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As Originally filed with the Securities and Exchange Commission on
September 30, 1998 Registration File No. 333-64815
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
JACKSONVILLE BANCORP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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Florida 6711 59-3472981
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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13245 Atlantic Boulevard Suite #5, Jacksonville,
Florida 32225 (904) 220-3001 (Address, including zip code, and
telephone number, including area code, of Registrant principal
executive offices)
Victor M. George
President, Chief Executive Officer
13245 Atlantic Boulevard, Suite #5
Jacksonville, Florida 32225
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(904) 220-3001
COPIES REQUESTED TO:
A. George Igler, Esquire
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
(850) 878-2411
(850) 878-1230 (facsimile)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933 check the following box. |_|
If this Form is filed to register additional securities for an Offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Title of Proposed Proposed
Each Class of Amount Maximum Maximum
Securities to Be to be Offering Aggregate Amount of
Registered Registered Price Per Share Offering Price (1) Registration Fee
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Common Stock $.01 par value................. 1,500,000 $ 10.00 $ 15,000,000 $ 4,425
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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UP TO 1,500,000 SHARES
COMMON STOCK
MINIMUM: 800,000 SHARES ----- MAXIMUM: 1,500,000 SHARES
JACKSONVILLE BANCORP, INC.
A PROPOSED BANK HOLDING COMPANY
FOR
THE JACKSONVILLE BANK
JACKSONVILLE, FLORIDA
A PROPOSED STATE-CHARTERED BANK
JACKSONVILLE BANCORP, INC., a Florida corporation ("Company"), hereby
offers for sale a minimum of 800,000 shares and a maximum of 1,500,000 shares at
a price of $10.00 per share (the "Offering"). During the Offering Period, which
is defined as the 45-day period following the effective date ("Effective Date")
of the Registration Statement filed under the Securities Act of 1933, as amended
("33 Act"), and any extension by the Company, in its sole discretion not to
exceed 130 days, 1,500,000 shares of common stock, par value $0.01 ("Common
Stock") will be offered at a price of $10.00 per share. The minimum number of
shares that an individual may be purchased is 250 ($2,500). Actual sales of
Common Stock to the public are expected to be made beginning on or about
February 3, 1999, and end on or about March 19, 1999. The Company has engaged
Keefe, Bruyette & Woods, Inc. ("KBW"), registered broker-dealer, to act as sales
agent to the Company with respect to the Offering. KBW has agreed to use its
best efforts to solicit subscriptions and purchase orders for shares of Common
Stock in the Offering. KBW has selected certain broker-dealers to assist in the
Offering. Neither KBW nor any selected broker-dealer shall have any obligation
to take or purchase any shares of Common Stock in the Offering. All subscription
funds tendered during the Offering Period will be deposited in an
interest-bearing escrow account with the Independent Banker's Bank of Florida
("Escrow Agent"). The Offering will be terminated and all subscription funds,
together with any interest earned thereon, will be promptly returned if final
regulatory approval to commence a banking operations has not been granted or the
minimum number of shares have not been subscribed to by the end of the Offering
Period, July 30, 1999, the latest date on which the subscription funds might be
held in escrow. Subscriptions obtained in the Offering may be accepted or
rejected, in whole or in part, by the Company for any reason. ONCE SUBSCRIPTION
FUNDS HAVE BEEN RELEASED BY THE ESCROW AGENT AND SHARES OF COMMON STOCK HAVE
BEEN ISSUED, IN THE EVENT THE OFFERING IS TERMINATED BECAUSE OF THE COMPANY'S
FAILURE TO SATISFY THE CONDITIONAL REGULATORY APPROVALS, SUBSCRIBERS WILL NOT
RECEIVE A FULL REFUND OF THEIR SUBSCRIPTION PAYMENT. SEE "TERMS OF THE
OFFERING".
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF THOSE RISKS
THAT MANAGEMENT BELIEVES PRESENT THE SUBSTANTIAL RISKS TO AN INVESTOR IN THIS
OFFERING.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION, THE FLORIDA DEPARTMENT OF BANKING AND FINANCE, OR ANY OTHER FEDERAL
OR STATE REGULATORY AGENCY, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE UNDERWRITING
TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) THE COMPANY(3)
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Per Share Minimum.................................. $ 10.00 $ .57 $ 9.43
Per Share Maximum.................................. $ 10.00 $ .61 $ 9.39
Minimum Offering................................... $ 8,000,000.00 $ 430,000.00 $ 7,570,000.00
Maximum Offering................................... $15,000,000.00 $ 930,000.00 $14,070,000.00
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(1) The Offering price was arbitrarily determined by the Board of Directors of
the Company and does not bear any relationship to the Company's assets,
book value, net worth or any other recog nized criteria of value.
(2) Consists of estimated commissions to be paid to KBW and selected brokers in
connection with the Offering, estimated at $440,000 if the minimum amount
of shares is sold, and $930,000 if the maximum amount of shares is sold,
including commissions. No underwriter's commission will be paid for sales
to officers, directors, and family members of officers and directors of
both the Company and the Bank. A 5.5% underwriter's commission will be paid
for sales to the public. For the purposes of the above table, the amount is
based upon the number of shares the Organizers have indicated that they
intend to purchase 178,500 shares ($ 1,785,000) for which no commission is
being charged. Excluded from the above amount are the organizational
expenses of the Company, which are estimated to be approximately $500,000.
See "USE OF PROCEEDS" for the assumptions used to arrive at these
estimates.
(3) If payment in cash for 800,000 shares is not received prior to the
end of the Offering Period, the Offering will terminate and all
subscription funds, together with any interest earned thereon, will be
promptly returned to subscribers. All purchases of shares by the Company's
Organizers and Directors will be subject to affiliate resale limitations
under the 33 Act and their purchases as described herein will be made on
the same terms, as those made by other investors. The Organizers and
Directors of the Company have represented to the Company that their
purchases of Common Stock will be made for investment purposes only and not
with a view to resell such shares See "RISK FACTORS," "TERMS OF THE
OFFERING," and "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
The Company is a "development stage company" with no prior operating
history. See "RISK FACTORS - Start-up Enterprise Lack of Operating History."
Prior to this Offering, there has been no public market for the Common Stock.
KBW has advised the Company that it anticipates making a market for
the Common Stock following completion of the Offering. The Company expects that
quotations for its Common Stock will be reported on the "Over-the-Counter
Bulletin Board" under the symbol "JAXBC". There can be no assurance that an
active trading market for such stock will develop.
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Keefe, Bruyette & Woods, Inc. J.P. Turner & Company, LLC
Capital Research Ashtin Kelly & Co.
The date of this Prospectus is February __, 1999.
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[FLORIDA/JACKSONVILLE MAP]
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AVAILABLE INFORMATION
Prior to the Offering, the Company has not been required to file
reports under the Securities Exchange Act of 1934 ("Exchange Act").
The Company has filed electronically with the Securities and Exchange
Commission ("Commission") through its Electronic Data Gathering Analysis and
Retrieval ("EDGAR") system, a Registration Statement on Form SB-2 (together will
all exhibits and schedules thereto, the "Registration Statement") under the 33
Act with respect to the registration of the shares offered by this Prospectus.
This Prospectus does not contain all of the information set forth in such
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information pertaining to the shares offered by this Prospectus and
related matters, reference is made to the Registration Statement, including the
exhibits filed as a part thereof.
The Registration Statement filed electronically with EDGAR by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at its Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a web site that contains
registration statements, reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The Company's complete Registration Statement is available for review on this
Web Site. The address of the Web Site is http://www.sec.gov. Copies of exhibits
may also be obtained by written request addressed to: Victor M. George,
President and Chief Executive Officer, Jacksonville Bancorp, Inc., 13245
Atlantic Boulevard, Suite 5, Jacksonville, Florida 32225, telephone number (904)
220-3001.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish annual reports to its shareholders which
will contain audited financial statements and quarterly reports which contain
unaudited financial statements. In addition, the Company will be required, under
section 15(d) of the Exchange Act, to file annual and quarterly reports with the
Commission. Copies of such reports will be available to the Company's
shareholders.
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PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information and
financial statements appearing elsewhere in this Prospectus. Prospective
investors are urged to read the entire Prospectus carefully. This Prospectus
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results may differ materially from the results discussed in
these statements. Factors which might cause such differences include, but are
not limited to, those discussed in "Risk Factors" beginning on Page 7.
RISK FACTORS
The securities offered hereby may be deemed to be speculative and
involve certain risks such as:
- - Start-up Enterprise -- Lack of Operating History
- - Failure of the Bank to Commence Operations;
Possible Loss of Subscription Funds
- - Financial Position of the Company and Expected
Lack of Initial Profitability
- - Highly Competitive Banking Market
- - Unpredictable Economic Conditions
- - Governmental Regulations for Protection of
Depositors
- - No Plans to Pay Dividends in the
Foreseeable Future
- - Intended Purchases by Organizers and Directors
- - Failure to Receive Regulatory Approvals; Possible
Loss of Subscription Funds
- - Possible Creditors Claims Against the Company
- - Anti-takeover Provision in Company's
Articles of Incorporation
- - No Established Market for Shares; Limited
Investment Liquidity
- - Arbitrary Determination of Offering Price
- - Dependency on Key Management
- - Absence of Preemptive Rights
- - Year 2000; Potential Adverse Effect on Business,
Financial Condition on Results of Operations
- - Preferred Stock; Shareholder Approval Not
Required
For these and other reasons, the purchase of the Common Stock is highly
speculative and involves significant investment risks. A prospective investor
should carefully consider the matters set forth under "RISK FACTORS" and should
be prepared to lose his or her entire investment.
THE COMPANY
Jacksonville Bancorp, Inc. was organized under the laws of the State of
Florida on October 24, 1997, for the purpose of operating as a bank holding
company pursuant to the Federal Bank Holding Company Act of 1956, as amended
("BHC Act"). In order to fund the organizational and preopening expenses of the
proposed bank, The Jacksonville Bank ("Bank") and the Company, estimated to be
approximately $700,000, one Organizer, R. C. Mills, has loaned the Company
$150,000, which the other ten Organizers have, on a pro-rata basis, guaranteed
to pay if the minimum Offering is not raised. The loan is at 8.5% interest and
will be repaid from the proceeds of the Offering. Through September 30, 1998,
the Company has expended $385,000 for such expenses. See "TERMS OF THE OFFERING
- - Purchases by Organizers and Directors of the Company." The Company intends to
use the minimum net proceeds of this Offering to purchase 100% of the common
stock to be issued by the Bank, to repay organizational expenses and for other
general corporate purposes. Neither the Company nor the Bank has commenced
business operations, and neither will do so until the Offering is completed and
the preliminary approvals of the Florida Department of Banking and Finance
("Department"), the Federal Deposit Insurance Corporation ("FDIC") and the Board
of Governors of the Federal Reserve System ("Federal Reserve") have been
satisfied. The main office of the Company and the Bank will be located in
Jacksonville, Duval County, Florida. The Company's mailing and temporary address
during the organizational period is 13245 Atlantic Boulevard, Suite 5,
Jacksonville, Florida 32225 and the telephone number is (904) 220-3001. See "THE
COMPANY."
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THE BANK
It is anticipated that the Bank will commence business operations at
the beginning of the second quarter of 1999, or as soon thereafter as
practicable. The Bank will engage in a general commercial and retail banking
business with primary emphasis upon high quality service to meet the financial
needs of the individuals and businesses residing and located in and around
Jacksonville, Florida. As part of its regular business operations, the Bank will
offer a full compliment of loans, including commercial, consumer/installment and
real estate loans. Commercial loans are expected to account for approximately
one-half of the Bank's estimated total loan portfolio. Commercial loans are
loans made to individual, partnership or corporate borrowers for a variety of
business purposes. Because of the nature of these types of loans, there exists a
higher risk of loss in this category of loan. To the extent that borrowers fail
to repay their loans, such failure may have a material adverse effect on the
Bank's and the Company's earnings and overall financial condition, as well as,
the value of the Common Stock. See "BUSINESS OF THE COMPANY."
The Bank will initially open with two full-service bank facilities.
The Bank's main office facility, which is expected to be ready for occupancy on
or about March 1, 1999, is located at 10325 San Jose Boulevard, Jacksonville,
Florida 32257. The main facility was initially purchased by the Company, during
the organizational phase, but will be transferred to the Bank on or before the
date of occupancy. The Bank's branch office (currently used as the
organizational offices) is located at 13245 Atlantic Boulevard, Suite 5,
Jacksonville, Florida 32225. The Company has entered into a lease agreement with
Joandy Road Partnership Corporation, d/b/a Harbour Village, for the branch
facility. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION."
TERMS AND CONDITIONS OF THE OFFERING
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Shares Offered................................. Up to 1,500,000 shares are being offered. A minimum of 800,000
shares are required to be sold in this Offering. See "TERMS OF
THE OFFERING."
Common Stock
Outstanding After the Offering................. Minimum - 800,000 Shares
Maximum - 1,500,000 Shares
Price.......................................... $10.00 per share.
Use of Proceeds................................ Proceeds of the Offering will be used to purchase 100% of the
issued and outstanding capital stock of the Bank; to provide
working capital for the Bank to commence its business operations
(including employees' salaries); to pay expenses in connection
with the formation of the Company, the organization of the Bank,
and this Offering; to pay commissions to KBW; and for
other corporate purposes of the Company. Proceeds not used to
purchase Bank stock will be retained by the Company and will be
used as working capital for general corporate purposes and to fund
future capital requirements of the Bank. See "USE OF
PROCEEDS."
Conditions of the Offering..................... The Offering will expire 45 days from the Effective Date of
Registration, unless extended for up to an additional 133 days by
the Company. Funds received by the Company during the
Offering Period will be deposited with the Escrow Agent. Funds
so deposited may be released to the Company only in accordance
with the terms of the Escrow Agreement between the Company
and the Escrow Agent. The Offering will be terminated by the
Company at the end of the Offering Period if subscriptions for
800,000 shares have not been received and deposited with the
Escrow Agent or if final approval to commence banking operations
has not granted, or
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the Company has canceled the Offering prior to withdrawing funds
from the Escrow Account.
Purchase Limitation............................ The Company reserves the right to reject any purchases, in whole
or in part. The minimum number of shares of Common Stock is
250 shares. The maximum number any person (other than the
Organizers and Directors) may individually or in the aggregate
with related persons may purchase is 40,000 shares, or 5% of the
total number of shares issued or subscribed for at the time the
subscription is received by the Company during the Offering
Period, whichever is greater.
Expiration Date................................ March 19, 1999, unless extended at the sole discretion by the
Company for an additional 133 days.
Sales Agent.................................... The shares are being offered on a "best efforts" basis. The
Company has entered into a Sales Agency Agreement with KBW
to act as Sales Agent for the Company in this Offering and has agreed
to pay certain commissions, fees and expenses to the Sales Agent for its
services. Further, KBW has engaged certain selected registered broker-dealers
to assist it in the Offer. In addition, the Company has agreed to indemnify
the Sales Agents against civil liabilities, including those which may arise
under the 33 Act. See "SALES AGENT".
Escrow Agent................................... Independent Bankers Bank of Florida, 615 Crescent Executive Court, Suite 400,
Lake Mary, Florida 32795-8423, telephone number (407) 541-1699.
Information About the Offering................. Questions concerning this Offering should be directed to the Stock
Sales Center at the toll-free number 1-877-298-6520.
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RISK FACTORS
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD GIVE CAREFUL ATTENTION
TO THE FOLLOWING STATEMENTS RESPECTING CERTAIN RISKS APPLICABLE TO THE OFFERING,
WHICH RISKS INCLUDE BUT ARE NOT LIMITED TO THOSE NOTED BELOW. OTHER FACTORS OF
IMPORTANCE ARE SET OUT ELSEWHERE IN THIS PROSPECTUS.
START-UP ENTERPRISE - LACK OF OPERATING HISTORY
Neither the Company nor the Bank has commenced business operations.
Both are newly organized entities with no operating history. The business of the
Company and the Bank is therefore subject to the risks associated with new
businesses, including initial unplanned lack of profitability, greater than
usual financial sensitivity to adverse economic conditions, and the potential
inability to raise additional capital when needed. In addition, because the Bank
has not commenced operations, investors will not have the information normally
associated with investments in a financial institution with a history of
operations, and therefore have less information upon which to make an investment
decision. The Company's profitability will depend primarily on the operations of
the Bank. Therefore, without any operating history there can be no assurance the
Company will ever be profitable. If the Bank ultimately is unsuccessful, the
Company will not be successful and there is no assurance that shareholders will
recover some or any of their investment in the Common Stock. Therefore, no one
should invest in Common Stock offered in the offering unless he or she is in a
position to lose the entire amount of his or her investment without a material
adverse effect on his or her financial position.
FAILURE OF THE BANK TO COMMENCE OPERATIONS; POSSIBLE LOSS OF SUBSCRIPTION FUNDS
Before the Bank can open for business it must obtain final approval
from both the Department and the FDIC. In the event that the Company issues
shares of Common Stock and such final approvals are not obtained, the Company
will return to subscribers only those funds remaining after deduction for
expenses incurred by the Company for this Offering and the organizational and
preopening expenses of the Company and the Bank. In the event final regulatory
approvals are not obtained, subscribers will be entitled to a return of only a
portion of their subscription funds. As of September 30, 1998, the Company's
accumulated deficit was $385,000, and the Company will continue to incur
pre-opening expenses until the Bank commences operations. It is estimated that
the Company will expend as much as $700,000 during the organizational stage and
in the event of liquidation, incur other costs of as much as $300,000 or a total
of $1.00 per share based upon the minimum of 800,000 shares. No assurances can
be given that such expenses and costs will not significantly exceed this
estimate. See, "TERMS OF THE OFFERING - Failure of Bank to Commence Operations."
FINANCIAL POSITION OF THE COMPANY AND EXPECTED LACK OF INITIAL PROFITABILITY
The initial activity of the Company will be to act as the sole
shareholder of the Bank. Thus, the profitability of the Company will be
dependent upon the successful operation of the Bank. Typically, new banks are
not profitable in the first year of operation and sometimes are not profitable
for several years. The Bank will incur significant expenses in establishing
itself as a going concern and there can be no assurance that the Bank will be
operated profitably or that future earnings, if any, will meet the levels of
earnings prevailing in the banking industry. As of September 30, 1998, the
Company's accumulated deficit was $385,000, and the Company will continue to
incur pre-opening expenses until the Bank commences operations. It is estimated
that the Company will expend as much as $700,000 during the organizational
stage.
