As filed with the Securities and Exchange Commission on January 13, 1998
Registration File No. 333-44161
================================================================================
SECURITIES AND EXCHANGE COMMISSION
------------------------------------
WASHINGTON, D.C. 20549
Amendment No. 2 to
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------------------------------------
PSB BANCGROUP, INC.
(Name of small business issuer in its charter)
Florida 6712 59-3454146
------- ---- ----------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
220 South First Street
Lake City, Florida 32025
(904) 754-0002
------------------------------------
(Address and telephone number
of principal executive offices)
Robert W. Woodard
President and Chief Executive Officer
220 South First Street
Lake City, Florida 32025
(904) 754-0002
----------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies Requested to:
Herbert D. Haughton, Esq. or A. George Igler, Esq
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
(904) 878-2411
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an Offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
==================================== ======================== ======================= ======================= ====================
Title of Proposed Proposed
each class Amount maximum maximum
of securities to be offering aggregate Amount of
to be registered registered(1) price per share(2) offering price(2) registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $. 01 par value 1,333,000 shares $9.00 $11,997,000 $3,635.00
Warrants 733,000 $0.00 $0 $0.00
==================================== ======================== ======================= ======================= ====================
</TABLE>
(1) Common Stock ("Shares") and Warrants are to be issued during the Offering
Period in Units. 133,000 Units will contain one Share and two Warrants to
purchase additional Common Stock and 467,000 Units will contain one Share
and one Warrant to purchase additional Common Stock. Units will not be
issued or certificated and the minimum number of Units which may be
purchased is 500 Units. Shares and Warrants will be detachable upon
issuance and will be issued and certificated separately. Shares issued
after the Offering Period will not have Warrants attached.
(2) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================
<PAGE>
467,000 UNITS, EACH CONSISTING OF ONE SHARE OF COMMON STOCK AND ONE
PURCHASE WARRANT FOR ONE SHARE OF COMMON STOCK
and
133,000 UNITS, EACH CONSISTING OF ONE SHARE OF COMMON STOCK AND TWO
PURCHASE WARRANTS, EACH FOR ONE SHARE OF COMMON STOCK
Minimum: 500,000 Units ----- Maximum: 600,000 Units
[LOGO] PSB BANCGROUP, INC.
A Proposed Bank Holding Company
for
PEOPLES STATE BANK
LAKE CITY, FLORIDA
A Proposed State-Chartered Bank
PSB BancGroup, Inc., a Florida corporation ("Company"), hereby offers for
sale a minimum of 500,000 Units and a maximum of 600,000 Units at a price of
$9.00 per unit (the "Offering").
During the Offering Period, which is defined as the 90 day period following
the effective date ("Effective Date") of the Registration Statement filed under
the Securities Act of 1933 as amended ("33 Act"), and any extension by the
Company in its sole discretion not to exceed 90 days, 600,000 shares will be
offered in "Units" at $9.00 per Unit. Each Unit consists of one share of Common
Stock, par value $0.01, of the Company ("Common Stock") and purchase warrants
("Warrant") to purchase one additional share of Common Stock at $9.00 per share.
Units purchased by Organizers will contain two Warrants while Units purchased by
Non-Organizers will contain only one Warrant. See "TERMS OF THE OFFERING -
Warrants". The minimum number of Units that may be purchased is 500.
Certificates will not be issued for Units as the Units are immediately separable
into shares and warrants. Only certificates for Common Stock and Warrants will
be issued in connection with the Offering. Warrants may be transferred by a
holder, however, only in conjunction with the simultaneous transfer of an equal
number of shares. The minimum number of Units offered is 500,000 and the
Organizers have committed to the Florida Department of Banking and Finance
("Department") to purchase, in the aggregate, at least 133,000 Units or 26.6% of
the total minimum Offering. See "TERMS OF THE OFFERING - Purchases by Organizers
of the Company".
The Company will issue shares pursuant to the exercise of Warrants
immediately following the closing of the Offering Period. The Company has
reserved 733,000 shares to be issued upon the execution of Warrants. Warrants
may be exercised immediately after issuance and will expire 48 months from the
Effective Date unless redeemed sooner by the Company ("Exercise Period"). See
"TERMS OF THE OFFERING - Warrants." The offer of shares pursuant to the exercise
of Warrants will end when all of the Warrants have been exercised or have
expired.
Actual sales of Units and shares to the public are expected to be made
beginning on or about March 15 , 1998, and end on or about March 15, 2002. The
Offering of Units and shares will be made on a continuous basis under Securities
and Exchange Commission ("SEC" or "Commission") Rule 415. The Units and shares
of the Company are offered on a best-efforts basis by certain directors and
executive officers of the Company, who will receive no commissions for such
sales. All subscription funds tendered during the Offering Period will be
deposited in an interest-bearing escrow account with the Independent Banker's
Bank of Florida ("Escrow Agent"). The Offering will be terminated and all
subscription funds, together with any interest earned thereon, will be promptly
returned if all required conditional regulatory approvals have not been obtained
or the minimum number of Units have not been subscribed to by the end of the
Offering Period. September 1, 1998 is the latest date on which the subscription
funds might be held in escrow prior to their return in the event the minimum is
not reached or the Company has not satisfied the conditional regulatory
approvals. Subscriptions obtained in the Offering may be accepted or rejected in
whole or in part by the Company for any reason. Once a subscription is accepted
by the Company, however, it cannot be withdrawn. See "TERMS OF THE OFFERING."
Once subscription funds have been released by the Escrow Agent and shares
of the Company's Common Stock are issued, in the event the Offering is
terminated because of the Company's failure to satisfy the conditional
regulatory approvals, subscribers will not receive a full refund of their
subscription payment. See "TERMS OF THE OFFERING - Failure of Bank to Commence
Operations."
The Company is a "development stage company" with no prior operating
history. See "RISK FACTORS - Start-up Enterprise-Lack of Operating History".
Prior to this Offering, there has been no public market for the Common Stock and
it is not anticipated that there will be an active trading market for the
shares. There can be no assurance that an active trading market for such stock
will develop since the Company presently does not intend to seek to list the
Common Stock on a national securities exchange or to qualify such Common Stock
for quotation on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ").
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD
NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF
THOSE RISKS THAT MANAGEMENT BELIEVES PRESENT THE SUBSTANTIAL RISKS TO AN
INVESTOR IN THIS OFFERING.
<PAGE>
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SEC PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
THIS OFFERING IS BEING MADE ON A 500,000 UNIT MINIMUM BASIS.
===================================================================================================================================
Price Underwriting
to Discounts and Proceeds to
Public(1) Commissions(2) the Company(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit . . . . . . . . . . . . . . . . . $9.00 $0 $9.00
Minimum(4) . . . . . . . . . . . . . . . . $4,500,000 $0 $4,500,000
Maximum(4). . . . . . . . . . . . . . . . $5,400,000 $0 $5,400,000
If all warrants are exercised . . . . . . $11,997,000 $0 $11,997,000
=================================== ============================= ========================= =====================================
</TABLE>
(1) Prior to this Offering, there has been no established market for the shares
of the Company's Common Stock. The Offering price was arbitrarily
determined by the Board of Directors of the Company and does not bear any
relationship to the Company's assets, book value, net worth or any other
recognized criteria of value. In the event a market should develop for the
Common Stock after completion of this Offering, there can be no assurance
that the market price will equal or exceed the Offering price herein.
(2) The securities offered hereby will be sold on a best-efforts, minimum
500,000 Unit basis by certain directors and executive officers of the
Company and no commissions will be paid on such sales. See "TERMS OF THE
OFFERING."
(3) Before deducting Offering expenses, estimated to be approximately $26,000
including registration fees, legal and accounting fees, printing and other
expenses. See "USE OF PROCEEDS" for an itemized statement of expenses.
(4) These securities are offered on a best-efforts, 500,000 Unit minimum basis.
If payment in cash for 500,000 Units is not received prior to the end of
the Offering Period, the Offering will terminate and all subscription
funds, together with any interest earned thereon, will be promptly returned
to subscribers. The Organizers of the Company have indicated that they may
be willing to subscribe for 15,000 additional Units in this Offering, not
to exceed an aggregate of 148,000 Units or 29.6% of the minimum Offering,
if necessary to help the Company sell the 500,000 Units necessary to
release subscription proceeds from the Subscription Escrow Account, as
defined herein and to continue the Offering. All purchases of Units by the
Company's Organizers will be subject to affiliate resale limitations under
the 33 Act and any additional purchases as described herein will be made on
the same terms, including Warrant provisions, as those made by other
investors. The Organizers of the Company have represented to the Company
that all purchases of Common Stock will be made for investment purposes
only and not with a view to resell such shares. The maximum number of
shares that will be sold in the Offering will be 600,000 shares. In the
event the maximum number of shares are sold, followed by the exercise of
all of the Warrants to be issued, then the maximum number of shares which
will be outstanding is 1,333,000. There can, however, be no assurance given
that any of the Warrants will be exercised. See "RISK FACTORS," "TERMS OF
THE OFFERING," and "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
The Company reserves the absolute right to cancel all subscriptions and
return all subscription funds, together with any income realized from the
investment of such funds, for any reason whatsoever, at any time prior to the
time that the Company withdraws subscription funds from the Subscription Escrow
Account. See "TERMS OF THE OFFERING."
The date of this Prospectus is March ___, 1998.
3
<PAGE>
AVAILABLE INFORMATION
Prior to the Offering, the Company has not been required to file
reports under the Securities Exchange Act of 1934 ("Exchange Act").
The Company has filed electronically with the SEC through its
Electronic Data Gathering Analysis and Retrieval ("EDGAR") system, a
Registration Statement on Form SB-2, as amended, (together will all exhibits and
schedules thereto, the "Registration Statement") under the Securities Act of
1933, as amended with respect to the registration of the Units and shares
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in such Registration Statement and the exhibits thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information pertaining to the Units and Shares
offered by this Prospectus and related matters, reference is made to the
Registration Statement, including the exhibits filed as a part thereof. Each
statement in this Prospectus referring to a document filed as an exhibit to such
Registration Statement is qualified by reference to the exhibit for a complete
statement of its terms and conditions.
The Registration Statement filed electronically with EDGAR by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at its Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a web site that contains
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The Company's complete Registration Statement is available for review on this
Web Site. The address of the Web Site is http://www.sec.gov. Copies of exhibits
may also be obtained by written request addressed to: Robert W. Woodard,
President, 220 South First Street, Lake City, Florida 32025.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish annual reports to its shareholders which
will contain audited financial statements and quarterly reports which contain
unaudited financial statements. In addition, the Company will be required, under
section 15(d) of the Exchange Act, to file annual and quarterly reports with the
Commission. Copies of such reports will be available to the Company's
shareholders.
1
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information and
financial statements appearing elsewhere in this Prospectus. Prospective
Investors are urged to read the entire Prospectus carefully.
Risk Factors
The securities offered hereby may be deemed to be speculative and
involve certain risks such as:
o Start-up Enterprise
o Dependency on Key Management
o Financial Position of the Company and
Expected Lack of Initial Profitability
o Highly Competitive Banking Market
o Unpredictable Economic Conditions
o Extensive Governmental Regulation
o No Plans to Pay Dividends in the
Foreseeable Future
o Possible Return of Less Than the
Subscription Amount
o Intended Purchases by Organizers
o Anti-takeover Provision in Company's
Articles of Incorporation
o No Established Market for Shares
o Arbitrary Determination of Offering Price
o Absence of Preemptive Rights
o Future Capital Needs of the Bank
o No Underwriting of this Offering
o Possible Dilution Resulting from Shares
Issued Under Warrant Plan
For these and other reasons, the purchase of the Units and shares is highly
speculative and involves significant investment risks. A prospective investor
should carefully consider the matters set forth under "RISK FACTORS" and should
be prepared to lose his or her entire investment.
The Company
PSB BancGroup, Inc. was organized under the laws of the State of
Florida on June 30, 1997, for the purpose of operating as a bank holding company
pursuant to the Federal Bank Holding Company Act of 1956, as amended ("BHC
Act"). In order to fund the organizational and pre-opening expenses of the
proposed bank estimated to be approximately $175,000, the Organizers purchased
from the Company in a private offering 3,942 shares of unregistered Common
Stock, par value $0.01 for $45.00 per share. No warrants were attached to those
shares, and the unregistered shares must be exchanged for Units issued in this
Offering. Through October 31, 1997, the Company has expended $66,966 for such
expenses. See "TERMS OF THE OFFERING - Purchases by Organizers of the Company".
The Company intends to use the minimum net proceeds of this Offering to purchase
100% of the common stock to be issued by Peoples State Bank ("Bank"), to repay
organizational expenses and for other general corporate purposes. Neither the
Company nor the Bank has commenced business operations, and neither will do so
until the Offering Period is completed and the requisite approvals of the
Florida Department of Banking and Finance ("Department"), the Federal Deposit
Insurance Corporation ("FDIC") and the Board of Governors of the Federal Reserve
System ("Federal Reserve") are obtained. The main office of the Company and the
Bank will be located in Lake City, Columbia County, Florida. The Company's
mailing address is, 220 South First Street, Lake City, Florida 32025 and the
telephone number is (904) 754-0002. See "THE COMPANY".
2
<PAGE>
The Bank
It is anticipated that the Bank will commence business operations
sometime during the second quarter of 1998, or as soon thereafter as
practicable. The Bank will engage in a general commercial and retail banking
business with primary emphasis upon high quality service to meet the financial
needs of the individuals and businesses residing and located in and around Lake
City, Florida. As part of its regular business operations, the Bank will offer a
full compliment of loans, including commercial, consumer/installment and real
estate loans. The Organizers expect that commercial loans will account for
approximately one-half of the Bank's estimated total loan portfolio. Commercial
loans are loans made to individual, partnership or corporate borrowers for a
variety of business purposes. Because of the nature of these types of loans,
there exists a higher risk of loss in this category of loan. To the extent that
borrowers fail to repay their loans, such failure may have a material adverse
effect on the Bank's and the Company's earnings and overall financial condition,
as well as, the value of the Common Stock. See "BUSINESS OF THE BANK".
It is intended that the Bank will operate in a modular bank facility
for at least the first year of operation, and that construction on a permanent
facility will begin on the same site approximately 4 months after the Bank
commences operations. The expected cost of building the approximately 4,500
square foot permanent facility is $450,000. The Company has not entered into any
agreements to construct the permanent building, and there can be no assurances
that the amounts actually incurred to construct the facility will not exceed
these estimates. See "BUSINESS OF THE COMPANY - Premises" and "BUSINESS OF THE
BANK General".
Terms and Conditions of the Offering
Shares offered............................. Up to 600,000 shares are being
offered. A minimum of 500,000 shares
are required to be sold in this
Offering. During the Offering Period
shares will be offered to the public
in Units consisting of one share of
Common Stock and one Warrant. During
the same period, organizers listed
herein under "MANAGEMENT - Directors
and Executive Officers of the
Company and the Bank" will be
offered Units consisting of one
share of Common Stock and two
Warrants. See "TERMS OF THE
OFFERING."
Warrants.................................. Each Warrant will entitle the holder
thereof to purchase one share of
additional Common Stock for $9.00 per
share during the 48 month period
following the Effective Date of
Registration of the shares. Warrants
subscribed to in the Offering Period
and subsequently issued will expire
48 months from the Effective Date of
Registration unless redeemed sooner
by the Company pursuant to the
Warrant Plan. The Warrants are
transferrable only in connection with
the transfer of a like number of
shares as provided in the Warrant
Plan. See "TERMS OF THE OFFERING -
Warrants and Purchases by Organizers
of the Company".
3
<PAGE>
Common Stock
Outstanding After the
Offering....................................... Minimum - 500,000 shares
Maximum - 600,000 shares
Price.......................................... $9.00 per Unit.
Use of Proceeds............................Proceeds of the Offering will be used
to purchase 100% of the issued and
outstanding capital stock of the
Bank; to provide working capital for
the Bank to commence its business
operations (including officers' and
employees' salaries); to pay expenses
in connection with the formation of
the Company, the organization of the
Bank, and this Offering; and for
other corporate purposes of the
Company. Proceeds not used to
purchase Bank stock will be retained
by the Company and will be used to
fund future capital requirements of
the Bank, as well as for other
permissible investments for bank
holding companies, including the
possible acquisition of other
financial institutions. See "USE OF
PROCEEDS."
Conditions of the Offering.................The Offering will expire 90 days from
the Effective Date of Registration
unless extended for up to an
additional 90 days by the Company.
Funds received by the Company during
the Offering Period will be deposited
with the Escrow Agent. Funds so
deposited may be released to the
Company only in accordance with the
terms of the Escrow Agreement between
the Company and the Escrow Agent. The
Offering will be terminated by the
Company at the end of the Offering
Period if subscriptions for 500,000
Units have not been received and
deposited with the Escrow Agent or if
all conditional regulatory approvals
have not been received by the Company
and the Bank, or the Company has
canceled the Offering prior to
withdrawing funds from the
Subscription Account.
Stock Options.............................. The Company has granted Robert W.
Woodard, the President and Chief
Executive Officer, at no cost to
him, and subject to shareholder
approval following commencement of
operation, an option to acquire
10,000 shares of the Company's
Common Stock at a price of $10.00
per share. See "ORGANIZERS AND
PRINCIPAL SHAREHOLDERS."
4
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD GIVE CAREFUL ATTENTION TO
THE FOLLOWING STATEMENTS RESPECTING CERTAIN RISKS APPLICABLE TO THE OFFERING,
WHICH RISKS INCLUDE BUT ARE NOT LIMITED TO THOSE NOTED BELOW. OTHER FACTORS OF
IMPORTANCE ARE SET OUT ELSEWHERE IN THIS PROSPECTUS.
Start-up Enterprise - Lack of Operating History
Neither the Company nor the Bank has commenced business operations. Both
are newly organized entities with no operating history. The business of the
Company and the Bank is therefore subject to the risks associated with new
businesses. In addition, because the Bank has not commenced operations,
investors will not have the information normally associated with investments in
a financial institution with a history of operations. The Company's
profitability will depend primarily on the operations of the Bank. Therefore,
without any operating history there can be no assurance the Company will ever be
profitable.
Dependency on Key Management
Regulatory approval to establish and operate a state-chartered bank is,
among other things, dependent upon the Department's approval of such bank's
proposed chief executive officer. Generally, the chief executive officer of a
start-up financial institution is deemed to be vital to the potential success of
the new institution. The Bank's application for a charter filed with the
Department proposed Robert W. Woodard as the Bank's Chief Executive Officer. In
the event of death, disability, resignation or other event causing the
unavailability of Mr. Woodard, final regulatory approval to commence banking
operations would be delayed until such time as a suitable replacement is
approved by the Department. The Company has obtained "key-man" life insurance
for Mr. Woodard in the amount of $250,000 which will defray the expenses that
the Company and the Bank might incur if the opening of the Bank was delayed as a
result of his death. The Company is the beneficiary of the key man policy. See
"MANAGEMENT - Key Man Insurance".
Failure to Receive Regulatory Approvals
Although the Company and the Bank have applied for all regulatory approvals
required to commence operations, final regulatory approval to commence banking
operations will not be obtained until the Company has expended a portion of the
proceeds of this Offering to employ personnel, rent temporary office space and
pay other pre-opening expenses. The Company received the Department's
conditional approval of the proposed Bank's charter application on January
21,1998. The Company anticipates conditional approval of its application for
deposit insurance from the FDIC approximately March 15, 1998. Finally, the
Company has filed an application to become a one-bank holding company with the
Federal Reserve Bank of Atlanta which was approved on March 5, 1998. The
conditional charter approval from the Department requires that final approval to
commence banking operations be obtained within twelve months after receipt of
conditional approval. While management of the Company is confident that all of
the necessary regulatory approvals will be obtained there can be no assurance
that the foregoing approvals will be obtained. In the event that the Company
issues the shares of Common Stock and final approval to commence banking
operations is not granted within twelve months after receipt of preliminary
regulatory approvals, the Company will solicit shareholder approval for its
dissolution and liquidation. In such event, the Company will promptly return to
subscribers all subscription funds and interest earned thereon, less all
expenses incurred by the Company, including the Offering expenses, the
organizational and pre-opening expenses of the Company and the Bank. In the
event of dissolution and liquidation, it is likely that subscribers will receive
only a portion of their initial investment due to the foregoing expenses. See
"TERMS OF THE OFFERING - Failure of Bank to Commence Operations."
Financial Position of the Company and Expected Lack of Initial Profitability
The initial activity of the Company will be to act as the sole shareholder
of the Bank. Thus, the profitability of the Company will be dependent upon the
successful operation of the Bank. Typically, new banks are not profitable in the
first year of operation and sometimes are not profitable for several years. The
Bank will incur significant expenses in establishing itself as a going concern
and there can be no assurance that the Bank will be operated profitably or that
future earnings, if any, will meet the levels of earnings prevailing in the
banking industry.
5
<PAGE>
Lack of Banking Experience by Organizers
Only Messers. C. F. Douglas and Robert W. Woodard have any direct banking
experience. While each of the remaining organizers have extensive business
experience in the proposed Bank's service area, they have never served on the
board of directors of a bank or bank holding company. Such lack of direct
experience may increase the risk of failure of the Bank and the Company.
Highly Competitive Banking Market
The Bank will engage in a general commercial and retail banking business in
Lake City, Columbia County, Florida. Competition among financial institutions in
the Bank's primary market area is intense. The Bank will compete with other
state banks, consumer finance companies, money market mutual funds, and other
financial institutions which have far greater financial resources than those
available to the Bank. Additionally, the Bank will compete with banks, savings
institutions and credit unions located in nearby markets which solicit business
from the Bank's Primary Service Area. The Bank's size may also impact its
ability to compete effectively with larger institutions in offering other
services. For example, as a start-up financial institution, the Bank's
relatively small capital base may affect its ability to compete for certain
types of loans due to regulatory lending limitations. If the Bank is unable to
compete for deposits effectively in its primary service area, such inability
would likely have an adverse effect on the Bank's potential for growth and
profitability. See "BUSINESS OF THE BANK - Market Area and Competition."
Unpredictable Economic Conditions
Commercial banks and other financial institutions are affected by economic
and political conditions, both domestic and international, and by governmental
monetary policies. Conditions such as inflation, recession, unemployment, high
interest rates, short money supply, international disorders and other factors
beyond the control of the Company and the Bank may adversely affect their
profitability. See "BUSINESS OF THE BANK - Monetary Policies."
Extensive Governmental Regulation
The Company and the Bank will operate in a highly regulated environment and
will be subject to supervision by several governmental regulatory agencies,
including the Federal Reserve, the Department, the FDIC and the Commission. The
regulations governing the Company and the Bank are intended to protect
depositors, not shareholders. The Company and the Bank will be vulnerable to
future legislation and government policy, including bank deregulation and
interstate expansion, which could adversely affect the banking industry as a
whole, including the operations of the Company and the Bank. See "SUPERVISION
AND REGULATION."
