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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 1, 1998
UB&T FINANCIAL SERVICES CORPORATION
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(Exact name of registrant as specified in its charter)
Georgia * 58-2378257
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
129 East Elm Street
Rockmart, Georgia 30153
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(Address, including zip code, of principal executive office)
(770) 684-8888
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(Registrant's telephone number, including area code)
* Registrant is a successor issuer pursuant to Rule 12g-3(a) promulgated under
the Securities Exchange Act of 1934 (the "Act"). This Report constitutes
Registrant's registration statement under Section 12(g) of the Act with
respect to its $5.00 par value common stock.
Page 1 of 10 Pages
Exhibit Index on Page 6
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 1, 1998 (the "Effective Date"), UB&T Financial Services
Corporation, a corporation organized and existing under the laws of the State of
Georgia (the "Company"), acquired all of the outstanding capital stock of and
became the parent holding company for United Bank & Trust Company, a commercial
bank organized and existing under the laws of the State of Georgia (the "Bank").
The Company was incorporated on March 10, 1998 solely to facilitate the
reorganization of the Bank into a holding company structure (the
"Reorganization") and to serve as the parent holding company of the Bank
following the Reorganization. The Company has not conducted any business except
as regards completion of the Reorganization and, since the Effective Date,
ownership of the Bank.
The Reorganization occurred pursuant to an Agreement and Plan of
Reorganization and Merger, dated as of March 16, 1998 (the "Agreement"), by and
among the Company, the Bank and UB&T Interim Corporation, a wholly owned
subsidiary of the Company ("Interim"). In accordance with the terms of the
Agreement, Interim merged into the Bank with the result that the Bank became a
wholly owned subsidiary of the Company. Pursuant to the Reorganization, on the
Effective Date each of the 451,105 shares of the $5.00 par value common stock of
the Bank (the "Bank Common Stock") outstanding immediately prior to the
Effective Date was converted into the right to receive one share of the $5.00
par value common stock of the Company (the "Common Stock").
The Reorganization is intended to constitute a tax-free transaction under
the Internal Revenue Code of 1986, as amended, and to be accounted for in a
manner similar to a pooling of interests.
For additional information regarding the Agreement and the Common Stock,
please refer to the copies of those documents, which are incorporated herein by
reference as Exhibits to this Report.
Because the Bank Common Stock was registered with the Federal Deposit
Insurance Corporation under Section 12(g) of the Act pursuant to Section 12(i)
thereof, the Company is a successor registrant pursuant to Rule 12g-3(a). This
Report also constitutes the Company's registration statement under Section 12(g)
of the Act with respect to the Common Stock.
Page 2 of l0 Pages
Exhibit Index on Page 6
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following audited financial statements of the Bank are filed as
part of this Report:
(1) Report of Independent Certified Public Accountants dated February
20, 1998.
(2) Balance Sheets at December 31, 1997 and 1996.
(3) Statements of Operations for the years ended December 31, 1997,
1996 and 1995.
(4) Statements of Changes in Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995.
(5) Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.
(6) Notes to Financial Statements.
(b) The Company was incorporated on March 10, 1998 and did not conduct any
operations except as related to completing the Reorganization during 1998. As a
result, the audited financial statements of the Bank filed with this Report
reflect the financial condition and results of operations of the Company on a
pro forma basis as of the dates and for the periods presented.
No pro forma adjustments are required for the statements of operations
for the years ended December 31, 1997, 1996 and 1995 or for the balance sheet as
of December 31, 1996. As a result, separate pro forma financial statements of
the Company giving effect to the Reorganization have been omitted as permitted
by Rule 11-02(b)(1) of Regulation S-X.
(c) The following Exhibits are filed with or incorporated by reference in
this Report as indicated below:
2 Agreement and Plan of Reorganization and Merger, dated as of March 16,
1998, by and among the Bank, Interim and the Company.
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4 Form of Certificate representing shares of the $5.00 par value common
stock of the Company.
Page 3 of 10 Pages
Exhibit Index on Page 6
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22 List of Subsidiaries of the Company.
99.1 The following Bank financial statements:
(1) Report of Independent Certified Public Accountants dated
February 20, 1998;
(2) Balance Sheets at December 31, 1997 and 1996;
(3) Statements of Operations for the years ended December 31, 1997,
1996 and 1995;
(4) Statements of Changes in Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995;
(5) Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995; and
(6) Notes to Financial Statements.
99.2 Description of the Common Stock.
Page 4 of 10 Pages
Exhibit Index on Page 6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UB&T FINANCIAL SERVICES CORPORATION
(Registrant)
By: /s/ Sumter R. Nelson
--------------------------------
Sumter R. Nelson, President
Date: September 1, 1998
Page 5 of 10 Pages
Exhibit Index on Page 6
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INDEX TO EXHIBITS
Exhibit
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2 Agreement and Plan of Reorganization and Merger, dated as of March
16, 1998, by and among the Bank, Interim and the Company.
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4 Form of Certificate representing shares of the $5.00 par value
common stock of the Company.
22 List of Subsidiaries of the Company.
99.1 The following Bank financial statements:
(1) Report of Independent Certified Public Accountants dated
February 20, 1998;
(2) Balance Sheets at December 31, 1997 and 1996;
(3) Statements of Operations for the years ended December 31, 1997,
1996 and 1995;
(4) Statements of Changes in Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995;
(5) Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995; and
(6) Notes to Financial Statements.
99.2 Description of the Common Stock.
Page 6 of 10 Pages
Exhibit Index on Page 6
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EXHIBIT 2
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of this the 16th day of March, 1998, by and among UNITED BANK &
TRUST COMPANY, a bank organized and existing under the laws of the State of
Georgia and located in Rockmart, Polk County, Georgia (the "Bank"), UB&T
FINANCIAL SERVICES CORPORATION, a corporation organized and existing under the
laws of the State of Georgia and located in Rockmart, Polk County, Georgia (the
"Company"), and UB&T INTERIM CORPORATION, a corporation organized and existing
under the laws of the State of Georgia as a wholly owned subsidiary of the
Company and located in Rockmart, Polk County, Georgia ("Interim").
PREAMBLE
Interim is a wholly owned subsidiary of the Company and has been organized
for the sole purpose of facilitating the reorganization of the Bank pursuant to
which the Bank, as the successor by merger to the Bank and Interim, will become
a wholly owned subsidiary of the Company. As part of the reorganization, the
shareholders of the Bank will receive the consideration set forth herein in
exchange for their shares of the common stock of the Bank. The Boards of
Directors of Interim, the Bank and the Company are of the opinion that the best
interests of each of the parties hereto and their respective shareholders would
be served if the Bank and Interim were to be merged under the articles of
incorporation and name of the Bank on the terms and conditions provided in this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the Company, the Bank and Interim hereby make, adopt and approve this
Agreement in order to set forth the terms and conditions for the merger of the
Bank and Interim.
ARTICLE ONE
DEFINITIONS
As used in this Agreement and in any amendments hereto, the following terms
shall have the following meanings respectively:
1.1 "Agreement" shall mean this Agreement and Plan of Reorganization and
Merger.
1.2 "Bank Common Stock" shall mean the $5.00 par value common stock of
the Bank.
1.3 "Certificate of Merger" shall mean the Certificate of Merger issued
by the Secretary of State of the State of Georgia approving the merger of
Interim into and with the Bank as contemplated in Article Two of this Agreement.
1.4 "Company Common Stock" shall mean the $5.00 par value common stock of
the Company.
1.5 "Effective Time" shall refer to the date and time at which the Merger
becomes effective as provided in Section 4.2 of this Agreement.
1.6 "Exchange Ratio" shall have the meaning set forth in Section 2.2(c)
of this Agreement.
1.7 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.8 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
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1.9 "Georgia Department" shall mean the Department of Banking and Finance
of the State of Georgia.
1.10 "Interim Common Stock" shall refer to the $5.00 par value common
stock of Interim.
1.11 "Merger" shall refer to the merger of the Bank and Interim as
provided in Section 2.1 of this Agreement.
1.12 "1933 Act" shall mean the federal Securities Act of 1933, as amended.
1.13 "Proxy Statement/Offering Circular" shall mean the combined proxy
statement and offering circular that will be mailed to the shareholders of the
Bank in connection with the Shareholders Meeting.
1.14 "Shareholders Meeting" shall refer to a meeting of the shareholders
of the Bank at which the shareholders consider approval of this Agreement.
ARTICLE TWO
TERMS OF MERGER
2.1 Merger. Subject to the terms of this Agreement, at the Effective
Time, Interim shall be merged into and with the Bank under the Articles of
Incorporation of the Bank pursuant to the provisions of and with the effect
provided in Section 7-1-530(b) of the Financial Institutions Code of Georgia.
The Bank shall be the surviving bank resulting from the Merger and shall
continue to conduct a general banking business under the name "United Bank &
Trust Company." The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the Boards of Directors of the
Company, the Bank and Interim.
2.2 Manner of Converting Shares. The manner and basis of converting the
shares of the capital stock of the Company, Interim and the Bank shall be as
follows:
(a) Company Common Stock. The share of the Company Common Stock
issued and outstanding immediately prior to the Effective Time shall be redeemed
at the Effective Time for its original sale price.
(b) Interim Common Stock. The share of Interim Common Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
451,105 shares of the Bank Common Stock, which shares of Bank Common Stock shall
remain issued and outstanding after the Merger.
(c) Bank Common Stock. Except as otherwise provided in this
Agreement, each share of the Bank Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held by shareholders
of the Bank who exercise their dissenters' rights of appraisal) shall, as of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive one (1) share of
Company Common Stock (the "Exchange Ratio").
(d) Reservation of Authorized Stock. At or prior to the Effective
Time, the Company shall reserve and set aside from authorized but unissued
shares of Company Common Stock that number of shares of Company Common Stock
necessary to satisfy the obligations assumed by the Company hereunder
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to issue and deliver shares in connection with the Merger. Such reservation
shall continue so long as and to the extent required to satisfy such obligations
assumed by the Company.
(e) Dissenting Shareholders. Any holder of shares of the Bank Common
Stock who complies with Sections 14-2-1301 et seq. of the Georgia Business
Corporation Code (made applicable to shareholders of the Bank by means of
Section 7-1-537 of the Georgia Financial Institutions Code) shall be entitled to
receive the value of such shares in cash as determined pursuant to the Georgia
Business Corporation Code; provided, however, that no such payment shall be made
to any dissenting shareholder unless and until such dissenting shareholder has
surrendered to the Company the certificate or certificates representing the
shares of the Bank Common Stock for which payment is being made.