HIGHLY COMPETITIVE BANKING MARKET
The Bank will engage in a general commercial and retail banking business in
Jacksonville, Duval County, Florida. Competition among financial institutions in
the Bank's primary market area is intense. The Bank will compete with other
state banks, consumer finance companies, money market mutual funds, and other
financial institutions which have far greater financial resources than those
available to the Bank. Additionally, the Bank will compete with banks, savings
institutions and credit unions located in nearby markets which solicit business
from the Bank's primary market area. If the Bank is unable to compete for
deposits effectively in its primary market area, such inability would likely
have an adverse effect on the Bank's potential for growth and profitability. See
"BUSINESS OF THE COMPANY - Market Area and Competition."
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UNPREDICTABLE ECONOMIC CONDITIONS
Commercial banks and other financial institutions are affected by
economic and political conditions, both domestic and international, and by
governmental monetary policies. Conditions such as inflation, recession,
unemployment, high interest rates, short money supply, international disorders
and other factors beyond the control of the Company and the Bank may adversely
affect their profitability. See "BUSINESS OF THE COMPANY - Monetary Policies."
GOVERNMENTAL REGULATIONS FOR PROTECTION OF DEPOSITORS
The Company and the Bank will operate in a highly regulated environment
and will be subject to supervision by several governmental regulatory agencies,
including the Federal Reserve, the Department, the FDIC and the Commission. The
regulations governing the Company and the Bank are intended to protect
depositors, not shareholders. The Company and the Bank will be vulnerable to
future legislation and government policy, including bank deregulation and
interstate expansion, which could adversely affect the banking industry as a
whole, including the operations of the Company and the Bank. See "SUPERVISION
AND REGULATION."
NO PLANS TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
It is not anticipated that the Company will distribute any dividends to
shareholders in the foreseeable future. Earnings of the Bank, if any, are
expected to be retained by the Bank to enhance its capital structure or
distributed to the Company to defray its operating costs. Dividend distributions
of state banks are restricted by statute and regulation.
See "DIVIDEND POLICY."
INTENDED PURCHASES BY ORGANIZERS AND DIRECTORS
The Organizers and Directors have indicated that they intend to
purchase 178,500 shares in the Offering, which will equal 22.3% of the minimum
of 800,000 shares required in order to release subscription proceeds from the
Escrow Account. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS." The Organizers and
Directors may purchase additional shares in the Offering. The ownership of more
than 25% of the Company's shares would virtually assure control of the election
of directors of the Company in future years. Therefore, to the extent that the
Organizers and Directors vote together after the Offering, they will have the
ability to exert significant influence over the election of the Company's Board
of Directors, as well as the affairs and policies of the Company. Such control
could be used, for example, to help prevent an acquisition of the Company,
thereby precluding shareholders from possibly realizing a premium that may be
offered for the Company's Common Stock by a potential acquiror. No single
individual investor, other than individual Organizers and Directors, may
subscribe for more than 5% of the total number of shares issued or subscribed
for at the time a subscription is received by the Company during the Offering
Period. The Organizers and Directors have represented to the Company that all
purchases of Common Stock will be made for investment purposes only and not with
a view to resell such shares. See "TERMS OF THE OFFERING - Purchases by
Organizers of the Company."
FAILURE TO RECEIVE REGULATORY APPROVALS; POSSIBLE LOSS OF SUBSCRIPTION FUNDS
Although the Company and the Bank have applied for all regulatory
approvals required to commence operations, final regulatory approval to commence
banking operations will not be obtained until the Company has expended a portion
of the proceeds of this Offering to employ personnel, rent temporary office
space and pay other pre-opening expenses. The Company received conditional
approval of the Bank's charter from the Florida Department of Banking and
Finance ("Department") on October 1, 1998, FDIC conditional approval of its
application for deposit insurance on December 3, 1998, and conditional approval
of application with the Federal Reserve Bank of Atlanta ("Federal Reserve") to
become a one-bank holding company on December 16, 1998.
The only nonstandard condition was issued by the FDIC requiring that
the Bank select a Chief Financial Officer acceptable to the FDIC prior to the
Bank opening for business. The Company has hired an experienced Chief Financial
Officer whom the FDIC has indicated is acceptable.
In the event that the Company issues the shares of Common Stock and
final approval to commence banking operations is not granted by July 30, 1999,
the Company will solicit shareholder approval for its dissolution and
liquidation. In such event, the Company will promptly return to subscribers all
subscription funds and interest earned thereon, less all expenses incurred by
the Company, including the Offering expenses, the organizational and pre-opening
expenses of the Company and the Bank. In the event of dissolution and
liquidation, it is likely that subscribers will receive only a portion of their
initial
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investment due to the foregoing expenses. See "TERMS OF THE OFFERING - Failure
of Bank to Commence Operations."
POSSIBLE CREDITORS CLAIMS AGAINST THE COMPANY
When the shares of Common Stock offered hereby are issued, the Offering
proceeds may be considered part of general corporate funds and thus may be
subject to the claims of creditors of the Company, including claims against the
Company that may arise out of actions of the Company's officers, directors, or
employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to refund the
subscription proceeds to shareholders because of the failure to open the Bank,
the refund process might be delayed and will be reduced by the amount of the
attachment.
ANTI-TAKEOVER PROVISIONS OF COMPANY'S ARTICLES OF INCORPORATION
The Company's Articles of Incorporation ("Articles") contain provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions which are not approved by the Board of Directors. The
effect of these provisions is to make it more difficult to effect a merger, sale
of control or similar transaction involving the Company, even though a majority
of the Company's shareholders may vote in favor of such a transaction. In
addition, the Articles provide for classes of Directors, whereby one-third of
the members of the Board of Directors shall be elected each year and each
director of the Company will serve for a term of three years. Finally, the
Articles provide that Florida's Control-Share Acquisition Statute shall apply to
acquisitions of control shares, as defined therein, of the Company's Common
Stock. The effect of these provisions is to make it more difficult to effect a
change in control of the Company through the acquisition of a large block of the
Company's Common Stock. See "SUMMARY OF ARTICLES OF INCORPORATION" and "Appendix
A."
NO ESTABLISHED MARKET FOR SHARES; LIMITED INVESTMENT LIQUIDITY
Presently there is no established market for the Common Stock. The
Company expects that the quotations for the Common Stock will be traded on the
Over-the-Counter Bulletin Board and its stock price quotation will be displayed
on the "Electronic Pink Sheet System" under the symbol "JAXBC". It is the
Company's intent, however, to apply to the National Automated Quotation System
("NASDAQ") to have its securities listed on the NASDAQ Small Cap Market as soon
as all of the qualification requirements are met. KBW has advised the Company
that, upon completion of this Offering, that it intend to act as market makers
in the Common Stock, subject to applicable laws and regulatory requirements.
Making a market in securities involves maintaining bid and ask quotations and
being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends, however, upon
the existence of willing buyers and sellers, the presence of which is not within
the control of the Company or any market maker. Even with a market maker,
factors such as the limited size of the Offering, the lack of earnings history
for the Company and the absence of a reasonable expectation of dividends within
the near future mean that there can be no assurance of the development in the
foreseeable future of an active and liquid market for the Common Stock. Even if
a market develops, there can be no assurance that a market will continue, or
that shareholders will be able to sell their shares at or above the offering
price of $10.00 per share. Furthermore, KBW has no obligation to make a market
in the Common Stock, and, if commenced, may cease market making activities at
any time. The potential size of a secondary market for the Common Stock might,
at least initially, be limited to some extent by the requirement of a $2,500
minimum investment imposed in connection with the Offering. The minimum
investment requirement may act to restrict the number of shareholders and make
subsequent trading of small numbers of shares less likely. Purchasers of Common
Stock should carefully consider the potential illiquid and long-term nature of
their investment in the shares being offered hereby.
ARBITRARY DETERMINATION OF OFFERING PRICE
The offering price of $10.00 per share was arbitrarily determined by
the Board of Directors of the Company, and does not bear any relationship to the
Company's assets, book value, net worth or any other recognized criteria of
value. In determining the offering price of the shares, the Department's capital
requirements for the Bank and general market conditions for the sale of such
securities were considered. In the event a market should develop for the Common
Stock after completion of this Offering, there can be no assurance that the
market price will equal or exceed the offering price herein.
9
<PAGE> 12
DEPENDENCY ON KEY MANAGEMENT
Regulatory approval to establish and operate a state-chartered bank is,
among other things, dependent upon the approval of such bank's proposed chief
executive officer. Mr. George has been approved by all banking regulatory
authorities to be the Bank's Chief Executive. Generally, the chief executive
officer of a start-up financial institution is deemed to be vital to the
potential success of the new institution. In the event of death, disability,
resignation or other event causing the unavailability of Mr. George, final
regulatory approval to commence banking operations would be delayed until such
time as a suitable replacement is approved by the Department. The Company has
obtained a $1,000,000 "key-man" life insurance policy on Mr. George which is
payable to the Company in the event of his death.
ABSENCE OF SHAREHOLDER PREEMPTIVE RIGHTS
No holder of the Common Stock of the Company will have preemptive
rights with respect to the issuance of shares of any class of stock. The total
number of shares of all classes of capital stock which the Company shall have
the authority to issue is 10,000,000 shares, which is comprised of 8,000,000
shares are Common Stock, par value $0.01 per share and 2,000,000 shares of
preferred stock. Each share of Common Stock is entitled to one vote per share in
all matters requiring a vote of shareholders. The Board of Directors of the
Company could from time to time determine to issue additional shares of the
authorized Common Stock in addition to the shares offered hereby, and in such
event the ownership interest of the subscribers in this Offering would be
diluted.
YEAR 2000; POTENTIAL ADVERSE EFFECTS ON BUSINESS, FINANCIAL CONDITIONS, ON
RESULTS OF OPERATIONS
Like many financial institutions, the Bank will rely upon computers for
the daily conduct of its business and for information systems processing. There
is concern among industry experts that on January 1, 2000, computers will be
unable to "read" the new year and there may be widespread computer malfunctions.
While the Company believes that it has available resources, and has adopted a
plan, to address Year 2000 compliance, the plan is largely dependent on third
party vendors. Vendors have informed the Company that their software is Year
2000 compliant or, if not, that they have adopted plans to ensure compliance.
Internal systems and software will be adequately programmed to address the Year
2000 issue. These systems will be tested to confirm that they will be Year 2000
compliant. Nevertheless, there is a risk that some hardware or software may not
be Year 2000 compliant, and the Company cannot, therefore, predict with any
certainty costs which might be incurred to respond to any Year 2000 issues.
Further, the business of many of the Bank's customers may be negatively
affected by the Year 2000 issue, and any financial difficulties incurred by the
Bank's customers in solving Year 2000 issues could negatively affect these
customers' ability to repay any loans which the Bank may have extended.
Therefore, even if the Bank does not incur significant direct costs in
connection with responding to the Year 2000 issue, there is a risk that the
failure or delay of customers or other third parties in addressing the Year 2000
issue or the costs involved in such process could have a material adverse effect
on the Bank's business, financial condition, or results of operations.
For a more detailed discussion of the Year 2000 issue see "MANAGEMENT'S
DISCUSSION AND ANALYSIS - Need for Technological Change; Year 2000 Compliance."
PREFERRED STOCK; SHAREHOLDER APPROVAL NOT REQUIRED
The Company's Articles of Incorporation permit the Company to issue
2,000,000 shares of preferred stock without shareholder approval. Preferred
Stock may be issued by the Company with such terms and rights as the Board of
Directors may determine in its discretion, including dividend, redemption
payments, and liquidation payments in preference to dividends or payments to
common stockholders. Such dividends or payments could reduce the book value or
market value of common shares. See "ARTICLES OF INCORPORATION SUMMARY -
Preferred Stock."
THE COMPANY
Jacksonville Bancorp, Inc. was incorporated under the laws of the State
of Florida on October 24, 1997, to operate as a bank holding company pursuant to
the BHC Act, and to purchase 100% of the issued and outstanding capital stock of
The Jacksonville Bank, a state-chartered commercial bank to be organized under
the laws of Florida which will conduct a general banking business in
Jacksonville, Florida. The Company received conditional approval of its
application for authority to organize a state-chartered bank from the Department
on October 1, 1998, its application for federal deposit insurance from the FDIC
on December 3, 1998, and its application to become a one-bank holding
10
<PAGE> 13
company with the Federal Reserve on December 16, 1998. Preliminary conditional
approvals have been received from all three bank regulators. The Company and the
Bank are currently working on satisfying the conditions of the preliminary
approvals.
The Bank expects to commence operations at the end of the first quarter
of 1999. See "BUSINESS OF THE BANK." The Organizers and Directors of the Company
are thirteen individuals. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS." The
initial Board of Directors will be comprised of twelve directors of which nine
of these individuals will serve on the initial Board of Directors of the Company
and nine of the Organizers will serve on the initial Board of Directors of the
Bank. See "MANAGEMENT."
The principal offices of the Company and the Bank will be located at
10325 San Jose Boulevard, Jacksonville, Florida. See "MANAGEMENT DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Premises."
Renovations of the main office are expected to be completed on or about March 1,
1999. The Company's current office, which it will occupy until the Bank opens
for business, is the branch office facility located at 13245 Atlantic Boulevard,
Suite 5, Jacksonville, Florida 32225. The telephone number is (904) 220-3001. In
the event of an unforeseen construction delays, the Bank may choose to commence
operations at the branch office.
TERMS OF THE OFFERING
GENERAL
The Company is Offering up to 1,500,000 shares of its Common Stock for
cash at a price of $10.00 per share. The minimum number of shares that can be
purchased is of 250 shares. No single individual investor, other than individual
Organizers and Directors, may subscribe for more than 40,000 shares, or more
than 5% of the total number of shares issued or subscribed for at the time a
subscription is received by the Company during the Offering Period, whichever is
greater. The purchase price of $10.00 per share shall be paid in full upon
execution and delivery of the Stock Order Form. All subscriptions tendered by
investors are subject to acceptance by the Board of Directors of the Company
through its duly authorized Subscription Committee, and the Company reserves the
absolute and unqualified discretion to reject or reduce any subscription for any
reason prior to acceptance. Furthermore, the Company reserves the right to
cancel this Offering, for any reason whatsoever, at any time prior to the time
the Company withdraws funds from the Escrow Account.
NO ESTABLISHED MARKET FOR COMMON STOCK
Prior to this Offering, there has been no established public market for
the shares of the Common Stock and there can be no assurance that an established
market for such stock will develop. The offering price has been arbitrarily
determined and is not a reflection of the Company's book value, net worth or any
other such recognized criteria of value. In determining the offering price of
the Common Stock, the capital requirements of the Department for the Bank and
general market conditions for the sale of such securities were considered. There
can be no assurance that, if a market should develop for the Common Stock, the
post-Offering market price will equal or exceed the initial offering price.
PLAN OF DISTRIBUTION
Beginning on the Effective Date, the Company will offer the shares to
the public for a period of 45 days, unless extended by the Company for up to 133
days in its sole discretion (the "Offering Period"). During this period, the
Company will offer up to 1,500,000 shares at a price of $10.00 per share. The
Company has engaged Keefe, Bruyette & Woods, Inc. ("KBW"), registered
broker-dealer, to act as Sales Agent to the Company with respect to the
Offering. See "Sales Agent." KBW has agreed to use its best efforts to solicit
subscriptions and purchase orders for shares of Common Stock in the Offering.
KRW has selected certain broker-dealers to assist in the Offering. Shares will
be offered primarily to persons who reside in the State of Florida. Persons
indicating an interest in acquiring Common Stock will be provided with a copy of
this Prospectus prior to the Company accepting subscription funds. Subscriptions
will be accepted only if accompanied by a proper executed Stock Order Form (see
Appendix C). During this Offering Period, the Company will conduct its first
closing when the conditions required to close the minimum Offering have been
met.
11
<PAGE> 14
CONDITIONS OF THE OFFERING
The Offering will expire at 5:00 p.m. Eastern Time on March 19, 1999
(the "Expiration Date") unless extended by the Company for up to an additional
133 days (July 30, 1999). The Offering is expressly conditioned upon fulfillment
of the following conditions ("Offering Conditions") within the Offering Period.
The Offering Conditions, which may not be waived, are as follows:
(i) Subscriptions for not less than $8,000,000 shall have been
deposited with the Escrow Agent;
(ii) The Company shall not have canceled this Offering prior to the
time funds are withdrawn from the Escrow Account.
ESCROW OF OFFERING PROCEEDS
All subscription funds and documents tendered by investors will be
placed in an Escrow Account with the Independent Bankers' Bank of Florida,
Orlando, Florida ("Escrow Agent"), pursuant to the terms of the Escrow
Agreement, the form of which is attached to this Prospectus as Appendix "B."
Upon receipt of a certification from the Company during the Offering Period
that: (i) the required conditional regulatory approvals have been received; and
(ii) subscriptions totaling not less than $8,000,000 have been received, the
Escrow Agent will release to the Company all subscription funds, and any income
received thereon.
Pending disposition of the Escrow Account under the Escrow Agreement,
the Escrow Agent is authorized, upon instructions to be given by Victor M.
George to invest subscription funds in direct obligations of the United States
Government, in short-term insured certificates of deposit and/or money market
management trusts for short-term obligations of the United States Government,
with maturities not to exceed 90 days. The Company will invest the subscription
funds in a similar manner after breaking escrow and prior to the time that the
Company infuses capital into the Bank. The Offering proceeds will be used to
purchase capital stock of the Bank and to repay expenses incurred in the
organization of the Company and the Bank. See "USE OF PROCEEDS."
In the event the Offering Conditions are not met within the Offering
Period or the Offering is terminated by the Company prior to withdrawing the
subscription funds, the Escrow Agent shall promptly return to the subscribers
their subscription funds, together with their allocated share of income, if any,
earned on the investment of the Escrow Account. Each Subscriber's proportionate
share of Escrow Account earnings shall be that fraction (i) the numerator of
which is the dollar amount of such subscriber's tendered subscription multiplied
by the number of days between the date of acceptance of the investor's
subscription and the date of the termination of the Offering, inclusive (the
subscriber's "Time Subscription Factor"), and (ii) the denominator of which is
the aggregate Time Subscription Factor of all investors depositing subscription
funds in the Escrow Account. The latest date to which the subscription funds
might be held in escrow prior to their return in the event the minimum is not
reached or final regulatory approval to commence operations is not granted is
July 30, 1999.