No Plans to Pay Dividends in the Foreseeable Future
It is not anticipated that the Company will distribute any dividends to
shareholders in the foreseeable future. Earnings of the Bank, if any, are
expected to be retained by the Bank to enhance its capital structure or
distributed to the Company to defray its operating costs. Dividend distributions
of state banks are restricted by statute and regulation. See "DIVIDEND POLICY."
Intended Purchases by Organizers
The Organizers are presently committed to purchase 133,000 Units in the
Offering, which will equal 26.6% of the minimum of 500,000 Units required in
order to release subscription proceeds from the Subscription Escrow Account. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS." However, the Organizers have indicated
that they may be willing to subscribe for additional Units in the Offering if
necessary to help the Company complete the Offering and release proceeds from
the Subscription Escrow Account. Total purchases by the Organizers will not
exceed 148,000 Units in the aggregate, which will equal 29.6% of the 500,000
Units. The ownership of more than 25% of the Company's shares will virtually
assure control of the election of directors of the Company in future years. The
Organizers have represented to the Company that all purchases of Common Stock
will be made for investment purposes only and not with a view to resell such
shares. See "TERMS OF THE OFFERING - Purchases by Organizers of the Company".
6
<PAGE>
Failure of the Bank to Commence Operations; Return of Subscription Funds
Before the Bank can open for business it must obtain final approval from
both the Department and the FDIC. In the event that the Company issues shares of
Common Stock and such approvals are not obtained, the Company will return to
subscribers only those funds remaining after deduction for expenses incurred by
the Company for this Offering and the organizational and pre-opening expenses of
the Company and the Bank. In the event final regulatory approvals are not
obtained, subscribers will be entitled to a return of only a portion of their
subscription funds. As of October 31, 1997, the Company's accumulated deficit
was $65,800, and the Company will continue to incur pre-opening expenses until
pre-opening the Bank commences operations. It is estimated that the Company will
expend as much as $175,000 during the organizational stage and in the event of
liquidation, incur other costs of as much as $15,000, or a total of $0.38 per
share based upon the minimum of 500,000 shares. No assurances can be given that
such expenses and costs will not significantly exceed this estimate. See, "TERMS
OF THE OFFERING - Failure of Bank to Commence Operations."
Possible Creditors Claims against the Company
Once 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. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to refund the
subscription proceeds to shareholders because of the failure to obtain the
required regulatory approvals, the refund process might be delayed and will be
reduced by the amount of the attachment.
Anti-Takeover Provisions
The Company's Articles of Incorporation ("Articles") contain provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions which are not approved by the Board of Directors. The
effect of these provisions is to make it more difficult to effect a merger, sale
of control or similar transaction involving the Company even though a majority
of the Company's shareholders may vote in favor of such a transaction. In
addition, the Company's Articles provide for classes of Directors, whereby
one-third of the members of the Board of Directors shall be elected each year
and each director of the Company will serve for a term of three years. Finally,
the Company's Articles provide that Florida's Control- Share Acquisition Statute
shall apply to acquisitions of control shares, as defined therein, of the
Company's Common Stock. The effect of these provisions is to make it more
difficult to effect a change in control of the Company through the acquisition
of a large block of the Company's Common Stock. See "DESCRIPTION OF COMMON
STOCK" and "Appendix A."
No Established Market for Shares
Presently there is no established market for the Common Stock. There can be
no assurance that an established public market will develop for such securities
upon completion of this Offering or whether substantial trading activity in the
Shares will occur for several years, if at all. Moreover, in the event that the
Organizers subscribe for additional Units in this Offering in order to achieve
the minimum subscription level necessary to release subscription proceeds from
the Subscription Escrow Account, an established public market of the Common
Stock will be less likely to develop. As a result, investors who may need or
wish to dispose of all or a part of their investment in the Common Stock may not
be able to do so except by private, direct negotiations with third parties. The
Company does not presently intend to seek to list the Common Stock on a national
securities exchange or to qualify such Common Stock for quotation on NASDAQ. At
such time as the Company's stock qualifies for listing on NASDAQ, the Company
may seek to list the Shares for quotation.
Arbitrary Determination of Offering Price
Prior to this Offering there has been no established market for the shares
of the Company's Common Stock. The Offering price was arbitrarily determined by
the Board of Directors of the Company, and does not bear any relationship to the
Company's assets, book value, net worth or any other recognized criteria of
value. In determining the Offering price of the shares, the Department's capital
requirements for the Bank and general market conditions for the sale of such
securities were considered. In the event a market should develop for the Common
Stock after completion of this Offering, there can be no assurance that the
market price will equal or exceed the Offering price herein.
7
<PAGE>
Absence of Shareholder Preemptive Rights
No holder of the Common Stock of the Company will have preemptive rights
with respect to the issuance of shares of any class of stock. The total number
of shares of all classes of capital stock which the Company shall have the
authority to issue is 10,000,000 shares, consisting of 8,000,000 shares of
Common Stock, par value $0.01 per share and 2,000,000 shares of Preferred Stock,
par value $0.01 per share. Each share of Common Stock is entitled to one vote
per share in all matters requiring a vote of shareholders. The Board of
Directors of the Company could from time to time determine to issue additional
shares of the authorized Common Stock in addition to the shares offered hereby,
as well as, one or more series of Preferred Stock and in such event the
ownership interest of the subscribers in this Offering may be diluted.
Future Capital Needs of the Bank
The Board of Directors of the Company may determine from time to time to
obtain additional capital through the issuance of additional shares of the
authorized Common Stock or Preferred Stock of the Company. There can be no
assurance that such shares will be issued at prices or on terms equal to the
Offering price and terms of this Offering.
No Underwriter of This Offering
This Offering is being made without the services of an underwriter. Sales
of the Company's Units will be solicited only by certain executive officers and
directors of the Company. Accordingly, there can be no assurance that the
minimum number of Units required to be sold will be sold at the expiration of
the Offering period. See "TERMS OF THE OFFERING."
Possible Dilution Resulting From Warrants
Up to 733,000 shares may be issued pursuant to the Warrants to be issued in
the Offering, assuming the sale of all 600,000 Units. In the event all Warrants
were exercised, the Company would have 1,333,000 shares outstanding. Warrants
issued in this Offering are transferable only if transferred with shares on a
one for one basis. Shareholders who do not, or are not able to exercise Warrants
received in this Offering may suffer a dilution of their investment in terms of
book value if other warrant holders exercise their Warrants and the book value
of the shares is greater than $9.00 at the time of such exercise. In addition,
an individual shareholder's percentage of ownership may also be affected if such
shareholder fails to exercise his or her Warrants and other shareholders
exercise Warrants.
Possible Control of the Company by Organizers
Organizers are purchasing Units containing two Warrants, and non-organizers
are purchasing Units containing one Warrant. The exercise of Warrants by
Organizers will result in Organizers increasing their percentage of ownership
thereby diluting non- organizers' percentage of ownership. Assuming the sale of
500,000 Units, 133,000 of which contain two Warrants and 367,000 of which
contain one Warrant, and the exercise of all Warrants held by Organizers and no
Warrants held by non-organizers, then the Organizers aggregate percentage of
ownership would increase from 26.6 percent to 52.71 percent of the total shares
outstanding. Assuming the exercise of all Warrants outstanding, the Organizers'
percent of ownership would increase from 26.6 percent to 30.45 percent of the
total shares outstanding. The ownership of more than 25 percent of the Company's
shares by the Organizers will virtually assure that Organizers will control the
election of directors of the Company in future years and the ownership of 52.71
percent by the Organizers assures that the Organizers will control both the
election of directors and the future direction of the Company and the Bank. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
Possible Return of Less Than the Subscription Amount
The Company expects to issue the shares of Common Stock before it has
obtained all final regulatory approvals for the Bank. In the event that the
Company issues the shares of Common Stock and the Department does not grant the
Bank final regulatory approval to commence banking operations within 12 months
after the Bank's receipt of preliminary approval from the Department, the
Company will promptly return to subscribers all subscription funds and interest
earned thereon, less all expenses incurred by the Company, including the
expenses of the Offering and the organizational and pre-opening expenses of the
Company and the Bank.
Once 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,
8
<PAGE>
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might be delayed; and if it becomes
necessary to pay creditors from the subscription funds, the payment to
shareholders might be further reduced.
Minimum and Maximum Lending Limits
Florida Law allows a state bank to extend credit to any one borrower in an
amount up to 25% of its capital accounts, provided that the unsecured portion of
any such loan may not exceed 15% of the capital accounts of the bank. Based upon
the proposed investment of $4,200,000 in capital stock of the Bank, the maximum
loan the Bank will be permitted to make is $1,050,000, provided that the
unsecured portion may not exceed $630,000. Assuming the maximum proceeds of the
Offering were invested in the Bank, the maximum loan the Bank would be permitted
to make would be $3,224,000 provided that the unsecured portion could not exceed
$1,935,000.
THE COMPANY
PSB BancGroup, Inc. was incorporated under the laws of the State of Florida
on June 30, 1997, to operate as a bank holding company pursuant to the BHC Act,
and to purchase 100% of the issued and outstanding capital stock of Peoples
State Bank, a state-chartered commercial bank to be organized under the laws of
Florida, which will conduct a general banking business in Lake City, Florida.
The Organizers filed an Application for Authority to Organize with the
Department on October 1, 1997. On January 21, 1998, the Company received the
Department's conditional approval to Organize. The Company also filed its
application for deposit insurance with the FDIC on November 12, 1997, and
expects to receive FDIC conditional approval on or about March 15, 1998. The
Company filed an application to become a one-bank holding company with the
Federal Reserve Bank of Atlanta on January 26, 1998. The Application was
approved on March 5, 1998.
The Bank expects to commence operations sometime in the second quarter of
1998. See "BUSINESS OF THE BANK." The Organizers of the Company are seven
individuals, all of whom reside in Columbia County, Florida. There are six (6)
additional persons who will serve as organizers of the Bank and who will serve
on the Board of Directors of the Bank, but not the Company, (hereinafter
collectively the "Organizers" and if individually "Organizer"). See "ORGANIZERS
AND PRINCIPAL SHAREHOLDERS." Five of the Organizers of the Company will serve on
the initial Board of Directors of the Company and eight of the Organizers will
serve on the initial Board of Directors of the Bank. See "MANAGEMENT."
Initially the principal offices of the Company and the Bank will be located
in a 1,440 square foot modular banking office at 500 South First Street, Lake
City, Florida 32025. See "BUSINESS OF THE COMPANY - Premises." The mailing
address of the Company's present office, which it will occupy until the Bank
opens for business, is 220 South First Street, Lake City, Florida 32025 and its
telephone number is (904) 754-0002.
TERMS OF THE OFFERING
General
The Company is Offering hereunder up to 600,000 shares of its Common Stock
for cash in Units at a price of $9.00 per Unit. A minimum subscription of 500
Units is required for each subscription hereunder. No single individual
investor, other than individual Organizers, may subscribe for more than 25,000
Units or more than 5% of the total number of shares issued or subscribed for at
the time a subscription is received by the Company during the Offering Period.
The purchase price of $9.00 per Unit shall be paid in full upon execution and
delivery of the Subscription Agreement. All subscriptions tendered by investors
are subject to acceptance by the Board of Directors of the Company through its
duly authorized Subscription Committee, and the Company reserves the absolute
and unqualified right to reject or reduce any subscription for any reason prior
to acceptance. Furthermore, the Company reserves the right to cancel this
Offering at any time prior to the time the Company withdraws funds from the
Subscription Escrow Account, for any reason whatsoever. For a 48 month period
following the effective date of Registration the Company will issue up to
733,000 shares pursuant to the Company's Warrant Plan and the Warrants issued
thereunder.
9
<PAGE>
Warrants
Subscribers who are Organizers, may subscribe to Units containing two
Warrants. Subscribers who are not Organizers may subscribe to Units containing
one Warrant. Warrants subscribed to during this 90 day period (or 180 day period
if extended) will expire 48 months from the Effective Date of Registration
unless redeemed sooner in accordance with the terms of the Warrant Plan.
Unexpired Warrants may be exchanged for shares upon the payment of $9.00 per
share to the Company, subject to the requirement that the minimum number of
shares which will be issued upon any single presentment will be 100 shares
unless the Warrant presented is for less than 100 shares, at which time all
shares must be purchased. Certificated Warrants may be transferred by a holder
only in conjunction with the simultaneous transfer of an equal number of shares.
Warrants may be exercised by presenting an executed Warrant Certificate, along
with a check representing the full amount of the exercise price, to: Robert W.
Woodard, President, PSB BancGroup, Inc., 220 South First Street, Lake City,
Florida.
No Established Market
Prior to this Offering there has been no established public market for the
shares of the Common Stock and/or Warrants and there can be no assurance that an
established market for such stock or Warrants will develop. The Offering price
has been arbitrarily determined and is not a reflection of the Company's book
value, net worth or any other such recognized criteria of value. In determining
the Offering price of the Common Stock, the capital requirements of the
Department for the Bank and general market conditions for the sale of such
securities were considered. There can be no assurance that, if a market should
develop for the Common Stock or Warrants, the post-Offering market price will
equal or exceed the initial Offering price.
Plan of Distribution
Pursuant to Commission Rule 415, (17 C.F.R. Section 230.415), the Company
intends to offer the Units and shares on a continuous basis for a period of up
to four years from the Effective Date.
Beginning on the Effective Date the Company will offer the shares in Units
to the public for a period of 90 days, unless extended by the Company for up to
90 days in its sole discretion (the Offering Period). During this period the
Company will offer 600,000 shares in Units at a price of $9.00 per Unit. Units
consisting of the Company's shares and Warrants will be offered by certain
officers and directors of the Company. The officers and directors will not
receive any commissions or other renumeration in connection with these
activities, but they may be reimbursed for reasonable expenses incurred as a
result of such activities, if any. In reliance on Rule 3a4-1 of the Securities
and Exchange Act of 1934 ("Exchange Act"), the Company believes that its
officers and directors who are engaged in the sale of the Units will not be
deemed to be brokers and/or dealers under the Exchange Act. Units will be
offered primarily to persons who work or reside in Columbia County, Florida. To
a limited extent, Units will be offered to friends, acquaintances and family
members of the Organizers, some of whom live outside the Columbia County
community and some of whom may live outside of the State of Florida. Persons
indicating an interest in acquiring Common Stock will be provided with a copy of
this Prospectus prior to the Company accepting subscription funds. Subscriptions
will be accepted only if accompanied by a proper Subscription Agreement. During
this Offering Period the Company will conduct its first Closing if the
conditions required to Close have been met. Units subscribed to by Organizers
during this period will consist of one share of Common Stock and two Warrants
while Units subscribed to by Non-Organizers will consist of one share of Common
Stock and one Warrant.
Warrant holders may acquire shares, subject to the minimum share purchase
limit, by executing a Warrant Certificate any time during the 48 months
following the Effective Date of Registration and delivering such Certificate,
along with the Warrant price of $9.00 per share, to the Company's Secretary at
its corporate office. See "TERMS OF THE OFFERING - Conditions of the Offering."
Warrants redeemed by the Company prior to the expiration of the 48 month period
must be converted to shares within 45 days of notice to warrant holders pursuant
to the Warrant Plan.
Conditions of the Offering
The Offering will expire at 5:00 p.m. Eastern Time, on _________, 1998 (the
"Expiration Date"). The Offering is expressly conditioned upon fulfillment of
the following conditions ("Offering Conditions") within the Offering Period. The
Offering Conditions, which may not be waived, are as follows:
(a) Subscriptions for not less than $4,500,000 shall have been deposited
with the Escrow Agent consisting of $4,322,610 in cash and $177,390 represented
by Organizers' shares currently issued and outstanding which are mandatorily
convertible into Units within 90 days from the Effective Date of Registration,
unless extended by the Company for up to 90 days or not later than
________________, 1998. See "Purchases by Organizers of the Company.";
10
<PAGE>
(b) The Company shall have received conditional approval from the Federal
Reserve of its application to become a one-bank holding company, the Organizers
shall have received conditional approval from the Department to charter the Bank
and the proposed Bank shall have received conditional approval of its
application for deposit insurance from the FDIC; and
(c) The Company shall not have canceled this Offering prior to the time
funds are withdrawn from the Subscription Escrow Account.
Escrow of Subscription Funds
All subscription funds and documents tendered by investors will be placed
in the Subscription Escrow Account with the Independent Bankers' Bank of
Florida, Orlando, Florida ("Escrow Agent"), pursuant to the terms of the Escrow
Agreement, the form of which is attached to this Prospectus as Appendix "B".
Upon receipt of a certification from the Company during the Offering Period
that: (i) the required conditional regulatory approvals have been received; and
(ii) subscriptions totaling not less than $4,500,000 have been received, the
Escrow Agent will release all subscription funds, and any income received
thereon, to the Company.
Pending disposition of the Subscription Escrow Account under the Escrow
Agreement, the Escrow Agent is authorized, upon instructions to be given by
either Robert W. Woodard or Alton C. Milton to invest subscription funds in
direct obligations of the United States Government, in short-term insured
certificates of deposit and/or money market management trusts for short-term
obligations of the United States Government, with maturities not to exceed 90
days. The Company will invest the subscription funds in a similar manner after
breaking escrow and prior to the time that the Company infuses capital into the
Bank. The Offering proceeds will be used to purchase capital stock of the Bank
and to repay expenses incurred in the organization of the Company and the Bank.
See "USE OF PROCEEDS."
In the event the Offering Conditions are not met within the Offering Period
or the Offering is terminated by the Company prior to withdrawing the
Subscription Funds, the Escrow Agent shall promptly return to the subscribers
their subscription funds, together with their allocated share of income, if any,
earned on the investment of the Subscription Escrow Account. Each Subscriber's
proportionate share of Subscription Escrow Account earnings shall be that
fraction (i) the numerator of which is the dollar amount of such subscriber's
tendered subscription multiplied by the number of days between the date of
acceptance of the investor's subscription and the date of the termination of the
Offering, inclusive (the subscriber's "Time Subscription Factor"), and (ii) the
denominator of which is the aggregate Time Subscription Factor of all investors
depositing subscription funds in the Subscription Escrow Account. The latest
date to which the subscription funds might be held in escrow prior to their
return in the event the minimum is not reached or the required regulatory
approvals are not received is November 1, 1998.
In the event that the Company issues the shares of Common Stock and the
Department does not authorize the Bank to commence banking operations within 12
months after the Bank's receipt of preliminary conditional approval from the
Department, the Company will promptly return to subscribers all subscription
funds and interest earned thereon, less all expenses incurred by the Company,
including the expenses of the Offering and the organizational and pre-opening
expenses of the Company and the Bank. See "TERMS OF THE OFFERING - Failure of
Bank to Commence Operations."
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE INVESTED
AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY INCOME WILL BE REALIZED FROM
THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all Offering Conditions are satisfied, and the Company withdraws the
subscription funds from the Subscription Escrow Account, all earnings on such
account shall belong to the Company.
The Independent Bankers' Bank of Florida, by accepting appointments as
Escrow Agent under the Escrow Agreement, in no way endorses the purchase of the
Company's securities by any person.
Failure of Bank to Commence Operations
The Department requires that a new state bank open for business (i.e.,
obtain a certificate of authorization) within 12 months after receipt of
preliminary approval from the Department. The Organizers anticipate that the
Bank will open for business sometime in the second quarter of 1998. Because
final approval of the Bank's charter is conditioned on the Company's raising
funds to capitalize the Bank at $4,200,000, the Company expects to issue the
shares of Common Stock before it has obtained all final regulatory approvals for
the Bank. In the event that the Company issues the shares of Common Stock and
the Department does not grant the Bank final regulatory approval to commence
11
<PAGE>
banking operations within 12 months after the Bank's receipt of preliminary
approval from the Department, the Company will promptly return to subscribers
all subscription funds and interest earned thereon, less all expenses incurred
by the Company, including the expenses of the Offering and the organizational
and pre-opening expenses of the Company and the Bank. It is probable that this
return will be further reduced by amounts paid to satisfy claims of creditors,
as discussed in the following paragraph.
Once 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. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might by delayed; and if it becomes
necessary to pay creditors from the subscription funds, the payment to
shareholders will be further reduced. As of October 31, 1997, the Company's
accumulated deficit was $65,800, and the Company will continue to incur
pre-opening expenses until the Bank commences operations. It is estimated that
the Company will expend as much as $175,000 in organizational expenses and in
the event of any liquidation, incur other costs of as much as $15,000, or $0.38
per share based upon the minimum of 500,000 shares. No assurances can be given
that such expenses and costs will not significantly exceed this estimate.
Purchases by Organizers of the Company
The Organizers have committed to the Florida Department of Banking and
Finance, as part of their Application to Organize a New Bank, to purchase
133,000 Units in the Offering. In order to organize the proposed new Bank, the
Organizers identified and assembled a management team, invested significant
amounts of money in the Company and expended significant amounts of time
preparing and submitting applications to organize the new bank with the
Department, the FDIC and the Federal Reserve. They have entered into agreements
to acquire property and to lease a temporary facility. Because of the time,
effort and risk incurred by the Organizers during the organizational and
pre-opening stage, Organizers will be offered Units which will contain one share
of Common Stock and two Warrants. Each Warrant will entitle the holder to
purchase one share of Common Stock at $9.00 per share.
The Organizers have indicated that they may be willing to subscribe for
additional Units in this Offering, if necessary, to help the Company complete
the Offering in order to release subscription proceeds from the Subscription
Escrow Account. The maximum aggregate number of Units which may be subscribed by
the Organizers in this Offering is 148,000 Units. All additional purchases will
be made on the same terms, including the same number of Warrants, as those made
by other investors. Any such purchases of Units by the Organizers will be
subject to affiliate resale limitations of the 33 Act. The Organizers have
represented to the Company that all purchases will be made for investment
purposes only and not with a view to resell such shares. If additional
purchases, as described above, are not necessary, the Organizers will purchase a
minimum of 133,000 Units pursuant to this Offering, or 26.6% of the 500,000
minimum Units to be issued in this Offering. If additional purchases as
described above are necessary, the Organizers will purchase additional Units
containing one Warrant and will then own, more than 26.6% of the outstanding
Common Stock of the Company, but no more than 29.6% of the minimum Units. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
During the organizational stage, Organizers purchased from the Company in a
private offering 3,942 shares of unregistered Common Stock, par value $0.01,
without Warrants, for $45.00 per share in order to provide funds to pay
organizational and pre-opening expenses estimated to be approximately $175,000.
Through October 31, 1997, the Company has expended approximately $67,000 for
such expenses. The remainder of these proceeds will be used by the Company to
fund ongoing expenses during the offering and pre-opening periods. Such
unregistered shares must be exchanged by the Organizers for Units on a one share
for five Unit basis at the time the conditions of the Offering have been met.
When exchanged for Units, all such shares initially purchased by the Organizers
shall be canceled. The cost of such shares, mandatorily convertible into Units,
will be included in the determination of whether sufficient funds have been
subscribed to in order to meet the minimum of $4,500,000.