2.3 Exchange of Stock Certificates.
(a) At and after the Effective Time, the certificates formerly
representing shares of Bank Common Stock shall represent a right to receive the
consideration provided for in Section 2.2(c) of this Agreement.
(b) Promptly after the Effective Time, the Company and the Bank shall
mail appropriate transmittal materials to the former holders of Bank Common
Stock. Holders of certificates formerly representing shares of Bank Common Stock
(other than shares as to which dissenters' rights of appraisal are being
exercised pursuant to Section 2.2(g) of this Agreement) shall thereafter
surrender such certificates and properly executed and completed transmittal
materials to the Bank and promptly upon such surrender shall receive in exchange
therefor the consideration provided for in Section 2.2 of this Agreement,
together with any unpaid dividends with respect to such surrendered shares of
Bank Common Stock or the shares of the Company Common Stock issued in exchange
therefore. The Company shall not be obligated to deliver the consideration to
which a holder of certificates formerly representing shares of Bank Common Stock
is entitled as a result of the Merger until such holder surrenders such
certificate or certificates for exchange as required by this Section 2.3(b). If
any certificate representing Company Common Stock is to be issued in a name
other than that in which a certificate surrendered for exchange is issued, the
certificate surrendered shall be properly endorsed or accompanied by a properly
executed stock power of attorney and otherwise in proper form for transfer and
the person requesting such exchange shall provide funds for the payment of any
applicable transfer taxes or establish to the satisfaction of the Bank that such
taxes are not payable.
2.4 Dissenting Shareholders. Any holder of shares of the Bank Common
Stock who complies with Sections 14-2-1301 et seq. of the Georgia Business
Corporation Code (made applicable to shareholders of the Bank by means of
Section 7-1-537 of the Financial Institutions Code of Georgia) shall not be
entitled to surrender his certificate or certificates representing shares of the
Bank Common Stock and receive in exchange for each share held the consideration
provided in Section 2.2 of this Agreement. The Bank shall give the Company
prompt notice of any written demand received by the Bank or from any such holder
for payment of the appraised value of the shares of the Bank Common Stock held
by him, and the Company shall have the right to participate in all negotiations
and proceedings with respect to such demand. The Bank agrees that it will not,
except with the prior written consent of the Company, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. Each holder of shares of the Bank Common Stock who becomes entitled,
pursuant to Sections 14-2-1301 et seq. of the Georgia Business Corporation Code,
to payment of the appraised value of his shares shall receive payment therefor
from the Company (but only after the value thereof shall have been agreed upon
or finally determined as provided in the Georgia Business Corporation Code).
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2.5 Rights of Holders of the Bank Common Stock. At and after the
Effective Time, holders of certificates formerly representing shares of Bank
Common Stock shall cease to have any rights as shareholders of the Bank (except
such rights, if any, as they may have as dissenting shareholders as set forth
herein). Thereafter, each certificate formerly representing shares of Bank
Common Stock shall instead be deemed for all corporate purposes to represent and
evidence only the right to receive shares of Company Common Stock pursuant to
this Agreement.
ARTICLE THREE
EFFECT OF MERGER
3.1 Business of the Bank. The Bank shall continue the business of the
Bank and Interim as a Georgia bank from and after the Effective Time in the
manner previously conducted by the Bank. Its business shall be conducted from
its offices located in Rockmart, Polk County, Georgia, under the name "United
Bank & Trust Company."
3.2 Assumption of Rights. At the Effective Time, the separate existence
and corporate organization of Interim shall cease and shall be merged into and
continued by the Bank, as the surviving entity resulting from the Merger. All
rights, franchises and interests of both Interim and the Bank in and to every
type of property (real, personal and mixed), and all choses in action of both
Interim and the Bank shall be transferred to and vested in the Bank as the
surviving entity resulting from the Merger, by virtue of the Merger, without any
deed or other transfer. The Bank, upon consummation of the Merger and without
any order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interests, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates,
assignee and receiver, and in every other fiduciary capacity, in the same manner
and to the same extent as such rights, franchises and interests were held or
enjoyed by either Interim or the Bank at the Effective Time, subject to the
conditions imposed by Article 2 of the Financial Institutions Code of Georgia.
3.3 Assumption of Liabilities. All liabilities and obligations of both
Interim and the Bank of every kind and description shall be assumed by the Bank
as the surviving entity resulting from the Merger, by virtue of the Merger, and
the Bank shall be bound thereby in the same manner and to the same extent that
Interim and the Bank were so bound at the Effective Time.
3.4 Articles of Incorporation. The Articles of Incorporation of the Bank,
as in effect at the Effective Time, shall continue in full force and effect
following the Effective Time as the Articles of Incorporation of the surviving
entity until otherwise amended or repealed as provided by law or by such
Articles of Incorporation.
3.5 Bylaws. The Bylaws of the Bank, as in effect at the Effective Time,
shall continue in full force and effect after the Effective Time as the Bylaws
of the surviving entity until otherwise amended or repealed as provided by law
or by such Bylaws.
3.6 Officers, Employees and Directors. The officers and employees of the
Bank immediately following the Effective Time shall be composed of the officers
and employees of the Bank immediately prior to the Effective Time. The Board of
Directors of the Bank immediately following the Effective Time shall be composed
of the same members as immediately prior to the Effective Time.
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3.7 Capital Stock of the Bank. The issued and outstanding capital stock
of the Bank upon completion of the Merger shall consist of 451,105 issued and
outstanding shares of the Bank Common Stock held by the Company.
ARTICLE FOUR
CLOSING AND EFFECTIVE TIME
4.1 Time and Place of Closing. The Closing will take place at 9:00 a.m.
Rockmart, Georgia time on the last business day immediately preceding the
Effective Time, or at such other time as the parties to this Agreement may
agree. The place of Closing shall be at the offices of the Bank located in
Rockmart, Georgia, or at such other place as may be mutually agreed upon by the
parties.
4.2 Effective Time. Subject to the satisfaction of all requirements of
applicable laws and regulations and the terms and conditions set forth herein,
the Merger contemplated by this Agreement shall be and become effective at the
time and on the date specified in the Certificate of Merger.
ARTICLE FIVE
EFFECTIVENESS
5.1 Conditions Precedent. The obligations of the Company, the Bank and
Interim under this Agreement to consummate the Merger are subject to the
fulfillment prior to or at the Effective Time of the following conditions:
(a) Regulatory Approval. The appropriate federal and state banking
and other regulatory agencies shall have approved the transactions contemplated
by this Agreement as required by the laws of the United States and the State of
Georgia.
(b) Shareholder Approvals. This Agreement and the transactions
contemplated thereby shall have been approved by the affirmative vote of the
holders of at least two-thirds (2/3) of the outstanding shares of the Bank
Common Stock entitled to vote thereon at the Shareholders Meeting. In addition,
this Agreement and the transactions contemplated thereby shall have been
approved by the affirmative vote of the holders of at least two-thirds (2/3) of
the outstanding shares of Interim Common Stock.
(c) Tax Opinion. The Company and the Bank shall have received a an
opinion from Sims Moss Kline & Davis LLP or special tax counsel in form and
substance satisfactory to the Company and the Bank regarding the federal tax
consequences of the transactions contemplated by the Agreement.
(d) Documents Satisfactory. All proceedings and related matters in
connection with the transactions contemplated by this Agreement shall be
satisfactory to counsel for the Company and the Bank.
5.2 Termination. This Agreement and the transactions contemplated thereby
may be terminated at any time prior to the Effective Time by notice to the other
parties hereto by the Bank if for any reason it should deem consummation of the
Merger undesirable.
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ARTICLE SIX
AMENDMENTS AND WAIVERS
6.1 Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the Boards of Directors of each of the parties hereto; provided,
however, that the provisions of Section 2.2 of this Agreement relating to the
manner or basis in which shares of the Bank Common Stock will be converted into
Company Common Stock shall not be amended after the Shareholders Meeting without
the approval of the holders of at least two-thirds (2/3) majority of the issued
and outstanding shares of the Bank Common Stock.
6.2 Waivers. Prior to or at the Effective Time, the Company and Interim,
acting through their respective Boards of Directors or their respective
Presidents, shall have the right to waive any default in the performance of any
term of this Agreement by the Bank, to waive or extend the time for the
compliance or fulfillment by the Bank of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of the Bank under this Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable governmental
regulation. Prior to or at the Effective Time, the Bank, acting through its
Board of Directors or President, shall have the right to waive any default in
the performance of any term of this Agreement by the Company or Interim, to
waive or extend the time for the compliance or fulfillment by the Company or
Interim of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Interim under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any law or applicable governmental regulation.
ARTICLE SEVEN
CONDUCT OF BUSINESS
7.1 The Bank. The Bank hereby covenants and agrees that during the term
of this Agreement its business will be conducted in substantially the same
manner as presently being conducted and that it will refrain from entering into
any transaction or contract other than in the ordinary course of business and
will not make any unusual or material change in its method of management,
marketing, accounting, lending policies or practices or operations.
7.2 The Company and Interim. The Company and Interim hereby covenant and
agree that they will not during the term of this Agreement enter into any
transaction or conduct any business activities other than those contemplated by
the terms of this Agreement.
ARTICLE EIGHT
ADDITIONAL AGREEMENTS
8.1 Shareholder Approval. As soon as reasonably practicable after the
execution of this Agreement, the Company and the Bank shall prepare and file the
Proxy Statement/Offering Circular with the FDIC and Georgia Department, take all
steps required to make available an exemption from the registration requirements
of the 1933 Act, and take any action required to be taken under the applicable
state Blue Sky or securities laws in connection with the issuance of the shares
of Company Common Stock upon consummation of the Merger. Each party shall
furnish all information concerning it and the holders of its capital stock as
the other party may reasonably request in connection with such action. The Bank
shall call a Shareholders Meeting to be held as soon as reasonably practicable
after the date of this Agreement for the purpose of voting
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upon approval of this Agreement and such related matters as it deems appropriate
and shall mail the Proxy Statement/Offering Circular to its shareholders in
contemplation of the Shareholders Meeting.