In the event that the Company issues the shares of Common Stock and the
Department does not authorize the Bank to commence banking operations on or
before July 30, 1999, the Company will promptly return to subscribers all
subscription funds and interest earned thereon, less all expenses incurred by
the Company, including the expenses of the Offering and the organizational and
pre-opening expenses of the Company and the Bank. See "TERMS OF THE OFFERING
Failure of Bank to Commence Operations."
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE
INVESTED AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY INCOME WILL BE
REALIZED FROM THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all of the Offering Conditions are satisfied and the Company
withdraws the funds from the Escrow Account, all earnings on such account shall
belong to the Company.
The Independent Bankers' Bank of Florida, by accepting appointment as
the Escrow Agent under the Escrow Agreement, in no way endorses the purchase of
the Company's securities by any person.
FAILURE OF BANK TO COMMENCE OPERATIONS
The Department requires that a new state bank open for business (i.e.,
obtain a certificate of authorization) within 12 months after receipt of
preliminary approval from the Department. The Organizers anticipate that the
Bank will open for business sometime in the beginning of the second quarter of
1999. Because final approval of the Bank's
12
<PAGE> 15
charter will be conditioned on the Company's raising funds to capitalize the
Bank at $6,400,000, the Company expects to issue the shares of Common Stock
before it has obtained all final regulatory approvals for the Bank. In the event
that the Company issues the shares of Common Stock and the Department does not
grant the Bank final regulatory approval to commence banking operations, the
Company will promptly return to subscribers all subscription funds and interest
earned thereon, less all expenses incurred by the Company, including the
expenses of the Offering and the organizational and pre-opening expenses of the
Company and the Bank.
After the Company issues the shares of Common Stock offered hereby, the
Offering proceeds may be considered part of general corporate funds and thus may
be subject to the claims of creditors of the Company, including claims against
the Company that may arise out of actions of the Company's officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain the final
regulatory approvals, the payment process might by delayed; and the payment to
shareholders will be further reduced. As of September 30, 1998, the Company's
accumulated deficit was $385,000, and the Company will continue to incur
pre-opening expenses until the Bank commences operations. It is estimated that
the Company will expend as much as $700,000 in organizational expenses and in
the event of any liquidation, incur other costs of as much as $300,000, or $1.00
per Share based upon the minimum of 800,000 shares. No assurances can be given
that such expenses and costs will not significantly exceed this estimate.
PURCHASES BY ORGANIZERS AND DIRECTORS OF THE COMPANY
The Organizers and Directors have indicated they intend to purchase
178,500 shares in the Offering. Such purchases may assist the Company in
completing the Minimum Offering. The Organizers and Directors may purchase
additional shares, if necessary, to complete the Minimum Offering. All purchases
by the Organizers and Directors will be made on the same terms as those made by
other investors. Any purchases of shares by the Organizers and Directors will be
subject to affiliate resale limitations of the 33 Act. The Organizers and
Directors have represented to the Company that all purchases will be made for
investment purposes only and not with a view to resell such shares. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS".
OTHER TERMS AND CONDITIONS/HOW TO SUBSCRIBE
The Company may cancel this Offering for any reason at any time prior
to the release of subscription funds from the Escrow Account, and accepted
subscriptions are subject to cancellation in the event that the Company elects
to cancel the Offering in its entirety.
Shares will be sold on a best-efforts basis. The Company has engaged
KBW, a registered broker-dealer, to act as Sales Agent for the Company with
respect to the Offering. KBW has agreed to use its best efforts to solicit
subscriptions and purchase orders for shares of Common Stock in the Offering.
KBW has selected certain broker-dealers to assist in the Offering. See "SALES
AGENT" for a more detailed discussion concerning KBW and other selected brokers.
It is anticipated that commissions paid to KBW will not exceed 5.5% of the
$10.00 per share sales price. The terms of the agreement entered into with KBW
are contained in Sales Agency Agreement which is
13
<PAGE> 16
included as an exhibit to the Registration Statement that will be filed with the
Commission. In the event that the Offering Conditions have not been satisfied by
the end of the Offering Period, this Offering will be terminated and the
subscription funds promptly returned to the subscribers, together with their
allocated share of earnings, if any, earned on the investment of the Escrow
Account as described herein. See "TERMS OF THE OFFERING - Escrow the Offering
Proceeds".
As soon as practicable, but no more than 30 days after receipt
of a subscription by the Escrow Agent, the Company will accept or reject such
subscription. Subscriptions not rejected by the Company within this 30-day
period shall be deemed accepted. Once a subscription is accepted by the Company,
it cannot be withdrawn by the subscriber. Payment from any subscriber for shares
in excess of the number of shares allocated to such subscriber, if any, will be
refunded by mail, without interest within five days of the date of rejection.
Certificates representing shares of Common Stock of the Company, duly
authorized and fully paid, will be issued as soon as practicable after
subscription funds are released to the Company from the Escrow Account.
Subscriptions to purchase shares of Common Stock must be made by
completing the Stock Order Form attached to this Prospectus (Appendix C) and
delivering the same to the Escrow Agent at 615 Crescent Executive Court, Lake
Mary, Florida 32795-8423, or mailing the same in the enclosed self-addressed
envelope. Full payment of the purchase price must accompany the subscription.
Failure to pay the full subscription price shall entitle the Company to
disregard the subscription. No Subscription Agreement is binding until accepted
by the Company, which may, in its sole discretion, refuse to accept any
subscription for shares, in whole or in part, for any reason whatsoever. After a
subscription is accepted and proper payment received, the Company shall not
cancel such subscription, unless all accepted subscriptions are canceled. Unless
otherwise agreed by the Company, all subscription amounts must be paid in United
States currency by check, bank draft or money order payable to "IBBF, FOR
JACKSONVILLE BANCORP, INC."
USE OF PROCEEDS
The gross proceeds from the sale of shares offered by the Company are
estimated to be a minimum of $8,000,000. This estimate is based upon the
assumption that the sale of 800,000 shares occurs prior to the expiration of the
Offering Period. However, if 800,000 shares are not sold, prior to the
expiration of the Offering Period, then the Offering will terminate and all
funds received from subscribers, adjusted for any income thereon, will be
promptly refunded. See "TERMS OF THE OFFERING."
The estimated Organizational and Offering expenses of the Company and
the Bank are as follows:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
PROCEEDS PROCEEDS
<S> <C> <C>
Offering Expenses(1) $ 600,000 $ 1,150,000
Organizational Expenses(2) 700,000 700,000
---------- -----------
TOTAL $1,300,000 $ 1,850,000
========== ===========
</TABLE>
- --------------------
(1) Comprised primarily of certain legal fees, marketing costs,
registration fees, accounting fees, escrow fees, printing and
mailing costs and other offering expenditures.
(2) Assuming the Bank opens in early 1999, organizational expenses
include, among other expenditures, application fees, salaries and
related expenditures, legal and other professional costs,
temporary rent and utilities, costs for market analysis,
pre-opening advertising, and certain capitalized organizational
costs to include software to support operations, computer
hardware and furniture fixtures and equipment.
The gross proceeds from the Offering will be applied as follows:
14
<PAGE> 17
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
PROCEEDS PROCEEDS
ASSUMING SALE ASSUMING SALE
OF 800,000 % OF NET OF 1,500,000 % OF NET
SHARES PROCEEDS SHARES PROCEEDS
-------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Repayment of Debt Incurred to Fund
Pre-Opening and Organizational
Expenses of the Company and the
Bank(2) ...................................... $ 700,000 9.46% $ 700,000 5.05%
Working capital(3) ............................... 6,700,000 90.54% 13,350,000 94.95%
---------- ------ ----------- ------
Net Proceeds...................................... $7,400,000 100.00% $13,850,000 100.00%
====== ======
Offering expenses of the Company and the
Bank(1) ....................................... 600,000 1,150,000
---------- -----------
Gross Proceeds ................................... $8,000,000 $15,000,000
========== ===========
</TABLE>
(1) Offering expenses are estimated to be $600,000, if the minimum amount of
shares sold and 1,000,000, if the maximum amount of shares is sold. The
offering expense includes the payment of an advisory fee to McAllen Capital
Partners, Inc. in the amount of 1.5% of gross proceeds. John W. Rose, a
Director of the Company, is the President of McAllen Capital Partners, Inc.
See "CERTAIN TRANSACTIONS -- Financial Advisors."
(2) Represents repayment of a revolving line of credit of $450,000 at an
interest rate of Prime minus 1% percent and a promissory note payable to a
Director of $150,000 at an interest rate of 8.5%. The pre-opening and
organizational expenses are estimated to reach $700,000. On December 17,
1998, the Company obtained an unsecured line of credit from Columbus Bank
and Trust Company for $135,000 to cover any additional pre-opening
expenses. See "CERTAIN TRANSACTIONS."
(3) The largest use of working capital will be the purchase of all the Common
Stock of the Bank. The minimum investment in the Bank will be $6,600,000 at
the completion of the minimum offering and $13,050,000 if the maximum
offering is completed. The primary use of the remaining working capital will
be income producing investments as permitted by banking regulations. The
income from investments will be used to pay legal, accounting and other
operating expenses of the holding company. To the extent that income from
investments is insufficient to pay these items, investments will be
liquidated for such payment. The working capital and income may also be
contributed to the Bank as capital, if needed.
All of the above offering, organizational and preopening expenses set
forth in the table above will be incurred whether or not the Bank conducts
operations. If the Offering is terminated prior to the release of subscription
funds by the Escrow Agent, none of these expenses will be deducted from the
subscription funds. If, however, subscription funds are released by the Escrow
Agent and the Bank does not commence business operations, all of the above
expenses, as well as additional expenses which will be incurred following such
release, will be deducted from the subscription funds. In the event a successful
Offering, organizational and preopening expenses will be deducted from the
Offering proceeds. A substantial portion of the proceeds of this Offering, as
noted in the table above, will be used by the Company for the purchase of
100% of the issued and outstanding capital stock of the Bank.
The following table is a schedule of estimated expenditures to be made
by the Bank out of the proceeds from the sale of its capital stock to the
Company at minimum proceeds.
[Table Follows This Page]
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<PAGE> 18
<TABLE>
<CAPTION>
MINIMUM % OF NET MAXIMUM % OF NET
PROCEEDS PROCEEDS PROCEEDS PROCEEDS
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Organizational expenses of the Bank, including
application, legal and consulting fees........................ $ 100,000 1.35% $ 100,000 .72%
Pre-opening expenses of the Bank, including salaries,
occupancy and other expenses(1)............................... 500,000 6.76% 500,000 3.61%
Repayment of loan for purchase of furniture, fixtures
and equipment(2).............................................. 250,000 3.38% 250,000 1.81%
Repayment of loan for purchase of refurbishing main
office(2)..................................................... 1,075,000 14.53% 1,075,000 7.76%
Cash, investments and other assets(3)........................... 4,675,000 63.17% 11,125,000 80.32%
---------- ----- ----------- -----
Total uses of capital.................................. $6,600,000 89.19% $13,050,000 94.22%
========== ===== =========== =====
</TABLE>
(1) Includes the annual salary of the President and Chief Executive
Officer, Victor M. George, in the amount of $95,000 per year.
(2) On July 11, 1998, the Company borrowed $625,000 for the acquisition
of the Bank's main office; $450,000 on December 1, 1998, to renovate
the main office, and $250,000 on October 5, 1998, for the purpose of
purchasing equipment, furniture and fixtures. These loans mature March
24, 1999, March 24, 1999, and February 16, 1999, respectively, and
require interest-only payments until maturity. The Bank will repay
these loans.
(3) The primary use of these funds will be to lend money to customers of
the Bank and for income producing investments. The Company has
identified certain commercial loan opportunities which are intended to
be underwritten by the Bank when the Bank receives its
charter. The aggregate amount of these commercial loans is
approximately $3,000,000. As the Company identifies other commercial
loan opportunities, including the purchase of loan participations from
other banks, total loans underwritten may increase to $5,000,000 when
the Bank receives its charter. Any working capital not invested in
commercial loans will be maintained in cash, over-night repurchase
agreements and/or short-term liquid investments which are the
obligations of the U.S. Treasury. The income from loans and investments
will be used to pay general operating expenses of the Bank. To the
extent that income from is insufficient to pay operating
expenses, operating expenses will be paid from the liquidation
of investment.
A portion of the proceeds of this Offering, see table above, will be
retained by the Company for the purpose of funding any required future additions
to the capital of the Bank. Since state banks are regulated with respect to the
ratio that their total assets may bear to their total capital, if the Bank
experiences greater growth than anticipated, it may require the infusion of
additional capital to support that growth. Management of the Company anticipates
that the proceeds of the Offering will be sufficient to support the Bank's
immediate capital needs and will seek, if necessary, long and short-term debt
financing to support
16
<PAGE> 19
any additional needs; however, management can give no assurance that such
financing, if needed, will be available or if available will be on terms
acceptable to management.
The Organizers intend to purchase a certain amount of stock in the
Offering. See "Organizers and Principal Shareholders." The Officers and
Organizers have the right to purchase these shares for the purpose of assisting
the Company in meeting the minimum amount of this offering, or to purchase their
shares after minimum amount has been purchased.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1998, and as adjusted to give effect to the sale of a minimum of
800,000 shares and a maximum of 1,500,000 shares of common stock offered hereby,
at an assumed public offering price of $10.00 per share, net of estimated
offering expenses.
[Table Follows This Page]
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<PAGE> 20
<TABLE>
<CAPTION>
AS ADJUSTED AS ADJUSTED
FOR MINIMUM FOR MAXIMUM
ACTUAL OFFERING(1) OFFERING(1)
------ ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Borrowings:
Short-term $ 1,125 $ 625 $ 625
======= ======= ========
Stockholders' equity:
Preferred Stock, $0.01 par value, authorized and $ -- $ -- $ --
unissued 2,000,000 shares
Common Stock, $0.01 par value, 8,000,000 shares
authorized, none issued
(800,000 shares at the minimum offering -- 8 15
and 1,500,000 shares at the maximum offering) -- 7,392 13,835
Additional paid-in capital (385) (385) (385)
------- ------- --------
Accumulated deficit
Total stockholders' equity $ (385) $ 7,015 $ 13,465
======= ======= ========
Total capitalization $ 740 $ 7,640 $ 14,090
======= ======= ========
</TABLE>
- -----------------
(1) Assuming a line of credit and note payable to Director R. C. Mills in the
amount of $150,000. See "CERTAIN TRANSACTIONS -- Organizational Advances."
DIVIDEND POLICY
Due to the fact that the Company and the Bank are both start-up
operations, it will be the policy of the Board of Directors of the Company to
reinvest earnings for such period of time as is necessary to ensure the
successful operations of the Company and of the Bank. There are no current plans
to initiate payment of cash dividends, and future dividend policy will depend on
the Bank's earnings, capital requirements, financial condition and other factors
considered relevant by the Board of Directors of the Company.
The Bank will be restricted in its ability to make capital
distributions to the Company under Florida banking laws and by regulations of
the Department. Pursuant to Section 658.37, Florida Statutes, a state bank may
not pay dividends from its capital. All dividends must be paid out of current
net profits then on hand plus retained net profits of the preceding two years,
after deducting bad debts, depreciation and other worthless assets, and after
making provision for reasonably anticipated future losses on loans and other
assets. Payments of dividends out of net profits is further limited by Section
658.37, which prohibits a state bank from declaring a dividend on its shares of
common stock until its surplus equals its stated capital, unless there has been
transferred to surplus not less than 20% of a state bank's net profits for the
preceding year (in the case of an annual dividend). Finally, a state bank may
not declare a dividend which would cause the capital accounts of a bank to fall
below the minimum amount required by law, regulation, order or any written
agreement with the Department or any Federal regulatory agency.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company was incorporated under the laws of the State of Florida on
October 24, 1997, for the purpose of organizing the Bank and purchasing 100% of
the outstanding capital stock of the Bank. The Company has been organized as a
mechanism to enhance the Bank's ability to serve its future customers'
requirements for financial services. The holding company structure will also
provide flexibility for expansion of the Company's banking business through the
possible acquisition of other financial institutions, as well as the ability to
provide additional banking-related services which the traditional commercial
bank may not provide under present laws. Finally, banking regulations require
that the Bank maintain a minimum ratio of capital to assets. In the event that
the Bank's growth is such that this minimum ratio is not maintained, the Company
may borrow funds, subject to the capital adequacy guidelines of the Federal
Reserve, and contribute them to the capital of the Bank and otherwise raise
capital in a manner which is unavailable to the Bank under existing banking
regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, the Company may make additional acquisitions in
the event that such acquisitions are deemed to be in the best interest of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See "SUPERVISION AND
REGULATION."
ORGANIZATIONAL AND PREOPENING PHASE
The Company is still in the development stage, and will remain in that
state until the Offering of the Company's Common Stock is completed. The Company
has initially funded its organizational expenses through a loan dated October
10, 1997, from one of the Organizers, R. C. Mills, in the amount of $150,000. In
March, 1998, the Company obtained a line of credit of $450,000 from a financial
institution at an interest rate of Prime minus 1%. The line is guaranteed by the
Company's Board of Directors. At September 30, 1998, there was $350,000
outstanding under this line of credit. As of September 30, 1998, the Company has
incurred $385,000 for organizational and preopening expenses including attorney
fees, employee compensation and filing fees. The remaining funds will be used to
fund costs and expenses during the Offering Period. On December 17, 1998, the
Company obtained an unsecured line of credit from Columbus Bank & Trust Company
for $135,000 to cover any additional pre-opening expenses. The line of credit
has been guaranteed by Director John C. Kowkabany.
On June 11, 1998, the Company purchased the main office quarters, a
former Kenny Rodgers restaurant, from Florida's Finest Chicken, Inc. The main
office is located at 10325 San Jose Boulevard, Jacksonville, Florida. The main
office will be expanded from 2,777 square feet to 3,015 square feet, with three
drive-through teller stations.
The Company has obtained a loan commitment from Columbus Bank & Trust
Company for up to $1.8 million in loans for the purchase and renovation of the
main office, as well as the purchase of furniture, fixtures and equipment. This
loan commitment permits the Company to make a series of unsecured loans with an
interest rate of the Prime rate less 1/2% and permits the execution of a
separate six-month note, renewable up to one year. Pursuant to this loan
commitment, the Company has borrowed $625,000 on June 11, 1998, for the
acquisition of the Bank's main office; $450,000 on December 1, 1998, to renovate
the main office, and $250,000 on October 5, 1998, for the purpose of purchasing
equipment, furniture and fixtures. These loans mature March 24, 1999, March 24,
1999, and February 16, 1999, respectively, and require interest-only payments
until maturity. The loans are guaranteed by the Organizers and Directors. The
Bank will take title to the main office and repay these loans incurred in
connection with the purchase and renovation of the main office.