Other Terms and Conditions/How to Subscribe
The Company may cancel this Offering for any reason at any time prior to
the release of subscription funds from the Subscription Escrow Account, and
accepted subscriptions are subject to cancellation in the event that the Company
elects to cancel the Offering in its entirety.
12
<PAGE>
Units will be marketed on a best-efforts basis exclusively through certain
directors and executive officers of the Company, none of whom will receive any
commissions or other form of remuneration based on the sale of the Units.
However, in the event that the Offering Conditions have not been satisfied by
__________, 1998, the Company may engage an underwriter to sell the Units on a
best-efforts basis and such underwriter would receive a commission based upon
such sales. It is anticipated that commissions paid to such underwriter, if
retained, will not exceed 7% of the $9.00 per Unit sales price and that other
expenses of such underwriting will not exceed an aggregate of $5,000. In the
event the Company engages an underwriter to sell Units prior to the expiration
of the Offering Period, a post-effective amendment to the Registration Statement
will be filed with the SEC containing the terms of any agreements entered into
with such underwriters and discussing any fees or expenses associated with such
agreements. In the event that the Offering Conditions have not been satisfied by
the end of the Offering Period, this Offering will be terminated and the
subscription funds promptly returned to the subscribers, together with their
allocated share of earnings, if any, earned on the investment of the
Subscription Escrow Account as described herein. See "TERMS OF THE Offering -
Escrow of Subscription Funds."
As soon as practicable, but no more than ten-business days after receipt of
a subscription, the Company will accept or reject such subscription.
Subscriptions not rejected by the Company within this ten-day period shall be
deemed accepted. Once a subscription is accepted by the Company, it cannot be
withdrawn by the subscriber. Payment from any subscriber for Units in excess of
the number of Units allocated to such subscriber, if any, will be refunded by
mail, without interest within ten days of the date of rejection.
Certificates representing shares of Common Stock of the Company, duly
authorized and fully paid, will be issued as soon as practicable after
subscription funds are released to the Company from the Subscription Escrow
Account.
Subscriptions to purchase shares of Common Stock can be made by completing
the Stock Subscription Agreement attached to this Prospectus (Appendix C) and
delivering the same to the Company at its offices, 220 South First Street, Lake
City, Florida 32025, or mailing the same in the enclosed self-addressed
envelope. Full payment of the purchase price must accompany the subscription.
Failure to pay the full subscription price shall entitle the Company to
disregard the subscription. No Subscription Agreement is binding until accepted
by the Company, which may, in its sole discretion, refuse to accept any
subscription for Units, in whole or in part, for any reason whatsoever. After a
subscription is accepted and proper payment received, the Company shall not
cancel such subscription unless all accepted subscriptions are canceled. Unless
otherwise agreed by the Company, all subscription amounts must be paid in United
States currency by check, bank draft or money order payable to "IBBF, for PSB
BancGroup, Inc. " A subscription will be accepted in writing by the Company only
in the Form of Acceptance attached to this Prospectus.
USE OF PROCEEDS
The gross proceeds from the sale of Units offered by the Company are
estimated to be a minimum of $4,500,000. This estimate is based upon the
assumption that the sale of 500,000 Units occurs prior to the expiration of the
Offering Period. However, if 500,000 Units are not sold, prior to the expiration
of the Offering Period, then the Offering will terminate and all funds received
from subscribers, adjusted for any income thereon, will be promptly refunded.
See "TERMS OF THE OFFERING."
The estimated Organizational and Offering expenses of the Company are as
follows:
[TABLE FOLLOWS THIS PAGE]
13
<PAGE>
Offering Organizational
-------- --------------
Registration fees, including blue
sky fees and expenses ......... $ 5,000 $ None
Salaries and expenses ........... None 2,000
Legal fees and expenses ......... 15,000 5,000
Accounting fees ................. 1,000 None
Printing and mailing expenses ... 2,700 None
Escrow Fees ..................... 2,500 None
Advertising ..................... 2,000 None
Miscellaneous ................... None 1,000
------- ----------
TOTAL ........................... $28,200 $8,000
======= ==========
All of the above expenses will be incurred whether or not the Bank conducts
operations. If, however, the Offering is terminated prior to the release of
subscription funds by the Escrow Agent, none of these expenses will be deducted
from the funds to be returned to subscribers. If, however, subscription funds
are released by the Escrow Agent and the Bank does not commence business
operations all of the above expenses, as well as additional expenses which will
be incurred following such release, will be deducted from the subscription
funds. Expenses related to a successful Offering will be deducted from the
Offering proceeds and expenses related to organization of the Company will be
expensed as incurred.
A substantial portion of the proceeds of this Offering ($4,500,000)
assuming the minimum number of Units is sold will be used by the Company for the
purchase of 100% of the issued and outstanding capital stock of the Bank and to
repay the expenses of this Offering and the expenses incurred in the
organization of the Company and the Bank.
A portion of the proceeds of this Offering in excess of the above amounts
will be retained by the Company for the purpose of funding any required future
additions to the capital of the Bank. Since state banks are regulated with
respect to the ratio that their total assets may bear to their total capital, if
the Bank experiences greater growth than anticipated, it may require the
infusion of additional capital to support that growth. Management of the Company
anticipates that the proceeds of the Offering will be sufficient to support the
Bank's immediate capital needs and will seek, if necessary, long and short-term
debt financing to support any additional needs; however, management can give no
assurance that such financing, if needed, will be available or if available will
be on terms acceptable to management.
Net proceeds from the Offering will be applied as follows:
<TABLE>
<CAPTION>
Minimum Proceeds Proceeds Maximum Proceeds
Assuming Sale Assuming Sale Assuming Sale
of 500,000 of 600,000 of 1,333,000
Shares Shares Shares
---------------- -------- ----------------
<S> <C> <C> <C>
Purchase of capital
stock of the Bank...................... $4,200,000 $4,200,000 $4,200,000
Organizational and Offering
expenses of the Company(2)............. 36,200 36,200 41,200(1)
Working capital and funds available
for expansion of banking and
banking-related services(2)(3)......... 263,800 1,163,800 8,655,800
------- --------- ---------
Net Proceeds............................. $4,500,000 $5,400,000 $12,897,000(4)
========= ========= ==========
</TABLE>
14
<PAGE>
The following is a schedule of estimated expenditures to be made by the
Bank out of the proceeds from the sale of its capital stock to the Company,
including the Bank's estimated operating expenses for its first twelve months of
operation.
Organizational expenses of Bank including Application,
legal and consulting fees ............................. $ 100,000
Pre-opening expenses of Bank including salaries,
occupancy and other expenses,............................ 50,000
Bank premises (land and site improvements only)............ 210,000
Construction of permanent quarters......................... 450,000
Salaries and benefits for officers......................... 175,000
Salaries and benefits for other employees.................. 210,000
Interest expense........................................... 260,000
General and administrative expense
comprised primarily of data processing,
provision for loan losses, marketing and
advertising, lease, telephone, casualty
and deposit insurance.................................... 319,000
Furniture, fixtures and equipment.......................... 92,000
Working capital............................................ 2,334,000
---------
$4,200,000
==========
The above described expenses are estimates only and assume the Bank will
commence operations sometime during the second quarter of 1998, or as soon
thereafter as practicable. Actual expenses may exceed these amounts. The figures
do not include estimated first year revenues of approximately $822,000. Total
organizational expenses for both the Bank and the Company as of October 31,
1997, amounted to $66,966. Organizational and pre-opening costs will be charged
to expense when incurred.
- -----------------------
(1) The Company expects to incur additional expenses in connection with the
maximum offering of approximately $5,000. These additional expenses will be
incurred because the Offering is projected to extend over a 48 month period
and will necessitate the filing of post-effective amendments to the
Registration Statement, printing costs in connection with prospectus
supplements and additional mailing costs.
(2) Amounts indicated do not include interest earned on investment of net
proceeds from this Offering during the Company's organizational stage
estimated to be approximately $25,000.
(3) These funds will be retained by the Company to be used for permissible
investments for one-bank holding companies, as well as possible future
capital needs of the Bank. See "REGULATION AND SUPERVISION - General."
(4) Assumes that all 733,000 Warrants are both issued and exercised, however no
assurances can be given that any Warrants will be exercised during the
Exercise Period.
DIVIDEND POLICY
As the Company and the Bank are both start-up operations, it will be the
policy of the Board of Directors of the Company to reinvest earnings for such
period of time as is necessary to ensure the successful operations of the
Company and of the Bank. There are no current plans to initiate payment of cash
dividends, and future dividend policy will depend on the Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of the Company.
The Bank will be restricted in its ability to pay dividends under Florida
banking laws and by regulations of the Department. Pursuant to Section 658.37,
Florida Statutes, a state bank may not pay dividends from its capital. All
dividends must be paid out of current net profits then on hand plus retained net
profits of the preceding two years, after deducting bad debts, depreciation and
other worthless assets, and after making provision for reasonably anticipated
future losses on loans and other assets. Payments of dividends out of net
profits is further limited by Section 658.37, which prohibits a bank from
declaring a dividend on its shares of common stock until its surplus equals its
stated capital, unless there has been transferred to surplus not less than 20%
of a bank's net profits for the preceding year (in the case of an annual
dividend). Finally, a state bank may not declare a dividend which would cause
the capital accounts of a bank to fall below the minimum amount required by law,
regulation, order or any written agreement with the Department or any Federal
regulatory agency.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is still in the development stage, and will remain in that
state until the Offering of the Company's Common Stock is complete. The Company
has funded its organizational costs through the sale of initial stock in the
Company to the Organizers in the amount of $177,390. Through October 31, 1997,
the Company has expended $66,966 for organizational costs including attorney
fees, employee compensation and filing fees. The remaining funds will be used to
fund costs and expenses during the Offering Period. Subscription funds during
the Offering Period contemplated herein will be placed in the Subscription
Escrow Account and invested in direct obligations of the United States
Government, in short-term insured certificates of deposits and/or money market
Management trusts for short-term obligations of the United States Government,
with maturities not to exceed 90 days.
On October 20, 1997, the Company entered into a contract to purchase the
property located at 500 South First Street, Lake City, Florida, to be used as
the main office location for the proposed bank. The purchase price of the
property is $170,000 and the Company has given a good faith deposit in the
amount of $5,000 which would be forfeited if the Company has not consummated the
transaction on or before April 1, 1998.
Management of the Company believes that the net proceeds of $4,500,000 from
the Offering will satisfy the cash requirements of the Company and the Bank for
their respective first years of operation. It is not anticipated that the
Company will find it necessary to raise additional funds to meet expenditures
required to operate the business of the Company and the Bank over the next 12
months. All anticipated material expenditures for such period have been
identified and provided for out of the proceeds of this Offering. See "USE OF
PROCEEDS."
BUSINESS OF THE COMPANY
General
The Company was incorporated under the laws of the State of Florida on June
30, 1997, for the purpose of organizing the Bank and purchasing 100% of the
outstanding capital stock of the Bank. The Company has been organized as a
mechanism to enhance the Bank's ability to serve its future customers'
requirements for financial services. The holding company structure will also
provide flexibility for expansion of the Company's banking business through
acquisition of other financial institutions and provision of additional
banking-related services which the traditional commercial bank may not provide
under present laws. Finally, banking regulations require that the Bank maintain
a minimum ratio of capital to assets. In the event that the Bank's growth is
such that this minimum ratio is not maintained, the Company may borrow funds,
subject to the capital adequacy guidelines of the Federal Reserve, and
contribute them to the capital of the Bank and otherwise raise capital in a
manner which is unavailable to the Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, the Company may make additional acquisitions in
the event that such acquisitions are deemed to be in the best interest of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See " SUPERVISION AND
REGULATION."
Premises
The Company has entered into a purchase agreement dated October 20, 1997,
to purchase property located at 500 South First Street, Lake City, Florida for a
cost of $170,000 from a party unaffiliated with the Organizers or the Company.
The purchase agreement is contingent upon obtaining preliminary charter approval
for the Bank. If however, preliminary approval from the FDIC is not received
before April 1, 1998, the seller may cancel the purchase agreement, and the
Company will forfeit its $5,000 deposit. The Bank intends to construct its
permanent headquarters building at this location. The proposed building will
contain a vault, four offices, five teller stations, three drive-in stations, a
conference facility, a loan operations area, and an area for the Bank's
bookkeeping operations all consisting of approximately 4,500 square feet.
Construction on the building is expected to begin approximately four months
after commencement of operations and is expected to cost approximately $450,000.
The Company expects that construction of the permanent facility will take
approximately 6 to 8 months with occupancy approximately 10 to 12 months
following commencement of operations. The Company has not entered into any
agreement regarding the construction and accordingly there is no assurance that
the amounts actually expended by the Company for the permanent building will not
exceed these estimates or that the true projections for occupancy can be met.
16
<PAGE>
Until construction of the permanent bank building is complete, the Company
and Bank will temporarily operate out of offices in a modular bank facility
located on the same site. The Bank will lease the approximately 1,440 square
foot facility pursuant to a 15 month lease at a monthly rental of $1,100 after
spending approximately $40,000 for site preparation.
BUSINESS OF THE BANK
General
The Bank anticipates that it will commence business operations sometime in
the second quarter of 1998 in a temporary facility located at 500 South First
Street in Lake City, Florida. The Bank will offer a full range of
interest-bearing and noninterest-bearing accounts, including commercial and
retail checking accounts, money market accounts, individual retirement accounts,
regular interest-bearing statement savings accounts, certificates of deposit,
commercial loans, real estate loans, home equity loans and consumer installment
loans. In addition, the Bank will provide such consumer products and services as
U.S. Savings Bonds, travelers checks, cashiers checks, safe deposit boxes, bank
by mail services, direct deposit and ATM cards.
The philosophy of Management of the Bank with respect to its initial
operations will emphasize prompt and responsive personal service to members of
the business and professional communities of Lake City, Florida, and the
surrounding area, in order to attract customers and acquire market share now
controlled by other financial institutions in the Bank's market area. The Bank's
prime location and range of banking services, as well as its emphasis on
personal attention and service, prompt decision making and consistency in
banking personnel, will be major tools in the Bank's efforts to capture such
market share. In addition, the Bank's proposed officers have substantial banking
experience, which will be an asset in providing both products and services
designed to meet the needs of the Bank's customer base. The Organizers are
active members of the business community in Lake City and continued active
community involvement will provide an opportunity to promote the Bank and its
products and services. The Organizers intend to utilize effective advertising
and superior selling efforts in order to build a distinct institutional image
for the Bank and to develop a strong customer base.
Market Area and Competition
The primary service area ("PSA") of the proposed Bank has been experiencing
steady growth in both population and banking deposits in recent years. Lake City
is the primary commercial and residential center located in the Northern part of
Columbia County, Florida. Columbia County maintains a steady commercial,
industrial and agricultural base, which has been expanding in recent years. The
largest employers in the County include: Columbia County School System, VA
Medical Center, Aero Corporation, Florida Department of Transportation, Columbia
Correctional Center, Homes of Merit, Lake City Medical Center, PCS Phosphate,
Wal-Mart, Anderson Columbia Company. Agricultural activities in Columbia County
center around the cattle, timber and other farming operations.
Competition among financial institutions in the Bank's primary service area
is intense. There are five commercial banks with a total of 11 branches
operating in Lake City. Of these 5 banks one is affiliated with a major bank
holding company. There are no savings associations headquartered in Lake City,
however, one savings association and one credit union operate two branches in
Lake City and one credit union is headquartered there. The Organizers believe
that the Bank will be able to effectively compete in its market, based upon the
Bank's philosophy which will be reflected in customer service, employee
attitudes and the products offered by the Bank.
Financial institutions primarily compete with one another for deposits. In
turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the availability of
unique financial services products. The Bank will be competing with financial
institutions which have much greater financial resources than the Bank, and
which may be able to offer more services and unique services and possibly better
terms to their customers. The Organizers, however, believe that the Bank will be
able to attract sufficient deposits to enable the Bank to compete effectively
with other area financial institutions.
The Bank will be in competition with existing area financial institutions
other than commercial banks and thrift institutions, including insurance
companies, consumer finance companies, brokerage houses, credit unions and other
business entities which target traditional banking markets. Due to the growth of
the Lake City area, it can be anticipated that additional competition will
continue from existing, as well as, new entrants to the market. Deposits
17
<PAGE>
The Bank will offer a wide range of interest-bearing and
noninterest-bearing deposit accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of businesses within the
Bank's market area, obtained through the personal solicitation of the Bank's
officers and directors, direct mail solicitation and advertisements published in
the local media. The Bank intends to pay competitive interest rates on time and
savings deposits up to the maximum permitted by law or regulation. In addition,
the Bank will implement a service charge fee schedule competitive with other
financial institutions in the Bank's market area covering such matters as
maintenance fees on checking accounts, per item processing fees on checking
accounts and returned check charges.
Loan Portfolio
The Bank will offer a full complement of loans, including commercial,
consumer/installment and real estate loans. Initially, the Bank will have a
legal lending limit for unsecured loans of approximately $630,000 and for
secured loans approximately $1,050,000.
Commercial loans, including construction loans secured by real estate, are
projected to be a substantial component of the Bank's loan portfolio. Commercial
lending will be directed principally towards small businesses whose demands for
funds fall within the Bank's legal lending limits and which are potential
deposit customers of the Bank. This category of borrowers includes individual,
partnership or corporate borrowers, and will result in loans to such borrowers
for a variety of business purposes. Particular emphasis will be placed on loans
to small and medium sized businesses and professionals. Commercial loans will be
underwritten on the basis of cash flow, ability to service debt from earnings
and collateral offered. Terms are projected to be from 90 days to five years
with interest rates indexed to Wall Street Journal prime rate. Because of the
nature of these types of loans, i.e. dependency on successful business
operations and generally on non-real estate collateral, there exists a higher
risk of loss in this category of loan. The Organizers expect that commercial
loans will account for approximately one-half of the Bank's estimated total loan
portfolio.
To a lesser extent the focus will be on the origination of 1-4 family
first, and to a limited extent, second real estate mortgage loans, typically
structured with fixed or adjustable interest rates based upon market conditions.
Generally the loan amount, as a percent of appraised value of the real property,
will not exceed 80%. In most cases where the loan to value ratio exceeds 80% the
amount in excess of 80% will be insured against loss by private mortgage
insurance ("PMI"). Fixed rate loans will usually have terms of five years or
less, with payments through the date of maturity generally based upon a 15 to 30
year amortization schedule. Adjustable rate loans will generally have a term of
between 15 to 30 years, with rates indexed to the one-year treasury bond. The
Bank intends to charge both discount points and an origination fee depending
upon market conditions. Because of the nature of the collateral, residential
real estate loans tend to have the lowest risk of loss when compared to other
types of loans such as commercial loans. In addition, to origination of loans
for the Bank's portfolio, the Bank will also originate real estate mortgage
loans for sale in the secondary market. The Organizers expect that loans secured
by real estate will account for approximately one-third of the Bank's estimated
total loan portfolio.
Based upon demand in the Bank's primary service area the Bank will make a
variety of consumer loans. The Bank's consumer loans will consist primarily of
installment loans to individuals for personal, family and household purposes,
including automobile loans, boat loans, recreational vehicle loans, home equity
loans, and personal lines of credit. Consumer loans will generally have terms
ranging from six months to ten years and will be made at market interest rates
generally ranging from 10 to 18 % A.P.R. For the most part, consumer loans will
be secured by such collateral as automobiles, boats, recreational vehicles,
personal residences, and so forth. This category of loans will also include
lines of credit and term loans secured by second mortgages on the residences of
borrowers for a variety of purposes including home improvements, education and
other personal expenditures. It is not expected that total consumer loans will
exceed 15 % of the Bank's estimated total loan portfolio. In the aggregate, the
risk of loss on such loans tends to be lower than that of commercial loans, but
greater than that of loans secured by residential real estate based upon the
nature of the collateral for such loans, as well as, the make-up of the
borrowers and the source of repayment.
While risk of loss in the Bank's loan portfolio is primarily tied to the
credit quality of the various borrowers, risk of loss may also increase due to
factors beyond the Bank's control, such as local, regional and/or national
economic downturns. General conditions in the real estate market may also impact
the relative risk in the Bank's real estate portfolio. Of the Bank's target
areas of lending activities, commercial loans are generally considered to have
greater risk than real estate loans or consumer installment loans.
18
<PAGE>
Management of the Bank intends to originate loans and to participate
portions of such loans to other banks with respect to loans which exceed the
Bank's lending limits. Management of the Bank does not believe that loan
participation will necessarily pose any greater risk of loss than loans which
the Bank originates.
Investments
At the close of its first year of operation, Management of the Bank
anticipates that investment securities will comprise approximately 33% of the
Bank's assets, other investments will comprise approximately 7% of the Bank's
assets and loans will comprise approximately 60% of the Bank's assets.
Initially, the Bank intends to invest primarily in securities backed by direct
obligations of the United States, obligations guaranteed as to principal and
interest by the United States, obligations of agencies of the United States and
certificates of deposit issued by commercial banks. In addition, the Bank will
enter into Federal Funds transactions with its principal correspondent bank, and
anticipates that it will primarily act as a net seller of such funds. The sale
of Federal Funds amounts to a short-term loan from the Bank to another bank,
usually overnight.
Asset/Liability Management
It will be the objective of the Bank to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash management, loan, investment, borrowing and capital
policies. Designated Officers of the Bank will be responsible for monitoring
policies and procedures that are designed to ensure acceptable composition of
the asset/liability mix, stability and leverage of all sources of funds while
adhering to prudent banking practices. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management of the Bank will seek to invest the largest portion of
the Bank's assets in commercial, consumer and real estate loans. The Bank's
asset/liability mix will likely be monitored on a daily basis with a monthly
report reflecting interest-sensitive assets and interest-sensitive liabilities
being prepared and presented to the Bank's Board of Directors. The objective of
this policy is to control interest-sensitive assets and liabilities so as to
minimize the impact of substantial movements in interest rates on the Bank's
earnings.
Correspondent Banking
The Bank intends to purchase certain services from correspondent banks.
Such services are available on a statewide or regional basis from commercial
banks, banker's banks, the Federal Reserve Bank of Atlanta and the Atlanta
Federal Home Loan Bank. The Bank will determine the availability of such
services and evaluate the quality and pricing of the services available and
based upon the above will select one or more providers for the services the Bank
will require. The Bank will then purchase from time to time, correspondent
services offered by such banks, including some of the following: check
collections, purchase or sale of Federal Funds, security safekeeping, investment
services, coin and currency supplies, overline and liquidity loan participations
and sales of loans to or participations with correspondent banks. Fees for such
services are generally transactional based and range from a low of $0.05 each
for processing an account debit or credit, to a high of $30.00 each for an
International Funds transfer. Other fees are assessed monthly and generally
range from $2.00 per month for certain investment services to $100 per month for
funds management.
