as a director,
officer, partner, trustee, employee, or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee
benefit plan, or other entity against liability asserted against or
incurred by him or her in that capacity or arising from his or her
status as a director, officer, employee, or agent, whether or not the
corporation would have power to indemnify or advance expenses to him
or her against the same liability under this part.
O.C.G.A. 14-2-859. APPLICATION OF PART.
(a) A corporation may, by a provision in its articles of
incorporation or bylaws or in a resolution adopted or a contract
approved by its board of directors or shareholders, obligate itself in
advance of the act or omission giving rise to a proceeding to provide
indemnification or advance funds to pay for or reimburse expenses
consistent with this part. Any such obligatory provision shall be
deemed to satisfy the requirements for authorization referred to in
subsection (c) of Code Section 14-2-853 or subsection (c) of Code
Section 14-2-855. Any such provision that obligates the corporation to
provide indemnification to the fullest extent permitted by law shall
be deemed to obligate the corporation to advance funds to pay for or
reimburse expenses in accordance with Code Section 14-2-853 to the
fullest extent permitted by law, unless the provision specifically
provides otherwise.
(b) Any provision pursuant to subsection (a) of this Code
section shall not obligate the corporation to indemnify or advance
expenses to a director of a predecessor of the corporation, pertaining
to conduct with respect to the predecessor, unless otherwise
specifically provided. Any provision for indemnification or advance
for expenses in the articles of incorporation, bylaws, or a resolution
of the board of directors or shareholders, partners, or, in the case
of limited liability companies, members or managers of a predecessor
of the corporation or other entity in a merger or
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<PAGE> 63
in a contract to which the predecessor is a party, existing at the
time the merger takes effect, shall be governed by paragraph (3) of
subsection (a) of Code Section 14-2-1106.
(c) A corporation may, by a provision in its articles of
incorporation, limit any of the rights to indemnification or advance
for expenses created by or pursuant to this part.
(d) This part does not limit a corporation's power to pay or
reimburse expenses incurred by a director or an officer in connection
with his or her appearance as a witness in a proceeding at a time when
he or she is not a party.
(e) Except as expressly provided in Code Section 14-2-857,
this part does not limit a corporation's power to indemnify, advance
expenses to, or provide or maintain insurance on behalf of an employee
or agent.
Item 15. Recent Sales of Unregistered Securities
None.
Item 16. Exhibits and Financial Statement Schedules
<TABLE>
<S> <C>
3.1 Articles of Incorporation
3.2 By-Laws
4 Specimen of certificate for Common Stock
5 Opinion and Consent of Ellis, Painter, Ratterree & Bart, LLP
10.1 Partnership Agreement
10.2 Amendment to Partnership
10.3 Contracts to Purchase Land
10.4 Employment Agreement of Harry H. Shearouse
10.5 Escrow Agreement
23.1 Consent of Thigpen, Jones, Seaton & Co.
23.2 Consent of Ellis, Painter, Ratterree & Bart, LLP.
24 Powers of Attorney
27 Financial Data Schedule (FOR SEC USE)
</TABLE>
II-11
<PAGE> 64
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-12
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 2 to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Springfield and State of Georgia on the 19th day of December, 1997.
CITIZENS EFFINGHAM BANCSHARES, INC.
By: /s/ Harry H. Shearouse
-----------------------------------------
Harry H. Shearouse
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints HARRY H. SHEAROUSE, his true and lawful
attorney-in-fact, with full power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date
----
<S> <C> <C>
/s/ Harry H. Shearouse President, Chairman of the 12/19/97
- -------------------------------- Board, Treasurer, and Director --------
Harry H. Shearouse
/s/ Jon G. Burns Director 12/19/97
- -------------------------------- --------
Jon G. Burns
/s/ Charles E. Hartzog Director 12/19/97
- -------------------------------- --------
Charles E. Hartzog
/s/ Philip M. Heidt Director 12/19/97
- -------------------------------- --------
Philip M. Heidt
/s/ W. Harvey Keiffer Director 12/19/97
- -------------------------------- --------
W. Harvey Kieffer
</TABLE>
<PAGE> 66
<TABLE>
<S> <C> <C>
/s/ C. Murray Kight Principal Accounting 12/19/97
- -------------------------------- Officer, Principal Financial --------
C. Murray Kight Officer, Secretary, and
Director
/s/ Thomas C. Strickland, Jr. Director 12/19/97
- -------------------------------- --------
Thomas C. Strickland, Jr.
/s/ Mariben M. Thompson Director 12/19/97
- -------------------------------- --------
Mariben M. Thompson
/s/ Thomas O. Triplett, Sr. Director 12/19/97
- -------------------------------- --------
Thomas O. Triplett, Sr.
/s/ J. Terrell Webb Director 12/19/97
- -------------------------------- --------
J. Terrell Webb
/s/ H. Mitchell Weitman Director 12/19/97
- -------------------------------- --------
H. Mitchell Weitman
/s/ Wendel H. Wilson Director 12/19/97
- -------------------------------- --------
Wendel H. Wilson
</TABLE>
<PAGE> 67
Item 17
Undertakings Pursuant to
the Form S-1 Requirements
Pursuant to Rule 415 and Reg. Section 229.512, the undersigned registrant
hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effect amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or at the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
CITIZENS EFFINGHAM BANCSHARES, INC.
By: Harry H. Shearouse /s/
---------------------------------------
Harry H. Shearouse, President,
Chairman of the Board, Treasurer, and
Director
C. Murray Kight /s/
---------------------------------------
C. Murray Kight, Principal Financial
Officer, Principal Accounting
Officer, and Secretary