Subscription funds during the Offering Period contemplated herein will
be placed in the Escrow Account and invested in direct obligations of the United
States Government, in short-term insured certificates of deposits and/or money
market Management trusts for short-term obligations of the United States
Government, with maturities not to exceed 90 days.
On April 23, 1998, the Company entered into a lease agreement with
Joandy Road Partnership Corporation to lease the Bank's temporary quarters,
which will also serve as a branch office of the Bank.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
The Company expects to complete this stock offering and receive final
regulatory approval to commence the Bank's operations and open for business
during the next three months. The strategy is for the Bank to conduct
traditional community banking activities, including the gathering of deposits
and investing those proceeds into loans and investment securities. The Company
does not expect to undertake any product research and development activities,
purchase any
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additional branch sites or make any significant equipment purchases during the
next 12 months. While certain support employees will be added to the staff after
the Bank opens for business, no significant increase is expected during the next
12 months. Management of the Bank expects that the proceeds from this Offering,
as well as cash flows from its deposit gathering activities, will be sufficient
to meet the Bank's cash flow and liquidity needs over the next few years.
The initial activity of the Company will be to act as the sole
shareholder of the Bank. The profitability of the Company will be dependent upon
the successful operations of the Bank. New banks are typically not profitable in
the first year of operation and sometimes are not profitable for several years.
As of September 30, 1998, the Company's accumulated deficit was $385,000. The
Company will continue to incur pre-opening expenses until the Bank commences
operations. Based upon industry standards, management's experience and current
market demand, management believes that the Bank will begin to be profitable in
the fourth quarter of the second year of operations. No assurance, however, can
be given that the Bank will be profitable, or if profitable, that the level of
earnings will equal that of the banking industry for similar institutions.
PREMISES
The Bank's permanent headquarters will be located at 10325 San Jose
Boulevard, Jacksonville, Florida. The Bank will occupy approximately 3,015 sq.
ft., plus three drive-through teller stations. The building is currently under
renovation and is expected to be ready for occupancy on or about March 1, 1999.
Pending commencement of operations, the Bank has a temporary address at
Harbour Village, 13245 Atlantic Boulevard, Suite 5, Jacksonville, Florida 32225.
In the event of an unforeseen construction delays, the Bank may choose to
commence operations from its branch office facility. The Harbour Village Office
will be a full-service branch office when the Bank commences operations. The
telephone number at the Bank's branch is (904) 220-3001.
NEED FOR TECHNOLOGICAL CHANGE; YEAR 2000 COMPLIANCE
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. The Company's
future success will depend in part on its ability to address the needs of its
clients by using technology to provide products and services that will satisfy
client demands for convenience as well as to create additional efficiencies in
the Bank's operations. Many of the Bank's competitors have substantially greater
resources to invest in technological improvements. There can be no assurance
that the Bank will be able to effectively implement new technology-driven
products and services or be successful in marketing such products and services
to its clients.
The Company is acutely aware of the many areas affected by the Year
2000 computer issue, as addressed by the Federal Financial Institutions
Examination Council ("FFIEC") in its interagency statement which provided an
outline for institutions to effectively manage the Year 2000 challenges.
Management is in the process of completing a Year 2000 plan which will be
approved by the Board of Directors and will include multiple phases, tasks to be
completed, and target dates for completion. Issues addressed will include
awareness, assessment, renovation, validation, implementation, testing, and
contingency planning.
The Company's main service provider has completed testing of its
mission critical application software and item processing software; the test
results, which have been documented and validated, are deemed to be Year 2000
compliant. FFIEC guidance on testing Year 2000 compliance of service providers
states that proxy tests are acceptable compliance tests. In proxy testing, the
service provider tests with a representative sample of financial institutions
that use a particular service, with the results of such testing shared with all
similarly situated clients of the service provider. The Company has authorized
the acceptance of proxy testing since the proxy tests have been conducted with
financial institutions that are similar in type and complexity to its own, using
the same version of the Year 2000 ready software and the same hardware operating
systems.
The Company also recognizes the importance of determining that its
potential loan customer's will face the Year 2000 problem in a timely manner to
avoid deterioration of the loan portfolio solely due to this issue. The Company
plans to identify any borrower having high Year 2000 risk exposure and taking
such exposure into consideration in underwriting any loan to such borrowers. To
the extent that the Bank identifies a year 2000 exposure associated with a
proposed borrower but determines to make a loan to such borrower, the Bank will
work on a one-to-one basis with the borrower to resolve the exposure.
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As a new business, with the latest hardware and software, management
does not believe that the Company has incurred or will incur material costs
associated with the Year 2000 issue. Yet, there can be no assurances that all
hardware and software that the Company will use will be Year 2000 compliant.
Management cannot predict the amount of financial difficulties it may incur due
to customers and vendors inability to perform according to their agreements with
the Company or the effects that other third parties may cause as a result of
this issue. Therefore, there can be no assurance that the failure or delay of
others to address the issue or that the costs involved in such process will not
have a material adverse effect on the Company's business financial condition,
and results of operations.
The Company's contingency plans relative to Year 2000 issues have not
been finalized - these plans are evolving as the Bank prepares to open. During
the organizational phase management will determine if it is necessary to develop
a "worst case scenario" contingency plan. Based on vendor representation to date
(as noted above), the Company's mission critical systems are expected to be Year
2000 compliant when the Bank opens or shortly thereafter, and, therefore, a
contingency plan has not been developed with respect to those systems. With
regards to non-mission critical internal systems, the Company's plans are to
acquire only those systems that are vendor certified as being Year 2000
compliant. Alternatively, some systems could be handled manually on an interim
basis. Should outside service providers not be able to provide compliant
systems, the Company will terminate those relationships and transfer to other
vendors.
BUSINESS OF THE COMPANY
GENERAL
For the first few years of its existence, the Company's primary
subsidiary and source of income will be the Bank. As the Company grows, it will
consider other banking related business opportunities to augment its earnings.
The Bank will seek to be the premier community based financial
institution in its market area by providing personalized bank products and
traditional bank services to individuals, small to medium-sized businesses,
professionals and other local organizations. The Bank intends to employ
professional and consumer-friendly individuals. While the Bank will provide PC
banking for customers that desire this banking option, customers will be able to
transact their banking directly with the Bank's employees, at no charge. The
telephones will be answered by employees as opposed to an automated system. Loan
products will be tailored to meet the needs of small to medium size businesses.
The Bank's operating principle will be to focus on customers, products
and services in its market area and to a lesser extent in surrounding counties
where local directors and management know the customers and understand their
businesses. As other banks in the market continue to merge, consolidate and grow
outside the area, the Bank will focus and rely on its base of local directors,
shareholders, management and employees for business development. Policies and
procedures will be tailored to the local market rather than to the regional and
statewide markets of other financial institutions. The Bank is committed to be
locally owned and managed and to provide friendly, personal service.
The Directors and management believe that the Bank's principal niche
will be the existing and expanding small to medium size businesses within the
market area and to a lesser extent the surrounding counties; the active
residential real estate mortgage market within the area; and the growing
consumer loan market.
Generally, customers will have one account officer to serve all of
their banking needs and will have access to senior management when necessary.
The Board of Directors and management will be responsible for maintaining a
visible profile of the Bank in the local community. The Directors and management
will be able to actively promote the Bank within the market due to their
established reputations and banking relationships in the local community.
PRODUCTS AND SERVICES
The Bank intends to provide a full range of competitive banking
services. In discussions with small businesses owners in the Bank's primary
market areas, the concerns frequently raised are the lack of continuity between
the loan officer at the larger bank resulting from turnover and promotions, the
unavailability of a bank employee to speak with about an account issue without
being assessed a service or access charge, and the lack of consistency in the
loan products that are offered to small businesses. The directors and management
of the Bank intend to focus their efforts to close the void, which, in their
opinion, has been caused by the dwindling service provided by larger banks to
small businesses. In order to compete with the financial institutions in the
market, the Bank intends to use its independent status to the fullest extent
possible. This will include an emphasis on specialized services for the small
business owner and professional, personal contacts by the officers, directors
and employees of the Bank. Loan participations will be arranged for customers
whose loan demands exceed the Bank's lending limits.
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The Bank intends to concentrate its marketing effort on the advantages
of local ownership and management, as well as, fiscal responsibility, personal
service and customer relations at the local level. The marketing program will be
directed toward all sizes of businesses, as well as all types of consumers.
Particular emphasis will be placed on newspaper and radio advertising, and
direct mail on a selective basis.
MARKET AREA AND COMPETITION
The Bank's primary market area is all of Duval County (including
primarily the Southside, Arlington, Mandarin and Beaches areas of Jacksonville).
Jacksonville is the largest city in the United States as measured by land area
according to the 1997 Florida Statistical Abstract. Jacksonville is home to the
Jacksonville Jaguars, one of the newest NFL franchises and is the corporate
headquarters to a number of regional and national companies. Duval County has a
strong commercial and industrial base which has been steadily expanding in
recent years. The largest employers in the county are: Naval Air Station Jax
(16,845 employees), Naval Station Mayport (12,156 employees), Duval County
School System (11,591 employees), State of Florida (10,465 employees), Duval
County Government (8,860), City of Jacksonville (8,180), and AT&T (8,000
employees).
According to the 1997 Florida Statistical Abstract, the population of
Duval County increased from 672,971 in 1990 to 730,258 in 1997, representing a
compound annual growth rate of 1.2% (slightly faster than the U.S. average of
1.1% per year). The population is projected to increase to 769,775 by 2002. In
1997, the median age in Duval County was 33.3 years (nearly five years younger
than the state's average), and the median household income in 1996 was $35,506
(the state median was $32,489). In 1997, the unemployment rate in the County was
3.3%, as compared to a national average of 4.9%.
Competition among financial institutions within the Bank's market area
is intense. According to the Florida Bankers Association, as of June 1997, there
were 47 financial institutions in the market with deposits of nearly $12.9
billion. Deposits in the market increased about $3.8 billion from 1995 to 1997,
an annual rate of 19.2%.
Financial institutions primarily compete with one another for deposits.
In turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the availability of
unique financial services products. The Bank will be competing with financial
institutions which have much greater financial resources than the Bank, and
which may be able to offer more services and unique services and possibly better
terms to their customers. The Directors and management, however, believes that
the Bank will be able to attract sufficient deposits to enable the Bank to
compete effectively with other area financial institutions.
The Bank will be in competition with existing area financial
institutions other than commercial banks and thrift institutions, including
insurance companies, consumer finance companies, brokerage houses, credit unions
and other business entities which target traditional banking markets. Due to the
growth of the Jacksonville area, it can be anticipated that significant
competition will continue from existing, as well, new entrants to the market.
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Bank believes that its Board is composed of the quality,
knowledgeable and proven business and banking professionals. Initially there
will be twelve members on the Bank's Board of Directors. Additional directors
may be added when and as deemed necessary. In order to fulfill their
responsibilities to the customers and shareholders of the Bank, it is
anticipated that the Board of Directors of the Bank will meet on a monthly
basis, or more often as needed, to review the operations of the Bank and provide
appropriate direction to management.
The Bank's Board of Directors intends to appoint committees to oversee
particular aspects of the Bank's operations. These committees will consist of
the Executive Committee, Executive Loan Committee, Asset/Liability and
Investment Committee, Audit Committee and Compensation Committee.
The Executive Committee will be responsible for defining and
implementing the overall strategy and policies of the Bank. It will also be
responsible for monitoring the financial performance of the Bank. The Executive
Committee will review and recommend marketing plans, capital plans, major
capital expenditures and expansion plans.
The Loan Committee will be responsible for ensuring the soundness of
the Bank's credit policy, conformance to lending policies and compliance with
applicable laws, rules and regulations. To fulfill these
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responsibilities, the Loan Committee will review the adequacy of the credit
policy on at least an annual basis, review all large loans and monitor the
performance of the loan portfolio on an ongoing basis.
The Asset/Liability and Investment Committee will be responsible for
ensuring the soundness of the Bank's investment policy and asset/liability
management policy and conformance to these policies and compliance to applicable
laws, rules and regulations. To fulfill these responsibilities, the committee
will review the adequacy of the investment and asset/liability management
policies on at least an annual basis. The Asset/Liability and Investment
Committee will also monitor performance of the investment portfolio, the Bank's
liquidity position and the interest rate sensitivity position.
The Audit Committee will consist solely of outside directors and will
be responsible for ensuring that an adequate audit program exists and that Bank
personnel are operating in conformance with all applicable laws, rules and
regulations. All auditors employed or engaged by the Bank will report directly
to the Audit Committee. To fulfill its responsibilities, the Audit Committee
will recommend the selection of auditors, review the audit program on at least
an annual basis to ensure the adequacy of its scope, and will review all reports
of auditors and examiners, as well as management's responses to such reports to
ensure the effectiveness of internal controls and the implementation of remedial
action. The Audit Committee will also be responsible for the integrity of the
internal loan review system.
The Compensation Committee will be responsible for ensuring that the
Bank's compensation policy is sufficient so that the Bank may retain highly
qualified and motivated employees. Compensation will be reviewed on an annual
basis, or more frequently if necessary.
DEPOSITS
The Bank intends to offer a wide range of interest-bearing and
noninterest-bearing deposit accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest-bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will primarily be residents, businesses and employees of businesses
within the Bank's primary market areas, obtained through the personal
solicitation of the Bank's officers and directors, direct mail solicitation and
advertisements published in the local media. The Bank intends to pay competitive
interest rates on time and savings deposits up to the maximum permitted by law
or regulation. In addition, the Bank will implement a service charge fee
schedule competitive with other financial institutions in the Bank's primary
market areas covering such matters as maintenance fees on checking accounts, per
item processing fees on checking accounts and returned check charges.
LOAN PORTFOLIO
The Bank intends to serve the financing needs of the Jacksonville
community by offering a variety of different loan products. Commercial loans
will include both collateralized and uncollateralized loans for working capital
(including inventory and receivables), business expansion (including real estate
acquisitions and improvements), and purchase of equipment and machinery. The
Bank expects to originate a variety of residential real estate loans, including
conventional mortgages collateralized by first mortgage liens to enable
borrowers to purchase, refinance, construction upon or improve real property.
Consumer loans will include collateralized and uncollateralized loans for
financing automobiles, boats, home improvements, and personal investments. The
Bank will primarily enter into lending arrangements for its portfolio loans with
individuals who are familiar to management and who are residents of the Bank's
primary market areas. It is anticipated that 20% to 25% of the loans will come
from outside the Bank's immediate primary market areas.
Management recognizes that credit losses will be experienced and
the risk of loss will vary with, among other things, the type of loan being
made, the creditworthiness of the borrower over the term of the loan and, in the
case of a collateralized loan, the quality of the collateral for the loan, as
well as the general economic conditions. Management will maintain an adequate
allowance for loan losses based on, among other things, industry standards,
management's experience, the Bank's historical loan loss experience, evaluation
of economic conditions and regular reviews of delinquencies and loan portfolio
quality. The Bank intends to follow a conservative lending policy, but one which
permits prudent risks to assist businesses and consumers primarily in the Bank's
primary market areas. Interest rates will vary depending on the cost of funds to
the Bank, the loan maturity, and the degree of risk. Whenever possible, interest
rates will be adjustable with fluctuations in the "prime" rate. The long-term
target loan-to-deposit ratio will be approximately 75%. This ratio is expected
to meet the credit needs of customers while allowing prudent liquidity through
the investment portfolio.
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Based upon the proposed $6,400,000 in initial capital stock of the
Bank, the maximum loan the Bank will be permitted to make is $1,600,000 provided
that the unsecured portion may not exceed $960,000. Assuming the maximum
proceeds of the Offering and a proposed initial Capital of $12,600,000, the
maximum loan the Bank would be permitted to make would be approximately
$3,150,000, provided that the unsecured portion could not exceed $1,890,000.
The Bank's commercial loans will primarily be underwritten on the basis
of the borrowers' ability to service such debt from income. As a general
practice, the Bank will take as collateral a security interest in any available
real estate, equipment, or other chattel although such loans may also be made on
an uncollateralized basis. Collateralized working capital loans will be
primarily collateralized by short term assets whereas long-term loans will be
primarily collateralized by long term assets.
Fixed and adjustable rate mortgage loans collateralized by single
family residential real estate generally will be generated in amounts of no more
than 80% of appraised value. The Bank may, however, lend up to 95% of the value
of the property collateralizing the loan, but if such loans are required to be
made in excess of 80% of the value of the property, they must be insured by
private or federally guaranteed mortgage insurance. In the case of mortgage
loans, the Bank will require mortgagees title insurance to protect against
defects in its lien on the property which may collateralize the loan. The Bank
in most cases will require title, fire and extended casualty insurance to be
obtained by the borrower, and, where required by applicable regulations, flood
insurance. The Bank will maintain its own errors and omissions insurance policy
to protect against loss in the event of failure of a mortgagor to pay premiums
on fire and other hazard insurance policies. Residential mortgage loans
typically represent a bank's lowest degree of risk, but provide the lowest
earnings.
The Bank will finance the construction of individual, owner-occupied
houses on the basis of written underwriting and construction loan management
guidelines. Construction loans will be structured either to be converted to
permanent loans with the Bank at the end of the construction phase or to be paid
off upon receiving financing from another financial institution. Construction
loans on residential properties will be generally made in amounts up to 95%
(along with mortgage insurance) of appraised value. Construction loans to
contractors will generally have terms of up to 12 months. The maximum loan
amounts for construction loans will be based on the lessor of the current
appraised value or the purchase.
The Bank will originate residential construction contractor loans to
finance the construction of single family dwellings. Most of the residential
construction loans will be made to individuals who intend to erect
owner-occupied housing on a purchased parcel of real estate. The Bank's
construction loans to individuals will typically range in size from $50,000 to
$200,000. Construction loans to contractors will be generally offered on the
same basis as other residential real estate loans except that a larger
percentage down payment will typically be required.
Unlike residential mortgage loans, which typically are made on the
basis of the borrowers' ability to make repayment from his employment and other
income, and which are collateralized by real property whose value tends to be
easily ascertainable, commercial loans will be underwritten on the basis of the
borrower's ability to make repayment from the cash flow of the business and
generally will be collateralized by business assets, such as accounts
receivable, equipment and inventory. As such, commercial loans are made at a
higher interest rate than residential mortgage loans, but have a higher risk of
default because business cash flow is dependent on economic conditions and the
ability of the business' management.