The Bank anticipates that it will sell loan participations to correspondent
banks with respect to loans which exceed the Bank's lending limit. As
compensation for services provided by a correspondent, the Bank may maintain
certain balances with such correspondents in non-interest bearing accounts, or
may elect to pay for such fees directly.
Data Processing
The Bank plans to sign a data processing servicing agreement with an
outside service bureau. It is expected that this servicing agreement will
provide for the Bank to receive a full range of data processing services,
including an automated general ledger, deposit accounting, commercial, real
estate and installment loan processing, payroll, central information file and
ATM processing and investment portfolio accounting.
Employees
In its first year of operation, the Bank anticipates that it will employ
eleven persons on a full-time basis, including three officers, and one person on
a part-time basis. The Bank will hire additional persons as needed, including
additional tellers and customer service representatives.
19
<PAGE>
Monetary Policies
The results of operations of the Bank will be affected by credit policies
of monetary authorities, particularly the Federal Reserve. The instruments of
monetary policy employed by the Federal Reserve include open market operations
in U.S. Government securities, changes in the discount rate on member bank
borrowings, changes in reserve requirements against member bank deposits and
limitations on interest rates which member banks may pay on time and savings
deposits. In view of changing conditions in the national economy and in the
money markets, as well as the effect of action by monetary and fiscal
authorities, including the Federal Reserve, no accurate prediction can be made
as to possible future changes in interest rates, deposit levels, loan demand or
the business and earnings of the Bank.
REGULATION AND SUPERVISION
General
As a one-bank holding company registered under the BHC Act, the Company
will be subject to regulation and supervision by the Federal Reserve. Under the
BHC Act, the Company's activities and those of its Bank subsidiary are limited
to banking, managing or controlling banks, furnishing services to or performing
services for its subsidiaries or engaging in any other activity that the Federal
Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. As a state-chartered
commercial bank, the Bank will be subject to extensive regulation by the Florida
Department of Banking and Finance ("Department") and the FDIC.
The Company and the Bank will be required to file reports with the Federal
Reserve, the Department and the FDIC concerning their activities and financial
condition, in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Federal Reserve, the
Department and the FDIC to monitor the Company's and the Bank's compliance with
the various regulatory requirements. The Bank's deposits will be insured up to
the applicable limits by the FDIC under the Bank Insurance Fund ("BIF"). The
Bank will be subject to regulation by the Federal Reserve and the Department
with respect to reserves required to be maintained against transaction deposit
accounts and certain other matters.
Regulation of the Company
General. The BHC Act prohibits the Company from acquiring direct or
indirect control of more than 5% of any class of outstanding voting stock or
acquiring substantially all of the assets of any bank or merging or
consolidating with another bank holding company without prior approval of the
Federal Reserve. The BHC Act also prohibits the Company from acquiring control
of any bank operating outside the State of Florida, unless such action is
specifically authorized by the statutes of the state where the bank to be
acquired is located. Additionally, the BHC Act prohibits the Company from
engaging in or from acquiring ownership or control of more than 5% of the
outstanding voting stock of any company engaged in a non-banking business,
unless such business is determined by the Federal Reserve to be so closely
related to banking or managing or controlling banks as to be properly incident
thereto. The BHC Act generally does not place territorial restrictions on the
activities of such non-banking related activities.
Transactions between the Company and the Bank. The Company's authority to
engage in transactions with related parties or "affiliates," or to make loans to
certain insiders, is limited by certain provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Specifically, Sections
23A and 23B of the Federal Reserve Act apply to all transactions by an
insured-state nonmember bank or a holding company with any affiliate. Sections
23A and 23B generally define an "affiliate" as any company that controls or is
under common control with an institution. Subsidiaries of a financial
institution, however, are generally exempted from the definition of "affiliate."
Section 23A limits the aggregate amount of transactions with any individual
affiliate to 10% of the capital and surplus of the Company and also limits the
aggregate amount of transactions with all affiliates to 24.1% of the Company's
capital and surplus. Certain transactions with affiliates, such as loans to
affiliates or guarantees, acceptances and letters of credit issued on behalf of
affiliates, are required to be collateralized by collateral in an amount and of
a type described in the statute. The purchase of low quality assets from
affiliates is generally prohibited. Section 23B provides that certain
transactions with affiliates, including loans and asset purchases, must be on
terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with nonaffiliated companies.
In the absence of comparable transactions, such transactions may only occur
under terms and circumstances, including credit standards, that in good faith
would be offered to or would apply to nonaffiliated companies. The Company does
not expect these provisions will have any effect on its proposed operations.
20
<PAGE>
Support of Subsidiary Depository Institutions. In accordance with Federal
Reserve policy, the Company is expected to act as a source of financial strength
and to commit resources to support the Bank. This support may be required at
times when the Company might not be inclined to provide such support. Such
support would include the infusion of additional capital into an under
capitalized bank subsidiary in situations where an additional investment in a
troubled bank might not ordinarily be made by a prudent investor. In addition,
any capital loans by a bank holding company to any of its subsidiary banks must
be subordinate in right of payment to deposits and to certain other indebtedness
of such subsidiary banks. In the event of bankruptcy, any commitment by a bank
holding company to a federal bank regulatory agency to maintain the capital of
its subsidiary bank will be assumed by the bankruptcy trustee and will be
entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA") a subsidiary bank of a
bank holding company, can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC insured depository
institution "in danger of default". "Default" is defined generally as the
appointment of a conservator or a receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
Control of a Bank Holding Company. FRB Regulation Y, adopted pursuant to
Section 225.41 of 12 U.S.C. Section 1817(j), requires persons acting directly or
indirectly or in concert with one or more persons to give the Board of Governors
of the Federal Reserve 60 days advanced written notice before acquiring control
of a bank holding company. Under the Regulation, control is defined as the
ownership or control with the power to vote 25 % or more of any class of voting
securities of the Holding Company. The Regulation also provides for a
presumption of control if a person owns, controls, or holds with the power to
vote 10 % or more (but less than 25 %) of any class of voting securities, and
if: (i) the Holding Company's securities are registered securities under Section
12 of the Securities and Exchange Act of 1934; or (ii) no other person owns a
greater percentage of that class of voting securities. It is not anticipated
that any purchaser of the securities offered herein, including any of the
Organizers, will acquire 10% of more of the Company's Common Stock.
Legislation and Regulations of the Bank
General. From time to time, various bills are introduced in the United
States Congress with respect to the regulation of financial institutions. Recent
banking legislation, particularly the FIRREA and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory
powers of the federal bank regulatory agencies and restructured the nation's
banking system. The following is a brief discussion of certain portions of these
laws and how they would effect the Company or the Bank.
The FDICIA revised sections of the FDIA affecting bank regulation, deposit
insurance and provisions for funding of the BIF administered by the FDIC. The
FDICIA also revised bank regulatory structures embodied in several other federal
banking statutes, strengthened the bank regulators' authority to intervene in
cases of deterioration of a bank's capital level, placed limits on real estate
lending and imposes detailed audit requirements.
Prompt and Corrective Action. The FDICIA required the federal banking
regulatory agencies to set certain capital and other criteria which would define
the category under which a particular financial institution would be classified.
The FDICIA imposes progressively more restrictive constraints on operations,
management, and capital distributions depending on the category in which an
institution is classified. Pursuant to the FDICIA, undercapitalized institutions
must submit recapitalization plans to their respective federal banking
regulatory agencies, and a company controlling a failing institution must
guarantee such institution's compliance with its plan in order for the plan to
be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories. For
example, a bank is deemed to be "well-capitalized" if it has a total risk-based
capital ratio (total capital to risk-weighted assets) of 10% or greater, a Tier
1 risk-based capital ratio (Tier 1 capital to risk-weighted assets) of 6% or
greater, and a Tier 1 leverage capital ratio (Tier 1 capital to adjusted total
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A bank is deemed to be "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, and (generally) a Tier 1 leverage capital ratio
of 4% or greater, and the bank does not meet the definition of a
"well-capitalized" institution. A bank is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%. In addition, the
FDIC is authorized effectively to downgrade a bank to a lower capital category
than the bank's capital ratios would otherwise indicate, based upon safety and
soundness considerations (such as when the bank has received a less than
satisfactory examination rating for any of the CAMEL rating categories other
than capital: i.e. Asset Quality, Management, Earnings or Liquidity). As a bank
drops to lower capital levels, the extent of action to be taken by the
21
<PAGE>
appropriate regulator increases, restricting the types of transactions in which
the bank may engage. The new capital standards are designed to bolster and
protect the deposit insurance fund. Based upon its proposed capital, the Bank
would be considered to be well capitalized.
Insurance on Deposit Accounts. In response to the requirements of the
FDICIA, the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The FDIC
assigns a financial institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period. These categories consist of well
capitalized, adequately capitalized or undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the financial institution's primary regulator, in the Bank's case
the Department, and information which the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. A financial institution's assessment rate depends on the capital category
and supervisory category to which it is assigned. There are nine assessment risk
classifications (i.e., combinations of capital groups and supervisory subgroups)
to which different assessment rates are applied. BIF assessment rates range from
0 basis points on deposits for a financial institution in the highest category
(i.e.. well-capitalized and financially sound with only a few minor weaknesses)
to 31 basis points on deposits for an institution in the lowest category (i.e.,
undercapitalized and posing a substantial probability of loss to the BIF, unless
effective corrective action is taken). The Bank does not expect any assessment
for its first year of operation.
Standards for Safety and Soundness. The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and their
holding companies standards relating to internal controls, information systems
and audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate. In
addition, the federal banking regulatory agencies are required to prescribe by
regulation standards specifying: (i) maximum classified assets to capital
ratios; (ii) minimum earnings sufficient to absorb losses without impairing
capital; (iii) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of depository institutions or the depository
institution holding companies; and (iv) such other standards relating to asset
quality, earnings and valuation as the agency deems appropriate. Finally, each
federal banking agency is required to prescribe standards for employment
contracts and other compensation arrangements of executive officers, employees,
directors and principal shareholders of insured depository institutions that
would prohibit compensation and benefits and other arrangements that are
excessive or that could lead to a material financial loss for the institution.
If an insured depository institution or its holding company fails to meet any of
its standards described above, it will be required to submit to the appropriate
federal banking agency a plan specifying the steps that will be taken to cure
the deficiency. If an institution fails to submit an acceptable plan or fails to
implement the plan, the appropriate federal banking agency will require the
institution or holding company, to correct the deficiency and until corrected,
may impose restrictions on the institution or the holding company including any
of the restrictions applicable under the prompt corrective action provisions of
the FDICIA.
The FDICIA also requires each appropriate federal banking agency to adopt
uniform regulations prescribing standards for extensions of credit secured by
real estate or made for the purpose of financing the construction of
improvements on real estate. In prescribing these standards, the banking
agencies must consider the risk posed to the deposit insurance funds by real
estate loans, the need for safe and sound operation of insured depository
institutions and the availability of credit.
Capital Requirements. The Federal Reserve and the FDIC have adopted capital
regulations which establishes a Tier 1 core capital definition and a minimum 3%
leverage capital ratio requirement for the most highly-rated banks and holding
companies (i.e., those banks and holding companies with a composite CAMELS
rating of 1 under the Uniform Financial Institutions Rating System established
by the Federal Financial Institutions Examination Council) that are not
anticipating or experiencing significant growth. All other state nonmember banks
are required to meet a minimum leverage ratio that is at least 100 to 200 basis
points above 3%. A holding company or bank that is not in the highest-rated
category or that is anticipating or experiencing significant growth will have to
meet a minimum leverage ratio of at least 4%. The minimum capital with which the
Bank will be permitted to open is $4 million.
Under the Federal Reserve's and the FDIC's risk-based regulations, a
holding company or bank must classify its assets and certain off-balance sheet
activities into categories and maintain specified levels of capital for each
category. The least capital is required for the category deemed by the Federal
Reserve and the FDIC to have the least risk, and the most capital is required
for the category deemed by the Federal Reserve and the FDIC to have the greatest
risk. The regulations require a holding company or bank to have a total risk
based capital ratio of 8% and a Tier 1 risk based capital ratio of 4%. Under the
statement of policy, certain assets are required to be deducted from risk-based
capital. Such assets include intangible assets, unconsolidated banking and
finance subsidiaries, investments in securities subsidiaries, ineligible equity
investments and reciprocal holding of capital instruments with other banks. In
addition, the Federal Reserve or the FDIC may consider deducting other assets on
22
<PAGE>
a case-by-case basis or investments in other subsidiaries on a case-by-case
basis or based on the general characteristics or functional nature of the
subsidiaries.
Loans to One Borrower. Florida law allows a state bank to extend credit to
any one borrower in an amount up to 25% of its capital accounts, which are
defined as unimpaired capital, surplus and undivided profits, provided that the
unsecured portion may not exceed 15% of the capital accounts of the bank. The
law permits exemptions for loans collateralized by accounts maintained with the
Bank and for loans guaranteed by the Small Business Administration, the Federal
Housing Administration and the Veterans Administration. The Bank will be subject
to these limits.
Payment of Dividends. While not the only source of income, the primary
source of income to the Company will be dividends from the Bank. A Florida
chartered commercial bank may not pay cash dividends that would cause the bank's
capital to fall below the minimum amount required by federal or Florida law.
Otherwise, a commercial bank may pay a dividend out of the total of current net
profits plus retained net profits of the preceding two years to the extent it
deems expedient, except as described below. Twenty percent of the net profits in
the preceding two year period may not be paid in dividends, but must be retained
to increase capital surplus until such surplus equals the amount of common and
preferred stock issued and outstanding. In addition, no bank may pay a dividend
at any time that net income in the current year when combined with retained net
income from the preceding two years produces a loss. The ability of the Bank to
pay dividends to the Company will depend in part on the FDIC capital
requirements in effect at such time and the ability of the Bank to comply with
such requirements.
Brokered Deposits. In accordance with the FDICIA, the FDIC has implemented
restrictions on the acceptance of brokered deposits. In general, an
"undercapitalized" institution may not accept, renew or roll over any brokered
deposits. "Adequately capitalized" institutions may request a waiver from the
FDIC to do so, while "well-capitalized" institutions may accept, renew or roll
over such deposits without restriction. The rule requires registration of
deposit brokers and imposes certain recordkeeping requirements. Institutions
that are not "well-capitalized" (even if meeting minimum capital requirements)
are subject to limits on rates of interest they may pay on brokered and other
deposits. The Bank does not expect to acquire any brokered deposits.
Liquidity. A state-chartered commercial bank is required under Florida law
to maintain a liquidity reserve of at least 15% of its total transaction
accounts and 8% of its total nontransaction accounts subject to certain
restrictions. This reserve may consist of cash-on-hand, demand deposits due from
correspondent banks, and other investments and short-term marketable securities.
The Bank will be subject to these requirements.
Community Reinvestment. Under the Community Reinvestment Act ("CRA"), as
implemented by Federal Reserve and FDIC regulations, holding companies and state
nonmember banks have a continuing and affirmative obligation consistent with
their safe and sound operation to help meet the credit needs of their entire
community, including low- and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires the Federal Reserve and the FDIC, in
connection with their examination of holding companies or state nonmember banks,
to assess the Company's record of meeting the credit needs of their communities
and to take such record into account in its evaluation of certain applications
by such institution. The FIRREA amended the CRA to require public disclosure of
an institution's CRA rating and to require that the Federal Reserve and the FDIC
provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system in lieu of the then existing five-tiered
numerical rating system. The Company and the Bank will be subject to these
regulations.
Deposit Insurance Funds Act of 1996. On September 30, 1996, Congress passed
and the President signed in to law the Deposit Insurance Funds Act of 1996
("DIFA"). Among other things, the DIFA, and rules promulgated thereunder by the
FDIC, provide for banks and thrifts to share the annual interest expense for the
Finance Corp. Bonds which were issued in the late 1980s to help pay the costs of
the savings and loan industry restructuring. The approximate annual interest
expense is $780 million of which BIF insured banks are expected to pay
approximately $322 million or 41%, while SAIF insured thrifts will pay
approximately $458 million or 59% of the interest expense. It is estimated that
the annual assessment for BIF insured institutions will be approximately 1.2
cents per $100 of deposits, while SAIF insured institutions will pay 6.5 cents
per $100 of deposits. These payments are to begin in 1997 and run through 1999.
Beginning in the year 2000 and continuing through the year 2017, banks and
thrifts will each pay 2.43 cents per $100 of deposits. These assessments will be
in addition to any regular deposit insurance assessments imposed by the FDIC
under FDICIA. See REGULATION AND SUPERVISION - Insurance on Deposit Accounts.
Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, existing restrictions on interstate acquisitions of
banks by bank holding companies were repealed on September 29, 1995, such that
the Company and any other bank holding company would be able to acquire any
23
<PAGE>
Florida-based bank, subject to certain deposit percentage and other
restrictions. The legislation also provides that, unless an individual state
elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to be subject to applicable state
branching laws. Florida has adopted legislation which will permit interstate
acquisitions and interstate branching effective June 1, 1997. Florida law
prohibits de novo branching by out of state banks.
Department Assessment. State-chartered commercial banks are required by
Department regulation to pay assessments to the Department to fund the
operations of the Department. The general assessment, to be paid semiannually,
is computed upon a bank's total assets, including consolidated subsidiaries, as
reported in the bank's latest quarterly call report. The Bank will be required
to pay such assessments semi-annually.
The Federal Reserve System
The Federal Reserve regulations require banks to maintain non
interest-earning reserves against their transaction accounts (primarily NOW and
regular checking accounts). The Federal Reserve regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts of
$49.3 million or less (subject to adjustment by the Federal Reserve) plus 10%
(subject to adjustment by the Federal Reserve between 8% and 14%) against that
portion of total transaction accounts in excess of $49.3 million. The first $4.4
million of otherwise reservable balances (subject to adjustments by the Federal
Reserve) are exempted from the reserve requirements. The balances maintained to
meet the reserve requirements imposed by the Federal Reserve may be used to
satisfy liquidity requirements. Because required reserves must be maintained in
the form of either vault cash, a noninterest-bearing account at a Federal
Reserve Bank or a pass-through account as defined by the Federal Reserve,
interest-earning assets of the Bank are reduced. The Company and the Bank will
be subject to these requirements.
Federal Securities Laws
The Company, in connection with this Offering, filed with the SEC a
registration statement under the Securities Act for the registration of the
Company's Common Stock. The registration under the Securities Act of shares of
the Common Stock issued in this Offering does not cover the resale of such
shares. Shares of the Common Stock purchased by persons who are not affiliates
of the Company may be resold without further registration. Shares purchased by
an affiliate of the Company will be subject to the resale restrictions of Rule
144 under the Securities Act. If the Company meets the current public
information requirements of Rule 144 under the Securities Act, each affiliate of
the Company who complies with the other conditions of Rule 144 (including the
holding period and those that require the affiliate's sale to be aggregated with
those of certain other persons) may be able to sell in the public market,
without registration, a number of shares not to exceed, in any three-month
period, the greater of (i) 1% of the outstanding shares of the Company, or (ii)
the average weekly volume of trading in such shares during the preceding four
calendar weeks. Provision may be made in the future by the Company to permit
affiliates to have their shares registered for sale under the Securities Act
under certain circumstances.
The scope of regulation, supervision and permissible activities of the
Company and the Bank is subject to change by future federal and state
legislation.
ORGANIZERS AND PRINCIPAL SHAREHOLDERS
The following persons are Organizers of the Company only: John W. Burns,
III, Robert M. Eadie, Shilpa U. Mhatre, Alton C. Milton, Jr., and Andrew T.
Moore. The following persons are the Organizers of the Bank only: Samuel F.
Brewer, Frank A. Broome, III, C. F. Douglas, Renny B. Eadie, III, Garland Kirby,
and Roger W. Ratliff. The following persons are organizers of both the Company
and the Bank: Alton C. Milton, Sr., and Robert W. Woodard. The Organizers, as a
group, intend to subscribe for 133,000 Units in the Offering which will equal
26.6% of the 500,000 minimum Units required to be sold in order to release funds
from the Subscription Escrow Agreement. In addition to the subscriptions
committed to by the Organizers, the Organizers have indicated that they may be
willing to subscribe for additional Units in the Offering if necessary to help
the Company complete the Offering and release the proceeds from the Subscription
Escrow Account. In any event, total purchases by the Organizers will not exceed
148,000 Units in the aggregate, which would equal 29.6% of the 500,000 minimum
Units required to be sold in order to release funds from the Subscription Escrow
Account.
Upon commencement of the business of the Bank, Mr. Woodard will receive, at
no cost to him, incentive stock options to purchase 10,000 shares of the
Company's common stock at an option price of $9.00 per share, exercisable at any
time after the vesting period, for ten years from the date of grant. See
"MANAGEMENT - Executive Compensation."
24
<PAGE>
All organizational expenses of the Company and the Bank have been financed
from the proceeds of the sale of stock to the Company Organizers in a private
offering. The Organizers have purchased a total of 3,942 shares of common stock
at a price of $45.00 per share in a private sale transaction in order to meet
the net worth requirements of the Florida Division of Securities imposed upon
issuer's who sell common stock through associated persons, as well as to provide
funds necessary to pay organizing and pre-opening expenses of the Company and
the Bank. This stock will be canceled and exchanged for Units issued by the
Company in the Offering.
Each of the Organizers intends to purchase the number of Units set forth in
the following Table, which also specifies the percentage of Common Stock to be
owned by the Organizers after completion of the Offering Period.
<TABLE>
<CAPTION>
Actual Number of
Name of Number of Percent of Beneficial Percent of Percent of
Beneficial Owner Shares Minimum Shares(1) Minimum(2) Maximum(4)
---------------- ------ ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Samuel F. Brewer 22,900 4.58 68,700 12.59 5.13
Frank A. Broome, III 11,200 2.24 33,600 6.43 2.50
John W. Burns, III 6,000 1.20 18,000 3.52 1.34
C. F. Douglas 2,300 0.46 6,900 1.37 0.51
Renny B. Eadie, III 11,200 2.24 33,600 6.43 2.50
Robert M. Eadie 11,200 2.24 33,600 6.43 2.50
Garland Kirby 15,100 3.02 45,300 8.54 3.37
Shilpa U. Mhatre 11,200 2.24 33,600 6.43 2.50
Alton C. Milton, Sr. 5,600 1.12 16,800 3.29 1.25
Alton C. Milton, Jr. 5,600 1.12 16,800 3.29 1.25
Andrew T. Moore 11,200 2.24 33,600 6.43 2.50
Roger W. Ratliff 16,700 3.34 50,100 9.39 3.73
Robert W. Woodard 2,800 0.56 18,400 3.57 1.37
----- ---- ------ ---- ----
TOTAL 133,000 26.6% 409,000 52.71%(3) 30.45%
------- ===== ======= ========= ======
- ------------------------------------
</TABLE>
(1) Based upon Warrants for the Shares to be issued in connection with the
proposed purchase, as well as the proposed options
for Mr. Woodard.