ARTICLE NINE
MISCELLANEOUS
9.1 Notices. Any notices or other communications required or permitted
under this Agreement shall be in writing, and shall be sufficiently given if
hand delivered or sent by registered or certified mail, postage prepaid,
addressed as follows:
The Company and Interim:
United Bank & Trust Company
129 E. Elm Street
Rockmart, Georgia 30153
Attention: Sumter R. Nelson, President and Chief Executive Officer
The Bank:
United Bank & Trust Company
129 E. Elm Street
Rockmart, Georgia 30153
Attention: Sumter R. Nelson, President and Chief Executive Officer
Copy to Counsel:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Gilbert H. Davis
or such other address as shall be furnished in writing by any of the parties and
any such notice or communication shall be deemed to have been given as of the
dates so personally delivered or mailed.
9.2 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia except to the
extent federal law shall be applicable.
9.3 Expenses. The expenses associated with the organization of the
Company and Interim, of the Merger, of obtaining related regulatory approvals,
any dissenters' rights proceedings or the purchase of dissenters' shares of Bank
Common Stock and of the issuance of Company Common Stock shall be borne by the
Company.
9.4 Headings. The headings in this Agreement are for convenience only and
shall not affect the construction or interpretation of this Agreement.
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IN WITNESS WHEREOF, the Bank, the Company and Interim have caused this
Agreement to be duly executed and delivered by their duly authorized officers as
of the date set forth first above.
UNITED BANK & TRUST COMPANY
ATTEST:
/s/ Melissa Y. Deems By: /s/ Sumter R. Nelson
- --------------------------- -----------------------------
Melissa Y. Deems, Secretary Sumter R. Nelson, President and
[SEAL] Chief Executive Officer
UB&T FINANCIAL SERVICES CORPORATION
ATTEST:
/s/ Melissa Y. Deems By: /s/ Sumter R. Nelson
- --------------------------- -----------------------------
Melissa Y. Deems, Secretary Sumter R. Nelson, President and
[SEAL] Chief Executive Officer
UB&T INTERIM CORPORATION
ATTEST:
/s/ Melissa Y. Deems By: /s/ Sumter R. Nelson
- --------------------------- -----------------------------
Melissa Y. Deems, Secretary Sumter R. Nelson, President and
Chief Executive Officer
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EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
UB&T FINANCIAL SERVICES CORPORATION
ARTICLE 1.
The name of the Corporation is: UB&T Financial Services Corporation
ARTICLE 2.
The Corporation shall have authority, to be exercised by its Board of
Directors, to issue 10,000,000 shares of voting common stock, $5.00 par value
per share.
ARTICLE 3.
The initial registered office of the Corporation shall be at 129 E. Elm
Street, Rockmart, GA 30153 in Polk County. The initial registered agent of the
Corporation shall be Sumter R. Nelson.
ARTICLE 4.
The mailing address of the initial principal office of the Corporation is
129 E. Elm Street, Rockmart, GA 30153.
ARTICLE 5.
The name and address of the incorporator is Gilbert H. Davis, Sims Moss
Kline & Davis LLP, 400 Northpark Town Center, Suite 310, 1000 Abernathy Rd.,
N.E., Atlanta, Georgia 30328.
ARTICLE 6.
The initial Board of Directors is composed of the following directors:
Bruce B. Albea
Lee Cummings
Dan Forsyth
William D. Heath, Jr.
J.W. LeGrande
James L. Lester
Sumter R. Nelson
Elmo Peppers
William Frank Shelley
Daniel B. Simon, III
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ARTICLE 7.
(a) A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director, except for liability (i) for any appropriation, in
violation of such director's duties, of any business opportunity of the
Corporation; (ii) for acts or omissions which involve intentional misconduct or
a knowing violation of law; (iii) of any of the types set forth in Section 14-2-
832 of the Georgia Business Corporation Code; or (iv) for any transaction from
which the director has received an improper personal benefit. The provisions of
this Article shall not apply with respect to acts or omissions occurring prior
to the effective date of this Article.
(b) Any repeal or modification of the provisions of this Article by the
shareholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation with respect to any act or omission occurring prior to the effective
date of such repeal or modification.
(c) If the Georgia Business Corporation Code hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Georgia Business Corporation Code.
(d) In the event that any of the provisions of this Article (including any
provisions within a single sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, the remaining
provisions are severable and shall remain enforceable to the fullest extent
permitted by law.
ARTICLE 8.
Any action required by law or by the Articles of Incorporation or Bylaws of
the Corporation to be taken at a meeting of the shareholders of the Corporation
and any action which may be taken at a meeting of the shareholders may be taken
without a meeting if written consent, setting forth the action so taken, shall
be signed by persons who would be entitled to vote at a meeting those shares
having sufficient voting power to cast not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shareholders entitled to vote were present and voted. No such written
consent shall be effective unless each consenting shareholder has been furnished
the same material that would have been required to be sent to shareholders in a
notice of a meeting at which the proposed action would have been submitted to
the shareholders, or unless the consent includes an express waiver of the right
to receive the material.
ARTICLE 9.
If at any time the Corporation has in effect an election to be a small
business corporation (an "S Corporation") pursuant to the provisions of Section
1361 of the Internal Revenue Code of 1986, as it may be amended from time to
time (the "Code"), the following restrictions shall apply in order to maintain
the Corporation's status as an S Corporation unless otherwise agreed upon
unanimously in writing by the shareholders of the Corporation:
(a) Shares of the Corporation may not be issued, sold, pledged or otherwise
transferred or assigned to any person or entity if such transaction would (i)
cause the Corporation to have more than 35 shareholders or (ii) cause the
Corporation to have as a shareholder a person or entity which would make the
Corporation ineligible to elect to be an S Corporation under Section 1361 of the
Code.
(b) In the event any shareholder of the Corporation shall desire to sell,
pledge, or otherwise
<PAGE>
transfer in any manner any or all of the stock in the Corporation owned by such
shareholder, any such transfer or attempt to transfer shall be void, and the
purported transferee or beneficiary thereof shall not be the record or
beneficial owner of such shares of stock in the Corporation or have any interest
therein or be entitled to any of the rights appertaining thereto, and the
Corporation shall not transfer any such shares on its stock ledger, stock
transfer records or stock books to the purported transferee or beneficiary
thereof unless and until the shareholder attempting so to transfer stock in the
Corporation shall have obtained the written consent of the Corporation to such
transfer. The Corporation shall be under no obligation to consent to any
proposed transfer.
(c) In the event of the death, disability or bankruptcy of a shareholder,
upon the levy on, seizure of or foreclosure on any shares of stock in the
Corporation, or upon the occurrence of any other event which would cause the
shareholder or the shareholder's representative to transfer the shareholder's
stock in the Corporation involuntarily in violation of the provisions of
paragraph (a) of this Article, or should a court require the shareholder to
transfer all or any portion of the shareholder's stock in the Corporation in
violation of paragraph (a) of this Article, then in any such event, such
transfer or attempted transfer shall be void and the purported transferee or
beneficiary shall not be the record or beneficial owner of such shares or have
any interest therein or be entitled to any of the rights appertaining thereto,
and the Corporation shall not transfer any such shares on its stock ledger,
stock transfer records or stock books to the purported transferee or
beneficiary thereof; and, in addition, such shares shall be deemed to be
redeemed immediately before the occurrence of the attempted involuntary
transfer, and payment therefor shall be made at the price and in the manner
provided for in Sections 14-2-914 to 917 of the Georgia Business Corporation
Code, as it may be amended from time to time.
(d) Each stock certificate of the Corporation shall bear the following
legend:
"Transfer of the shares evidenced by this certificate is limited by
the terms and provisions of the Articles of Incorporation, and any
attempted sale, pledge or other transfer of this certificate shall be
void unless made in compliance with the provisions of the Articles of
Incorporation."
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation this 8th day of March, 1998
/s/ Gilbert H. Davis
--------------------------------
Gilbert H. Davis, Incorporator
<PAGE>
EXHIBIT 3.2
BYLAWS OF
UB&T FINANCIAL SERVICES CORPORATION
Adopted: March 16, 1998
<PAGE>
TABLE OF CONTENTS
BYLAWS OF
UB&T FINANCIAL SERVICES CORPORATION
<TABLE>
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ARTICLES SECTION PAGE
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ARTICLE 1
OFFICES 1
Section 1.1. Registered Office 1
Section 1.2. Other Offices 1
ARTICLE 2
MEETINGS OF SHAREHOLDERS 1
Section 2.1. Location of Meetings 1
Section 2.2. Annual Meetings 1
Section 2.3. Special Meeting 1
Section 2.4. Notice of Meetings 1
Section 2.5. Quorum 1
Section 2.6. Majority 2
Section 2.7. Voting 2
Section 2.8. Action by Consent 2
ARTICLE 3
DIRECTORS 2
Section 3.1. Number; Election 2
Section 3.2. Vacancies 2
Section 3.3. Powers 3
Section 3.4. Compensation 3
Section 3.5. Removal 3
ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS 3
Section 4.1. Location of Meetings 3
Section 4.2. First Meeting of New Board 3
Section 4.3. Regular Meetings 3
Section 4.4. Special Meetings 3
Section 4.5. Notice of Meetings 4
Section 4.6. Quorum 4
Section 4.7. Majority 4
Section 4.8. Action by Consent 4
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 5
COMMITTEES 4
Section 5.1. Election 4
Section 5.2. Minutes 4
ARTICLE 6
NOTICES 4
Section 6.1. Required Notices 4
Section 6.2. Waiver of Notice 5
ARTICLE 7
OFFICERS 5
Section 7.1. Officers; Election; Term 5
Section 7.2. Additional Officers and Agents 5
Section 7.3. Salaries; Other Duties and Authority 5
Section 7.4. Removal; Vacancies 5
Section 7.5. Chairman of the Board 5
Section 7.6. President 5
Section 7.7. Vice President 6
Section 7.8. Secretary 6
Section 7.9. Treasurer 6
ARTICLE 8
CERTIFICATES FOR SHARES 6
Section 8.1. Form of Certificates 6
Section 8.2. Lost Certificates 6
Section 8.3. Transfers of Shares 7
Section 8.4. Closing of Transfer Books 7
Section 8.5. Registered Shareholders 7
Section 8.6. List of Shareholders 7
ARTICLE 9
INDEMNIFICATION 8
Section 9.1. Indemnification. 8
Section 9.2. Insurance 8
Section 9.3. Notice to Shareholders 8
</TABLE>
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<TABLE>
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ARTICLE 10
GENERAL PROVISIONS 9
Section 10.1. Dividends 9
Section 10.2. Depositories 9
Section 10.3. Contracts and Deeds 9
Section 10.4. Seal 9
Section 10.5. Books and Records 9
Section 10.6. ByLaw Amendments 9
</TABLE>
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ARTICLES SECTION PAGE
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ARTICLES SECTION PAGE
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<PAGE>
BYLAWS
OF
UB&T FINANCIAL SERVICES CORPORATION
(the "Corporation")
ARTICLE 1
OFFICES
Section 1.1. Registered Office. The Corporation shall have a registered
agent and a registered office in Georgia as initially set forth in the
Corporation's Articles of Incorporation and as the board of directors may from
time to time determine.