Consumer loans made by the Bank will include automobiles, recreation
vehicles, boats, second mortgages, home improvements, home equity lines of
credit, personal (collateralized and uncollateralized) and deposit account
collateralized loans. Consumer loans will be made at fixed and variable interest
rates and may be made based on up to a ten-year amortization schedule but which
become due and payable in full and are generally refinanced in 36 to 60 months.
Consumer loans will be attractive to the Bank because they typically have a
shorter term and carry higher interest rates than that charged on other types of
loans. Consumer loans also carry a higher risk of loss to the Bank than
residential mortgages because either they are uncollateralized, the collateral
is depreciable, and therefore less dependable than first real estate mortgages,
or the amount of the loan underwritten is a higher percentage of the value of
the collateral securing the loan than in a first real estate mortgage.
INVESTMENTS
The primary objective of the Bank's investment portfolio will be to
develop a mixture of investments with maturities and compositions so as to earn
an acceptable rate of return while meeting the liquidity requirements of the
Bank. This will be accomplished by matching the maturity of assets with
liabilities to the greatest extent possible.
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The Bank intends to invest primarily in U.S. obligations guaranteed as
to principal and interest. The Bank will also enter into federal funds
transactions with its principal correspondent banks and anticipates that it will
be a net seller of funds. All investments with a maturity in excess of one year
will be readily salable on the open market.
ASSET/LIABILITY MANAGEMENT
It will be the objective of the Bank to manage assets and liabilities
to provide a satisfactory, consistent level of profitability within the
framework of established cash management, loan, investment, borrowing and
capital policies. Designated officers of the Bank will be responsible for
monitoring policies and procedures that are designed to ensure acceptable
composition of the asset-liability mix, stability and leverage of all sources of
funds while adhering to prudent banking practices. It is the overall philosophy
of management to support asset growth primarily through growth of core deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management will seek to invest the largest portion of it's assets
in commercial, consumer and real estate loans. The asset/liability mix will
likely be monitored on a daily basis with a monthly report reflecting
interest-sensitive assets and interest-sensitive liabilities being prepared and
presented to the Board of Directors. The objective of this policy is to control
interest-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on the Bank's earnings.
CORRESPONDENT BANKING
The Bank intends to purchase certain services from correspondent banks.
Such services are available on a statewide or regional basis from commercial
banks, banker's banks, the Federal Reserve Bank of Atlanta and the Atlanta
Federal Home Loan Bank. The Bank will determine the availability of such
services and evaluate the quality and pricing of the services available and
based upon the above will select one or more providers for the services the Bank
will require. The Bank will then purchase from time to time, correspondent
services offered by such banks, including some of the following: check
collections, purchase or sale of Federal Funds, security safekeeping, investment
services, coin and currency supplies, overline and liquidity loan participations
and sales of loans to or participations with correspondent banks.
The Bank anticipates that it will sell loan participations to
correspondent banks with respect to loans which exceed the Bank's lending limit.
As compensation for services provided by a correspondent, the Bank may maintain
certain balances with such correspondents in non-interest bearing accounts, or
may elect to pay for such fees directly.
DATA PROCESSING
The Bank has entered into a data processing servicing agreement with an
outside service bureau, M&I Data Services on May 13, 1998. This servicing
agreement provides for the Bank to receive a full range of data processing
services, including an automated general ledger, deposit accounting, commercial,
real estate and installment loan processing, payroll, central information file
and ATM processing, and investment portfolio accounting. The servicing agreement
is for a term of seven years with an option for the Bank to renew for an
additional term of one year. The servicing agreement provides for installation
and set up, limited training, and consultation services necessary for the Bank
to commence using the data processing services, as well as a license to use the
computer software necessary for the services. The initial cost to the Bank for
these items will be $178,150. Thereafter, the Bank will be charged $9,000 per
month, plus fees for certain services as used. It is estimated that the total
monthly fees will be approximately $15,700.
STAFFING
It is the Bank's goal to maintain a competently trained staff of
bankers who are already living in the community or who intend to live in the
community on a permanent basis, in order to build long-term personal
relationships with customers. Personnel will be required to take banking courses
and other seminars to maintain and enhance their overall banking knowledge.
MONETARY POLICIES
The results of operations of the Bank will be affected by credit
policies of monetary authorities, particularly the Federal Reserve. The
instruments of monetary policy employed by the Federal Reserve include open
market operations in U.S. Government securities, changes in the discount rate on
member bank borrowings, changes in reserve requirements against member bank
deposits and limitations on interest rates which member banks may pay on time
and savings deposits. In view of changing conditions in the national economy and
in the money markets, as well as the effect
25
<PAGE> 28
of action by monetary and fiscal authorities, including the Federal Reserve, no
accurate prediction can be made as to possible future changes in interest
rates, deposit levels, loan demand or the business and earnings of the Bank.
The Bank intends to originate commercial and residential mortgages.
For a discussion of the loan portfolio, see "BUSINESS OF THE COMPANY -- Loan
Portfolio".
DESCRIPTION OF PROPERTY
Neither the Company nor the Bank intend to purchase any real property
for investment purposes. The Company and the Bank will purchase or lease real
property as needed to serve as premises for the operations of the Company or
the Bank.
On June 11, 1998, the Company purchased a commercial property located
at 10325 San Jose Boulevard, Jacksonville, Florida, consisting of a 1/2 acre
site and a 2,777 square foot building. This was formerly a Kenny Rogers Roast
Chicken restaurant. The purchase price was $587,500. The site and building are
presently undergoing extensive renovations, including the addition of three
drive-through lanes. The cost of renovation is under contract for $379,500, plus
change orders of approximately $15,000. This facility, which will serve as the
Bank's main office, is expected to be complete prior to opening the Bank in
March, 1999.
The Company currently leases a 1,400 square foot storefront space in
the Harbour Village Retail Center at 13245-5 Atlantic Boulevard, which has been
approved to serve as a branch. The Company is using this facility as its
organizational office. The five year lease calls for rent of $1,864 per month
plus common area maintenance fees.
REGULATION AND SUPERVISION
GENERAL
As a one-bank holding company registered under the BHC Act, the Company
will be subject to regulation and supervision by the Federal Reserve. Under the
BHC Act, the Company's activities and those of its Bank subsidiary are limited
to banking, managing or controlling banks, furnishing services to or performing
services for its subsidiaries or engaging in any other activity that the Federal
Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. As a state-chartered
commercial bank, the Bank will be subject to extensive regulation by the
Department and the FDIC.
The Company and the Bank will be required to file reports with the
Federal Reserve, the Department and the FDIC concerning their activities and
financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with or acquisitions of other
financial institutions. Periodic examinations are performed by the Federal
Reserve, the Department and the FDIC to monitor the Company's and the Bank's
compliance with the various regulatory requirements. The Bank's deposits will be
insured up to the applicable limits by the FDIC under the Bank Insurance Fund
("BIF"). The Bank will be subject to regulation by the Federal Reserve and the
Department with respect to reserves required to be maintained against
transaction deposit accounts and certain other matters.
REGULATION OF THE COMPANY
GENERAL. The BHC Act prohibits the Company from acquiring direct or
indirect control of more than 5% of any class of outstanding voting stock or
acquiring substantially all of the assets of any depository institution or
merging or consolidating with another bank holding company without prior
approval of the Federal Reserve. The BHC Act also prohibits the Company from
acquiring control of any bank operating outside the State of Florida, unless
such action is specifically authorized by the statutes of the state where the
depository institution to be acquired is located. Additionally, the BHC Act
prohibits the Company from engaging in or from acquiring ownership or control of
more than 5% of the outstanding voting stock of any company engaged in a
non-banking business, unless such business is determined by the Federal Reserve
to be so closely related to banking or managing or controlling banks as to be
properly incident thereto. The BHC Act generally does not place territorial
restrictions on the activities of such non-banking related activities.
TRANSACTIONS BETWEEN THE COMPANY AND THE BANK. The Company's authority
to engage in transactions with related parties or "affiliates," or to make loans
to certain insiders, is limited by certain provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA").
Specifically, Sections 23A and 23B of the Federal Reserve Act apply to all
transactions by an insured-state nonmember bank or a holding company with any
affiliate. Sections 23A and 23B generally define an "affiliate" as any company
that controls or is under common control with a depository institution.
Subsidiaries of a depository institution, however, are generally exempted from
the definition of "affiliate." Section 23A limits the aggregate amount of
transactions with any individual affiliate to 10% of the capital and surplus of
the Company and also limits the aggregate amount of transactions with all
affiliates to 20% of the Company's capital and surplus. Certain transactions
with affiliates, such as loans to affiliates or guarantees, acceptances and
letters of credit issued on behalf of affiliates, are required to be
collateralized by collateral in an amount and of a type described in the
statute. The purchase of low quality assets from affiliates is prohibited.
Section 23B provides that certain transactions with affiliates, including loans
and asset purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
institution as those prevailing at the time for comparable transactions with
nonaffiliated companies. In the absence of comparable transactions, such
transactions may only occur under terms and circumstances, including credit
standards, that in good faith would be offered to or would apply to
nonaffiliated companies. The Company does not expect these provisions will have
any effect on its proposed operations.
SUPPORT OF SUBSIDIARY DEPOSITORY INSTITUTIONS. In accordance with
Federal Reserve policy, the Company is expected to act as a source of financial
strength and to commit resources to support the Bank. This support may be
required at times when the Company might not be inclined to provide such
support. Such support would include the infusion of additional capital into an
under capitalized bank subsidiary in situations where an additional investment
in a troubled bank might not ordinarily be made by a prudent investor. In
addition, any capital loans by a bank holding
26
<PAGE> 29
company to any of its subsidiary banks must be subordinate in right of payment
to deposits and to certain other indebtedness of such subsidiary banks. In the
event of bankruptcy, any commitment by a bank holding company to a federal bank
regulatory agency to maintain the capital of its subsidiary bank will be assumed
by the bankruptcy trustee and will be entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA") a subsidiary bank of a
bank holding company, can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC insured depository
institution "in danger of default." "Default" is defined generally as the
appointment of a conservator or a receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
CONTROL OF A BANK HOLDING COMPANY. FRB Regulation Y, adopted pursuant
to Section 225.41 of 12 U.S.C. Section 1817(j), requires persons acting directly
or indirectly or in concert with one or more persons to give the Board of
Governors of the Federal Reserve 60 days advanced written notice before
acquiring control of a bank holding company. Under the Regulation, control is
defined as the ownership or control with the power to vote 25% or more of any
class of voting securities of the holding company. The Regulation also provides
for a presumption of control if a person owns, controls, or holds with the power
to vote 10% or more (but less than 25%) of any class of voting securities, and
if: (i) the holding company's securities are registered securities under Section
12 of the Exchange Act; or (ii) no other person owns a greater percentage of
that class of voting securities. It is not anticipated that any purchaser of the
securities offered herein, including any of the Organizers, will acquire 10% of
more of the Company's Common Stock.
LEGISLATION AND REGULATIONS OF THE BANK
GENERAL. From time to time, various bills are introduced in the United
States Congress with respect to the regulation of depository institutions.
Recent banking legislation, particularly the FIRREA and the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), has broadened the
regulatory powers of the federal bank regulatory agencies and restructured the
nation's banking system. The following is a brief discussion of certain portions
of these laws and how they would effect the Company or the Bank.
The FDICIA revised sections of the FDIA affecting bank regulation,
deposit insurance and provisions for funding of the BIF administered by the
FDIC. The FDICIA also revised bank regulatory structures embodied in several
other federal banking statutes, strengthened the bank regulators' authority to
intervene in cases of deterioration of a bank's capital level, placed limits on
real estate lending and imposes detailed audit requirements.
PROMPT AND CORRECTIVE ACTION. The FDICIA required the federal banking
regulatory agencies to set certain capital and other criteria which would define
the category under which a particular depository institution would be
classified. The FDICIA imposes progressively more restrictive constraints on
operations, management, and capital distributions depending on the category in
which an depository institution is classified. Pursuant to the FDICIA,
undercapitalized depository institutions must submit recapitalization plans to
their respective federal banking regulatory agencies, and a company controlling
a failing depository institution must guarantee such depository institution's
compliance with its plan in order for the plan to be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories. For
example, a bank is deemed to be "well-capitalized" if it has a total risk-based
capital ratio (total capital to risk-weighted assets) of 10% or greater, a Tier
1 risk-based capital ratio (Tier 1 capital to risk- weighted assets) of 6% or
greater, and a Tier 1 leverage capital ratio (Tier 1 capital to adjusted total
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A depository institution is deemed to be "adequately capitalized" if it has a
total risk-based capital ratio of 8% or greater, and (generally) a Tier 1
leverage capital ratio of 4% or greater, and the depository institution does not
meet the definition of a "well-capitalized" institution. A depository
institution is deemed to be "critically undercapitalized" if it has a ratio of
tangible equity (as defined in the regulations) to total assets that is equal to
or less than 2%. In addition, the FDIC is authorized effectively to downgrade a
depository institution to a lower capital category than the depository
institution's capital ratios would otherwise indicate, based upon safety and
soundness considerations (such as when the depository institution has received a
less than satisfactory examination rating for any of the CAMELS rating
categories other than capital: i.e. Asset Quality, Management, Earnings,
Liquidity and Interest Rate Sensitivity). As a bank drops to lower capital
levels, the extent of action to be taken by the appropriate regulator increases,
restricting the types of transactions in which the depository institution may
engage. The new capital standards are
27
<PAGE> 30
designed to bolster and protect the deposit insurance fund. Based upon its
proposed capital, the Bank would be considered to be well capitalized.
INSURANCE ON DEPOSIT ACCOUNTS. In response to the requirements of the
FDICIA, the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The FDIC
assigns a financial institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period. These categories consist of well
capitalized, adequately capitalized or undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the depository institution's primary regulator, in the Bank's
case the Department, and information which the FDIC determines to be relevant to
the depository institution's financial condition and the risk posed to the
deposit insurance funds. A financial institution's assessment rate depends on
the capital category and supervisory category to which it is assigned. There are
nine assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied. BIF
assessment rates range from 0 basis points on deposits for a depository
institution in the highest category (i.e., well-capitalized and financially
sound with only a few minor weaknesses) to 31 basis points on deposits for an
institution in the lowest category (i.e., undercapitalized and posing a
substantial probability of loss to the BIF, unless effective corrective action
is taken). The Bank does not expect any assessment for its first year of
operation.
STANDARDS FOR SAFETY AND SOUNDNESS. The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and their
holding companies standards relating to internal controls, information systems
and audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate. In
addition, the federal banking regulatory agencies are required to prescribe by
regulation standards specifying: (i) maximum classified assets to capital
ratios; (ii) minimum earnings sufficient to absorb losses without impairing
capital; (iii) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of depository institutions or the depository
institution holding companies; and (iv) such other standards relating to asset
quality, earnings and valuation as the agency deems appropriate. Finally, each
federal banking agency is required to prescribe standards for employment
contracts and other compensation arrangements of executive officers, employees,
directors and principal shareholders of insured depository institutions that
would prohibit compensation and benefits and other arrangements that are
excessive or that could lead to a material financial loss for the depository
institution. If an insured depository institution or its holding company fails
to meet any of its standards described above, it will be required to submit to
the appropriate federal banking agency a plan specifying the steps that will be
taken to cure the deficiency. If a depository institution fails to submit an
acceptable plan or fails to implement the plan, the appropriate federal banking
agency will require the depository institution or holding company, to correct
the deficiency and until corrected, may impose restrictions on the institution
or the holding company including any of the restrictions applicable under the
prompt corrective action provisions of the FDICIA.
The FDICIA also requires each appropriate federal banking agency to
adopt uniform regulations prescribing standards for extensions of credit secured
by real estate or made for the purpose of financing the construction of
improvements on real estate. In prescribing these standards, the banking
agencies must consider the risk posed to the deposit insurance funds by real
estate loans, the need for safe and sound operation of insured depository
institutions and the availability of credit.
CAPITAL REQUIREMENTS. The Federal Reserve and the FDIC have adopted
capital regulations which establishes a Tier 1 core capital definition and a
minimum 3% leverage capital ratio requirement for the most highly-rated banks
and holding companies (i.e., those banks and holding companies with a composite
CAMELS rating of 1 under the Uniform Financial Institutions Rating System
established by the Federal Financial Institutions Examination Council) that are
not anticipating or experiencing significant growth. All other state nonmember
banks are required to meet a minimum leverage ratio that is at least 100 to 200
basis points above 3%. A holding company or bank that is not in the
highest-rated category or that is anticipating or experiencing significant
growth will have to meet a minimum leverage ratio of at least 4%. Based upon the
Bank's Business Plan, the minimum capital with which the Bank will be permitted
to open is $6.4 million.
Under the Federal Reserve's and the FDIC's risk-based regulations, a
holding company or bank must classify its assets and certain off-balance sheet
activities into categories and maintain specified levels of capital for each
category. The least capital is required for the category deemed by the Federal
Reserve and the FDIC to have the least risk, and the most capital is required
for the category deemed by the Federal Reserve and the FDIC to have the greatest
risk. The
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<PAGE> 31
regulations require a holding company or bank to have a total risk based capital
ratio of 8% and a Tier 1 risk based capital ratio of 4%. Under the statement of
policy, certain assets are required to be deducted from risk-based capital. Such
assets include intangible assets, unconsolidated banking and finance
subsidiaries, investments in securities subsidiaries, ineligible equity
investments and reciprocal holding of capital instruments with other banks. In
addition, the Federal Reserve or the FDIC may consider deducting other assets on
a case-by-case basis or investments in other subsidiaries on a case-by-case
basis or based on the general characteristics or functional nature of the
subsidiaries.
LOANS TO ONE BORROWER. Florida law allows a state bank to extend credit
to any one borrower in an amount up to 25% of its capital accounts, which are
defined as unimpaired capital, surplus and undivided profits, provided that the
unsecured portion may not exceed 15% of the capital accounts of the bank. Based
upon the proposed $6,400,000 in initial capital stock of the Bank, the maximum
loan the Bank will be permitted to make is $1,600,000 provided that the
unsecured portion may not exceed $960,000. Assuming the maximum proceeds of the
Offering and a proposed initial Capital of $12,600,000, the maximum loan the
Bank would be permitted to make would be approximately $3,150,000 provided that
the unsecured portion could not exceed $1,890,000. The law permits exemptions
for loans collateralized by accounts maintained with the Bank and for loans
guaranteed by the Small Business Administration, the Federal Housing
Administration and the Veterans Administration.
PAYMENT OF DIVIDENDS. While not the only source of income, the primary
source of income to the Company will be dividends from the Bank. A Florida
chartered commercial bank may not pay cash dividends that would cause the bank's
capital to fall below the minimum amount required by federal or Florida law.