(2) Individual percentages based upon 500,000 shares outstanding, plus Warrants
to be acquired by each individual Organizer equal to the actual number of
shares proposed to be acquired by such Organizer and 10,000 shares to be
issued to Mr. Woodard under the proposed stock option plan when calculating
Mr. Woodard's percentage and the total percentages.
(3) Total percentage based upon 500,000 shares outstanding, plus Warrants to be
acquired by all Organizers and 10,000 shares to be issued to Mr. Woodard
under the proposed Stock Option Plan.
(4) Percentage based upon 1,343,000 shares which is the sum of 600,000 shares,
the maximum number of Shares which can be issued in the Offering, 733,000
shares, the maximum number of shares which can be issued pursuatn to the
maximum number of Warrants which can be issued in the Offering, and 10,000
shares to be issued to Mr. Woodard under the proposed stock option plan
when calculating Mr. Woodard's percentage and the total percentage. No
assurances can be given that any Warrants will be exercised, and therefore
that any of the 733,000 shares will ever be issued.
Each of the Organizers will acquire their Units during the Offering Period
and, therefore, will acquire both Common Stock and Warrants exercisable in
accordance with the terms set forth herein. While there can be no assurance that
the Organizers will exercise their Warrant rights, it can be assumed that most
or all will exercise such rights and will therefore acquire additional Common
Stock during the 48 month period following the Effective Date of registration.
See, "RISK FACTORS, Possible Dilution Resulting From Warrants."
MANAGEMENT
Directors and Executive Officers of the Company and the Bank
Effective upon organization of the Company, all Organizers served as
initial directors of the Company. See, "Appendix A" herein. Subsequently, upon
advice of counsel, certain Organizers resigned as Company directors in order to
serve exclusively as members of the proposed Bank's Board of Directors.
The proposed directors and executive officers for the Company and the Bank
are as follows:
[TABLE FOLLOWS THIS PAGE]
25
<PAGE>
Position with Position with
Name Company Bank
---- ------- ----
Samuel F. Brewer None Director
Frank A. Broome, III None Director
John W. Burns, III Director None
C. F. Douglas None Director
Renny B. Eadie, III None Director
Robert M. Eadie Director None
Garland Kirby None Director
Shilpa U. Mhatre Director None
Alton C. Milton, Sr. Director and Director and
Chairman of the Board Chairman of the Board
Alton C. Milton, Jr. Director None
Andrew T. Moore Director None
Roger W. Ratliff None Director
Robert W. Woodard Director, President Director, President
and Chief Executive Officer and Chief Executive Officer
Company. Each of the above persons has been a director of the Company
or a proposed director of the Bank since at least September, 1997. The initial
Board of Directors of the Company consists of seven directors. The directors
will be divided into three classes, designated Class I, Class II and Class III.
Each class will consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
Company's initial directors will expire at the first meeting of shareholders at
which directors are elected. It is expected that the Company will hold an
organizational meeting of the shareholders shortly after the Bank commences
operations at which time the shareholders will be asked to elect Directors. The
Company intends to recommend that the shareholders elect the initial directors
to their respective terms set forth in the above Schedule. Following the
subsequent election of the Company's directors, the term of the Company's Class
I directors will expire at the Company's next annual meeting of shareholders;
the term of the Company's Class II directors will expire at the Company's second
annual meeting of shareholders; and the term of the Company's Class III
directors will expire at the Company's third annual meeting of shareholders. At
each annual meeting of shareholders, successors to the class of directors whose
term expires at the annual meeting will be elected for a three-year term. If the
number of directors is changed, an increase or decrease will be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class will hold office for a
term that will coincide with the remaining term of that class, but in no event
will a decrease in the number of directors shorten the term of any incumbent
director. Any director elected to fill a vacancy not resulting in an increase in
the number of directors will have the same remaining term as that of his
predecessor. Except in the case of removal from office, any vacancy on the Board
of Directors will be filled by a majority vote of the remaining directors then
in office. The effect of the classified Board of Directors is to make it more
difficult for a person, entity or group to effect a change in control of the
Company through the acquisition of a large block of the Company's voting stock.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and the position filled
by another person nominated and elected for that purpose by the affirmative vote
of the holders of at least 66% of the outstanding shares of the Company's Common
Stock. The Company's officers are appointed by the Board of Directors and hold
office at the will of the Board.
26
<PAGE>
Bank. Each of the Bank's proposed directors will, upon approval of the
Department, serve until the Bank's first shareholders meeting, which meeting
will be held shortly after the Bank commences operations. It is anticipated that
each interim director will be nominated to serve as director of the Bank at that
meeting. After the first shareholders meeting, directors of the Bank will serve
for a term of one year and will be elected each year at the Bank's annual
meeting. The Bank's officers will be appointed by its Board of Directors and
will hold office at the will of the Board.
Initial Directors and Officers. The following is a brief description of
the business, civic and educational experience of the initial Directors and
Officers:
Samuel F. Brewer(2), age 36, is a resident of Lake City, Florida. He
graduated with a BBA in risk management from the University of Georgia
in 1985. Since 1988, Mr. Brewer has been an owner in Lake City Tobacco
Warehouses, Inc. He is also an owner in R & H Farms, Inc. and A+
Mini-Storage located in Alachua, Florida. Mr. Brewer is the
Secretary/Treasurer of Greenten Corp. which is a commercial
warehousing/handling and distribution operation in Greeneville,
Tennessee. He is Vice-President of Brewer Development Corp. which is a
Steak-Out Delivery franchise located in Birmingham, Alabama. Mr. Brewer
is the President of the Florida Tobacco Warehouse Association and
currently serves on the 39 member federal marketing committee for the
U.S. Department of Agriculture. He is a member of the First United
Methodist Church of Lake City, Lake City Elks Club, and the Lake City
Country Club.
Frank A. Broome, III(2), age 33, is a licensed Optometrist practicing
in Lake City, Florida. Dr. Broome graduated from the University of
Florida, Gainesville, Florida in 1986 with a degree in Psychology and
from the Southern College of Optometry, Memphis, Tennessee with a
doctorate degree. He is currently in private practice with his wife,
Dr. Kimberly M. Broome, and Dr. Ronald R. Foreman. He is a member of
the American Optometric Association, Florida Optometric Association,
and Southern Council of Optometrists. He served as Chairman of the
Volunteers in Service to our Nation (VISION USA) Committee from
1995-1998, and also chaired the Assistance to Graduates/Undergraduates
Committee from 1991-1994. In addition to Optometry, Dr. Broome owns and
manages three parcels of commercial property. His civic and social
activities include the Lake City Rotary Club (President-Elect, 1997;
Secretary, 1992-1994), Past- President and current Board of Directors
of the Columbia County Gator Club, and past board member of the
Columbia County Friends of the Public Library.
John W. Burns(1), age37, is a State Farm Insurance Agent in Lake City,
Florida. Mr. Burns was born and raised in Lake City where his family
has lived for three generations. He graduated from Stetson University
in Deland, Florida, in 1981 with a Bachelor of Arts degree and is
currently the Alumni Relations Chairman for the Columbia County region.
He has been a State Farm Insurance Agent since 1989 and was named one
of the top 50 agents in the country in 1990. He has served as President
and Campaign Chairman of the United Way of Suwannee Valley and is
currently serving as Treasurer. Mr. Burns has recently served on the
Board of Directors of Happy House Day Care Center, is currently a
member of the Lake City Elks Lodge and the Lake City Rotary Club.
C. F. Douglas(2), age 64, has 39 years of banking experience, beginning
in 1956 with the Dixie County State Bank, Cross City, Florida,
advancing to Vice President and a member of the Board of Directors. In
1965, he moved to Lake City, Florida, and joined the First National
Bank as Cashier, advanced to President and held that position until the
bank changed ownership in 1973. He joined First Federal Savings and
Loan Association in 1973, which merged with Sun Federal Savings and
Loan Association, and served as First Vice President in charge of Loan
Production. Sun Federal merged with Anchor Savings Bank, New York, New
York, along with other banks in the southeast. He served as Vice
President of Anchor Savings, responsible for loan administration in
Florida. He retired from Anchor Savings Bank in 1988, and joined
Community National Bank, Lake City, Florida, as Vice President and Loan
Officer in 1988 where he served until 1990. In October 1990, he joined
Lafayette County State Bank, Mayo, Florida, as Chief Executive Officer.
He retired from banking in 1995. He has owned and managed a
mini-storage facility for the past 12 years and recently added record
storage (archives) to the business. He holds a two year certificate in
Accounting and is a graduate of The School of Banking of The South,
Baton Rouge, Louisiana (Louisiana State University). Civic and social
organizations include: Kiwanis (past President), Elks, Chamber of
Commerce, Committee of 100, Boy Scouts of America (Regional Finance
Officer) and other various organizations. He served in the United
States Air Force from 1952-1956.
Renny B. Eadie, III(2), age 48, has lived in Columbia County all his
life. In 1977, he formed Columbia Ready Mix Concrete, Inc., and serves
as President and Manager, operating ready-mix plants in Lake City and
Live Oak, Florida. Mr. Eadie is also Vice President of Lake City
Industries, Inc., a lumber and building supply company, and Vice
President of Silcox Precast, Inc., Live Oak, Florida, a manufacturer of
specialty concrete products. He is a member of the First Baptist
Church, Lake City, Florida, Lake City Masonic Lodge, Lake City York
Rite, and Lake City Shrine Club.
27
<PAGE>
Robert M. Eadie(1), age 45, a native of Lake City, Florida, graduated
from Columbia High School and received an AA degree from Lake City
Community College. After serving in the United States Army, he joined
his father in the family business in 1975. Since that time, he has
managed Lake City Industries, Inc., a lumber and building supply
business. He presently serves as the company's President, and also
serves as Vice-President of Columbia Ready Mix, Inc., having ownership
in both businesses. He is a member of First Baptist Church, the Masonic
Lodge, the Shrine Club and the Lake City York Rite. He and his wife,
Linda, have two daughters, Erica and Angela.
Garland Kirby(2), age 45, is Vice President of Kirby Oil Company in
Lake City, Florida, a wholesale distributor of Amoco petroleum
products. In 1989, Mr. Kirby and his brother formed Kirby Brothers
Enterprises, Inc., which is engaged in retail gasoline sales through
convenience stores. He is an active member and deacon at First Baptist
Church and is a fourth generation Columbia County resident.
Shilpa U. Mhatre(1), age 44, received a BS in Microbiology from the
University of Bombay in 1974. For the past 19 years, she has operated
the business office for Psychiatric Associates of Lake City, P.A., a
successful medical practice owned by her husband. In addition, she has
owned and managed several residential and commercial properties in Lake
City for the past 13 years and is part owner of The Plantations, a
48-bed adult living facility in Lake City.
Alton C. Milton, Jr.(1), age 27, is a 1988 graduate of Columbia High
School, Lake City, Florida. Upon graduation he and his father became
joint partners of M & M Farms, a venture that includes tree farming and
cattle farming. In 1991, he joined his father in the Sunshine True
Value Hardware Store, located in Lake City, Florida. In 1995, he became
a stockholder of the company and serves as its Vice President. Recently
he and his father purchased Sunshine Electrical & Plumbing Supply,
Inc., which is a wholesaler and distributor of plumbing, electrical and
related supplies serving north central Florida. He serves as Vice
President of this company.
Alton C. Milton, Sr.(3), age 63, is a native of Columbia County. He
received his GED from Columbia High School in 1957. He began working at
an early age in the timber and turpentine business. In 1957 he joined
Orange State Pipe & Supply Co., Lake City, Florida, as counter
salesman. He later became purchasing agent, then manager and during the
last five years of employment there, he formed his own company,
Sunshine Electrical & Plumbing Supply. The company grew to four
locations over the next several years. In 1975 he opened Sunshine
Hardware, now known as Sunshine True Value Hardware, wholly owned by he
and his son. In 1988 he sold the wholesale business and the hardware
business. In 1991 he re-purchased the hardware store. He recently
re-purchased the original wholesale business as well. He has also
bought, sold and developed real estate in Columbia and surrounding
counties. He served as director of Lake City Federal Savings & Loan,
which later became Sun Federal which was merged with Anchor Savings &
Loan in 1986. He is a member of the Lake City Chamber of Commerce and a
member of the Deep Creek Advent Christian Church.
Andrew T. Moore(1), age 46, attended The Bolles School, Jacksonville,
Florida, from 1966-1970 and graduated from Jacksonville University in
1974 with a BS degree in Business. He joined the family business,
Rountree-Moore Ford/Toyota, in May of 1974 and presently serves as Vice
President and General Manager. He has served as President and Treasurer
of the Lake City Kiwanis Club, served five years as a Board Member of
the Lake City/Columbia County Chamber of Commerce and three years as a
Columbia County Boys Club Board Member.
Roger W. Ratliff(2), age 50, attended high school in Jasper, Florida
and received an AA degree from North Florida Junior College in Madison,
Florida. His early work career was spent in various sales positions. He
joined Horizon Industrial Supplies, Inc., in 1981 becoming a 1/3 owner
soon thereafter. He and Greg Pittman, shareholders of Horizon,
eventually bought the remaining portion of the company in 1994, with
each now owning 50%. Mr. Ratliff is also involved as a part owner of
Bar Harbor Lodge, Inc., a Best Western motel located in Bar Harbor,
Maine; Live Oak Innkeepers, Inc., a Best Western motel located at U.S.
129 and I-10 in Live Oak, Florida and PRS Properties, Inc., which owns
an industrial property in Lake City, Florida. Mr. Ratliff is a
life-long resident of Jasper, Florida and is a member of the West Lake
Church of God.
Robert W. Woodard(3)(4), age 48, has over 23 years of banking
experience. His work experience began with the Hillsboro SunBank (then
Hillsboro Bank) in Plant City, Florida, in 1969. After working with
Hillsboro Sun Bank for two years, he relocated to West Palm Beach,
Florida, to complete his BS degree in Business Administration at Palm
Beach Atlantic College. In 1975, he returned to Hillsboro SunBank where
he remained until 1987. During his employment with Hillsboro SunBank he
worked as Head Teller, Internal Auditor, Credit Analyst, Credit
Manager, and Assistant Vice President, Commercial Loans. In October,
1987, he moved to Lake City, Florida, where he joined Barnett Bank of
North Central Florida as Vice President, Commercial Loans. In 1990, he
28
<PAGE>
left banking and moved to Tallahassee, Florida, where he became
Director of Development for Florida Baptist Family Ministries, a
position which he held for two years. In 1992, he returned to Barnett
Bank of North Central Florida, Lake City, Florida, as Vice President,
Commercial Loans. In August 1992, he joined CNB National Bank, Lake
City, Florida as Vice President, Commercial Loans. During his
employment at CNB, the company grew from three offices to ten offices
with locations in six counties in North Central Florida. In 1995, he
was appointed Senior Vice President, Commercial Banking. In that
capacity, he served as the senior lender, responsible for supervision
of the banks' $152 million loan portfolio as well as the entire lending
staff. Mr. Woodard and his family have lived in Lake City, Florida, for
8 years. His civic and social activities include Board Member and
Treasurer of the Lake City Rotary Club; Board Member and Past Treasurer
of the Suwannee Valley United Way; Florida Bankers Association Group
III Chairman; member of the City of Lake City Planning and Zoning Board
and Board of Adjustments; member of the Columbia County Industrial
Development Authority and the Lake City-Columbia County Chamber of
Commerce. His is an active member of First Baptist Church, Lake City,
Florida.
- ------------------------------------
(1) Will serve as a Director of the Company, only.
(2) Will serve as a Director of the Bank, only.
(3) Will serve as a Director of both the Company and the Bank.
(4) Will serve as an Executive Officer of the Bank.
Executive Compensation
The Organizers entered into an employment agreement with Robert W.
Woodard in July of 1997, to assist the Organizers with the formation of the
Company and the Bank. Under the terms of the Agreement, Mr. Woodard will serve
as a director and Chief Executive Officer of the Company and is being paid a
salary of $5,625 per month, plus a mileage allowance of $0.315 per mile for
business use during the Bank's organizational phase. The understanding between
the Organizers and Mr. Woodard is that Mr. Woodard will be employed by the
Company as its President and Chief Executive Officer, and by the Bank as its
President and Chief Executive Officer at an annual base salary of $67,500, plus
a performance bonus based upon the achievement of certain goals and objectives
that will be established by the Board of Directors relating to the levels of
profitability and asset growth of the Bank. It is not expected that such bonus
would exceed 50% of Mr. Woodard's base salary. The Agreement which initially is
for a term of two years, also contains a commitment to grant, at no cost to him,
an option to purchase 10,000 shares of Company Common Stock at $9.00 per share.
Such option would vest at the rate of 20% per year over five years, would expire
10 years from the grant date and would be subject to the terms of a qualified
stock option plan adopted by the Company's Board of Directors and approved by
its shareholders. Mr. Woodard will be provided with an automobile allowance, as
well as participation in such other benefit plans which the Bank makes available
generally to all employees. Mr. Woodard's employment will be at the will of the
Board and the Bank may terminate Mr. Woodard for any reason upon majority vote
of the Board of Directors. If, however, the termination is without cause, Mr.
Woodard will be entitled to severance pay in an amount not to exceed the
remainder due on his contract plus any incentive compensation which he may have
been entitled to. The Board of Directors must review Mr. Woodard's performance
annually, and determine whether to extend the Agreement for a one-year period.
In the event of Mr. Woodard's termination for any reason, Mr. Woodard agrees not
to become employed with any business enterprise who competes or intends to
compete, directly or indirectly, with any office of the Company located in
Columbia County for a period of 24 months following such termination.
Transactions with Affiliates
Mr . Woodard is the only Organizer or proposed director of the Company
that has received any cash compensation for services rendered on behalf of the
Company. See "MANAGEMENT - Executive Compensation." Once the Bank opens for
business, it is anticipated that it will extend loans to the Bank's and/or the
Company's Directors, their associates or members of the immediate families of
the Directors of the Bank or the Company. Such loans will be made on
substantially the same terms and conditions, including interest rates,
collateral and credit underwriting procedures as those prevailing at the time
for comparable transactions by the Bank with other persons.
Stock Option Plans
Incentive Stock Option Plan. The Company's Board of Directors has
adopted an Incentive Stock Option Plan ("Plan") for employees who are
contributing significantly to the management or operation of the business of the
Company or its subsidiaries as determined by the committee administering the
Plan. The Plan is contingent upon approval by the Company's shareholders. The
Plan provides for the grant of options at the discretion of a committee
designated by the Board of Directors to administer the Plan. No person may serve
as a member of the committee who is then eligible for a grant of options under
29
<PAGE>
the Plan or has been so eligible for a period of one year prior to his service
on the committee. The option exercise price must be at least 100% (110% in the
case of a holder of 10% or more of the Common Stock) of the fair market value of
the stock on the date the option is granted, but in no case will the exercise
price be less than the offering price contained herein. The options are
exercisable by the holder thereof in full at any time following a vesting period
and prior to their expiration in accordance with the terms of the Plan. Stock
options granted pursuant to the Plan will expire on or before (i) the date which
is the tenth anniversary of the date the option is granted, or (ii) the date
which is the fifth anniversary of the date the option is granted in the event
that the option is granted to a key employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
of the Company. Mr. Woodard's proposed Employment Contract contains a provision
whereby he will be granted, at no cost to him, an option to purchase 10,000
shares of the Company's common stock. See "MANAGEMENT - Executive Compensation."
The Committee may grant a Limited Right simultaneously with respect to
the grant of any stock option, with respect to all or some of the shares covered
under the stock option. A Limited Right may not be exercised before six months
from the date of the grant and may be exercised only if: (i) there is a change
in control of the Company; (ii) the underlying option is eligible to be
exercised; and (iii) the fair market value of the underlying shares on the day
of the exercise is greater than the exercise price of the related option. The
Limited Right may be for no more than 100% of the difference between the
exercise price and the fair market value of the common stock of the Company.
Directors Stock Option Plan. The Board of Directors may, at the
Company's first annual meeting of shareholders after the Bank opens for
business, propose for shareholder approval a directors' stock option plan, which
will be designed to provide incentive compensation to directors in the event
that the Company's common stock increases in value during the term of such
options. The detail of this directors' option plan have not yet been determined,
but such details would be disclosed to shareholders in the Company's Proxy
Statement issued in connection with solicitation of shareholder approval of such
a plan.
Key Man Insurance
The Company has purchased a key man life insurance policy ("Policy")
insuring the life of Mr. Woodard. The Company is both the owner and the
beneficiary of the Policy. The amount of the Policy is $250,000 and the proceeds
of the Policy would be used to defray the costs of any delay in the Application
and organization process caused by Mr. Woodard's death. Should Mr. Woodard die
during the organizational process the Company may elect to terminate the
Offering and refund all subscription proceeds to the Subscribers.
30
<PAGE>
ARTICLES OF INCORPORATION - SUMMARY
The authorized capital stock of the Company is 10,000,000 shares
consisting of 8,000,000 shares of Common Stock, par value, $0.01 per share, of
which 3,942 shares are presently issued and outstanding and 2,000,000 shares of
Preferred Stock, par value $0.01 per share of which no shares are presently
outstanding. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
Common Stock
The holders of Common Stock are entitled to elect the members of the
Board of Directors of the Company and such holders are entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of the Company. No holder of any class of stock of the Company has preemptive
rights with respect to the issuance of shares of that or any other class of
stock and the Common Stock is not entitled to cumulative voting rights with
respect to the election of directors.
The holders of Common Stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefore. Upon the liquidation, dissolution or winding up of
the Company, the holder of each share of Common Stock will be entitled to share
equally in the distribution of the Company's assets. The holders of Common Stock
are not entitled to the benefit of any sinking fund provision. The shares of
Common Stock of the Company are not subject to any redemption provisions, nor
are they convertible into any other security or property of the Company. All
shares of Common Stock outstanding upon completion of this Offering will be,
fully paid and nonassessable.
The Company will require the payment of a $9.00 transfer fee with
regard to all requests for cancellation and re-issue of the Company's shares
after the initial issue of share certificates. No such fee will be required for
shares originally issued, or issued in exchange for Warrants.