Section 1.2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Georgia as the board of
directors may from time to time determine or the business of the Corporation may
make appropriate.
ARTICLE 2
MEETINGS OF SHAREHOLDERS
Section 2.1. Location of Meetings. All meetings of shareholders shall be
held at such place within or without the State of Georgia as may be from time to
time fixed by the board of directors or as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof or at the Corporation's
registered office if not so fixed or stated.
Section 2.2. Annual Meetings. A meeting of shareholders of the
Corporation shall be held annually. The annual meeting shall be held on such
date as the board of directors shall determine from time to time and as shall be
specified in the notice of the meeting.
Section 2.3. Special Meeting. Special meetings of shareholders may be
called for any purpose or purposes by the president, the board of directors or
the holders of at least 25 percent of the outstanding voting stock of the
Corporation.
Section 2.4. Notice of Meetings. Written notice of a meeting stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than 10 nor more than 60 days before the date of the meeting in accordance with
Article 6. Notice of any meeting at which amendments to or restatements of the
Articles of Incorporation, a merger of the Corporation, a share exchange, or the
disposition of corporate assets requiring shareholder approval are to be
considered, shall state such purpose, and further comply with all requirements
of law. Notice of any meeting may be given by the President, the Secretary or by
the person or persons calling such meeting.
Section 2.5. Quorum. The holders of a majority of the shares of stock
issued and outstanding and
<PAGE>
entitled to vote, present in person or by proxy, shall constitute a quorum at
all meetings of shareholders for the transaction of business. If a quorum shall
not be present, the shareholders present, in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. At such reconvened
meeting, any business may be transacted which might have been transacted at the
adjourned meeting.
Section 2.6. Majority. Unless otherwise required by law, if a quorum is
present, the affirmative vote of a majority of the shares of stock represented
at the meeting shall be the act of the shareholders, except that a unanimous
vote of the issued and outstanding shares of voting capital stock shall be
required to approve matters at a special meeting of shareholders with respect to
which matters no notice had been given in the notice of such special meeting.
Section 2.7. Voting. Each outstanding share of stock having voting power
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by a proxy executed in
writing by the shareholder or by a duly authorized attorney-in-fact. If the
validity of any proxy is questioned it must be submitted to the secretary of the
Shareholders' meeting for examination or to a proxy officer or committee
appointed by the person presiding at the meeting. The secretary of the meeting,
or if appointed, the proxy officer or committee, shall determine the validity or
invalidity of any proxy submitted. Reference by the secretary in the minutes of
the meeting to the irregularity of a proxy shall be received as prima facie
evidence of the facts stated for the purpose of establishing the presence of a
quorum at such meeting and for other purposes. In all elections for directors,
every shareholder entitled to vote shall have the right to vote, in person or by
proxy, the number of shares of stock owned by such shareholder for as many
persons as there are directors to be elected and for whose election such
shareholder has the right to vote, but shareholders may not cumulate their
votes.
Section 2.8. Action by Consent. Any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by persons who would be
entitled to vote at a meeting those shares having voting power to cast not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shareholders entitled to vote were present
and voted, and any further requirements of law pertaining to such consents have
been complied with.
ARTICLE 3
DIRECTORS
Section 3.1. Number; Election. The board of directors shall consist of at
least five and up to 25 members, with the exact number to be fixed from by
resolution of the board of directors or the shareholders, provided, that the
board of directors may not increase or decrease the number of members by more
than two in any one year. Directors must be over age eighteen, but need not be
residents of the State of Georgia or shareholders of the Corporation. The
directors, other than the first board of directors, shall be elected at the
annual meeting of shareholders, and each director elected shall serve until the
next succeeding annual meeting and until such person's successor shall have been
elected and qualified or until the earlier resignation, removal from office, or
death of such person. The first board of directors shall hold office until the
first annual meeting of shareholders.
2
<PAGE>
Section 3.2. Vacancies. Any vacancy occurring in the board of directors
may be filled by the shareholders or by the affirmative vote of a majority of
the remaining directors even though the remaining directors may constitute less
than a quorum of the board of directors. If there shall be only one director and
such director shall resign, he may elect a new director, who shall take office
immediately upon the effectiveness of such resignation. A director elected to
fill a vacancy shall be elected for the unexpired portion of the term of his
predecessor in office. Any directorship to be filled by reason of an increase in
the number of directors may be filled by the affirmative vote of a majority of
the remaining directors present at a meeting even though less than a quorum of
the board of directors is present. A director elected to fill a newly created
directorship shall serve until the next election of directors by the
shareholders and the election and qualification of his successor.
Section 3.3. Powers. The business and affairs of the Corporation shall be
managed by its board of directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Articles of Incorporation or these bylaws directed or required to be exercised
or done by the shareholders.
Section 3.4. Compensation. Directors may be allowed such compensation for
attendance at regular or special meetings of the Board of Directors and of any
special or standing committees thereof as may be from time to time determined by
resolution of the Board of Directors or by the Shareholders. A Director may also
serve the Corporation in a capacity other than that of Director and receive
compensation, as determined by the Board of Directors, for services rendered in
that other capacity.
Section 3.5. Removal. Any Director may be removed from office, with or
without cause, upon the majority vote of the Shareholders, at a meeting with
respect to which notice of such purpose is given, and a removed Director's
successor may be elected at the same meeting to serve the unexpired term.
ARTICLE 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1. Location of Meetings. Meetings of the board of directors,
regular or special, may be held either within or without the State of Georgia.
Directors may attend and participate in meetings either in person or by means of
conference telephones or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by means of such communications equipment shall constitute presence in
person at any meeting.
Section 4.2. First Meeting of New Board. The first meeting of each newly
elected board of directors shall be held immediately following the annual
meeting of shareholders at the place where such annual meeting is held. Such
meeting shall be designated as the annual meeting of the board of directors, and
no notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present.
Alternatively, the new board of directors may convene at such place and time as
shall be fixed by the consent in writing of all its members.
Section 4.3. Regular Meetings. Regular meetings of the board of directors
may be held with such frequency and at such time and at such place as shall from
time to time be determined by the board. If the board has so fixed the
frequency, time and place of regular meetings, no notice thereof shall be
necessary.
3
<PAGE>
Section 4.4. Special Meetings. Special meetings of the board of directors
may be called by the president or by any director on two days' notice to each
director in accordance with Article 6.
Section 4.5. Notice of Meetings. Notice of a meeting need not be given to
any director who signs a waiver of notice either before or after the meeting or
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice thereof. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting.
Section 4.6. Quorum. A majority of the directors shall constitute a
quorum for the transaction of business. If a quorum shall not be present at any
meeting of directors, the directors present may adjourn the meeting from time to
time until a quorum shall be present, without notice of the time and place that
the meeting will be reconvened other than announcement at the adjourned meeting.
Section 4.7. Majority. The act of a majority of the directors present at
the meeting at which a quorum is present shall be the act of the board of
directors, unless the act of a greater number is required by law or by the
Articles of Incorporation.
Section 4.8. Action by Consent. Any action required or permitted to be
taken at a meeting of directors or of a committee thereof may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed by
all directors or all members of the committee, as the case may be, entitled to
vote with respect to the subject matter thereof. Such consent shall be filed
with the minutes of the proceedings of the board or the committee.
ARTICLE 5
COMMITTEES
Section 5.1. Election. In the event that the number of directors of the
corporation shall be in excess of one, the board of directors, by resolution
adopted by a majority of the full board, may designate from among its members an
executive committee, and one or more other committees, each consisting of one or
more directors and each of which, to the extent provided in the resolution
establishing such committee, shall have and may exercise all authority of the
board of directors in the management of the Corporation, except as otherwise
required by law. Vacancies in the membership of the committee shall be filled by
a majority vote of the full board of directors.
Section 5.2. Minutes. Each such committee shall keep regular minutes of
its proceedings and report the same to the board when required.
ARTICLE 6
NOTICES
Section 6.1. Required Notices. Whenever under the provisions of
applicable law, the Articles of Incorporation or these bylaws any notice is
required to be given to any director or shareholder, such notice shall be given
in writing and delivered either personally or by first class mail or telegram,
addressed to such
4
<PAGE>
director or shareholder at his address as it appears on the records of the
Corporation. If mailed, such notice shall be deemed to be delivered two business
days after it was deposited in the United States mail with first class postage
prepaid. Notices given by any other means shall be deemed delivered when
received by the addressee.
Section 6.2. Waiver of Notice. Whenever under the provisions of
applicable law, the Articles of Incorporation or these bylaws, any notice is
required to be given to any director or shareholder, a written waiver thereof
signed by the person or persons entitled to such notice, either before or after
the time stated therein, shall be deemed the equivalent to the giving of such
notice.
ARTICLE 7
OFFICERS
Section 7.1. Officers; Election; Term. The officers of the Corporation
shall be chosen by the board of directors and shall consist of a president and a
secretary and such other officers or assistant officers, including vice
presidents, as may be elected by the board of directors. Any person may hold
more than one office. Officers shall be elected at the first meeting of the
board of directors following the annual meeting of shareholders and shall hold
office until their respective successors have been elected and shall have
qualified, and if the board of directors shall fail in any year or years to meet
and elect officers, the officers last elected shall continue to hold office. No
officer need be a member of the board of directors.
Section 7.2. Additional Officers and Agents. The board of directors may
appoint such other officers, including a chairman and vice chairman of the
board, a treasurer, one or more vice presidents, assistant, senior and executive
vice presidents, assistant secretaries, assistant treasurers and agents as it
shall deem necessary. Such officers and agents shall hold their respective
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board of directors.