Otherwise, a commercial bank may pay a dividend out of the total of current net
profits plus retained net profits of the preceding two years to the extent it
deems expedient, except as described below. Twenty percent of the net profits in
the preceding two year period may not be paid in dividends, but must be retained
to increase capital surplus until such surplus equals the amount of common and
preferred stock issued and outstanding. In addition, no bank may pay a dividend
at any time that net income in the current year when combined with retained net
income from the preceding two years produces a loss. The ability of the Bank to
pay dividends to the Company will depend in part on the FDIC capital
requirements in effect at such time and the ability of the Bank to comply with
such requirements.
BROKERED DEPOSITS. In accordance with the FDICIA, the FDIC has
implemented restrictions on the acceptance of brokered deposits. In general, an
"undercapitalized" depository institution may not accept, renew or roll over any
brokered deposits. "Adequately capitalized" institutions may request a waiver
from the FDIC to do so, while "well-capitalized" institutions may accept, renew
or roll over such deposits without restriction. The rule requires registration
of deposit brokers and imposes certain recordkeeping requirements. Depository
institutions that are not "well-capitalized" (even if meeting minimum capital
requirements) are subject to limits on rates of interest they may pay on
brokered and other deposits. The Bank does not expect to acquire any brokered
deposits.
LIQUIDITY. A state-chartered commercial bank is required under Florida
law to maintain a liquidity reserve of at least 15% of its total transaction
accounts and 8% of its total nontransaction accounts subject to certain
restrictions. This reserve may consist of cash-on-hand, demand deposits due from
correspondent banks, and other investments and short-term marketable securities.
The Bank will be subject to these requirements.
COMMUNITY REINVESTMENT. Under the Community Reinvestment Act ("CRA"),
as implemented by Federal Reserve and FDIC regulations, holding companies and
state nonmember banks have a continuing and affirmative obligation consistent
with their safe and sound operation to help meet the credit needs of their
entire community, including low- and moderate-income neighborhoods. The CRA does
not establish specific lending requirements or programs for depository
institutions nor does it limit a depository institution's discretion to develop
the types of products and services that it believes are best suited to its
particular community, consistent with the CRA. The CRA requires the Federal
Reserve and the FDIC, in connection with their examination of holding companies
or state nonmember banks, to assess the Company's record of meeting the credit
needs of their communities and to take such record into account in its
evaluation of certain applications by such institution. The FIRREA amended the
CRA to require public disclosure of a depository institution's CRA rating and to
require that the Federal Reserve and the FDIC provide a written evaluation of an
institution's CRA performance utilizing a four-tiered descriptive rating system
in lieu of the then existing five-tiered numerical rating system. The Company
and the Bank will be subject to these regulations.
DEPOSIT INSURANCE FUNDS ACT OF 1996. On September 30, 1996, Congress
passed and the President signed in to law the Deposit Insurance Funds Act of
1996 ("DIFA"). Among other things, the DIFA, and rules promulgated thereunder by
the FDIC, provide for banks and thrifts to share the annual interest expense for
the Finance Corp. Bonds which were issued in the late 1980s to help pay the
costs of the savings and loan industry restructuring. The approximate
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<PAGE> 32
annual interest expense is $780 million of which BIF insured banks are expected
to pay approximately $322 million or 41%, while SAIF insured thrifts will pay
approximately $458 million or 59% of the interest expense. It is estimated that
the annual assessment for BIF insured institutions will be approximately 1.2
cents per $100 of deposits, while SAIF insured institutions will pay 6.5 cents
per $100 of deposits. These payments are to begin in 1997 and run through 1999.
Beginning in the year 2000 and continuing through the year 2017, banks and
thrifts will each pay 2.43 cents per $100 of deposits. These assessments will be
in addition to any regular deposit insurance assessments imposed by the FDIC
under FDICIA. See REGULATION AND SUPERVISION - Insurance on Deposit Accounts.
INTERSTATE BANKING. Under the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, existing restrictions on interstate
acquisitions of banks by bank holding companies were repealed on September 29,
1995, such that the Company and any other bank holding company would be able to
acquire any Florida-based bank, subject to certain deposit percentage and other
restrictions. The legislation also provides that, unless an individual state
elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to be subject to applicable state
branching laws. Florida has adopted legislation which will permit interstate
acquisitions and interstate branching effective June 1, 1997. Florida law
prohibits de novo branching by out of state banks.
DEPARTMENT ASSESSMENT. State-chartered commercial banks are required by
Department regulation to pay assessments to fund the operations of the
Department. The general assessment, to be paid semiannually, is computed upon a
bank's total assets, including consolidated subsidiaries, as reported in the
bank's latest quarterly call report. The Bank will be required to pay such
assessments semi-annually.
THE FEDERAL RESERVE SYSTEM
The Federal Reserve regulations require banks to maintain non
interest-earning reserves against their transaction accounts (primarily NOW and
regular checking accounts). The Federal Reserve regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts of
$49.3 million or less (subject to adjustment by the Federal Reserve) plus 10%
(subject to adjustment by the Federal Reserve between 8% and 14%) against that
portion of total transaction accounts in excess of $49.3 million. The first $4.4
million of otherwise reservable balances (subject to adjustments by the Federal
Reserve) are exempted from the reserve requirements. The balances maintained to
meet the reserve requirements imposed by the Federal Reserve may be used to
satisfy liquidity requirements. Because required reserves must be maintained in
the form of either vault cash, a noninterest-bearing account at a Federal
Reserve Bank or a pass-through account as defined by the Federal Reserve,
interest-earning assets of the Bank are reduced. The Company and the Bank will
be subject to these requirements.
ORGANIZERS AND PRINCIPAL SHAREHOLDERS
The following persons are Organizers and Directors of both the Company
and Bank: D. Michael Carter, Victor M. George (Organizer/Director), George H.
Groves, James M. Healey, David C. Keasler (Organizer) John C. Kowkabany, Rudolph
A. Kraft, R. C. Mills, (Organizer/Director) John W. Rose, John R. Schultz,
Charles F. Spencer, Bennett A. Tavar, and Gary L. Winfield, M.D. The Organizers,
as a group, intend to subscribe for 178,500 shares in the Offering which will
equal 22.31% of the 800,000 minimum shares required to be sold in order to
release funds from the Escrow Agreement. The Organizers and Directors have
indicated that they may be willing to subscribe for additional shares in the
Offering if necessary to help the Company complete the Offering and release the
proceeds from the Escrow Account. In any event, total purchases by the
Organizers will not exceed 258,500 shares in the aggregate, which would equal
approximately 32.31% of the 800,000 minimum shares required to be sold in order
to release funds from the Escrow Account. Should it be necessary for management
to purchase additional shares of stock to assist the Company in closing the
minimum offering and substantial additional shares are not sold to the public
subsequent to the closing of the minimum offering, management may have
sufficient votes to control the results of most actions voted on by
shareholders.
The following chart shows ownership information with respect to
Organizers and Directors if they purchase stock in the Offering as currently
intended.
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<PAGE> 33
<TABLE>
<CAPTION>
% OF OWNERSHIP % OF OWNERSHIP
BASED ON BASED ON
NUMBER OF MINIMUM MAXIMUM
NAME(1) SHARES(2) OFFERING(3) OFFERING(3)
- ------- --------- ----------- ---------------
<S> <C> <C> <C>
D. Michael Carter 10,500 1.31% 0.70%
Victor M. George 12,500 1.56% 0.83%
George H. Groves 5,000 .62% 0.33%
James M. Healey 15,000 1.88% 1.00%
David C. Keasler 5,000 .62% 0.33%
John C. Kowkabany 15,000 1.88% 1.00%
Rudolph A. Kraft 15,000 1.88% 1.00%
R. C. Mills 27,000 3.37% 1.80%
John W. Rose 25,000 3.13% 1.67%
John R. Schultz 12,500 1.56% 0.83%
Charles F. Spencer 10,000 1.25% 0.67%
Bennett A. Tavar 13,500 1.69% 0.90%
Gary L. Winfield, M.D. 12,500 1.56% 0.83%
-------- ----------- ------
TOTAL 178,500 22.31% 11.89%
======== =========== ======
</TABLE>
- --------------
(1) Each of the Organizers will acquire their shares during the Offering Period
and in accordance with the terms set forth herein.
(2) Number of shares to be purchased in the Offering.
(3) Individual percentages based upon 800,000 shares outstanding and 1,500,000,
shares outstanding, respectively.
All organizational and preopening expenses, as well as certain fixed
asset acquisitions of the Company, and the Bank have been financed by the
Organizers and Directors, or by loans guaranteed by the Organizers and
Directors. For further discussion of transactions between the Organizers,
Directors and the Company, see "CERTAIN TRANSACTIONS" on page 33 and
"MANAGEMENT'S DISCUSSION AND ANALYSIS" on page 19.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AND THE BANK
COMPANY. The initial Board of Directors of the Company consists of 12
directors. The directors will be divided into three classes, designated Class I,
Class II and Class III. Each class will consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board of
Directors. The term of the Company's initial directors will expire at the first
meeting of shareholders at which directors are elected. Following the subsequent
election of the Company's directors, the term of the Class I directors will
expire at the Company's next annual meeting of shareholders; the term of the
Class II directors will expire at the Company's second annual meeting of
shareholders; and the term of the Class III directors will expire at the
Company's third annual meeting of shareholders. At each annual meeting of
shareholders, successors to the directors whose terms expires at the annual
meeting will be elected for three-year terms. If the number of directors is
changed, an increase or decrease will be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional director of any class elected to fill a vacancy resulting from an
increase in such class will hold office for a term that will coincide with the
remaining term of that class, but in no event will a decrease in the number of
directors shorten the term of any incumbent director. Any director elected to
fill a vacancy not resulting in an increase in the number of directors will have
the same remaining term as that of his predecessor. Except in the case of
removal from office, any vacancy on the Board of Directors will be filled by a
majority vote of the remaining directors then in office. The effect of the
classified Board of Directors is to make it more difficult for a person, entity
or group to effect a change in control of the Company through the acquisition of
a large block of the Company's voting stock.
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<PAGE> 34
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and the position filled
by another person nominated and elected for that purpose by the affirmative vote
of the holders of at least 66% of the outstanding shares of the Company's Common
Stock. The Company's officers are appointed by the Board of Directors and hold
office at the will of the Board.
BANK. Each of the nine proposed directors of the Bank will stand for
election at the Bank's first shareholders meeting, which meeting will be held
shortly before the Bank commences operations. The Company will be the sole
shareholder of the Bank. After the first shareholder meeting, directors of the
Bank will serve for a term of one year and will be elected each year at the
Bank's annual meeting of shareholders. The Bank's officers will be appointed by
its Board of Directors and will hold office at the will of the Board.
The proposed directors and executive officers for the Company and the
Bank are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY POSITION WITH BANK
- ---- --------------------- -------------------
<S> <C> <C>
D. Michael Carter Director Director
Victor M. George Chairman, President, CEO President, Chairman, CEO and Chief
George H. Groves Director Director
James M. Healey Director --
David C. Keasler N/A Senior Vice President, Senior Loan Officer
John C. Kowkabany Director --
Rudolph A. Kraft Director --
R. C. Mills Director Director
John W. Rose Director Director
Lynn H. Sandberg N/A Senior Vice President of Operations
John R. Schultz Director Director
Charles F. Spencer Director Director
Bennett A. Tavar Director Director
Gary L. Winfield, M.D. Director Director
</TABLE>
INITIAL DIRECTORS. The following is a brief description of the
business, civic and educational experience of the initial Directors:
D. MICHAEL CARTER, age 45, is a Certified Public Accountant and a
graduate of Florida State University. Mr. Carter has lived in Jacksonville,
Florida since 1975 and has an active accounting practice under Carter, Merolle &
Company, P.A. Tax and audit clients include businesses, business owners and
executives, as well as professionals. Prior to forming his firm in 1980, Mr.
Carter had been a public accountant with two national accounting firms.
VICTOR M. GEORGE, age 57, will be the President and CEO of the Company
and the Bank. He will serve as the Company's Interim Chairman of the Board until
the first annual meeting of shareholders. Mr. George has over 30 years of
experience in the banking industry which began in 1971 with The Fifth Third Bank
in Cincinnati, Ohio. Mr. George was the Vice President and Senior Commercial
Regional Lender when he left Fifth Third Bank in 1980 to form VMG & Associates,
Inc., an international financial firm. Mr. George moved to Orlando, Florida in
1983 to join Barnett Bank of Central Florida, N.A., where he served as Senior
Vice President, Corporate Banking. Mr. George left Barnett Bank of Central
Florida in 1988 to join First Florida Bank, N.A., Orange County, Florida, were
after a series of promotions he became the President for First Florida Bank of
Orange County, Florida. In 1993, after First Florida Banks, Inc. was acquired by
Barnett Banks, Inc., Mr. George joined Community First Bank, a $320 million
community bank located in Jacksonville, Florida. He was Executive Vice President
responsible for commercial lending and consumer lending and the oversight of 10
branches. While at Community First Bank, commercial loan growth increased 30%
annually, and consumer loans grew 212% through an indirect lending program
implemented by Mr. George. When Community First Bank was acquired by Compass
Bank in August 1996, Mr. George became the President of Fields Motor Cars of
Florida, Inc. He resigned his position in October 1997 to form the Company and
organize the Bank. Mr. George received his B.A. degree in
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<PAGE> 35
Economics from Georgetown University in Washington, D.C. He also attended
George Washington University for graduate study and has attended numerous
banking and management courses with the American Institute of Banking and the
American Management Association, respectively. Mr. George has lived in the
Jacksonville area for five years. His civic and social activities include
membership in the Meninak Club of Jacksonville, Sawgrass Country Club, former
member of the University Club and a fund raising committee member of the
Methodist Medical Center Hospice. Mr. George has been active in sponsoring the
Senior Olympics in Jacksonville. From 1983 to 1993, Mr. George was involved in
the Central Florida community where he was active in the Mid-Florida Economic
Development Commission.
GEORGE H. GROVES, age 58, has over 25 years experience in the financial
services industry. He has served at the executive level for both community and
regional commercial banks. In these capacities, he was responsible for all
aspects of business development and operations, including strategic planning,
profit/loss analysis, product development, marketing, sales and staff
development. Mr. Groves was most recently Senior Executive Vice President and
Chief Banking Officer of Keystone Financial, Inc., where he directed the banks
growth efforts, including the acquisition of 14 banks, two non-bank companies
and start-up of three banking related businesses. During Mr. Groves seven-year
tenure, Keystone Financial grew from three banks with net income of $24 million
on $2.0 billion in total assets to an organization with seven banks, several
subsidiaries and net income of $100 million on total assets approaching $7.0
billion. Mr. Groves prior financial institutions experience include:
President/CEO, Northern Central Bank; Senior Vice President, Irwin Union Bank &
Irwin Union Corporation; and Commercial Lender, First National Bank of Chicago.
A native of Kentucky, Mr. Groves received his bachelor of science, engineering,
from the United States Military Academy at West Point. He served in the United
States Army achieving the rank of Captain. He has an M.B.A. from the University
of Virginia's Darden Graduate School of Business. He has served on the board of
directors of Pennsylvania Bankers Association.
JAMES M. HEALEY, age 41, is the Vice President of the Jacksonville
Mint, Inc., a direct-mailed advertising firm. Prior to his association with the
Jacksonville Mint, Mr. Healey worked with Carnation Food Products, Inc. and
International Harvester. Mr. Healey attended Purdue University where he received
a B.A. degree from Purdue's Business School with special studies in Marketing
and Personnel. Mr. Healey has been a resident and an active member of the
Jacksonville community since 1984.
JOHN C. KOWKABANY, age 56, is a Jacksonville based real estate investor
and consultant. Mr. Kowkabany has significant private and public sector
experience. A resident of the Neptune Beach community, he has been active in
local government, serving as the City's Councilman from 1985 to 1989 and then
two four-years terms as Mayor from 1989 to 1997. Mr. Kowkabany's public sector
experience has provided him with experience and knowledge regarding the local
business and civic community, as well as close working relationships with
various appointed officials on the local, state and federal levels. A native of
Jacksonville, Mr. Kowkabany attended local schools and graduate with a Bachelor
of Arts from Jacksonville University. He has been involved in numerous civic,
charitable and social organizations, including Kiwanis International, American
Cancer Society, Historical Society, Florida League of Cities, Gator Bowl
Association and the Jacksonville Quarterback Club.
RUDOLPH A. KRAFT, age 63, is the President and Chief Executive Officer
of Kraft Holdings, Inc., a real estate investment and rental company. From
November 1988 until June 1998 he was part owner of Kraft Motorcar Company, Inc.,
Jacksonville, Florida, a Mercedes- Benz, Jeep, Eagle and Buick Dealership. Mr.
Kraft has served on the board of a number of civic organizations. He currently
sits on the President's Council for Kettering University in Flint, Michigan.
R. C. MILLS, age 61, is Executive Vice President and Chief Operating
Officer of Heritage Holdings, Inc., a national distributor of propane gas. Mr.
Mills is a native of Tallahassee, Florida and a graduate of the University
ofSarasota. Mr. Mills was instrumental in building Heritage Holdings, Inc. into
a national, publicly-traded company which is listed on the New York Stock
Exchange. Mr. Mills has an extensive business background and is experienced in
business mergers and acquisitions, corporate finance and personnel management.
Mr. Mills resides in the Jacksonville area and is a member of the First Baptist
Church of Jacksonville.
JOHN W. ROSE, age 49, has been a financial services executive, advisor,
and investor for over 25 years. Mr. Rose is the Founder/President of McAllen
Capital Partners, Inc., a boutique firm providing a select range of financial,
economic and management services, as well as capital resources exclusively to
the financial services industry. Mr. Rose
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continues to serve as a special advisor to F.N.B. Corporation (Hermitage,
Pennsylvania). Mr. Rose is also a general partner and chairman of the investment
committee of Castle Creek Capital (California), a series of funds that invests
in financial service companies. Prior to forming McAllen Capital, Mr. Rose
served in various capacities with the following Chicago-based firms: President,
Livingston Financial Group; Senior Vice President, ABN/LaSalle National Bank;
Associate, William Blair & Co.; Principal, Dwyer, Rose & Associates; and Vice
President, First National Bank. He currently serves on the Board of Directors of
Regent Bancshares, Philadelphia, Pennsylvania, and First County Bank, Chardon,
Ohio. Mr. Rose earned his undergraduate degree from Case Western Reserve
University. He received his M.B.A. degree from Columbia University.