Requirements for Super Majority Approval of Transactions
The Company's Articles contain provisions requiring super majority
shareholder approval to effect certain extraordinary corporate transactions
which are not approved by the Board of Directors. The Articles require the
affirmative vote or consent of the holders of at least 66% of the shares of each
class of Common Stock of the Company entitled to vote in elections of directors,
in order to approve any: (i) merger, consolidation, disposition of all or a
substantial part of the assets of the Company or a subsidiary of the Company, or
(ii) exchange of securities requiring shareholder approval or liquidation of the
Company ("Affiliated Transaction"), if any person who together with his
affiliates and associates owns beneficially 5% or more of any voting stock of
the Company ("Interested Shareholder") is a party to the transaction, provided
that a majority of the disinterested Directors of the Company has not approved
the transaction. In addition, the Articles require the separate approval by the
holders of a majority of the shares of each class of stock of the Company
entitled to vote in elections of directors which are not beneficially owned,
directly or indirectly, by an Interested Shareholder, of any merger,
consolidation, disposition of all or a substantial part of the assets of the
Company or a subsidiary of the Company, or exchange of securities requiring
shareholder approval ("Business Combination"), if an Interested Shareholder is a
party to such transaction; provided, that such approval is not required if: (i)
the consideration to be received by the holders of the stock of the Company
meets certain minimal levels determined by a formula under the Articles
(generally the highest price paid by the Interested Shareholder for any shares
acquired); (ii) there has been no reduction in the average dividend rate from
that which was obtained prior to the time the Interested Shareholder became
such; and (iii) the consideration to be received by the shareholders who are not
Interested Shareholders shall be paid in cash or in the same form as the
Interested Shareholder previously paid for shares of such class of stock. This
Article, as well as the Article establishing a classified Board of Directors,
may be amended, altered, or repealed only by the affirmative vote or consent of
the holders of at least 66% of the shares of each class of stock of the Company
entitled to vote in elections of directors.
Acquisition Offers
The Board of Directors of the Company, when evaluating any offer of
another Person (as defined in the Articles) to: (i) make a tender or exchange
offer for any equity security of the Company; (ii) merge or consolidate the
Company with another corporation or entity; or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
shall, in connection with the exercise of its judgment in determining what is in
the best interest of the Company and its shareholders, give due consideration to
all relevant factors, including, without limitation: (i) the social and economic
effect of acceptance of such offer on the Company's present and future customers
and employees and those of its subsidiaries (as defined in the Articles); (ii)
on the communities in which the Company and its subsidiaries operate or are
31
<PAGE>
located; (iii) on the ability of the Company to fulfill its corporate objectives
as a financial institution holding company; and (iv) on the ability of its
subsidiary financial institutions to fulfill the objectives of such institutions
under applicable statutes and regulations.
Control Share Acquisitions
The Company's Articles provide that any person who acquires 20% or more
of the Company's shares after the Offering is closed must comply with the
Florida Statutes governing control-share acquisitions. Generally a person
intending to acquire such shares must give the Company notice of such intent and
request a meeting of the shareholders at which shareholder's will be given an
opportunity to vote on whether such shares will be accorded full voting rights.
Refusal by the shareholders to accord full voting rights would result in the
proposed acquiror obtaining shares which could not be voted on any matters to
come before the shareholders. Certain acquisitions are exempt from the effects
of the Article, such as mergers or business combinations which have been
approved by the Company's Board of Directors as well as acquisitions of shares
issued by the Company in its Offering or in subsequent Offerings approved by the
Board.
The effect of all of the above provisions is to make it more difficult
for a person, entity or group to effect a change in control of the Company
through the acquisition of a large block of the Company's voting stock.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
the proposed Bank is a party or of which any of their properties are subject;
nor are there material proceedings known to the Company contemplated by any
governmental authority; nor are there material proceedings known to the Company,
pending or contemplated, in which any director, officer or affiliate or any
proposed principal security holder of the Company, or any associate of any of
the foregoing is a party or has an interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby will be passed upon for the Company by Igler & Dougherty, P.A.,
1501 Park Avenue East, Tallahassee, Florida 32301, counsel to the Company.
EXPERTS
The financial statements of the Company as of October 31, 1997, and for
the period from June 30, 1997, (date of incorporation) to October 31, 1997,
included elsewhere in the Registration Statement have been included in reliance
upon the reports of Hacker, Johnson, Cohen & Grieb, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing matters.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission, 450
Fifth Street Northwest, Washington, D.C. 20549, a Form SB-2 Registration
Statement (herein, together with all amendments thereto, called the
"Registration Statement") under the 33 Act, as amended, with respect to the
shares of Common Stock offered hereby. This filing was made electronically
through EDGAR. This Prospectus does not contain all of the information included
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 and schedules thereto. A complete copy of the
document may be obtained at the Securities and Exchange Commission's web site
located at http://www.sec.gov.
32
<PAGE>
FINANCIAL STATEMENTS
AND
NOTES THERETO
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Index to Financial Statements
Page
Independent Auditors' Report................................... F-2
Balance Sheet at October 31, 1997.............................. F-3
Statement of Operations for the Period from June 30, 1997
(Date of Incorporation) to October 31, 1997 .......... F-4
Statement of Changes in Stockholders' Equity
for the period from June 30, 1997 (Date of Incorporation)
to October 31, 1997................................... F-5
Statement of Cash Flows for the Period from June 30, 1997
(Date of Incorporation) to October 31, 1997 .......... F-6
Notes to Financial Statements as of October 31, 1997 and
for the Period from June 30, 1997 (Date of Incorporation)
to October 31, 1997 .................................. F-7 - F-8
All schedules have been omitted because of the absence of the conditions under
which they are required or because the required information is included in the
financial statements and related notes.
F-1
<PAGE>
Independent Auditors' Report
Board of Directors PSB BancGroup, Inc.:
We have audited the accompanying balance sheet of PSB BancGroup, Inc. (a
development stage company) (the "Company") at October 31, 1997, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the period from June 30, 1997 (Date of Incorporation) to October 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at October 31,
1997, and the results of its operations and its cash flows for the period from
June 30, 1997 (Date of Incorporation) to October 31, 1997, in conformity with
generally accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
December 5, 1997
F-2
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Balance Sheet
October 31, 1997
Assets
Cash ................................................... $ 106,554
Other assets ........................................... 5,035
---------
Total ......................................... $ 111,589
=========
Liabilities and Stockholders' Equity
Commitment (Note 4)
Stockholders' equity:
Preferred stock, $.01 par value, 2,000,000 shares
authorized, none issued and outstanding ....... --
Common stock, $.01 par value, 8,000,000 shares
authorized, 3,942 shares issued and outstanding 40
Additional paid-in capital ........................ 177,350
Accumulated deficit ............................... (65,801)
---------
Total stockholders' equity .................... 111,589
---------
Total ......................................... $ 111,589
=========
See Accompanying Notes to Financial Statements.
F-3
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Statement of Operations
Period from June 30, 1997 (Date of Incorporation) to October 31, 1997
Interest income ....... $ 1,165
Organizational expenses 66,966
--------
Net loss ......... $(65,801)
========
See Accompanying Notes to Financial Statements.
F-4
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
Period from June 30, 1997 (Date of Incorporation) to October 31, 1997
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
Balance at June 30, 1997
(date of incorporation) $ -- -- -- --
Sale of common stock ...... 40 177,350 -- 177,390
Net loss .................. -- -- (65,801) (65,801)
-------- -------- -------- --------
Balance at October 31, 1997 $ 4 177,386 (65,801) 111,589
======== ======== ======== ========
See Accompanying Notes to Financial Statements.
F-5
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period from June 30, 1997 (Date of Incorporation) to October 31, 1997
Cash flows used in administrative activities during the development stage:
Net loss ........................................... $ (65,801)
Adjustments to reconcile net loss to net cash
used by administrative activities during the
development stage
Increase in other assets ................... (5,035)
---------
Net cash used in administrative activities
of the development stage ............... (70,836)
---------
Cash flows from financing activities-
Proceeds from issuance of common stock ............. 177,390
---------
Net increase in cash ........................................ 106,554
Cash at beginning of period ................................. --
---------
Cash at end of period ....................................... $ 106,554
=========
Supplemental disclosures of cash flow information-
Cash paid during period for:
Interest ........................................... $ --
=========
Income taxes ....................................... $ --
=========
See Accompanying Notes to Financial Statements.
F-6
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
October 31, 1997
(1) Summary of Significant Accounting Policies
General.PSB BancGroup, Inc. (the "Company") was incorporated on June
30, 1997 in the State of Florida. The Company plans to apply
for approval from the Board of Governors of the Federal Reserve
System ("Board of Governors") to become a one-bank holding
company and plans to acquire 100% of the outstanding shares of
Peoples State Bank (the "Bank"), which is planned to be
incorporated and organized in Lake City, Florida. The
operations of the Company, which initially are intended to
consist solely of the ownership of the Bank, have not commenced
as of October 31, 1997. Therefore, with the exception of
organizational costs which are being expensed when incurred,
accounting policies have not been established. The Company has
adopted a fiscal year end of December 31.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Common Stock Offering. As of October 31, 1997, the Company has sold
3,942 shares of common stock to its organizers for an aggregate
of $177,390. Such shares must be exchanged by the organizers
for units (See Note 5) on a one share for five unit basis at
the time the conditions of the offering have been met. When
exchanged for units, all shares will be canceled.
(2) Organization
On October 1, 1997, the Organizers of the Company filed an
application for authority to organize a state-chartered bank
with the Comptroller of the State of Florida, Department of
Banking and Finance. The approval of this application will be
contingent upon certain conditions being met. These conditions
include, among other things, the establishment of total capital
accounts of not less than $4,050,000 with not less than
$2,100,000 allocated to common capital, after all
organizational and preopening expenses, and the approval by the
Board of Governors of the Federal Reserve System of the
Company's application to acquire the stock of the Bank as a
registered bank holding company.
(3) Related Parties
The Company has appointed one of its Organizers as the President
and Chief Executive Officer of the Company.
(continued)
F-7
<PAGE>
PSB BANCGROUP, INC.
(A Development Stage Company)
Notes to Financial Statements, Continued
(4) Commitment
The Company has entered into a purchase agreement dated October 20,
1997 to purchase a parcel of land for $170,000. The Bank
intends to construct its main office at this location. If
preliminary charter approval for the Bank is not received by
April 1, 1998 the seller may cancel the purchase agreement and
the Company would forfeit its $5,000 deposit.
(5) Sale of Common Shares and Warrants
The Company plans to offer a total of 600,000 shares of its common
stock to the public. (1) During the offering period shares
will be included in units with a unit consisting of one share
of common stock and purchase warrants. The price per unit is
expected to be $9. A total of 600,000 units will be offered
for sale. 133,000 of these units will be offered to the
organizers of the Company and will consist of one share of
common stock and two purchase warrants. The remaining 467,000
units will be offered to the public and consist of one share
of common stock and one purchase warrant. Each warrant
entitles the holder thereof to purchase one share of
additional common stock for $9 per share during the 48 month
period following the effective date of the warrant
certificate. (2) After the sale of 600,000 units has been
completed, 733,000 shares will be available to holders of the
warrants. However there can be no assurance given that any of
the warrants will be exercised. The Company expects to incur
approximately $26,000 in offering costs relating to this sale.
(6) Incentive Stock Option Plan
The Company's Board of Directors is currently considering the
adoption of an Incentive Stock Option Plan ("Plan"). The Plan,
if adopted, will be contingent upon approval by the Company's
shareholders. The Plan will provide for the grant of options at
the discretion of a committee designated by the Board of
Directors to administer the Plan. The option exercise price
must be at least 100% (110% in the case of a holder of 10% or
more of the Common Stock) of the fair market value of the stock
on the date the option is granted and the options are
exercisable by the holder thereof in full at any time following
a vesting period and prior to their expiration in accordance
with the terms of the Plan. The Company's president's proposed
Employment Contract contains a provision whereby he will be
granted an option to purchase 10,000 shares of the Company's
common stock under this Plan.
F-8
<PAGE>
APPENDIX "A"
ARTICLES OF INCORPORATION
34
<PAGE>
ARTICLES OF INCORPORATION
OF
PSB BANCGROUP, INC.
The undersigned incorporators, for the purpose of forming a corporation
under the Florida Business Corporation Act, hereby adopt the following Articles
of Incorporation.
ARTICLE I - NAME
The name of the Corporation is PSB BancGroup, Inc. ("Corporation"). The
initial principal place of business of the Corporation shall be 2451 Castle
Heights Drive, Lake City, Florida 32025 or at such other place within the State
of Florida as the Board of Directors may designate. The name of the registered
agent is Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee, Florida
32301, which address is also the address of the Registered Office of the
Corporation.
ARTICLE II - NATURE OF BUSINESS
The Corporation may engage in or transact any or all lawful activities
or business permitted under the laws of the United States and the State of
Florida, or any other state, county, territory or nation.
ARTICLE III - CAPITAL STOCK Section 1 - Classes of Stock. The total
number of shares of all classes of capital stock which the Corporation shall
have authority to issue is 10,000,000 consisting of:
A. 2,000,000 shares of preferred stock, par value one cent ($0.01) per
share ("Preferred Stock"); and
B. 8,000,000 shares of common stock, par value one cent ($0.01) per
share ("Common Stock"). Each holder of shares of Common Stock shall be entitled
to one vote per share.
Section 2 - Preferred Stock: The Board of Directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Florida (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series and to fix the
designation, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
35
<PAGE>
below the number of shares then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation. ARTICLE IV -
TERM OF EXISTENCE This Corporation is to exist perpetually.
ARTICLE V - OFFICERS AND DIRECTORS
The names and street addresses of the initial officers and directors
who shall hold office the first year
of the Corporation's existence or until their successors are elected are:
Name Address Title
- ---- ------- -----
Alton C. Milton 2451 Castle Heights Dr. Chairman of
Lake City, FL 32025 The Board, Director
Robert W. Woodard 2451 Castle Heights Dr. President and Chief
Lake City, FL 32025 Executive Officer,
Director
Robert M. Eadie Rt. 13, Box 559 Treasurer, Director
Lake City, FL 32055
Roger W. Ratliff Rt. 4, Box 77-B Secretary,Director
Jasper, FL 32052
Samuel F. Brewer 226 Park Lane Director
Lake City, FL 32025
John W. Burns,III 2451 Castle Heights Dr. Director
Lake City, FL 32025
Arthur W. Coward 2451 Castle Heights Dr. Director
Lake City, FL 32025
Renny B. Eadie, III Rt. 5, Box 913 Director
Lake City, FL 32024
Garland Kirby 445 S. 7th Street Director
Lake City, FL 32025
J. Gregory Pittman Rt. 13 Box 468 Director
Lake City, FL 32055
36
<PAGE>
ARTICLE VI - INCORPORATORS
The name and street address of the incorporator to these Articles of
Incorporation is Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee,
Florida 32301.
ARTICLE VII - MANAGEMENT OF THE BUSINESS OF THE COMPANY
Section 1 - Authority of the Board. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2 - Action by Shareholders. Any action required or permitted to
be taken by the shareholders of the Corporation must be effected at a duly
called Annual or Special Meeting of Shareholders of the Corporation and may not
be effected by any consent in writing by such shareholders.
Section 3 - Special Meetings of Shareholders. Special Meetings of
shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or the President of the Corporation, or by
shareholders holding at least 20% of the outstanding shares of the Corporation.
ARTICLE VIII - NUMBER OF DIRECTORS
Section 1 - Number of Directors: The Board of Directors of the
Corporation shall be comprised of not less than three (3) nor more than fifteen
(15) directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the Corporation. However, this paragraph
shall not be construed to limit the authority of the shareholders of the
Corporation to increase the number of directors in accordance with the Bylaws of
the Corporation.
37
<PAGE>
Section 2 - Election and Term: Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The term of the initial directors of the
Corporation expires at the first shareholders' meeting at which directors are
elected.
Section 3 - Classes: The directors shall be divided into three classes,
as nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the Annual Meeting of Shareholders one year
following their election, the term of office of the second class (Class II) to
expire at the Annual Meeting of Shareholders two years following their election
and the term of office of the third class (Class III) to expire at the Annual
Meeting of Shareholders three years following their election. At each Annual
Meeting of Shareholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall be elected
for a term of office to expire at the third succeeding Annual Meeting of
Shareholders after their election.
Section 4 - Vacancies: Newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum. Directors so chosen shall
hold office for a term expiring at the next Annual Meeting of Shareholders. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
Section 5 - Notice: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
Section 6 - Removal by Shareholders: Any director, or the entire Board
of Directors, may be removed from office at any time by the affirmative vote of
the holders of at least 66% of the voting power of all of the then-outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
ARTICLE IX - SPECIAL VOTING PROVISIONS FOR AFFILIATED
TRANSACTIONS AND BUSINESS COMBINATIONS
Section 1 - Definitions: The terms defined below shall apply for
purposes of this Article IX:
A. "Affiliated Transaction," when used in reference to the Corporation
and any Interested Shareholder (as hereinafter defined), means any of the
following situations:
38
<PAGE>
l. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (i) any
Interested Shareholder or (ii) any other corporation (whether
or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate of an
Interested Shareholder.
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) of assets of the Corporation or any
Subsidiary of the Corporation to or with any Interested
Shareholder, or any Affiliate or Associate of any Interested
Shareholder:
a. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all assets, determined on a consolidated
basis, of the Corporation; or
b. Having an aggregate fair market value
equal to 5% or more of the aggregate fair market
value of all outstanding shares of the Corporation;
or
c. Representing 5% or more of the earning
power or net income determined on a consolidated
basis, of the Corporation.
3. the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
transactions) of any shares of the Corporation or any
Subsidiary to any Interested Shareholder or any Affiliate of
any Interested Shareholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate Fair Market Value (as hereinafter defined) equaling
or exceeding 5% or more of all the outstanding shares of the
Corporation and its Subsidiaries, except pursuant to the
exercise of warrants or rights to purchase stock offered, or
a dividend or distribution paid or made, pro rata to all
shareholders of the Corporation.
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Shareholder or any Affiliate of
any Interested Shareholder.
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not with
or into or otherwise involving an Interested Shareholder)
which has the effect, directly or indirectly, of increasing
39
<PAGE>
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate of any Interested
Shareholder.
6. any receipt by the Interested Shareholder or any
Affiliate or Associate of the Interested Shareholder of the
benefit, directly or indirectly (except proportionately as a
shareholder of the Corporation), of any loans, advances,
guaranties, pledges, or other financial assistance or any tax
credits or other tax advantages provided by or through the
Corporation.
B. "Interested Shareholder" means any Person who is the
Beneficial Owner, directly or indirectly, of more than 10% of the
outstanding voting shares of the corporation. However, the term
"Interested Shareholder" shall not include the Corporation or any
Subsidiary; any savings, employee stock ownership, or other employee
benefit plan of the Corporation or any Subsidiary; or any fiduciary of
any such plan when acting in such capacity. For the purpose of
determining whether a person is an Interested Shareholder pursuant to
this Section, the number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned through application of
Article III, Section 3, but shall not include any other shares of
Voting Stock that may be issuable pursuant to any contract, arrangement
or understanding, upon exercise of conversion rights, warrants,
options, or otherwise.
C. "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in Paragraph B of this Section 1,
the term "Subsidiary" shall mean only a corporation of which a majority
of each class of equity security is owned, directly or indirectly, by
the Corporation.
D. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a
member of the Board of Directors prior to the time that the Interested
Shareholder became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the Board of Directors.
E. "Fair Market Value" means: (i) the Fair Market Value of a
share on the date in question shall be determined by a majority of
40
<PAGE>
Disinterested Directors, appropriately adjusted for any dividend or
distribution in shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller
number of shares of such stock; and (ii) in the case of property other
than cash or shares, the Fair Market Value of such property on the date
in question as determined by a majority of the Disinterested Directors.
F. Reference to "Highest Per Share Price" shall in each case
with respect to any class of stock reflect an appropriate adjustment
for any dividend or distribution in shares of such stock or any stock
split or reclassification of outstanding share of such stock into a
greater number of shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller
number of shares of such stock.
G. "Affiliate" shall have the meaning set forth in Section
607.0901, Florida Statutes.
H. "Person" shall mean any individual, a group acting in
concert, a corporation, a partnership, an association, a joint venture,
an investors' pool, a joint stock company, a trust, an unincorporated
organization or similar company, a syndicate or any other group formed
for the purpose of acquiring, holding or disposing of the equity
securities of the Corporation.
I. "Beneficial Ownership" is defined herein to mean a Person
who, directly or indirectly, has the:
1. voting power, which includes the power to vote or
to direct the voting of the "Voting Stock" as that term is
defined herein;
2. investment power, which includes the power to
dispose of or to direct the disposition of the Voting Stock;
or
3. the right to acquire the voting power or
investment power, whether such right is exercisable
immediately or only after the passage of time, pursuant to any
agreement, arrangement or understanding or upon the exercise
of conversion rights, warrants or options, or otherwise.
J. "Acting in Concert" means (i) knowing participation in a
joint activity or conscious parallel action towards a common goal
whether or not pursuant to an express agreement; or (ii) a combination
or pooling of voting or other interests in the securities of an issuer
for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangements, whether written or
otherwise.
K. "Voting Stock" means the outstanding shares of all classes
or series of the Corporation entitled to vote generally in the election
of directors.
41
<PAGE>
Section 2 - Affiliated Transactions: In addition to any affirmative
vote required by law or these Articles of Incorporation, and except as otherwise
expressly provided in this Section, any Affiliated Transaction shall be approved
by the affirmative vote of the holders of two-thirds of the Voting Stock, voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law or in any agreement with any national
securities exchange or otherwise.
Section 3 - Exceptions: The voting provisions of Section 2 of this
Article IX shall not be applicable to a particular Affiliated Transaction if all
of the conditions specified in either of the following Paragraphs A and B are
met:
A. The Affiliated Transaction has been approved by a majority
of the Disinterested Directors; or
B. In the Affiliated Transaction, consideration shall be paid
to the holders of each class of voting shares and all of the following
conditions shall be met:
1. The aggregate amount of the cash and the Fair Market Value,
as of the valuation date of consideration, other than cash to be
received per share by the holders of Common Stock in such Affiliated
Transaction are at least equal to the higher of the following:
(a) if applicable, the Highest Per Share Price (as
previously defined herein), including any brokerage
commissions, transfer taxes and soliciting dealers' fees, paid
by the Interested Shareholder for any shares of Common Stock
acquired by it (i) within the two-year period immediately
prior to the first public announcement date of the Affiliated
Transaction ("Announcement Date"), or (ii) in the transaction
in which it became an Interested Shareholder, whichever is
higher;
(b) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the
Interested Shareholder became an Interested Shareholder (such
latter date is referred to in this Article IX as the
"Determination Date"), whichever is higher;
(c) if applicable, the price per share equal to the
Fair Market Value per share of such class or series determined
pursuant to sub-paragraph A.1.(b) of this Section 3,
42
<PAGE>
multiplied by the ratio of the Highest Per Share Price,
including any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested Shareholder
for any shares of Voting Stock acquired by it within the
two-year period immediately prior to the Announcement Date
(the numerator), to the Fair Market Value per share of such
class or series on the first day in such two-year period on
which the Interested Shareholder acquired the Voting Stock
(the denominator); or
(d) if applicable, the highest preferential amount
per share to which the holders of shares of such Voting Stock
are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
2. The consideration to be received by holders of a particular class of
outstanding Voting Stock (including Common Stock) shall be in
cash or in the same form as the Interested Shareholder has
previously paid for shares of such Voting Stock. If the
Interested Shareholder has paid for shares of any class of
Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either
cash or the form used to acquire the largest number of shares
of such class of Voting Stock previously acquired by it. The
consideration to be received pursuant to this provision shall
be subject to appropriate adjustment in the event of any stock
dividend, stock split, combination of shares or similar event.