Section 7.3. Salaries; Other Duties and Authority. The salaries of all
officers of the Corporation shall be fixed by the board of directors. No officer
shall be prevented from receiving such salary by reason of the fact that such
officer is also a director of the Corporation. In addition to the duties and
authority conferred upon each officer by these bylaws, each officer shall have
such other duties and authority as may be conferred upon such officer by the
Board of Directors or delegated to such officer by the President.
Section 7.4. Removal; Vacancies. Any officer or agent elected or
appointed by the board of directors may be removed by the board at any time with
or without cause by the affirmative vote of a majority of the board of
directors. Officers and agents otherwise elected or appointed may be removed in
accordance with Georgia law. Any vacancy occurring in any office of the
Corporation may be filled by the board of directors.
Section 7.5. Chairman of the Board. If the Board of Directors elects a
Chairman of the Board, the Chairman shall preside at all meetings of the board
of directors and at all meetings of the shareholders.
Section 7.6. President. The president shall be the chief executive
officer of the Corporation, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
board of directors are carried into effect. If there shall be no Chairman of the
Board, the president shall preside at all meetings of shareholders and the board
of directors. The president shall have the
5
<PAGE>
authority and power to execute on behalf of the Corporation bonds, mortgages,
notes, contracts, leases and other documents and instruments (whether or not
requiring the seal of the Corporation) except where such documents or
instruments are required by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the Corporation. If there
shall be no treasurer, the president shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the board of directors. He shall
disburse the funds of the Corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the board of directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of the
financial condition of the Corporation.
Section 7.7. Vice President. Each vice president shall perform such
duties and have such powers as the board of directors may from time to time
prescribe.
Section 7.8. Secretary. The secretary shall attend all meetings of
shareholders and the board of directors and shall record the proceedings of such
meetings in books to be kept for that purpose and shall perform like duties for
any committee of directors when required. He shall give, or cause to be given,
notice of all meetings of shareholders and shall perform such duties as may be
prescribed by the board of directors or the president, under whose supervision
he shall be. He shall have custody of the corporate seal of the Corporation, and
he shall have authority to affix it to any instrument requiring it, and when so
affixed it may be attested by his signature.
Section 7.9. Treasurer. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the Corporation as may be ordered by
the board of directors, taking proper vouchers for such disbursements, and shall
render to the president and the board of directors, at its regular meetings, or
when the board of directors so requires, an account of all his transactions as
treasurer and of the financial condition of the Corporation. If required by the
board of directors, he shall give the Corporation a bond in such sum with surety
or sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
ARTICLE 8
CERTIFICATES FOR SHARES
Section 8.1. Form of Certificates. The shares of stock of the Corporation
shall be represented by certificates which shall be in such form as the Board of
Directors may from time to time adopt. Such certificates shall be numbered,
shall be entered in the books of the Corporation as they are issued, shall be
signed by the president or a vice president and by the secretary or an assistant
secretary and shall be sealed with the seal of the Corporation or a facsimile
thereof.
6
<PAGE>
Section 8.2. Lost Certificates. The board of directors may direct that a
new certificate be issued in place of any certificate theretofore issued by the
Corporation which is alleged to have been lost or destroyed. When authorizing
the issuance of a new certificate, the board of directors, in its discretion and
as a condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it deems
adequate, to protect the Corporation from any claim that may be made against it
with respect to any such certificate alleged to have been lost or destroyed.
Section 8.3. Transfers of Shares. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the person entitled
thereto, the old certificate shall be conspicuously marked on its face
"cancelled" and filed with the permanent stock records of the Corporation and
the transaction shall be recorded upon the books of the Corporation.
Section 8.4. Closing of Transfer Books. In order to determine the
Corporation's shareholders (i) entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, (ii) entitled to receive payment of
any dividend or (iii) for any other proper purpose, the board of directors may
provide that the stock transfer books shall be closed for a stated period not to
exceed 50 days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 10 days immediately
preceding such meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any such
determination of shareholders, such date to be not more than 50 days and, in
case of a meeting of shareholders, not less than 10 days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, unless the board of
directors fixes a new record date for the adjourned meeting.
Section 8.5. Registered Shareholders. The Corporation shall be entitled
to recognize the person registered on its books as the owner of shares for the
purposes of determining who shall (i) have the right to receive dividends
declared with respect to such shares, or vote such shares, and (ii) be held
liable for calls and assessments. Except as otherwise provided by law, the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof.
Section 8.6. List of Shareholders. The officer or agent having charge of
the stock books and records of the Corporation shall make a complete list of the
shareholders entitled to vote at a meeting of shareholders or any adjournment
thereof. Such list shall be arranged in alphabetical order and shall contain the
address of each shareholder and the number of shares, and class and series, if
any, of shares held by each such shareholder. Such list shall be produced and
kept open at the time and place of the meeting and shall be subject to
inspection by any shareholder immediately prior to and during the meeting. Such
list shall be prima facie evidence of who is a shareholder of record.
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ARTICLE 9
INDEMNIFICATION
Section 9.1. Indemnification. Each person who is or was a director or
officer of the Corporation, and each person who is or was a director or officer
of the Corporation who at the request of the Corporation is serving or has
served as an officer, director, partner, joint venturer or trustee of another
corporation, partnership, joint venture, trust or other enterprise shall be
indemnified by the Corporation against those expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement which are allowed to be
paid or reimbursed by the Corporation under the laws of the State of Georgia and
which are actually and reasonably incurred in connection with any action, suit,
or proceeding, pending or threatened, whether civil, criminal, administrative or
investigative, in which such person may be involved by reason of his being or
having been a director or officer of this Corporation or of such other
enterprises. Such indemnification shall be made only in accordance with the laws
of the State of Georgia and subject to the conditions prescribed therein.
In any instance where the laws of the State of Georgia permit
indemnification to be provided to persons who are or have been an officer or
director of the Corporation or who are or have been an officer, director,
partner, joint venturer or trustee of any such other enterprise only on a
determination that certain specified standards of conduct have been met, upon
application for indemnification by any such person the Corporation shall
promptly cause such determination to be made (i) by the board of directors by
majority vote of a quorum consisting of directors not at the time parties to the
proceeding; (ii) if a quorum cannot be obtained, by majority vote of a committee
duly designated by the board of directors (in which designation directors who
are parties may participate), consisting solely of two or more directors not at
the time parties to the proceeding; (iii) by special legal counsel selected by
the board of directors or its committee in the manner prescribed in (i) or (ii),
or if a quorum of the board of directors cannot be obtained under (i), and a
committee cannot be designated under (ii), selected by majority vote of the full
board of directors (in which selection directors who are parties may
participate); or (iv) by the shareholders, but shares owned by or voted under
the control of directors who are at the time parties to the proceeding may not
be voted on the determination.
As a condition to any such right of indemnification, the Corporation may
require that it be permitted to participate in the defense of any such action or
proceeding through legal counsel designated by the Corporation and at the
expense of the Corporation.
Section 9.2. Insurance. The Corporation may purchase and maintain
insurance on behalf of any such persons whether or not the Corporation would
have the power to indemnify such officers and directors against any liability
under the laws of the State of Georgia.
Section 9.3. Notice to Shareholders. If any expenses or other amounts are
paid by way of indemnification, other than by court order, action by
shareholders or by an insurance carrier, the Corporation shall provide notice of
such payment to the shareholders in accordance with the provisions of the laws
of the State of Georgia.
8
<PAGE>
ARTICLE 10
GENERAL PROVISIONS
Section 10.1. Dividends. Subject to applicable laws and the provisions of
the Articles of Incorporation relating thereto, if any, dividends may be (i)
declared by the board of directors at any regular or special meeting, and (ii)
paid in cash, in property or in shares of the Corporation's capital stock.
Before declaring any dividend, the board may set aside out of any funds of the
Corporation available for dividends such sums as the directors may from time to
time, in their absolute discretion, think proper as a reserve fund to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the Corporation or for such other purposes as the directors shall
think conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
Section 10.2. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such bank, banks, or other financial
institutions as the Board of Directors may from time to time designate and shall
be drawn out on checks, drafts or other orders signed on behalf of the
Corporation by such person or persons as the Board of Directors may from time to
time designate.
Section 10.3. Contracts and Deeds. All contracts, deeds and other
instruments shall be signed on behalf of the Corporation by the President or by
such other officer, officers, agent or agents as the Board of Directors may from
time to time by resolution provide.
Section 10.4. Seal. The Corporation shall have a corporate seal which
shall have inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal Georgia." The seal may be used by the
Secretary of the Corporation by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced. The board of directors may
from time to time authorize any other officer to affix the seal of the
Corporation and to attest to such affixation by his signature.
Section 10.5. Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholder, board of directors, and committees of directors and shall
keep at its registered office or principal place of business, or at the office
of its transfer agent or registrar, a record of its shareholders, giving the
names and addresses of all shareholders, and the number, class and series, if
any, of the shares held by each.
Section 10.6. ByLaw Amendments. These bylaws may be altered, amended, or
repealed or new bylaws may be adopted by the board of directors or the
shareholders. Any bylaws adopted by the board of directors may be altered,
amended or repealed by the board of directors or the shareholders, but new
bylaws adopted by the shareholders may be altered, amended or repealed only by
the shareholders.
9
<PAGE>
EXHIBIT 4
Form of Stock Certificate
UB&T FINANCIAL SERVICES CORPORATION
Incorporated Under The Laws Of The State Of Georgia
NUMBER SHARES
C ________________ ________
Common Stock
$5.00 Par Value
CUSIP #902585 10 8
See Reverse For Certain Definitions
This Certifies that ____________________________ is the owner of
_______________ fully paid and non-assessable shares of the Common Stock of UB&T
FINANCIAL SERVICES CORPORATION, a corporation organized under the laws of the
State of Georgia, transferable only on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are subject to all the terms, conditions and limitations of the
Certificate of Incorporation and the By-laws of the Corporation and amendments
thereto, copies of which are on file with the Corporation, to all of which the
holder, by acceptance hereof, assents.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated: SEAL UB&T FINANCIAL SERVICES CORPORATION
____________________ _______________________
Melissa Y. Deems Sumter R. Nelson
Secretary President
Form of Reverse Side Of Unit Certificate
UB&T FINANCIAL SERVICES CORPORATION
The Corporation will furnish upon request and without charge to each
stockholder the powers, designations, preferences and relative,
participating, optional and other special rights of each class of stock and
series within a class of stock of the Corporation, as well as the
qualifications, limitations and restrictions relating to those preferences
and/or rights. A Stockholder may make the request to the Corporation or to
its Transfer Agent and Registrar.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations;
TEN COM - as tenants in common UNIF GIFT ACT______Custodian_______
<PAGE>
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - - as joint tenants with right of under Uniform Gifts to Minors
Survivorship and not as tenants Act ___________________
In common (State)
Additional abbreviations may also be used though not in the above list.