JOHN R. SCHULTZ, age 34, is a fourth generation native of Jacksonville,
Florida. Mr. Schultz is Chief Executive Officer of the Schultz Companies. He is
the Founder and Chairman of Schultz Construction, Inc., a commercial/residential
contractor and is Co-owner of Schultz Properties, Inc., a commercial real estate
brokerage firm. Mr. Schultz is a graduate of The Bolles School and attended the
University of Florida. Mr. Schultz is a director of numerous companies and
community organizations, including First Coast Venture Capital Corp.,
Southeast-Atlantic Corp. (Canada Dry bottler/distributor for Florida and
Georgia), Junior Achievement of Jacksonville, St. Vincent's Foundation, Museum
of Science and History, Jacksonville Museum of Contemporary Art, Volunteer
Jacksonville and Visador Company. Mr. Schultz is also a member of various
professional and civic organizations, including the Northeast Florida Builders
Association, Jacksonville Association of Realtors, Rotary Club of West
Jacksonville and Jacksonville Community Council, Inc. Mr. Schultz is an alumni
of the 1994 Class of Leadership Jacksonville.
CHARLES F. SPENCER, age 55, is President of the International
Longshoremen's Association, Local 1408 in Jacksonville, Florida. In addition,
Mr. Spencer is Vice President of the South Atlantic and Gulf Coast District of
I.L.A. and Vice President at Large of the Florida AFL-CIO. Mr. Spencer is a
member of the Jacksonville Sports Development Authority appointed by the Mayor.
He also serves as Secretary-Treasurer, elected by board members of the J.S.D.A.
A native of Jacksonville, Mr. Spencer is very active in the community. He is a
member of the West Side Church of Christ, where he teaches and is a member of
the finance committee. Mr. Spencer is a board member of Edward Waters College
where he attended school and is a former board member of the Florida Community
College at Jacksonville Foundation, which he also attended.
BENNETT A. TAVAR, age 41, is Owner and President of Logical Business
Systems, Inc., a computer hardware sales firm located in Jacksonville, Florida.
Mr. Tavar has been a resident of Jacksonville since 1982 and is active in a
number of local civic organizations.
GARY L. WINFIELD, M.D., age 41, is a physician. Dr. Winfield has had an
active family practice in Jacksonville, Florida since 1989, operating under
Sandcastle Family Practice, P.A. From 1986 to 1989, Dr. Winfield completed his
residency requirements at St. Vincent's Hospital in Jacksonville. Dr. Winfield
is also Vice President of Medical Affairs for Anthem Health Plans of Florida, a
provider of health insurance. Dr. Winfield received his undergraduate degree
from the University of Oklahoma and is a graduate of the College of Medicine of
the University of Oklahoma.
OFFICERS. The following is a brief description of the business, civic
and educational experience of the initial Officers:
TIMOTHY R. HILYER, age 47, will be Vice President/Credit Administrator
of the Bank. Mr. Hilyer has over ten years of experience with the financial
services industry, including credit administration positions with community and
large regional banks. Prior to joining the Bank, he was Vice President and
Senior Credit Officer with Gulf Coast National Bank (Naples, Florida). Mr.
Hilyer's prior employment has included: Senior Credit Officer, Community First
Bank (Jacksonville), Credit Administration Officer, Bank South (Waycross,
Georgia), and Senior Credit Analyst, First Union National Bank (Columbus,
Georgia). A native of Georgia, he holds a bachelors of business administration
from the University of Georgia.
DAVID C. KEASLER, age 41, will be Senior Vice President and Senior Loan
Officer of the Bank. Mr. Keasler has 17 years financial services experience,
with specific expertise in the areas of credit production, underwriting and
administration. Most recently, he was President of Ponte Vedra Capital, Inc., a
Jacksonville-based mortgage brokerage business. His prior financial institutions
affiliations include: Vice President-Corporate Banking, Southeast Bank (Miami,
Florida), Vice President, American National Bank of Florida. A native of
Florida, Mr. Keasler holds a B.S.B.A. in Finance and Banking from the University
of Arkansas. His civic responsibilities included: Treasurer of River Region
Human Services and Committee Chairman for the Tournament Players Championship.
Mr. Keasler has been a resident of Jacksonville for 42 years.
LYNN H. SANDBERG, age 42, will be Senior Vice President and Chief
Operations Officer of the Bank. Ms. Sandberg has nearly 25 years of financial
institution experience, focused primarily in the areas of financial management,
operations, and information technology. Ms. Sandberg was most recently Vice
President/Cashier with Enterprise National Bank,
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a community bank based in Jacksonville, Florida. At Enterprise National Bank,
Ms. Sandberg was responsible for item processing, bookkeeping, and information
systems. Her previous financial services positions included: Senior Product
Manager, Nation or (a financial services software firm), Vice
President-Operations, FloridaBank (Jacksonville), Operations Officer, Barnett
Operations Company (Jacksonville), and Assistant Vice President, Florida
National Bank (Jacksonville). A Florida native, Ms. Sandberg is a graduate of
Santa Fe Community College (Gainesville) and is presently attending Jacksonville
University.
EXECUTIVE COMPENSATION
The Organizers entered into an employment agreement with Victor M.
George in February 27, 1998, to assist the Organizers with the formation of the
Company and the Bank. Under the terms of the Agreement, Victor M. George will
serve as the President and Chief Executive Officer of the Company, subject to
selection by the Board of Directors, and as President, Chief Executive Officer
of the Bank, subject to selection by the Bank's Board of Directors. Mr. George
will be paid a base salary of $95,000 and will be entitled to a fixed
performance bonus equal to 3% of the Company's quarterly consolidated net income
before taxes (excluding extraordinary gains or losses) and without consideration
of the performance bonus computed in accordance with generally accepted
accounting principles. The Bank will also provide Mr. George with an automobile
for use during the term of employment. Under the employment agreement, the base
salary and any bonus is paid by the Bank. As part of his employment agreement,
the Bank will pay the annual membership fee for Mr. George to be a member at a
business club and country club as approved by the Board of Directors.
Mr. George may participate in all employee benefits, stock option
plans, pension plans, insurance plans and other fringe benefits commensurate
with his position. On or before each December 31, the Board of Directors shall
review the employment agreements and the employees' performance and vote whether
to extend the term of the employment agreements for an additional year. The
decision to extend the employment agreements is within the sole discretion of
the Board of Directors.
The Employment agreement provides for termination by the Bank for
"cause." In the event the Bank chooses to terminate Mr. George's employment for
reasons other than for cause, they (or in the event of death, their respective
beneficiaries) would be entitled to a severance payment equal to the total
annual compensation for the remainder of the term of the respective employment
agreement. In the event of a change of control of the Company or the Bank, Mr.
George will be entitled to three times his annual compensation.
In the event Mr. George voluntarily terminates his employment, other
than for reasons mentioned herein, all rights and benefits under the respective
employment agreement shall immediately terminate upon the effective date of
termination.
STOCK OPTION PLANS
The Board of Directors intends to present, for shareholder approval, at
the Company's first annual meeting of shareholders, a Directors' Stock Option
Plan and a Key Employee Stock Option Plan (collectively the "Plans"), which will
be designed to provide incentive compensation to Directors and key employees of
the Company. The detail of the Plans have not yet been determined, but such
details would be disclosed to shareholders in the Company's Proxy Statement
issued in connection with solicitation of shareholder approval of such Plans. It
is anticipated that 15% of the shares of the outstanding shares resulting from
this Offering will be set aside for stock options under the Plans, 8% to the
Employees of the Company, and 5.5% to the directors of the Company, based
pro-rata on the number of shares of the Company that each director purchased.
Such options will not be granted at less than fair market value of the Company's
Common Stock on the date of grant. Under Mr. George's employment agreement, he
will be granted a stock option for 50,000 shares, subject to adoption and
approval by the Company's shareholders of the Key Employee Stock Option Plan.
KEY-MAN LIFE INSURANCE
The Company has obtained a $1,000,000 "key-man" life insurance policy
on Mr. George which is payable to the Company in the event of his death. Should
Mr. George die during the organizational process, the Company may elect to
terminate the Offering and refund all subscription proceeds to the subscribers,
or the Company may seek a qualified replacement which would delay the
commencement of operations and increase pre-opening expenses.
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CERTAIN TRANSACTIONS
ORGANIZATIONAL ADVANCES
In order to fund the initial organizational expenses of the Bank, estimated to
be approximately $700,000, one of the Directors, R. C. Mills, loaned the Company
$150,000, as evidenced by a Promissory Note dated October 10, 1997. The loan is
at 8.5% interest payable and will be repaid from the proceeds of the Offering.
The terms of this loan are as favorable to the Company as those loans generally
available from unaffiliated third parties. In particular, the 8.5% interest rate
is less than the interest rate being charged by commercial lenders in the
Jacksonville area for similar loans. The loan has been ratified by a majority of
the company's independent directors who had no interest in the transaction and
who had access to independent legal counsel at the time of the transaction.
Pre-opening expenses exceeding the $150,000 loaned to the Company by
the Director will be funded through two lines of credit that have been extended
to the Company by the Independent Banker's Bank of Florida and on terms and
conditions as follows:
INDEPENDENT BANKER'S BANK OF FLORIDA
<TABLE>
<S> <C>
Loan Amount......................... up to $450,000.
Terms............................... On demand, interest monthly, due on or before April 10, 1999.
Rate................................ Wall Street Journal prime minus 1%, floating.
Fee................................. None.
Guarantors.......................... Organizing Directors--limited to $62,500 per director.
</TABLE>
COLUMBUS BANK & TRUST COMPANY
<TABLE>
<S> <C>
Loan Amount......................... up to $135,000 (No funds have been drawn down).
Terms............................... On demand, interest monthly, due on or before April 16, 1999.
Rate................................ Wall Street Journal prime at 7-3/4%.
Fee................................. None.
Guarantors.......................... John C. Kowkabany.
</TABLE>
The Organizers and Directors have also agreed to act as guarantors on
loans of up to $1.8 million pursuant to a commitment in that amount from
Columbus Bank Trust Company for loans to purchase and renovate the main office
facility and to purchase furniture, fixtures and equipment. This loan commitment
permits the Company to make a series of unsecured loans with an interest rate of
the prime rate less 1/2% and permits the execution of separate six-month notes,
renewable up to one year. Pursuant to this loan commitment, the Company has
borrowed $625,000 on January 11, 1998, for the acquisition of the Banks main
office; $450,000 on December 1, 1998, to renovate the main office, and $250,000
on October 18, 1998, for the purpose of purchasing equipment, furniture and
fixtures. These loans mature March 24, 1999, March 24, 1999, and February 16,
1999, respectively, and require interest-only payments until maturity.
All future material affiliated transactions must be approved by a
majority of the Company's outside independent directors who do not have an
interest in the transactions and who had access, at the Company's expense, to
the issuer's or independent legal counsel.
BANKING TRANSACTIONS
It is anticipated that the Directors and officers of the Company and
the Bank and the companies with which they are associated will have banking
transactions with the Bank in the ordinary course of business. All transactions
between the Bank and affiliated persons, including 5% shareholders, will be on
terms no less favorable to the Bank than could be obtained from independent
third parties. Any loans and commitments to lend to such affiliated persons or
entities included in such transaction will be made in accordance with all
applicable laws and regulations and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons of similar creditworthiness.
FINANCIAL ADVISORS
On June 10, 1998, the Company engaged McAllen Capital Partners, Inc.
("McAllen Capital") as a financial advisor to assist the Company with its
marketing efforts and future strategic planning. McAllen Capital is a
diversified consulting firm providing financial, economic and management
consulting services to the financial services industry. McAllen Capital is
providing financial advice to the Company in connection with the Offering and
has been retained to provide post-capitalization strategic planning services.
McAllen Capital was chosen because of its specific expertise in the financial
services industry and experience in corporate recapitalization, including
transactions involving shareholder rights offerings and community offerings.
Following the Offering, McAllen Capital will assist management and the Board of
Directors in the post-capitalization phase by analyzing and monitoring the
Company's program in
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implementing its new corporate strategies. John W. Rose, a Director for both
the Company and the Bank, is the President of McAllen Capital, which will
receive 1.5% fee of the gross proceeds of the public offering (excluding the
amount raised from directors and employees) for its advisory service in
connection with this Offering. McAllen Capital will not, solicit the sale or
purchase or purchase or sell Common Stock in connection with the Offering and
otherwise act as an underwriter with respect to the Offering. This transaction
was ratified by outside-non employee Directors of the Company. Mr. Rose did not
vote or participate in the discussions relating to the engagement of McAllen
Capital.
SALES AGENT
The Company has engaged Keefe, Bruyette & Woods, Inc. ("KBW"), a
registered broker-dealer, to act as sales agent to the Company with respect to
the Offering. KBW has agreed to use its best efforts to solicit subscriptions
and purchase orders for shares of Common Stock in the Offering. KBW has selected
certain broker-dealers to assist in the Offering, including, but not limited to,
J.P. Turner and Company, LLC, Capital Research, Ashtin Kelly & Company. These
selected broker-dealers intend to sell 5% or more of the Offering. Other
selected broker-dealers will be retained who do not intent to sell more than 5%
of the Offering. Neither KBW nor selected broker-dealers shall have any
obligation to take or purchase any shares of Common Stock in the Offering.
KBW has provided advice to the Company regarding the structure of the Offering,
as well as with respect to marketing the shares of Company Stock to be issued in
the Offering. KBW was chosen because of its general experience in the financial
services industry and because of its experience in transactions involving
community offerings.
KBW has not prepared any report or opinion constituting a
recommendation or advice to the Company, nor have they prepared an opinion as
to the fairness of the offering price or the terms of the Offering to the
Company. KBW expressed no opinion as to the prices at which shares to be
distributed in connection with the Offering may trade if and when they are
issued at any future time. See "DETERMINATION OF OFFERING PRICE."
As compensation for their services, the Company has agreed that KBW
shall receive: (i) no marketing fee for the Common Stock subscribed for
or purchased by the Company's officers, Directors, or employees, and (ii) a
marketing fee of 5.5% of the aggregate offering price of the Common Stock sold
in the Offering and the Syndicated Community Offering. KBW and Turner will pass
on to such selected broker-dealers who participate in the Syndicated Community
Offering an amount of stock sold at a comparable price per share in a similar
market environment. Fees with respect to purchases affected with the assistance
of broker-dealers other than KBW or Turner will be transmitted by KBW or Turner
to such broker-dealer. In connection with its engagement of KBW and Turner, the
Company has agreed to indemnify KBW and Turner against certain liability arising
out of its engagement or, in the event indemnification is unavailable, to
contribute to payments that KBW and Turner may be required to make in respect
thereof.
SUMMARY OF ARTICLES OF INCORPORATION
This following sets forth a general summary of certain provisions of
the Company's Articles which may be deemed to have an "anti-takeover effect or
otherwise restrict sales of the Company's Common Stock." The description below
is necessarily general and, with respect to the provision contained in the
Company's Articles, reference should be made to such documents. SEE EXHIBIT A.
Despite the belief of the Board of Directors of the Company that these
restrictive provisions are in the best interest of the shareholders, these
provisions may have the effect of discouraging a future takeover attempt which
would not be approved by the Company's Board of Directors, but pursuant to which
shareholders might receive a premium for their Common Stock over current market
prices or the effect of precluding other corporate action that a majority of the
shareholders felt were in their best interest. As a result, shareholders who
might desire to participate in such a transaction may not have any opportunity
to do so. Such provisions may also render the removal of the Board of Directors
of the Company and management more difficult. Finally, certain restrictive
provisions might make it difficult or impossible to sell Common Stock to persons
other than existing shareholder or the Company or might delay such a sale to
such an extent as to cause a substantial hardship on the selling shareholder.
AUTHORIZED SHARES. The Articles authorize the issuance of 10,000,000
shares of capital stock consisting of 8,000,000 shares of Common Stock and
2,000,000 shares of preferred stock. The amount of authorized shares of Common
Stock is greater than that to be issued in this Offering in order to provide the
Company's Board of Directors with as much flexibility as possible to effect,
among other things, financing, acquisitions, stock dividends, stock splits and
employee stock option transactions. However, these additional authorized shares
may also be used by the Board of Directors consistent with its fiduciary duty to
deter future attempts to gain control of the Company. The Company's Board
currently has no plans for the issuance of any preferred stock or any additional
Common Stock other than the
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issuance of shares of Common Stock in this Offering. The Company will not offer
preferred stock to directors, officers and other affiliated persons except on
the same terms as to all other shareholders.
SPECIAL MEETINGS OF SHAREHOLDERS. A special meeting of the shareholders
may be called by a resolution adopted by a majority of the Board of Directors,
the Chairman of the Board or the President of the Company, or by shareholders
holding at least 20% of the outstanding shares of the Company.
DIRECTORS. The Company's directors are divided into three classes, with
the term of office of the first class (Class I) to expire at the 1999 Annual
Meeting of Shareholders, the term of office of the second class (Class II) to
expire at the 2000 Annual Meeting, and the term of office of the third class
(Class III) to expire at the 2001 Annual Meeting. Any director, or the entire
Board of Directors, may be removed from office by the affirmative vote of the
holders of at least 60% of the voting power of all of the then outstanding
shares of capital stock of the Company entitled to vote generally in the
election of directors, voting together as a single class. State law only
requires a simple majority to remove a director from the Board.
AFFILIATED TRANSACTIONS AND BUSINESS COMBINATIONS. The Company's
Articles contain provisions requiring supermajority shareholder approval to
effect certain extraordinary corporate transactions which are not approved by a
majority of the disinterested members of the Board of Directors. The Articles
require the affirmative vote or consent of the holders of at least 66% of the
shares of voting stock, voting together as a single class, to approve any
merger, consolidation, disposition of all or a substantial part of the assets of
the Company or a subsidiary of the Company, exchange of securities requiring
shareholder approval or liquidation of the Company ("Affiliated Transaction"),
if any person who together with his affiliates and associates owns beneficially
10% or more of any voting stock of the Company ("Interested Shareholder") is a
party to the transaction; provided that a majority of the Disinterested
Directors of the Company has not approved the transaction.
CONTROL SHARE ACQUISITIONS. Control Shares acquired by a person acting
alone or as part of a group, with certain exceptions, have only such voting
rights as may be granted by a resolution approved by the holders of other than
interested shares of the Company. Additionally, such Control Shares are subject
to redemption by the Company within 60 days after the last acquisition if no
Acquiring Person Statement is filed. Dissenting shareholders to any Control
Share Acquisition shall have the right to obligate the Acquiring Person to
purchase their shares for the highest amount proposed to be paid per share in
the Control Share Acquisition.