3. During such portion of the three-year period
preceding the announcement date that such Interested
Shareholder has become an Interested Shareholder and except as
approved by a majority of the Disinterested Directors:
(a) there shall have been no failure to
declare and pay at the regular date any full
quarterly dividends (whether or not cumulative) on
any outstanding stock having preference over the
Common Stock as to dividends or liquidation;
(b) there shall have been (i) no reduction
in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any subdivision
of the Common Stock), and (ii) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock, and
(iii) no such Interested Shareholder
43
<PAGE>
who has become the Beneficial Owner of any additional
shares of Voting Stock except as part of the
transaction which results in such Interested
Shareholder becoming an Interested Shareholder.
4. Unless approved by a majority of the Disinterested
Directors, no Interested Shareholder shall have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Affiliated
Transaction or otherwise, during the three-year period
preceding the date the Interested Shareholder became an
Interested Shareholder.
5. A proxy or information statement describing the
proposed Affiliated Transaction and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
shareholders of the Corporation at least 30 days prior to the
consummation of such business combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
Section 4 - Board Discretion: A majority of the Disinterested Directors
of the Corporation shall have the power and duty to determine for the purposes
of this Article IX, on the basis of information known to them after reasonable
inquiry: (i) whether a person is an Interested Shareholder; (ii) the number of
shares of Voting Stock beneficially owned by any person; (iii) whether a person
is an Affiliate or Associate of another; and (iv) whether the assets which are
the subject of any Affiliated Transaction have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Affiliated Transaction has, an aggregate Fair Market Value
equal to or greater than 25% of the combined assets of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article IX.
Section 5 - Interested Shareholder's Duty: Nothing contained in this
Article IX shall be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
Section 6 - Amendment: Notwithstanding any other provisions of these
Articles of Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, or these
Articles of Incorporation, the affirmative vote of the holders of at least 66%
44
<PAGE>
of the voting power of all of the then-outstanding shares of the Voting Stock
(after giving effect to the provisions of Article III of these Articles of
Incorporation), voting together as a single class, shall be required to alter,
amend or repeal this Article IX.
ARTICLE X - CONTROL SHARE ACQUISITIONS
It is the intent of the Organizers of the Corporation that the
provisions of the "Florida Control-Share Acquisitions" statute, Section
607.0902, Florida Statutes (1994 Supp.) shall apply to acquisitions of the
Corporation's shares by a person acting alone or as part of a group which would
result in an Acquiring Person, as defined herein, owning Control Shares of the
Company, except for those acquisitions defined in Section 1(f)(2) and (3) of
this Article X.
SECTION 1 - Definitions: The following terms when used in this section
shall mean:
A. "Acquiring Person" means a person who makes or proposes to
make, or persons acting as a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934 who make or propose to make, a
Control-Share Acquisition; but "Acquiring Person" does not include the
Corporation.
B. "Acquiring Person Statement" means the statement provided
for in Section 607.0902(6), Florida Statutes (1994 Supp.) which shall
set forth all of the following:
1. The identity of the Acquiring Person and each
other member of any group of which the Acquiring Person is a
part for purposes of determining Control Shares.
2. A statement that the Acquiring Person Statement is
given pursuant to Section 607.0902(6), Florida Statutes (1994
Supp.).
3. The number of shares of the Corporation owned,
directly or indirectly following the acquisition, by the
Acquiring Person and each other member of the group.
4. The range of voting power under which the
Control-Share Acquisition falls or would, if consummated,
fall.
5. If the Control-Share Acquisition has not taken
place:
(a) A description in reasonable detail of
the terms of the proposed Control-Share Acquisition;
and
(b) Representations of the Acquiring Person,
together with a statement, in reasonable detail of
the facts upon which they are based, that the
proposed Control-Share Acquisition, if consummated,
45
<PAGE>
will not be contrary to law and that the Acquiring
Person, has the financial capacity to make the
proposed Control-Share Acquisition, including the
acquisition of dissenter's shares, if any.
C. "Affiliate" means a person who directly or indirectly
controls the Corporation. "Control" means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of the Corporation, whether through the
ownership of voting securities, by contract, or otherwise. A person's
beneficial ownership of ten percent or more of the voting power of a
Corporation's outstanding shares entitled to vote in the election of
directors (except a person holding voting power in good faith as an
agent, bank, broker, nominee, custodian or trustee for one or more
beneficial owners who do not individually or as a group control the
Corporation) creates a presumption that the person controls the
Corporation.
D. "All voting power" means the aggregate voting power that
the shareholders of the Corporation would have in the election of
directors, except for this Article.
E. "Control Shares" means issued and outstanding shares of the
Corporation that, except for this section, would have voting power when
added to all other shares of the Corporation owned of record or
beneficially by an Acquiring Person or in respect to which that
Acquiring Person may exercise or direct the exercise of voting power,
that would entitle the Acquiring Person, immediately after acquisition
of the shares (directly or indirectly), to exercise or direct the
exercise of the voting power of the Corporation in the election of
directors within any of the following ranges of voting power:
1. One-fifth (1/5) or more but less than one-third
(1/3) of all voting power;
2. One-third (1/3) or more but less than a majority
of all voting power; or
3. A majority or more of all voting power.
F. "Control-Share Acquisition" means:
1. acquisition by any person of ownership of, or the
power to direct the exercise of voting power with respect to,
Control Shares.
2. A person who acquires shares in the ordinary
course of business for the benefit of others in good faith and
not for the purpose of circumventing this section has not made
a Control-Shares Acquisition of shares in respect of which
that person is not able to exercise or direct the exercise of
votes without further instruction from others.
46
<PAGE>
3. The acquisition of any Control Shares does not
constitute a Control-Share Acquisition if the acquisition is
made in good faith and not for the purpose of circumventing
this Section in any of the following circumstances:
(a) Shares acquired in any distribution
conducted by the Corporation through any public or
private offering or acquired pursuant to any warrant
certificate, stock option plan or other employee
benefit plan.
(b) Pursuant to the laws of descent and
distribution.
(c) By a donee under an inter vivos gift.
(d) Pursuant to a transfer between or among
immediate family members, or between or among persons
under direct common control. An "immediate family
member" is any relative or spouse of a person, or any
relative of such spouse, who has the same home as
such person.
(e) Pursuant to the satisfaction of a pledge
or other security interest.
(f) Pursuant to a merger or plan of
consolidation or share exchange effected in
compliance with the Florida Statutes, if the
Corporation is a party to the agreement of merger or
plan of consolidation or share exchange.
(g) From any person whose previous
acquisition of Control Shares would have constituted
a Control-Shares Acquisition, but for this Section
F.3. (other than this subsection F.3.(g), provided
the acquisition does not result in the Acquiring
Person holding voting power within a higher range of
voting power than that of the person from whom the
Control Shares were acquired.
(h) Acquisition by a person of additional
shares within the range of voting power for which
such person has received approval pursuant to the
Control Share Statute or within the range of voting
power resulting from shares acquired in a transaction
described in this Section F.3.
(i) An increase in voting power resulting
from any action taken by the Corporation, provided
the person whose voting power is thereby affected is
not an Affiliate of the Corporation.
(j) Pursuant to the solicitation of proxies
subject to Regulation 14A under the Securities
Exchange Act of 1934 or Chapter 607 of the Florida
Statutes.
47
<PAGE>
G. "Interested Shares" means the shares of the Corporation in
respect of which any of the following persons may exercise or
direct the exercise, as of the applicable record date, of the
voting power of the Corporation in the election of directors,
other than solely by the authority of a revocable proxy:
1. The Acquiring Person.
2. Any officer of the Corporation.
3. Any employee of the Corporation who is also a
director of the Corporation.
H. "Person" means any individual, Corporation, partnership,
unincorporated association or other entity.
SECTION 2 - Voting Rights: Control Shares of the Corporation acquired
in a Control-Share Acquisition shall have only such voting rights as are granted
by resolution approved by the holders of other than Interested Shares of the
Corporation, as provided for in Section 607.0902(a), Florida Statutes (1994
Supp).
SECTION 3. - Redemption of Control Shares by the Company: Control
Shares acquired in a Control-Share Acquisition with respect to which no
Acquiring Person Statement has been filed with the Corporation are subject to
redemption by the Corporation at any time during the period ending 60 days after
the last acquisition of Control Shares by such Acquiring Person or persons. Such
shares are also subject to redemption by the Corporation in the event the
Control Shares are not accorded full voting rights by the shareholders as
provided for in Section 607.0902 (10)(b) and Section 607.0902(9), Florida
Statutes (1994 Supp.). Such shares shall be subject to redemption at the fair
value thereof. Fair value shall be the higher of, the average price paid for all
shares of the Corporation, exclusive of the Control Shares, for the 90 days
prior to the date of redemption by the Corporation or book value of the
Corporation's shares on the last day of the month preceding the date of
redemption by the Corporation, as calculated by Generally Accepted Accounting
Procedures ("GAAP").
SECTION 4 - Rights of Dissenting Shareholders: If the Control-Share
Acquisition is approved by the required vote at the meeting of shareholders at
which it was voted upon, then any shareholder who did not vote in favor of the
Control-Share Acquisition shall have the right to file with the Corporation a
written demand for payment for his/her shares within ten (10) days after the
date of the shareholder meeting. A shareholder may demand payment for less than
all of the shares registered in his/her name. The Corporation shall deliver all
such demands for payment to the Acquiring Person immediately following the
expiration of the ten (10) day period. The Acquiring Person shall then be
48
<PAGE>
obligated to purchase all shares subject to the demand for payment for the
highest amount he has proposed to pay per share in the Control- Share
Acquisition. Payment to shareholders making demand must be made on the day upon
which the Control-Share Acquisition is consummated or upon surrender of the
certificate or certificates representing shares for which demand has been made
to the Acquiring Person, whichever is later. Any shareholder failing to make
demand within the applicable ten (10) day period shall remain a shareholder of
the Corporation. SECTION 5 - Alteration or Repeal of this Section: This Section
shall not be altered, amended, or repealed, except by an affirmative vote of at
least 66 percent of the total number of shares of the Corporation entitled to
vote on such matter.
ARTICLE XI - ACQUISITION OFFERS
The Board of Directors of the Corporation, when evaluating any offer of
another Person to (i) make a tender or exchange offer for any equity security of
the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries (as defined in Article IX); on the
communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objectives
as a financial institution holding company and on the ability of its subsidiary
financial institutions to fulfill the objectives of such institutions under
applicable statutes and regulations.
ARTICLE XII - INDEMNIFICATION
Section 1 - General: The Corporation shall indemnify any officer,
director, employee or agent of the Corporation to the fullest extent authorized
by Section 607.0850, Florida Statutes, as it now exists or may hereafter be
amended, but in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment. This
includes, but is not limited to, any person who was or is made a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("Proceeding"), by reason of the fact
49
<PAGE>
that he or she, or a person of whom heor she is the legal representative, is or
was a director or officer of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such Proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, reasonably incurred or suffered by such person in
connection therewith. Such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that the Corporation shall indemnify any such person seeking indemnity in
connection with an action, suit or Proceeding (or part thereof) initiated by
such person only if such action, suit or Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. Such right shall be a
contract right and shall include the right to be paid by the Corporation for all
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
indemnified under this Article or otherwise. Section 2 - Failure to Pay Claim:
If a claim under Section 1 of this Article is not paid in full by the
Corporation within 90 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under Section 607.0850 for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Section 607.0850, nor an actual determination by the Corporation (including its
50
<PAGE>
Board of Directors, independent legal counsel, or its shareholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that claimant has not met the applicable
standard of conduct.
Section 3 - Other Rights: The rights conferred on any individual by
Sections 1 and 2 of this Article shall not be exclusive of any other right which
such individual may have or hereafter acquire under any statute, provision of
these Articles of Incorporation, Bylaws of the Corporation, agreement, vote of
shareholders or Disinterested Directors or otherwise.
Section 4 - Insurance: The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under Section 607.0850
Section 5 - Personal Liability: A director of the Corporation shall not
be personally liable to the Corporation or its shareholders for monetary damages
for any statement, vote, decision or failure to act regarding corporate
management or policy except as provided in the FBCA. If Section 607.0850 is
amended after adoption of these Articles of Incorporation and such amendment
further eliminates or limits the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the FBCA, as so amended.
Any repeal or modification of the foregoing paragraph by the
shareholders or the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by the
laws of the State of Florida, and all rights conferred upon shareholders are
granted subject to this reservation; provided, however, that, notwithstanding
any other provision of these Articles of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 66% of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors (after giving effect to the provisions of Article III),
voting together as a single class, shall be required to amend or repeal this
Article XIII, Section 3 of Article VII, Article VIII, Article IX, Article X or
Article XI.
51
<PAGE>
IN WITNESS OF THE FOREGOING, the undersigned has executed these
Articles of Incorporation on behalf of the Board of Directors this 27th day of
June, 1997.
/s/ H. D. Haughton
Herbert D. Haughton
Incorporator/General Counsel
STATE OF FLORIDA )
COUNTY OF LEON )
BEFORE ME, the undersigned Notary Public, in and for the State of
Florida at large, personally appeared Herbert D. Haughton, known personally to
me to be the individual described in and who executed the foregoing Amended
Articles of Incorporation of PSB BancGroup, Inc. and after being duly sworn,
acknowledged that he executed the same for the uses and purposes therein
expressed.
(Seal) /s/ Cristina H. Marshall
Notary Public
Cristina H. Marshall
Name Typed or Printed
My commission expires: 01/13/98
52
<PAGE>
CERTIFICATE DESIGNATING
REGISTERED AGENT/REGISTERED OFFICE
In accordance with Section 48.091, Florida Statutes, the following
designation and acceptance are being submitted in compliance thereof.
DESIGNATION:
Pursuant to the provision of Section 607.0501, Florida Statutes, PSB
BancGroup, Inc. desires to organize under the laws of the State of Florida, and
in connection therewith, hereby designates Igler & Dougherty, P.A. as its
registered agent whose address is 1501 Park Avenue East, Tallahassee, Florida
32301, which address shall also be the address of the Registered Office of the
Corporation.
ACCEPTANCE:
Having been named to accept service of process for the above-stated
corporation, at the place designated in this certificate, we hereby agree to act
in this capacity, and we further agree to comply with the provisions of all
statutes relative to the proper and complete performance of our duties, and we
accept the duties and obligations of Section 607.0501, Florida Statutes.
----------------
IGLER & DOUGHERTY, P.A.
By: /s/ H. D. Haughton
- -----------------------
Herbert D. Haughton
Dated: June 27th , 1997
----
53
<PAGE>
APPENDIX "B"
ESCROW AGREEMENT
54
<PAGE>
Independent Bankers' Bank of Florida
ESCROW AGREEMENT
This Escrow Agreement is entered into and effective this 6th day of
January , 1998 , by and between PSB BancGroup, Inc., a Florida corporation ( the
"Company") and the Independent Bankers' Bank of Florida ("Escrow Agent" or
"Agent").
WITNESSETH:
WHEREAS, the Company, proposes to offer for sale up to 600,000 shares
of its $ 0.01 par value common stock (the "Common Stock"), which shares shall be
registered under the Securities Act of 1933, as amended, at a price of $9.00
each, in minimum subscriptions of 500 shares ("Offering"); and
WHEREAS, the Company has requested the Escrow Agent to serve as the
depository for the payment of subscription proceeds ('Payments") received by the
Company from investor(s) who are subscribing to purchase shares of Common Stock
in the Company pursuant to, and in accordance with, the terms and conditions
contained in the Company's Prospectus and Subscription Agreements thereto; and
WHEREAS, the Offering will terminate at 5:00 P.M. Eastern Time, 90 Days
after the Effective Date of the Company's Registration Statement, unless
extended by the Company for up to an additional 90 days ("Offering Period"),
and, if during the Offering Period the minimum number of shares have been
subscribed to, the Offering will continue until the earlier of: (i) the maximum
number of shares are subscribed to, or (ii) one year after the Effective Date of
the Company's Registration Statement.
NOW THEREFORE, in consideration of the premises and understandings contained
herein, the parties agree as follows:
(1) The Company hereby appoints and designates the Escrow Agent for the
Purposes set forth herein. The Escrow Agent acknowledges and accepts said
appointment and designation. The Company understands that the Escrow Agent, by
accepting said appointment and designation, in no way endorses the merits of the
offering of the shares described herein. The Company agrees to notify any person
acting on its behalf that the position of Escrow Agent does not constitute such
an endorsement, and to prohibit said persons from the use of the Agent's name as
an endorser of such offering. The Company further agrees to allow the Escrow
Agent to review any sales literature in which the Agent's name appears and which
is used in connection with such offering.
(2) The Company shall deliver all payments received (the "Subscription
Funds") to the Escrow Agent (Independent Bankers' Bank of Florida, Attn:
Customer Service Group) in the form in which they are received by noon of the
fifth (5th) business day after their receipt by the Company, and the Company
shall deliver to the Escrow Agent within ten(10) calendar days copies of written
acceptances of the Company for shares in the Company for which the Subscription
Funds represent payment. Upon receipt of such written acceptance by the Company,
the Escrow Agent shall deposit such funds into the escrow account. The Company
55
<PAGE>
shall also deliver to the Escrow Agent completed copies of Subscription
Agreements for each subscriber, along with such subscriber's name, address,
number of shares subscribed and social security or taxpayer identification
number.
(3) Subscription Funds shall be held and disbursed by the Escrow Agent
in accordance with the terms of this Agreement.
(4) In the event any Subscription Funds are dishonored for payment for
any reason, the Escrow Agent agrees to orally notify the Company thereof as soon
as practicable and to confirm same in writing and to return due dishonored
Subscription Funds to the Company in the form in which they were delivered.
(5) Should the Company elect to accept a subscription for less than the
number of shares shown in the purchaser's Subscription Agreement, by indicating
such lesser number of shares on the written acceptance of the Company
transmitted to the Escrow Agent, the Agent shall deposit such payment in the
escrow account and then, upon separate instruction from the Company, remit
within ten (10) days after such deposit to such subscriber at the address shown
in his Subscription Agreement that amount of his Subscription Funds in excess of
the amount which constitutes full payment for the number of subscribed shares
accepted by the Company as shown in the Company's written acceptance, without
interest or diminution. Said address shall be provided by the Company to the
Escrow Agent as requested.
(6) Definitions as used herein:
(a) "Total Receipts" shall mean the sum of all Subscription
Funds delivered to the Escrow Agent pursuant to Paragraph (3) hereof, less (i)
all Subscription Funds returned pursuant to Paragraphs (5) and (6) hereof and
(ii) all Subscription Funds which have not been paid by the financial
institution upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Eastern Time, 90
days after the Effective Date of the Company's Registration Statement; provided,
however, in the event that the Escrow Agent is given oral notification followed
in writing, by the Company that it has elected to extend the offering to a date
not later than 90 additional days, then the Expiration Date shall mean 5:00
P.M., Eastern Time, on the date to which the offering has been extended. The
Company will notify the Escrow Agent of the effective date of the Offering
Circular as soon as practicable after such date has been determined.
(c) "Closing Date" shall mean the business day on which the
Company, after determining that all of the Offering conditions have been met,
selects in its sole discretion. The Closing Date shall be confirmed to the
Escrow Agent in writing by the Company.
(d) "Escrow Release Conditions" shall mean that (i) the
Company has not canceled the Offering, and (ii) that the Company has received
preliminary approval from the appropriate regulatory entity to charter the Bank
as well as preliminary approval for deposit insurance from the FDIC.
(7) If, on or before the Expiration Date, (i) the Total Receipts held
by the Escrow Agent equal or exceed $4,500,000 and (ii) the Company has
certified to the Agent that, upon receipt of the net proceeds of the offering
(after the deduction of all fees, commissions, and other expenses of the
offering): (a) the Company will have stockholders' equity of at least
$4,200,000; and (b) the Escrow Release Conditions have been consummated, the
Escrow Agent shall :
56
<PAGE>
(a) No later than 10:00 A.M., Eastern Time, one day
prior to Closing Date (as that term is defined herein), deliver to the Company
all Subscription Agreements provided to the Escrow Agent; and
(b) On the Closing Date, no later than 10:00 o'clock
A.M., Eastern Time, upon receipt of 24-hour written instructions from the
Company, remit all amounts representing Subscription Funds, plus any profits or
earnings, held by the Escrow Agent pursuant hereto to the Company in accordance
with such instructions.
(8) If (i) the Escrow Release Conditions are not met by the Expiration
Date, or (ii) the offering is canceled by the company at any time prior to the
Expiration Date, then the Escrow Agent shall promptly remit to each subscriber
at the address set forth in his Subscription Agreement an amount equal to the
amount of his Subscription Funds thereunder, plus any profits or earnings
thereon. The earnings accruing to any individual subscriber under this paragraph
shall be a prorated share of the gross earnings on all funds under escrow,
weighted by the amount and the duration of the funds tendered for the individual
subscription. Under no circumstances will earnings accrue to any subscription
canceled for any reason other than those provided for in this paragraph.
(9) Pending disposition of the Subscription Funds under this Agreement,
the Escrow Agent will invest collected Subscription Funds, in $1,000 increments
above a maintained balance of $50,000, in overnight repurchase agreements
collateralized at 102% with obligations of the United States Treasury or United
States Government Agencies. These repurchase agreement transactions will earn
interest at a rate of 35 basis points below the daily Overnight Fed Funds Sold
rate.
(10) The obligations as Escrow Agent hereunder shall terminate upon the
Agents transferring all funds held hereunder pursuant to the terms of Paragraphs
(7) or (8) herein, as applicable.
(11) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, or other
paper or document which the Agent believes to be genuine and what it purports to
be.
(12) The Escrow Agent shall not be liable for anything which the Agent
may do or refrain from doing in connection with this Escrow Agreement, except
for the Agent's own gross negligence or willful misconduct.
(13) The Escrow Agent may confer with legal counsel in the event of any
dispute or questions as to the construction of any of the provisions hereof, or
the Agent's duties hereunder, and shall incur no liability and shall be fully
protected in acting in accordance with the opinions and instructions of such
counsel. Any and all expenses and legal fees in this regard will be paid by the
Company.
(14) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection with any
Subscription Funds involved herein or affected hereby, the Agent shall be
entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held under this Agreement, and in so
doing shall be entitled to continue to refrain from acting until (a) the right
of adverse claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court in Orange County, Florida assuming and having
jurisdiction of the Subscription Funds involved herein or affected hereby or (b)
57
<PAGE>
all differences shall have been adjusted by agreement and the Agent shall have
been notified in writing of such agreement signed by the parties hereto. In the
event of such disagreement, the Agent may, but need not, tender into the
registry or custody of any court of competent jurisdiction in Orange County,
Florida all money or property in the Agent's hands under the terms of this
Agreement, together with such legal proceedings as the Agent deems appropriate
and thereupon to be discharged from all further duties under this Agreement. The
filing of any such legal proceeding shall not deprive the Agent of compensation
earned prior to such filing. The Escrow Agent shall have no obligation to take
any legal action in connection with this Agreement or towards its enforcement,
or to appear in, prosecute or defend any action or legal proceeding which would
or might involve the Agent in any cost, expense, loss or liability unless
indemnification shall be furnished.