For value received,______________________ hereby sell, assign and transfer unto
Please insert Social Security or other
Identifying Number of Assignee
_______________________________________
(Please Print Or Typewrite Name And Address, Including Zip Code Of Assignee)
______________________________________________________________________shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _________________ Attorney to transfer the said stock on the books of
the within-named Corporation with the full power of substitution in the
premises.
Dated, __________________________-
X__________________________________
(Signature)
X__________________________________
(Signature)
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
EXHIBIT 22
SUBSIDIARIES OF UB&T FINANCIAL SERVICES CORPORATION
Name Jurisdiction of Organization
- ---- ----------------------------
United Bank & Trust Company Georgia
Page 7 of 10 Pages
Exhibit Index on Page 6
<PAGE>
EXHIBIT 99.1
FINANCIAL STATEMENTS OF UNITED BANK & TRUST COMPANY
Page 8 of l0 Pages
Exhibit Index on Page 6
<PAGE>
UNITED BANK AND TRUST COMPANY
Financial Statements
December 31, 1997 and 1996
With Independent Auditors' Report Thereon
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
United Bank and Trust Company:
We have audited the accompanying balance sheets of United Bank and Trust Company
as of December 31, 1997 and 1996, and the related statements of income,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1997. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United Bank and Trust Company
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997 in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 20, 1998
<PAGE>
UNITED BANK AND TRUST COMPANY
Balance Sheets
December 31, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1997 1996
------ ----------- ----------
<S> <C> <C>
Cash and due from banks, including Federal reserve
requirements of $125,000 in 1997 and 1996 $ 895,370 1,380,146
Federal funds sold 1,621,174 935,000
Interest-bearing deposits with other banks 286,505 883,042
Investment securities available for sale (notes 2 and 6) 13,581,664 14,915,929
Loans (notes 3 and 6) 22,757,060 17,944,977
Less:
Unearned interest and loan fees 13,137 15,528
Allowance for loan losses (note 3) 312,519 239,747
----------- ----------
Loans, net 22,431,404 17,689,702
----------- ----------
Premises and equipment, net (note 4) 2,051,439 2,156,365
Accrued interest receivable 435,056 414,293
Other assets (note 7) 171,851 289,342
----------- ----------
Total assets $41,474,463 38,663,819
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity 1997 1996
------------------------------------ ----------- ----------
<S> <C> <C>
Liabilities:
Deposits:
Noninterest-bearing $ 2,968,293 2,782,973
Interest-bearing (note 5) 32,881,626 28,196,632
----------- ----------
Total deposits 35,849,919 30,979,605
Borrowings (note 6) -- 2,600,000
Accrued interest payable 361,034 290,681
Accrued expenses and other liabilities 136,850 57,814
----------- ----------
Total liabilities 36,347,803 33,928,100
----------- ----------
Shareholders' equity (note 8):
Common stock - $5 par value. Authorized 2,000,000
shares; issued and outstanding 451,105 shares 2,255,525 2,255,525
Surplus 2,187,292 2,187,292
Retained earnings 673,099 411,775
Net unrealized holding gains (losses) on investment securities
available for sale 10,744 (118,873)
----------- ----------
Total shareholders' equity 5,126,660 4,735,719
Commitments (note 3) --
----------- ----------
Total liabilities and shareholders' equity $41,474,463 38,663,819
=========== ==========
</TABLE>
-3-
<PAGE>
UNITED BANK AND TRUST COMPANY
Statements of Income
Years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ----------
<S> <C> <C> <C>
Interest income:
Loans, including fees $2,190,029 1,913,323 1,790,065
Investment securities:
Tax exempt 100,935 82,378 25,423
Taxable 881,476 889,434 505,954
Deposits with other banks 29,436 22,825 29,366
Federal funds sold 20,062 15,790 15,431
---------- --------- ---------
Total interest income 3,221,938 2,923,750 2,366,239
---------- --------- ---------
Interest expense:
Deposits (note 5) 1,381,263 1,205,859 1,009,518
Borrowings 135,429 182,154 44,655
---------- --------- ---------
Total interest expense 1,516,692 1,388,013 1,054,173
---------- --------- ---------
Net interest income 1,705,246 1,535,737 1,312,066
Provision for loan losses (note 3) 93,050 51,500 36,000
---------- --------- ---------
Net interest income after provision
for loan losses 1,612,196 1,484,237 1,276,066
---------- --------- ---------
Other income:
Service charges on deposit accounts 389,210 258,362 213,913
Gain (loss) on sale of investment securities (note 2) 6,554 -- (2,245)
Other operating income 13,107 63,968 31,049
---------- --------- ---------
Total other income 408,871 322,330 242,717
---------- --------- ---------
Other expenses:
Salaries and employee benefits 823,985 780,502 656,933
Net occupancy and equipment expense 278,857 268,450 202,867
Other operating expense (note 9) 425,140 468,341 390,450
---------- --------- ---------
Total other expenses 1,527,982 1,517,293 1,250,250
---------- --------- ---------
Income before income taxes 493,085 289,274 268,533
Income taxes (note 7) 141,540 80,913 80,800
---------- --------- ---------
Net income $ 351,545 208,361 187,733
========== ========= =========
Basic income per common share based on weighted
average common shares outstanding of 451,105
in 1997, 1996, and 1995 $.78 .46 .42
==== === ===
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
UNITED BANK AND TRUST COMPANY
Statements of Shareholders' Equity
Years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Net unrealized holding
Common stock gains (losses) on
-------------------------------- Retained investment securities
Shares Amount Surplus earnings available for sale Total
------- ---------- --------- -------- ---------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 451,105 $2,255,525 2,187,292 83,347 (163,550) 4,362,614
Net income -- -- -- 187,733 -- 187,733
Change in net unrealized gain (loss)
on investment securities available
for sale -- -- -- -- 147,663 147,663
------- ---------- --------- ------- --------- ---------
Balance at December 31, 1995 451,105 2,255,525 2,187,292 271,080 (15,887) 4,698,010
Net income -- -- -- 208,361 -- 208,361
Change in net unrealized gain (loss)
on investment securities available
for sale -- -- -- (102,986) (102,986)
Cash dividends paid ($0.15 per share) -- -- -- (67,666) (67,666)
------- ---------- --------- ------- --------- ---------
Balance at December 31, 1996 451,105 2,255,525 2,187,292 411,775 (118,873) 4,735,719
Net income -- -- -- 351,545 -- 351,545
Change in net unrealized gain (loss)
on investment securities available
for sale -- -- -- -- 129,617 129,617
Cash dividends paid ($0.20 per share) -- -- -- (90,221) -- (90,221)
------- ---------- --------- ------- --------- ---------
Balance at December 31, 1997 451,105 $2,255,525 2,187,292 673,099 10,744 5,126,660
======= ========== ========= ======= ========= =========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
UNITED BANK AND TRUST COMPANY
Statements of Cash Flows
Years ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 351,545 208,361 187,733
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 93,050 51,500 36,000
Depreciation and amortization 158,686 156,958 116,276
Deferred income tax expense (benefit) (6,909) 15,941 13,727
(Gain) loss on sale of investment securities -
available for sale (6,554) -- 2,245
Changes in assets and liabilities:
Increase in accrued interest receivable (20,763) (54,669) (152,284)
Decrease (increase) in other assets 158 126,646 (73,407)
Increase in accrued interest payable 70,353 38,883 102,777
Increase (decrease) in accrued expenses and
other liabilities 79,036 47,588 (73,356)
----------- ---------- ----------
Net cash provided by operating activities 718,602 591,208 159,711
----------- ---------- ----------
Cash flows from investing activities:
Purchase sales of interest-bearing deposits with
other banks -- (685,042) (99,000)
Proceeds from maturities of interest-bearing
deposits with other banks 596,537 -- 385,275
Purchase of investment securities:
Purchase of investment securities - held to maturity -- -- (1,272,766)
Purchase of investment securities - available for sale (7,141,307) (2,351,802) (8,885,775)
Proceeds from calls/maturities of investment securities -
available for sale 2,599,062 1,043,567 1,022,297
Proceeds from paydowns on mortgage-backed securities 369,854 634,999 --
Proceeds from calls/maturities of investment securities -
held to maturity -- -- 1,038,918
Proceeds from sales of investment securities
available for sale 5,705,770 -- 395,701
Net (increase) decrease in loans (4,777,283) (1,619,291) 382,001
Purchase of premises and equipment (49,930) (500,690) (517,950)
----------- ---------- ----------
Net cash used in investing activities (2,697,297) (3,478,259) (7,551,299)
----------- ---------- ----------
</TABLE>
(Continued)
-6-
<PAGE>
UNITED BANK AND TRUST COMPANY
Statements of Cash Flows
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase in demand deposits, NOW
accounts, and savings accounts $ 3,510,634 627,643 4,162,702
Net increase in certificates of deposit 1,359,680 3,498,549 1,042,683
Borrowings from FHLB -- -- 2,600,000
Repayments of FHLB advances (2,600,000) -- (565,000)
Net (decrease) increase in federal funds purchased -- (120,000) 120,000
Dividends paid (90,221) (67,666) --
----------- --------- ---------
Net cash provided by financing activities 2,180,093 3,938,526 7,360,385
----------- --------- ---------
Net increase (decrease) in cash and cash
equivalents 201,398 1,051,475 (31,203)
Cash and cash equivalents at beginning of year 2,315,146 1,263,671 1,294,874
----------- --------- ---------
Cash and cash equivalents at end of year $ 2,516,544 2,315,146 1,263,671
=========== ========= =========
Supplemental disclosures of cash paid during
the year for:
Interest $ 1,458,795 1,349,130 951,396
=========== ========= =========
Income taxes $ 52,141 108,096 142,828
=========== ========= =========
Supplemental disclosure of noncash investing
and financing activities:
Transfer of investment securities held-to-
maturity to available-for-sale category $ -- -- 4,021,560
=========== ========= =========
Sale of real estate, financed with loans
from the Bank $ 59,780 -- --
=========== ========= =========
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
December 31, 1997, 1996, and 1995
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of United Bank and Trust Company
("Bank") conform to generally accepted accounting principles and to general
practices within the banking industry. The following is a description of
the more significant accounting policies.
(a) General
The Bank was incorporated as a banking corporation under the laws of
the State of Georgia on October 27, 1988, for the purpose of
conducting commercial banking business in Polk County, Georgia.
Effective January 16, 1990, upon receipt of approval from the Georgia
Department of Banking and Finance, the Bank commenced operations.
The Bank provides a full range of banking services to individual and
corporate customers in northwest Georgia. The Bank is subject to
competition from other financial institutions and other companies
providing financial services. The Bank is subject to regulations of
certain Federal and state agencies and undergoes periodic examinations
by those regulatory authorities.
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and income and expenses for the period.
Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant
change in the near term relate to the determination of the allowance
for loan losses.
(b) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Bank considers
amounts due from banks and federal funds sold to be cash equivalents.
Generally, federal funds are sold for one-day periods.
(Continued)
-8-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
(c) Investment Securities
Investment securities held-to-maturity are adjusted for amortization
of premiums and accretion of discounts. With the exception of
mortgage-backed securities, purchase premiums and discounts are
amortized and accreted to interest income using the straight-line
method over the period to maturity of the related securities. Interest
income is recognized when earned. If an investment security is sold,
the realized gain or loss on the sale is recognized on the trade date,
based on the net proceeds and the adjusted carrying amount of the
specific security sold.
Mortgage-backed securities are stated at their unpaid principal
balances, net of unamortized purchase premiums and unaccreted purchase
discounts. The purchase premiums and discounts are amortized and
accreted to interest income using a method which approximates a level
yield over the lives of the mortgage-backed securities, taking into
consideration assumed prepayment patterns.
A decline in the fair value below cost of any available-for-sale or
held-to-maturity investment security that is deemed other than
temporary is charged to income resulting in the establishment of a new
cost basis for the security.
(d) Loans
Loans are generally reported at principal amount less unearned
interest, unearned loan fees, and the allowance for loan losses.
Interest income on installment loans made on a discount basis is
recognized using a method which approximates a level yield. Interest
income on all other loans is recognized on a level-yield basis.
Impaired loans are accounted for under the provisions of SFAS 114,
Accounting by Creditors for Impairment of a Loan and SFAS 118,
Accounting by Creditors for Impairment of a Loan-Income Recognition
and Disclosures, which amends the requirements of SFAS 114 regarding
interest income recognition and related disclosure requirements. Under
these provisions, impaired loans are measured based on the present
value of expected future cash flows, discounted at the loan's
effective interest rate, or at the loan's observable market price, or
the fair value of the collateral if the loan is collateral dependent.
At December 31, 1997 and 1996, pursuant to the definitions within SFAS
114 and SFAS 118, the Bank's impaired loans were insignificant.
Additions to the allowance for loan losses are based on management's
evaluation of the loan portfolio under current economic conditions,
value of underlying collateral, past loan loss experience, and such
other factors which, in management's judgment, deserve recognition in
estimating loan losses. Loans are charged off when, in the opinion of
management, such loans are deemed to be uncollectible. Recognized
losses are charged to the allowance, and subsequent recoveries are
added to the allowance.
(Continued)
-9-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
Management believes that the allowance for loan losses is adequate.
While management uses available information to recognize loan losses,
future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the
Bank's allowance for loan losses. Such agencies may require the Bank
to recognize additions to the allowance based on their judgments of
information available to them at the time of their examination.
A substantial portion of the Bank's loans is secured by real estate in
markets in northwest Georgia, including primarily Polk, Paulding,
Floyd, and Bartow Counties. Accordingly, the ultimate collectibility
of a substantial portion of the Bank's loan portfolio is susceptible
to changes in the market conditions in these areas.
Loans on which the accrual of interest has been discontinued are
designated as nonaccrual loans. Accrual of interest on loans is
discontinued when reasonable doubt exists as to the full, timely
collection of interest or principal or they become contractually in
default for 90 days or more as to either interest or principal unless
they are both well secured and in the process of collection. When a
loan is placed on nonaccrual status, previously accrued and
uncollected interest for the year in which the loan is placed on
nonaccrual status is charged to interest income on loans with the
balance, if any, charged to the allowance for possible loan losses,
unless management believes that the accrued interest is recoverable
through the liquidation of collateral.
Loans for which it is probable that the Bank will be unable to collect
all amounts due according to the contractual terms of the note
agreement are considered to be impaired. When a loan is considered to
be impaired, cash receipts are applied under the contractual terms of
the loan agreement, first to principal and then to interest income. A
loan is also considered impaired if its terms are modified in a
troubled debt restructuring after January 1, 1995. For these accruing
impaired loans, cash receipts are typically applied to principal and
interest receivable in accordance with terms of the restructured loan
agreement.
Loan origination fees and certain loan origination costs relating to
loans originated have been deferred and are being recognized using a
method which approximates level yield over the terms of the loans.
(e) Premises and Equipment
Premises and equipment are carried at cost, less accumulated
depreciation, which is computed using the straight-line method over
the estimated useful lives of the related assets.
(Continued)
-10-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
(f) Income Taxes
The Bank accounts for income taxes under the asset and liability
method, whereby deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(g) Reclassifications
Certain reclassifications have been made to the 1996 and 1995
financial statements to conform with classifications adopted in 1997.
(2) Investment Securities
Investment securities available for sale are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury and U.S.
governmental agencies $ 7,492,422 41,290 (7,934) 7,525,778
Mortgage-backed securities 3,785,845 7,700 (73,003) 3,720,542
State and municipal 1,907,065 54,540 (5,761) 1,955,844
Federal Home Loan Bank stock 379,500 -- -- 379,500
----------- ------- ------- ----------
$13,564,832 103,530 86,698 13,581,664
=========== ======= ======= ==========
December 31, 1996
------------------------------------------------
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
----------- ---------- ---------- ----------
U.S. Treasury and U.S.
governmental agencies $ 9,447,523 14,449 80,540 9,381,432
Mortgage-backed securities 3,194,221 8,459 75,164 3,127,516
State and municipal 2,169,083 1,666 48,868 2,121,881
Federal Home Loan Bank stock 285,100 -- -- 285,100
----------- ------- ------- ----------
$15,095,927 24,574 204,572 14,915,929
=========== ======= ======= ==========
</TABLE>
(Continued)
-11-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
The carrying value and estimated fair value of investment securities
available for sale at December 31, 1997, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations with or without
call or prepayment penalties.
Amortized Estimated
cost fair value
----------- ----------
Due after one year through five years $ 1,010,000 1,005,396
Due after five years through ten years 6,115,018 6,151,519
Due after ten years or more 2,274,469 2,324,707
Mortgage-backed securities 3,785,845 3,720,542
Federal Home Loan Bank stock 379,500 379,500
----------- ----------
$13,564,832 13,581,664
=========== ==========
In 1996, there were no sales of investment securities. Proceeds from the
sale of investment securities during 1997 and 1995 were $5,705,770 and
$395,701, respectively. Gross realized gains of $16,012 and gross realized
losses of $9,458 were recorded on sales of investment securities in 1997.
Gross realized losses on the sale of investment securities were $2,245 in
1995.
Investment securities with a carrying value of approximately $-0- and
$4,004,000 at December 31, 1997 and 1996, respectively, were pledged to
secure public funds on deposit. Additionally, all Federal Home Loan Bank
("FHLB") stock has been pledged to secure borrowings from the FHLB.
(3) Loans
The following is a summary of loans by classification at December 31, 1997
and 1996:
1997 1996
----------- ----------
Real estate - 1-4 family residential $ 6,651,373 4,736,989
Real estate - multi-family 560,437 561,166
Real estate - construction 1,035,643 747,356
Other loans secured by real estate 3,610,960 2,329,580
Commercial, financial, and agricultural 5,716,240 5,081,822
Consumer installment and single payment 5,182,407 4,488,064
individual ----------- ----------
$22,757,060 17,944,977
=========== ==========
(Continued)
-12-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
The following is a summary of transactions in the allowance for loan
losses for the years ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Allowance for loan losses, beginning of year $239,747 212,253 213,273
Provision for loan losses 93,050 51,500 36,000
Loans charged off (31,905) (32,012) (43,986)
Recoveries on loans previously charged off 11,627 8,006 6,966
-------- ------- -------
Allowance for loan losses, end of year $312,519 239,747 212,253
======== ======= =======
</TABLE>
Nonaccrual loans at December 31, 1997, 1996, and 1995 amounted to
approximately $45,000, $60,000, and $8,600, respectively.
The Bank has, in the normal course of business, direct and indirect loans
outstanding to various executive officers, directors, and their associates.
The following is a summary of activity during 1997 for such loans:
Balance at December 31, 1996 $1,836,319
New loans 1,106,799
Repayments 1,630,492
----------
Balance at December 31, 1997 $1,312,626
==========
In the normal course of business, the Bank has unfunded commitments to
extend credit and standby letters of credit approximating $2,317,000 and
$30,500, respectively, at December 31, 1997. The Bank uses the same credit
policies in making these commitments as it does for its standard lending
arrangements.
(4) Premises and Equipment
The following is a summary of premises and equipment at December 31, 1997
and 1996:
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Land and land improvements $ 448,506 448,506
Building 1,352,085 1,352,085
Automobile 19,617 19,617
Furniture and equipment 1,051,443 1,001,512
---------- ---------
Total premises and equipment 2,871,651 2,821,720
Less accumulated depreciation 820,212 665,355
---------- ---------
Net premises and equipment $2,051,439 2,156,365
========== =========
</TABLE>
(Continued)
-13-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
(5) Interest-Bearing Deposits
The following is a summary of interest-bearing deposits by classification
at December 31, 1997 and 1996:
1997 1996
----------- ----------
Interest-bearing demand deposits $ 8,313,266 5,116,545
Savings 5,357,270 5,228,676
Time certificates under $100,000 15,884,254 12,522,639
Time certificates of $100,000 and over 3,326,836 5,328,772
----------- ----------
Total interest-bearing deposits $32,881,626 28,196,632
=========== ==========
Interest expense for time certificates of $100,000 and over approximated
$242,000, $181,000, and $129,000 for the years ended December 31, 1997,
1996, and 1995, respectively.