(15) The Escrow Agent may resign for any reason, upon thirty (30) days
written notice to the Company. Upon the expiration of such thirty (30) day
notice period, the Escrow Agent may deliver all Subscription Funds and
Subscription Agreements in possession under this Escrow Agreement to any
successor Escrow Agent appointed by the Company, or if no successor Escrow Agent
has been appointed, to any court of competent jurisdiction. Upon either such
delivery, the Escrow Agent shall be released from any and all liability under
this Escrow Agreement. A termination under this paragraph shall in no way change
the terms of Paragraphs (14) and (16) affecting reimbursement of expenses,
indemnity and fees.
(16) The Escrow Agent will charge the Company for services hereunder a
fee of $2,000.00, plus an additional fee of $5.00 for each check issued, $10.00
for each wire and $.50 for each photo copy necessitated in the performance of
duties, with total fees for services not to exceed $2,500.00. All actual
expenses and costs incurred by the Agent in performing obligations under this
Escrow Agreement will be paid by the Company. All fees and expenses shall be
paid on the Closing Date by the Company. Any subsequent fees and expenses will
be paid by the Company upon receipt of invoice.
(17) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, to the respective addresses set forth herein. The Escrow
Agent shall not be charged with knowledge of any fact, including but not limited
to performance or non-performance of any condition, unless the Escrow Agent has
actually received written notice thereof from the Company or its authorized
representative clearly referring to this Escrow Agreement.
(18) The rights created by this Escrow agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the Escrow Agent and the parties hereto.
(19) This Escrow Agreement shall be construed and enforced according to
the laws of the State of Florida.
(20) This Escrow Agreement shall terminate and the Escrow Agent shall
be discharged of all responsibility hereunder at such time as the Escrow Agent
shall have completed all duties hereunder.
(21) This Escrow Agreement may be executed in several counterparts,
which taken together shall constitute a single document.
(22) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
58
<PAGE>
(23) If any provision of this Escrow Agreement is declared by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(24) The Company shall provide the Escrow Agent with its Employer
Identification Number as assigned by the Internal Revenue Service. Additionally,
the Company shall complete and return to the Escrow Agent any and all tax forms
or reports required to be maintained or obtained by the Escrow Agent.
(25) The authorized signature of the Escrow Agent hereto is consent
that a signed copy hereof may be filed with the various regulatory authorities
of the State of Florida and with any Federal Government agencies or regulatory
authorities.
In Agreement and acceptance of the Independent Bankers' Bank of Florida Escrow
Agreement between PSB BancGroup, Inc. (Company), for the purpose of organizing a
financial institution to be known as PSB BancGroup, and the Independent Bankers'
Bank of Florida (Escrow Agent).
<TABLE>
<CAPTION>
PSB BANCGROUP, INC.
Company
<S> <C>
Address: 220 South First Street
Lake City, Florida 32025
Fax: (904) 754-0919
Phone: (904) 754-0002
By: /s/ Robert W. Woodard
---------------------------------------
Authorized Signature
Title: Robert W. Woodard, President & CEO
--------------------------------------
(Type Name and Title)
Attest: 1/6/98
------------------------
Date ADDITIONAL AUTHORIZED SIGNER
By: /s/ Roger W. Ratliff Name: /s/ Alton C. Milton
---------------------------- --------------------------------------
Additional Authorized Signature
Title: Secretary Title: Alton C. Milton, Sr., Chairman
------------------------- --------------------------------------
(Type Name and Title)
(SEAL)
INDEPENDENT BANKERS' BANK OF FLORIDA
------------------------------------
Address: 109 E. Church Street, Suite BB,
or
P.O. Box 4998
Orlando, Florida 32802-4998
Attest: 1/6/98 Fax: (407) 843-4817
------------------------
Date
By: /s/ Brian Wilkinson By: /s/ James H. McKillop
------------------------ -------------------------------------
Authorized Signature
Title: Senior Vice-President Title: James H. McKillop, Senior Vice President
------------------------ -------------------------------------
(Type Name and Title)
(CORPORATE SEAL)
</TABLE>
59
<PAGE>
APPENDIX "C"
STOCK SUBSCRIPTION AGREEMENT
60
<PAGE>
PSB BANCGROUP, INC.
ORGANIZER SUBSCRIPTION AGREEMENT
To: PSB BancGroup, Inc.
220 South First Street
Lake City, Florida 32025
Gentlemen:
You have informed me that PSB BancGroup, Inc. ("PSB, Inc."), a Florida
corporation ("Company"), is offering during an Offering Period which will end on
____________, 1998 up to a maximum of 500,000 Units, each consisting of one
share of the Company's $0.01 par value common stock ("Common Stock") and two
Warrants to purchase Common Stock, at a price of $9.00 per Unit as described in
and offered pursuant to the Prospectus dated February , 1998, ("Prospectus")
which has been furnished to the undersigned. In addition, you have informed me
that the minimum subscription is 500 Units.
1. Subscription. Subject to the terms and conditions hereof, the
undersigned hereby tenders this Subscription Agreement ("Agreement"), together
with payment in United States currency by check, bank stock draft or money order
payable to "IBBF, for PSB BancGroup, Inc." (the "Funds"), representing the
payment of $9.00 per Unit for the number of Units indicated below.
2. Acceptance of Subscription. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company shall reject this subscription,
if at all, in writing within five business days after receipt of this Agreement.
The Company may reduce the number of Units for which the undersigned has
subscribed, indicating acceptance of less than all of the Units subscribed on
the Company's written Form of Acceptance.
3. Acknowledgments. The undersigned hereby acknowledges that he/she has
received a copy of the Prospectus and agrees to be bound by the terms of this
Agreement and the Subscription Escrow Agreement.
4. Revocation. The undersigned agrees that once this Agreement is
accepted by the Company, it may not be withdrawn. Therefore, until the earlier
of the expiration of five business days after receipt by the Company of this
Agreement or acceptance of this Agreement by the Company, the undersigned may
withdraw his/her subscription and receive a full refund of the subscription
price. The undersigned agrees that, except as provided in this Section 4, he/she
61
<PAGE>
shall not cancel, terminate or revoke this Agreement or any agreement of the
undersigned made hereunder and that this Agreement shall survive the death or
disability of the undersigned.
The Shares to be issued in connection with this subscription are not
insured by the Federal Deposit Insurance Corporation or any other Federal or
State agency. By executing this Agreement, the subscriber is not waiving any
rights the subscriber may have under federal securities laws, including the 33
Act and the Securities Exchange Act of 1934.
Please fill in the information requested below, make your check payable to
"IBBF, for PSB BancGroup, Inc.," and mail the Agreement, Stock Certificate
Registration Instructions and payment to the attention of: Robert W. Woodard,
President and CEO, PSB BancGroup, Inc., 220 South First Street, Lake City,
Florida 32025.
- -------------------- -------------------------------------
No. of Units Subscribed (Signature of Subscriber)
---------------------------------------
(Signature of Subscriber)
- -------------------- -------------------------------------
Fund Tendered ($9.00 Name(s) (Please Print or Type)
per Unit subscribed)
Date: ____________________________
Phone Number:
__________________________(Home)
________________________(Office)
Residence Address:
---------------------------------
---------------------------------
---------------------------------
City, State and Zip Code
62
<PAGE>
PSB BANCGROUP, INC.
NON-ORGANIZER SUBSCRIPTION AGREEMENT
To: PSB BancGroup, Inc.
220 South First Street
Lake City, Florida 32025
Gentlemen:
You have informed me that PSB BancGroup, Inc. ("PSB, Inc."), a Florida
corporation ("Company"), is offering during an Offering Period which will end on
____________, 1998 up to a maximum of 500,000 Units, each consisting of one
share of the Company's $0.01 par value common stock ("Common Stock") and one
Warrant to purchase Common Stock, at a price of $9.00 per Unit as described in
and offered pursuant to the Prospectus dated February , 1998, ("Prospectus")
which has been furnished to the undersigned. In addition, you have informed me
that the minimum subscription is 250 Units.
1. Subscription. Subject to the terms and conditions hereof, the
undersigned hereby tenders this Subscription Agreement ("Agreement"), together
with payment in United States currency by check, bank stock draft or money order
payable to "IBBF, for PSB BancGroup, Inc."(the "Funds"), representing the
payment of $9.00 per Unit for the number of Units indicated below.
2. Acceptance of Subscription. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company shall reject this subscription,
if at all, in writing within five business days after receipt of this Agreement.
The Company may reduce the number of Units for which the undersigned has
subscribed, indicating acceptance of less than all of the Units subscribed on
the Company's written Form of Acceptance.
3. Acknowledgments. The undersigned hereby acknowledges that he/she has
received a copy of the Prospectus and agrees to be bound by the terms of this
Agreement and the Subscription Escrow Agreement.
4. Revocation. The undersigned agrees that once this Agreement is
accepted by the Company, it may not be withdrawn. Therefore, until the earlier
of the expiration of five business days after receipt by the Company of this
Agreement or acceptance of this Agreement by the Company, the undersigned may
withdraw his/her subscription and receive a full refund of the subscription
price. The undersigned agrees that, except as provided in this Section 4, he/she
shall not cancel, terminate or revoke this Agreement or any agreement of the
undersigned made hereunder and that this Agreement shall survive the death or
disability of the undersigned.
63
<PAGE>
The Shares to be issued in connection with this subscription are not
insured by the Federal Deposit Insurance Corporation or any other Federal or
State agency. By executing this Agreement, the subscriber is not waiving any
rights the subscriber may have under federal securities laws, including the 33
Act and the Securities Exchange Act of 1934.
Please fill in the information requested below, make your check payable to
"IBBF, for PSB BancGroup, Inc.," and mail the Agreement, Stock Certificate
Registration Instructions and payment to the attention of: Robert W. Woodard,
President and CEO, PSB BancGroup, Inc., 220 South First Street, Lake City,
Florida 32025.
- -------------------- ---------------------------------------
No. of Units Subscribed (Signature of Subscriber)
---------------------------------------
(Signature of Subscriber)
- -------------------- ---------------------------------------
Fund Tendered ($9.00 Name(s) (Please Print or Type)
per Unit subscribed)
Date: ____________________________
Phone Number:
__________________________(Home)
________________________(Office)
Residence Address:
---------------------------------
---------------------------------
---------------------------------
City, State and Zip Code
64
<PAGE>
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Additional Name if Tenant in Common, Joint Tenant or Tenants by the Entireties
(see below).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mailing Address:
- --------------------------------------------------------------------------------
Social Security Number or other Taxpayer Identification Number:
- --------------------------------------------------------------------------------
Number of Shares to be registered in above name(s):
Legal form of ownership:
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Tenants by the Entirety ___ Other ______________________
(Husband and wife only)
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder I would be interested in the following services
checked below:
PERSONAL BUSINESS
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft ___ ___
Protection
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
(m) Debit Card ___ ___
(n) Visa/MasterCard ___ ___
(o) Future Trust Services ___ ___
2. I would like our new bank to provide the following additional services:
--------------------------------------------------------------------
65
<PAGE>
FORM OF ACCEPTANCE
ORGANIZER
PSB BancGroup, Inc.
220 South First Street
Lake City, Florida 32025
To:
Dear Subscriber:
PSB BancGroup, Inc., ("Company") acknowledges receipt of your
subscription for _______ Units, each consisting of one share of its $0.01 par
value Common Stock and two Warrants to purchase one share of Common Stock and
your check in the amount of $________________.
The Company hereby accepts your subscription for the purchase of
_________ Units, for an aggregate amount of $______________, effective as of the
date of this letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK DULY
AUTHORIZED AND FULLY PAID ALONG WITH YOUR WARRANT CERTIFICATE WILL BE ISSUED TO
YOU AS SOON AS PRACTICABLE AFTER ALL SUBSCRIPTION FUNDS ARE RELEASED TO THE
COMPANY FROM THE SUBSCRIPTION ESCROW ACCOUNT, AS DESCRIBED IN THE SUBSCRIPTION
AGREEMENT EXECUTED BY YOU AND IN THE PROSPECTUS WHICH YOU HAVE BEEN FURNISHED.
IN THE EVENT THAT: (i) THE OFFERING IS CANCELED; OR (ii) THE MINIMUM NUMBER OF
SUBSCRIPTIONS (500,000 UNITS) IS NOT OBTAINED; OR (iii) THE COMPANY SHALL NOT
HAVE RECEIVED APPROVAL FROM THE FEDERAL RESERVE TO BECOME A BANK HOLDING
COMPANY; OR (iv) THE BANK SHALL NOT HAVE RECEIVED FINAL CHARTER APPROVAL FROM
THE FLORIDA COMPTROLLER AND APPROVAL FOR DEPOSIT INSURANCE FROM THE FEDERAL
DEPOSIT INSURANCE CORPORATION, YOUR SUBSCRIPTION FUNDS WILL BE RETURNED TO YOU,
TOGETHER WITH ANY PRO RATA PORTION OF INTEREST EARNED THEREON, IF ANY, AS
DESCRIBED IN THE PROSPECTUS.
If this acceptance is for a lesser number of Units than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Units in excess of the number of Units accepted hereby will be
refunded to you by mail, without interest, within ten (10) days of the date
hereof.
Very truly yours,
PSB BancGroup, Inc.
BY: ____________________________________
Robert W. Woodard
President & Chief Executive Officer
66
<PAGE>
FORM OF ACCEPTANCE
NON-ORGANIZER
PSB BancGroup, Inc.
220 South First Street
Lake City, Florida 32025
To:
Dear Subscriber:
PSB BancGroup, Inc., ("Company") acknowledges receipt of your
subscription for _______ Units, each consisting of one share of its $0.01 par
value Common Stock and one Warrant to purchase one share of Common Stock and
your check in the amount of $________________.
The Company hereby accepts your subscription for the purchase of
_________ Units, for an aggregate amount of $______________, effective as of the
date of this letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK DULY
AUTHORIZED AND FULLY PAID ALONG WITH YOUR WARRANT CERTIFICATE WILL BE ISSUED TO
YOU AS SOON AS PRACTICABLE AFTER ALL SUBSCRIPTION FUNDS ARE RELEASED TO THE
COMPANY FROM THE SUBSCRIPTION ESCROW ACCOUNT, AS DESCRIBED IN THE SUBSCRIPTION
AGREEMENT EXECUTED BY YOU AND IN THE PROSPECTUS WHICH YOU HAVE BEEN FURNISHED.
IN THE EVENT THAT: (i) THE OFFERING IS CANCELED; OR (ii) THE MINIMUM NUMBER OF
SUBSCRIPTIONS (500,000 UNITS) IS NOT OBTAINED; OR (iii) THE COMPANY SHALL NOT
HAVE RECEIVED APPROVAL FROM THE FEDERAL RESERVE TO BECOME A BANK HOLDING
COMPANY; OR (iv) THE BANK SHALL NOT HAVE RECEIVED FINAL CHARTER APPROVAL FROM
THE FLORIDA COMPTROLLER AND APPROVAL FOR DEPOSIT INSURANCE FROM THE FEDERAL
DEPOSIT INSURANCE CORPORATION, YOUR SUBSCRIPTION FUNDS WILL BE RETURNED TO YOU,
TOGETHER WITH ANY PRO RATA PORTION OF INTEREST EARNED THEREON, IF ANY, AS
DESCRIBED IN THE PROSPECTUS.
If this acceptance is for a lesser number of Units than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Units in excess of the number of Units accepted hereby will be
refunded to you by mail, without interest, within ten (10) days of the date
hereof.
Very truly yours,
PSB BancGroup, Inc.
BY: ____________________________________
Robert W. Woodard
President & Chief Executive Officer
67
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell or an offer to buy, any
securities other than the Units to which it relates, or any offer of such Units
to any person in any state or other jurisdiction in which such offer is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to any of the dates as of
offers or sales are being made hereunder, the Company is required to update the
Prospectus to reflect any facts or events arising after the effective date of
the Registration Statement filed with the Securities and Exchange Commission
which represent a fundamental change in the information set forth in the
Registration Statement.
Until ____________, 1998, all dealers effecting transactions in the Units,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This delivery requirement is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Prospectus Summary............................. 4
Risk Factors................................... 6
The Company.................................... 9
Terms of the Offering.......................... 10
Use of Proceeds................................ 13
Dividend Policy................................ 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ............................ 16
Business of the Company........................ 16
Business of the Bank........................... 17
Regulation and Supervision..................... 20
Organizers and Principal Shareholders.......... 25
Management..................................... 26
Articles of Incorporation - Summary............ 31
Legal Proceedings.............................. 32
Legal Matters.................................. 32
Experts........................................ 32
Additional Information......................... 32
Index to Financial Statements.................. F-1
Appendix A - Articles of Incorporation
Appendix B - Escrow Agreement
Appendix C - Stock Subscription Agreement
================================================================================
Minimum 500,000 Shares
Maximum 600,000 Shares
[LOGO]
PSB
BancGroup, Inc.
Each Unit consists of One Share of
Common Stock and
Warrants to Purchase
Additional Common Stock
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
March ___, 1998
----------------------------------------------------------
68
<PAGE>
PART-II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24: Indemnification of Directors and Officers
As provided under Florida law, the Company's Directors shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of duty of care or any other duty owed to the Company as a director,
unless the breach of or failure to perform those duties constitutes: (i) a
violation of criminal law, unless the director had reasonable cause to believe
his conduct was lawful, or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which the director received an improper
personal benefit; (iii) for unlawful corporate distributions; or (iv) an act or
omission which involves a conscious disregard for the best interests of the
Corporation or which involves willful misconduct; or (v) an act of recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety,
or property.
Article XII of the Company's Articles of Incorporation provides that the
Company shall indemnify a director who has been successful in the defense of any
proceeding to which he was a party or in defense of any claim, issue or matter
therein because he is or was a director of the Company, against reasonable
expenses incurred by him in connection with such defense.
The Company's Articles of Incorporation also provide that the Company is
required to indemnify any director, officer, employee or agent made a party to a
proceeding because he is or was a director, employee or agent against liability
incurred in the proceeding if he acted in a manner he believed in good faith or
to be in or not opposed to the best interests of the Company and, in the case of
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by: (i) a disinterested majority of the Board
of Directors; (ii) a majority of a committee of disinterested directors; (iii)
independent legal counsel; or (iv) an affirmative vote of a majority of shares
held by disinterested stockholders. No indemnification may be made to or on
behalf of a director, officer, disinterested stockholder, employee or agent in
connection with a proceeding by or in the right of the Company in which such
person was adjudged liable to the Company or in connection with any other
proceeding in which such person was adjudged liable on the basis that personal
benefit was improperly received by him.
69
<PAGE>
Item 25: Other Expenses of Issuance and Distribution
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts and commissions, if any. All
of the amounts shown are estimated except for the registration fees of the SEC.
SEC Registration Fees....................... $ 3,635
Blue Sky Registration Fees & Expenses....... 1,365
Legal fees and expenses..................... 15,000
Accounting Fees............................. 1,000
Printing and Engraving expenses............. 2,700
Escrow Fees................................. 2,500
Advertising................................. 2,000
-------
Total................................ $28,200
=======
Item 26: Recent Sales of Unregistered Securities.
During the organizational phase of the Company, and in order to meet the
net worth requirements of a Florida issuer, the Company issued 3,942 shares of
Common Stock without Warrants in a private Offering to its directors for $45.00
per share. Each of these shares will be exchanged for one Unit to be issued in
this Offering. The exchange will not occur until the Conditions of the Offering
have been met.
70
<PAGE>
Item 27: Exhibits and Financial Statement Schedules
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description of Exhibit
*3.1 Articles of Incorporation of the Company
(Appendix A to Prospectus).
*3.2 By-Laws of the Company.
*4.1 Specimen Common Stock Certificate.
*4.2 Specimen Warrant Certificate.
*4.3 Escrow Agreement with Independent Bankers' Bank of Florida
(Appendix B of prospectus).
*4.4 Warrant Plan adopted by the Company on January 9, 1998.
*5.1 Opinion of Igler & Dougherty, P.A.
*10.1 Employment Agreement between the Company and
Robert W. Woodard.
*10.2 Land Purchase Agreement.
*23.1 Consent of Igler & Dougherty, P.A., included in the
Opinion Letter
23.2 Consent of Hacker, Johnson, Cohen & Grieb
*24 Power of Attorney (included in signature page
to this Registration Statement).
*27 Financial Data Schedule
- ------------------------------------
* Denotes previously EDGAR filed as part of this Registration Statement, File
No. 333-44161.
71
<PAGE>
Item 28. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (ss. 230.424[b] of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
(iii) To include any 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.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms different from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(e) 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 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.
72
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Form SB-2 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 2nd day of March, 1998.
PSB BANCGROUP, INC.
By: /s/ Robert W. Woodard
---------------------
Robert W. Woodard, President, Chief Executive Officer
and Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Form SB-2 Registration Statement has been signed by the
following persons in the capacities and as of the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director March 2, 1998
- ------------------------------------------
John W. Burns, III
* /s/ Robert W. Woodard Director March 2, 1998
- ------------------------------------------
Robert M. Eadie President and
Chief Financial Officer
* /s/ Robert W. Woodard Director March 2, 1998
- -----------------------------------------
Shilpa U. Mhatre
* /s/ Robert W. Woodard Director March 2, 1998
- ------------------------------------------
Alton C. Milton, Sr. Chairman of the Board
* /s/ Robert W. Woodard Director March 2, 1998
- ------------------------------------------
Alton C. Milton, Jr.
* /s/ Robert W. Woodard Director March 2, 1998
- ------------------------------------------
Andrew T. Moore
/s/ Robert W. Woodard Director, President March 2, 1998
- -------------------------------------------
Robert W. Woodard and Chief Executive Officer
</TABLE>
* Pursuant to Power of Attorney filed January 13, 1997, authorizing Robert
W. Woodard and Alton C. Milton, Sr., or either of them, as the true and
lawful attorneys-in-fact to sign all amendments to the Form SB-2
Registration Statement.
73
<PAGE>
Exhibit 23.2
Consent of Hacker, Johnson, Cohen & Grieb
<PAGE>
Accountants' Consent
PSB BancGroup, Inc.
Lake City, Florida:
We consent to the use of our report dated December 5, 1997 on the balance sheet
of PSB BancGroup, Inc. as of October 31, 1997 and the related statements of
operations, stockholders' deficit and cash flows for the period from June 30,
1997 to October 31, 1997, included in the Prospectus of the Registration
Statement of PSB BancGroup, Inc. on Form SB-2 and to reference to our firm under
the heading "Experts" in the Prospectus.
/s/HACKER, JOHNSON, COHEN & GRIEB PA
- ------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
March 11, 1998