(6) Borrowings
At December 31, 1997, the Bank had available lines of credit commitments
with the FHLB totaling $4,000,000. No advances were outstanding as of
December 31, 1997.
At December 31, 1996, the Bank has pledged, under a blanket floating lien
with the FHLB, all FHLB stock owned by the Bank and certain qualifying
first mortgage loans with unpaid principal balances totaling approximately
$4,633,000.
(7) Income Taxes
The components of income tax expense attributable to income from continuing
operations consist of:
1997 1996 1995
--------- ------ ------
Federal:
Current tax expense $148,449 64,972 67,073
Deferred tax (benefit) expense (6,909) 15,941 13,727
-------- ------ ------
$141,540 80,913 80,800
======== ====== ======
(Continued)
-14-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
Income tax expense for the years ended December 31, 1997, 1996, and 1995
differed from the amounts computed by applying the U.S. Federal income tax
rate of 34% to income before income taxes as follows:
1997 1996 1995
-------- ------ ------
Computed "expected" tax expense $167,649 98,353 91,301
Increase (decrease) in income taxes
resulting from:
Tax-exempt interest (29,134) (23,823) (7,910)
Change in the valuation allowance
for deferred tax assets (5,682)
Other, net 3,025 6,383 3,091
-------- ------ ------
$141,540 80,913 80,800
======== ====== ======
The change in the valuation allowance for deferred tax assets during the
year ended December 31, 1995 resulted from the generation of taxable
income, the availability of tax loss carrybacks, and the expected future
taxable income of the Bank. At December 31, 1997 and 1996, the Bank has
recorded a valuation allowance of $6,973 relating to a portion of its state
gross receipts tax credit carryforwards.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets as of December 31, 1997 and 1996 are
presented below:
1997 1996
-------- --------
Deferred tax assets:
Unrealized holding losses on investment
securities available for sale $ -- 61,125
Provision for loan losses 102,719 76,419
State gross receipts tax credit carryforwards 16,715 11,549
------- -------
Total gross deferred tax assets 119,434 149,093
Less valuation allowance 6,973 6,973
------- -------
112,461 142,120
------- -------
Deferred tax liabilities:
Depreciation (52,012) (27,455)
Unrealized holding gains on investment
securities available for sale (5,648)
-------
Total gross deferred tax liabilities (57,660) (27,455)
------- -------
Net deferred tax assets $ 54,801 114,665
======= =======
The Bank has approximately $25,000 in state gross receipts tax credits for
state income tax purposes which expire through the year 2009.
(Continued)
-15-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
(8) Regulatory Matters
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework of prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory accounting practices.
The Bank's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings,
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined) to average assets (as
defined). Management believes, as of December 31, 1997, that the Bank meets
all capital adequacy requirements to which it is subject.
As of December 31, 1997, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum total risk-
based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the
table below. There are no conditions or events since that notification that
management believes have changed the Bank's capital category.
The Bank's actual capital amounts and ratios are also presented in the
table below:
<TABLE>
<CAPTION>
Minimum to be well
capitalized under
Minimum for capital prompt corrective
Actual adequacy purposes action provisions
------------------- -------------------- --------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total risk-based capital
(to risk-weighted assets) $5,429,000 20.36 $2,132,720 8.00 $2,665,900 10.00
Tier 1 capital - risk-based
(to risk-weighted assets) 5,116,000 19.19 1,064,360 4.00 1,559,540 6.00
Tier 1 capital - leverage
(to average assets) 5,116,000 12.17 1,682,080 4.00 2,102,600 5.00
As of December 31, 1996:
Total risk-based capital
(to risk-weighted assets) 5,094,000 23.00 1,734,320 8.00 2,167,900 10.00
Tier 1 capital - risk-based
(to risk-weighted assets) 4,855,000 22.00 867,160 4.00 1,300,740 6.00
Tier 1 capital - leverage
(to average assets) 4,855,000 12.78 1,519,480 4.00 1,899,350 5.00
</TABLE>
The Bank is restricted, without prior regulatory approval, in the payment
of cash dividends to 50% of the prior year's net income, subject to
maintenance of required capital.
(Continued)
-16-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
(9) Supplemental Financial Data
Components of other operating expense in excess of 1% of gross income for
the respective years are as follows:
Years ended December 31,
------------------------
1997 1996 1995
-------- ------ ------
Expenses:
Legal and professional fees $45,152 60,716 28,107
Stationery and supplies 43,267 48,831 43,539
Director fees 42,700 42,500 41,500
FDIC fees and other insurance 26,673 22,327 29,868
======= ====== ======
(10) Fair Value of Financial Instruments
SFAS 107, Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments, whether
or not recognized on the face of the balance sheet, for which it is
practicable to estimate that value. Fair value estimates are made at a
specific point in time, based on relevant market information and
information about the financial instrument. These estimates do not reflect
any premium or discount that could result from offering for sale at one
time the Bank's entire holdings of a particular financial instrument.
Because no market exists for a portion of the Bank's financial instruments,
fair value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments, and other factors. These estimates are subjective in
nature and involves uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision. Changes in assumptions
could significantly affect the estimates. Fair value estimates are based on
existing on-and-off balance sheet financial instruments without attempting
to estimate the value of anticipated future business and the value of
assets and liabilities that are not considered financial instruments. In
addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in any of the estimates. The
assumptions used in the estimation of the fair value of the Bank's
financial instruments are explained below. Where quoted market prices are
not available, fair values are based on estimates using discounted cash
flow and other valuation techniques. Discounted cash flows can be
significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. The following fair value estimates
cannot be substantiated by comparison to independent markets and should not
be considered representative of the liquidation value of the Bank's
financial instruments, but rather a good-faith estimate of the fair value
of financial instruments held by the Bank. SFAS 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements.
(Continued)
-17-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
The following methods and assumptions were used by the Bank in estimating
the fair value of its financial instruments:
(a) Cash and Due from Banks, Federal Funds Sold, and Interest-Bearing
Deposits with Other Banks
Fair value equals the carrying value of such assets.
(b) Investment Securities
The fair value of investment securities is based on quoted market
prices, where available. If quoted market prices are not
available, fair value is based on quoted market prices of
comparable instruments.
(c) Loans
The fair value of loans is calculated using discounted cash flows
by loan type. The discount rate used to determine the present
value of the loan portfolio is an estimated market discount rate
that reflects the credit and interest rate risk inherent in the
loan portfolio. The estimated maturity is based on the Bank's
historical experience with repayments adjusted to estimate the
effect of current market conditions. The carrying amount of
accrued interest approximates its fair value.
(d) Deposits
As required by SFAS 107, the fair value of deposits with no
stated maturity, such as noninterest-bearing demand deposits, NOW
accounts, savings, and money market deposit accounts, is equal to
the carrying value. Certificates of deposit have been valued
using discounted cash flows. The discount rate used is based on
estimated market rates for deposits of similar remaining
maturities. The carrying amount of accrued interest payable
approximates its fair value.
(e) Borrowings
The fair value of borrowings approximates the carrying value as
the borrowings are at a variable rate of interest.
(Continued)
-18-
<PAGE>
UNITED BANK AND TRUST COMPANY
Notes to Financial Statements
The carrying value and estimated fair value of the Bank's financial
instruments at December 31, 1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
--------------------- ---------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 895 895 1,380 1,380
======= ====== ======== ========
Federal funds sold $ 1,621 1,621 935 935
======= ====== ======== ========
Interest-bearing deposits
with other banks $ 287 287 883 883
======= ====== ======== ========
Investment securities $13,582 13,582 14,916 14,916
======= ====== ======== ========
Loans, net $22,431 17,690 17,477
======= ======== ========
Financial liabilities:
Deposits $35,850 30,980 31,108
======= ======== ========
FHLB borrowings $ -- -- 2,600 2,600
======= ====== ======== ========
</TABLE>
-19-
<PAGE>
EXHIBIT 99.2
DESCRIPTION OF CAPITAL STOCK OF
UB&T FINANCIAL SERVICES CORPORATION
The following information concerning the Company's capital stock summarizes
certain provisions of the Company's Articles of Incorporation and Bylaws and
certain statutes regulating the rights of holders of Company capital stock. The
information does not purport to be a complete description of such matters and is
qualified in all respects by the provisions of the Company's Articles of
Incorporation and Bylaws and the corporate laws of the State of Georgia.
GENERALLY. The Company's Articles of Incorporation authorize the Company's
Board of Directors to issue a maximum of 10,000,000 shares of $5.00 par value
common stock. As of September 1, 1998, 451,105 shares were issued and
outstanding.
DIVIDEND RIGHTS. The Board of Directors of the Company is empowered to pay
such dividends at such time as they may deem appropriate out of funds legally
available for the payment of dividends. Shareholders should, however, be aware
that the only current source of funds with which the Company could pay dividends
would be from amounts received as dividends from the Company's wholly owned
subsidiary, United Bank & Trust Company.
VOTING RIGHTS. The holders of Common Stock are entitled to one vote for
each share of Common Stock held. The holders of the Common Stock are not
entitled to cumulative voting rights in the election of directors, which means
that the holders of more than 50% of the shares of the Common Stock voting in
the election of directors (subject to the voting rights of any preferred shares
then outstanding) can elect all of the directors then standing for election if
they choose to do so and, in such event, the holders of the remaining less than
50% of the shares voting for the election of directors are not able to elect any
person or persons to the Board.
PREEMPTIVE RIGHTS. The holders of Common Stock do not have any preemptive
or preferential right to purchase or to subscribe for any additional shares of
Common Stock or any other securities that may be issued by the Company.
ASSESSMENT AND REDEMPTION. The shares of Common Stock presently
outstanding are fully paid and nonassessable. There is no provision for
redemption or conversion of Common Stock.
LIQUIDATION RIGHTS. In the event of liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the holders of the Common
Stock (and the holders of any class or series of stock entitled to participate
with the Common Stock in the distribution of assets) will be entitled to share
ratably in any of the net assets or funds which are available for distribution
to shareholders after the satisfaction of all liabilities or after adequate
provision is made therefor and
Page 9 of 10 Pages
Exhibit Index on Page 6
<PAGE>
after distribution to holders of any class of stock having preference over the
Common Stock in liquidation.
Page 10 of 10 Pages
Exhibit Index on Page 6