ACQUISITION OFFERS. The Board of Directors of the Company, when
evaluating any offer of another "Person" (as defined in the Articles) to: (i)
make a tender or exchange offer for any equity security of the Company; (ii)
merge or consolidate the Company with another corporation or entity; or (iii)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Company, shall, in connection with the exercise of its judgement
in determining what is in the best interest of the Company and its shareholders,
give due consideration to all relevant factors, including, without limitation:
(1) the social and economic effect of acceptance of such offer on the Company's
present and future customers and employees and those of its subsidiaries in the
communities in which its subsidiaries operate or are located; (2) on the ability
of the Company to fulfill its corporate objectives as a financial bank holding
company; and (3) on the ability of its subsidiary financial banks to fulfill the
objectives of such banks under applicable statutes and regulations.
INDEMNIFICATION. The Company's Articles provide for the indemnification
of directors and executive officers to the maximum extent permitted by Florida
law as authorized by the Board of Directors and for the advancement of expenses
incurred in connection with the defense of any action, suit or proceeding that
the director or executive officer was a party to by reason of the fact that he
or she is or was a director of the Company upon the receipt of an undertaking to
repay such amount, unless it is ultimately determined that such director is not
entitled to indemnification.
AMENDMENT OF THE ARTICLES. Generally, amendments to the Articles must
be approved by a majority affirmative vote of its Board of Directors and also by
a majority of the outstanding shares of its voting stock. However, the
affirmative vote of 66% of the outstanding shares held by shareholders entitled
to vote is required to amend sections of the Articles which deal with special
meetings of shareholders, number and classes of directors, affiliated
transactions and business combinations, acquisition offers, and indemnification.
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LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or the
proposed Bank is a party or of which any of their properties are subject; nor
are there proceedings known to the Company contemplated by any governmental
authority; nor are there proceedings known to the Company, pending or
contemplated, in which any director, officer or affiliate or any proposed
principal security holder of the Company, or any associate of any of the
foregoing is a party or has an interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby will be passed upon for the Company by Igler & Dougherty, P.A.,
1501 Park Avenue East, Tallahassee, Florida 32301, counsel to the Company.
EXPERTS
The financial statements of the Company as of December 31, 1997, and
for the period from October 24, 1997 (date of incorporation) to December 31,
1997, included elsewhere in the Registration Statement, have been included in
reliance upon the reports of Hacker, Johnson, Cohen & Grieb, PA, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing matters.
ADDITIONAL INFORMATION
The Company has filed with the Commission, 450 Fifth Street Northwest,
Washington, D.C. 20549, a Form SB-2 Registration Statement (herein, together
with all amendments thereto the "Registration Statement") under the 33 Act, as
amended, with respect to the shares of Common Stock offered hereby. This filing
was made electronically through EDGAR. This Prospectus does not contain all of
the information included in the Registration Statement. For further information
with respect to the Company and the Common Stock, reference is hereby made to
the Registration Statement and the exhibits and schedules thereto. A complete
copy of the document may be obtained at the Commission's web site located at
http://www.sec.gov.
39
<PAGE> 42
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report......................................................................................F-2
Balance Sheets at September 30, 1998 (unaudited) and December 31, 1997............................................F-3
Statements of Operations for the Periods from January 1, 1998 to September 30,
1998 (unaudited) and October 24, 1997
(Date of Incorporation) to December 31, 1997 ............................................................F-4
Statements of Changes in Stockholders' Deficit
for the Periods from January 1, 1998 to September 30, 1998 (unaudited)
and October 24, 1997 (Date of Incorporation)
to December 31, 1997.....................................................................................F-5
Statements of Cash Flows for the Periods from January 1, 1998 to September 30,
1998 (unaudited) and October 24, 1997
(Date of Incorporation) to December 31, 1997.............................................................F-6
Notes to Financial Statements as of September 30, 1998 (unaudited) and
December 31, 1997 and for the Periods from January 1, 1998 to
September 30, 1998 (unaudited) and October 24, 1997 (Date
of Incorporation) to December 31, 1997 ..................................................................F-7 - F-8
</TABLE>
All schedules have been omitted because of the absence of the conditions under
which they are required or because the required information is included in the
financial statements and related notes.
F-1
<PAGE> 43
INDEPENDENT AUDITORS' REPORT
Board of Directors
Jacksonville Bancorp, Inc.:
We have audited the accompanying balance sheet of Jacksonville Bancorp, Inc. (a
development stage company) (the "Company") at December 31, 1997, and the
related statements of operations, changes in stockholders' deficit, and cash
flows for the period from October 24, 1997 (Date of Incorporation) to December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at December 31,
1997, and the results of its operations and its cash flows for the period from
October 24, 1997 (Date of Incorporation) to December 31, 1997, in conformity
with generally accepted accounting principles.
/s/ Hacker, Johnson, Cohen & Grieb PA
- -------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Orlando, Florida
August 28, 1998
F-2
<PAGE> 44
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash............................................................................... $ 71,359 114,533
Premises and equipment............................................................. 686,602 --
Other assets....................................................................... 3,329 --
----------- ------------
Total....................................................................... $ 761,290 114,533
=========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit..................................................................... 350,000 --
Note payable....................................................................... 625,000 --
Note payable to related party (Note 3)............................................. 150,000 150,000
Accrued interest payable........................................................... 21,429 2,125
----------- -------
Total liabilities........................................................... 1,146,429 152,125
----------- -------
Commitments (Note 4)
Stockholders' deficit:
Preferred stock, $.01 par value, 2,000,000 shares authorized, none
issued and outstanding...................................................... -- --
Common stock, $.01 par value, 8,000,000 shares
authorized, none issued and outstanding..................................... -- --
Additional paid-in capital..................................................... -- --
Accumulated deficit............................................................ (385,139) (37,592)
----------- -------
Total stockholders' deficit................................................. (385,139) (37,592)
----------- -------
Total....................................................................... $ 761,290 114,533
=========== =======
</TABLE>
See Accompanying Notes to Financial Statements
F-3
<PAGE> 45
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM OCTOBER 24, 1997
JANUARY 1, (DATE OF
1998 TO INCORPORATION) TO
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------------
(UNAUDITED)
<S> <C> <C>
Interest income.................................................................. $ 6,436 1,054
Organizational expenses:
Compensation and benefits.................................................... (186,264) (25,847)
Rent......................................................................... (15,376) (500)
Professional fees............................................................ (57,484) (10,000)
Application fees............................................................. (22,114) --
Interest expense............................................................. (30,189) (2,125)
Other........................................................................ (42,556) (174)
--------- -------
Total........................................................................ (353,983) (38,646)
--------- -------
Net loss..................................................................... $(347,547) (37,592)
========= =======
</TABLE>
See Accompanying Notes to Financial Statements.
F-4
<PAGE> 46
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
PERIODS FROM OCTOBER 24, 1997 (DATE OF INCORPORATION) TO
DECEMBER 31, 1997 AND FROM JANUARY 1, 1998 TO
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT DEFICIT
------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at October 24, 1997
(date of incorporation) ............. $ -- -- -- --
Net loss ................................ -- -- (37,592) (37,592)
------- -- -------- --------
Balance at December 31, 1997 ............ -- -- (37,592) (37,592)
Net loss (unaudited) .................... -- -- (347,547) (347,547)
------- -- -------- --------
Balance at September 30, 1998 (unaudited) $ -- -- (385,139) (385,139)
======= == ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
F-5
<PAGE> 47
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM OCTOBER 24, 1997
JANUARY 1, (DATE OF
1998 TO INCORPORATION) TO
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ---------------
(UNAUDITED)
<S> <C> <C>
Cash flows used in administrative activities during the development stage:
Net loss .................................................................... $(347,547) (37,592)
Adjustments to reconcile net loss to net cash used by administrative
activities during the development stage:
Increase in other assets ................................................ (3,329) --
Increase in accrued interest payable .................................... 19,304 2,125
--------- ---------
Net cash used in administrative activities
of the development stage ............................................ (331,572) (35,467)
--------- ---------
Cash flows from investing activities:
Acquisition of premises and equipment ....................................... (686,602) --
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt .............................................. 975,000 150,000
--------- ---------
Net (decrease) increase in cash ................................................. (43,174) 114,533
Cash at beginning of period ..................................................... 114,533 --
--------- ---------
Cash at end of period ........................................................... $ 71,359 114,533
========= =========
Supplemental disclosures of cash flow information-
Cash paid during period for:
Interest..................................................................... $ -- --
========= =========
Income taxes ................................................................ $ -- --
========= =========
</TABLE>
See Accompanying Notes to Financial Statements.
F-6
<PAGE> 48
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND SEPTEMBER 30, 1998 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL. Jacksonville Bancorp, Inc. (the "Company") was incorporated on
October 24, 1997 in the State of Florida. The Company has applied to
the Board of Governors of the Federal Reserve System ("Board of
Governors") to become a one-bank holding company and plans to acquire
100% of the outstanding shares of The Jacksonville Bank (the "Bank"),
which is planned to be incorporated and organized in Jacksonville,
Florida. The operations of the Company, which initially are intended to
consist solely of the ownership of the Bank, have not commenced as of
September 30, 1998. Therefore, with the exception of organizational
costs which are being expensed when incurred, accounting policies have
not been established. The Company has adopted a fiscal year end of
December 31.
The accompanying financial statements at September 30, 1998 and for the
nine-month period then ended is unaudited; however, in the opinion of
management, all adjustments necessary for the fair presentation of the
financial statements have been included. All such adjustments are of a
normal recurring nature. The results for the nine months ended
September 30, 1998 are not necessarily indicative of the results which
may be expected for the entire year.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
(2) ORGANIZATION
In February, 1998, the Company filed an application for authority to
organize a state-chartered bank with the Comptroller of the State of
Florida, Department of Banking and Finance. The approval of this
application will be contingent upon certain conditions being met. These
conditions include, among other things, the establishment of total
capital accounts of the Bank of not less than $4,050,000 with not less
than $2,100,000 allocated to common capital, after all organizational
and preopening expenses, and the approval by the Board of Governors of
the Federal Reserve System of the Company's application to acquire the
stock of the Bank as a registered bank holding company.
(3) RELATED PARTIES
The Company has appointed one of its Organizers as the President and Chief
Executive Officer of the Company. The Company also has a $150,000 note
payable to one of its Organizers; the note, dated October 10, 1997,
bears interest at an annual rate of 8.5%, and is expected to be repaid
from the proceeds of the stock offering.
(4) PREMISES AND EQUIPMENT
In June 1998, the Company purchased a former fast-food restaurant site
which will be renovated and used as the Bank's main office. The
purchase price was $587,500, and the Company expects to spend an
additional $390,000 for renovations of the existing building. This
facility is expected to open in early 1999.
A summary of premises and equipment at September 30, 1998 (unaudited)
follows:
<TABLE>
<S> <C>
Building and leasehold improvements.................................. $ 622,329
Furniture, fixtures and equipment.................................... 64,273
---------
Total, at cost....................................................... $ 686,602
=========
</TABLE>
The premises and equipment set forth above are pledged to collateralize the
note payable discussed in Note 8.
Office facilities, which will serve as the main office until the main
office renovation is complete, have been leased under an operating
lease which commenced in July 1998. The leased office facilities will
serve as a branch office when the main office renovation is completed.
(continued)
F-7
<PAGE> 49
JACKSONVILLE BANCORP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(4) PREMISES AND EQUIPMENT, CONTINUED
The lease, which provides for a term of sixty months, requires the Company
to pay utilities, insurance, taxes and other operating expenses. As of
September 30, 1998 (unaudited), future minimum rental commitments under
the noncancelable lease are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1998................................................................. $ 5,250
1999................................................................. 21,840
2000................................................................. 22,716
2001................................................................. 23,628
2002................................................................. 24,096
Thereafter........................................................... 12,282
--------
$ 109,812
=========
</TABLE>
(5) SALE OF COMMON SHARES
The Company plans to offer a minimum of 800,000 shares and a maximum of
1,500,000 shares of its common stock to the public. The price per share
is expected to be $10. The Company expects to incur offering costs
ranging from $600,000 to $1.15 million relating to this sale.
(6) INCENTIVE STOCK OPTION PLAN
The Company's Board of Directors has adopted an Incentive Stock Option Plan
("Plan"). The Plan will be contingent upon approval by the Company's
shareholders. The Plan will provide for the grant of options at the
discretion of a committee designated by the Board of Directors to
administer the Plan. The option exercise price must be at least 100%
(110% in the case of a holder of 10% or more of the Common Stock) of
the fair market value of the stock on the date the option is granted
and the options will be exercisable by the holder thereof in full at
any time following a vesting period and prior to their expiration in
accordance with the terms of the Plan. The Company has entered into an
Employment Contract with its chief executive officer whereby he has
been granted an option to purchase 50,000 shares of the Company's
common stock under this Plan.
(7) LINE OF CREDIT
In April 1998, the Company obtained a line of credit of $450,000 from a
financial institution at an interest rate of Prime minus 1%. The line
is guaranteed by the Company's Board of Directors. At September 30,
1998, $350,000 was outstanding under this line of credit. These amounts
will be used to fund organizational and other costs incurred by the
Company and to repay advances from organizers. It is intended that
amounts outstanding under this line of credit will be repaid from the
proceeds of the Company's common stock offering.
(8) NOTE PAYABLE
In May 1998, the Company obtained credit availability from another
financial institution, which provides for a short-term line of credit,
a loan for the acquisition of the Bank's main office, and a loan for
the purchase of furniture, fixtures and equipment. Each of these loans
are guaranteed by certain directors of the Company. The arrangement
provides for: (i) a $200,000 line of credit which bears interest at
prime minus 1/2%, with an additional $500,000 letter of credit, with a
term of 180 days; (ii) a loan of up to $850,000 for the purchase and
renovation of the Bank's main office, with provisions for a first lien
on the underlying real estate and an interest rate of prime minus 1/2%;
and, (iii), a loan of up to $250,000 to purchase furniture, fixtures
and equipment, bearing interest at prime minus 1/2% and a term of 180
days. It is intended that each of these loans will be repaid from the
proceeds of the Company's common stock offering. At September 30, 1998,
$625,000 was outstanding under this credit facility.
F-8
<PAGE> 50
APPENDIX "A"
ARTICLES OF INCORPORATION
<PAGE> 51
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of JACKSONVILLE BANCORP, INC., a Florida corporation, filed on
October 24, 1997, as shown by the records of this office.
The document number of this corporation is P97000091697.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Twenty-fourth day of October, 1997
/s/ SANDRA B. MORTHAM
------------------------------
Sandra B. Mortham
Secretary of State
[SEAL]
<PAGE> 52
ARTICLES OF INCORPORATION
OF
JACKSONVILLE BANCORP, INC.
The undersigned incorporators, for the purpose of forming a corporation
under Chapter 607, the Florida Business Corporation Act, hereby adopt the
following Articles of Incorporation.
ARTICLE I - NAME
The name of the Corporation is "Jacksonville Bancorp, Inc."
("Corporation"). The principal place of business of the Corporation shall be
2275 Spanish Moss Drive, Jacksonville, Florida 32246, or at such other place
within the State of Florida as the Board of Directors may designate. The name of
the registered agent is Igler & Dougherty, P.A., 1501 Park Avenue East,
Tallahassee, Florida 32301, which address is also the address of the Registered
Office of the Corporation.
ARTICLE II - NATURE OF BUSINESS
The Corporation may engage in or transact any or all lawful activities or
business permitted under the laws of the United States and the State of Florida,
or any other state, county, territory or nation.
ARTICLE III - CAPITAL STOCK
SECTION 1 - CLASSES OF STOCK: The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue is 10,000,000,
consisting of:
A. 2,000,000 shares of preferred stock, par value one cent ($0.01) per
share ("Preferred Stock"); and
B. 8,000,000 shares of common stock, par value one cent ($0.01) per
share ("Common Stock"). Each holder of shares of Common Stock shall be
entitled to one vote per share.
SECTION 2 - PREFERRED STOCK: The Board of Directors is authorized, subject
to any limitations prescribed by law, to provide for the issuance of the shares
of Preferred Stock in series,
<PAGE> 53
and by filing a certificate pursuant to the applicable laws of the State of
Florida (such certificate being hereinafter referred to as a "Preferred Stock
Designation"), to establish from time to time the number of shares to be
included in each such series and to fix the designation, powers, preferences and
rights of the shares of each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares then outstanding) by
the affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of any such holders is required pursuant to the terms of any Preferred
Stock Designation.
ARTICLE IV - TERM OF EXISTENCE
This Corporation is to exist perpetually.
ARTICLE V - OFFICERS AND DIRECTORS
The names and street addresses of the initial officers and directors who
shall hold office the first year of the Corporation's existence or until their
successors are elected are:
<TABLE>
<CAPTION>
Name Address Title
- ---- ------- -----
<S> <C>
Victor M. George 126 Willow Pond Lane President/Chief Executive Officer
Ponte Vedra Beach, FL 32082 and Director
David C. Keasler 2275 Spanish Moss Drive Secretary and
Jacksonville, FL 32246 Director
Richard D. Spence 339 Ponte Vedra Boulevard Director
Ponte Vedra Beach, FL 32082
Harold S. O'Steen 759 North Edgewood Avenue Director
Jacksonville, FL 32205
Anthony T. Sleiman 4347-10 South University Blvd. Director
Jacksonville, FL 32216
</TABLE>
2
<PAGE> 54
ARTICLE VI - INCORPORATORS
The name and street address of the incorporator to these Articles of
Incorporation is Igler & Dougherty, P.A., 1501 Park Avenue East, Tallahassee,
Florida 32301.
ARTICLE VII - MANAGEMENT OF THE BUSINESS OF THE COMPANY
SECTION 1 - AUTHORITY OF THE BOARD. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
SECTION 2 - ACTION BY SHAREHOLDERS. Any action required or permitted to be
taken by the shareholders of the Corporation must be effected at a duly called
Annual or Special Meeting of Shareholders of the Corporation and may not be
effected by any consent in writing by such shareholders.
SECTION 3 - SPECIAL MEETINGS OF SHAREHOLDERS. Special Meetings of
shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or the President of the Corporation, or by
shareholders holding at least 20% of the outstanding shares of the Corporation.
ARTICLE VIII - NUMBER OF DIRECTORS
SECTION 1 - NUMBER OF DIRECTORS: The Board of Directors of the Corporation
shall be comprised of not less than three (3) nor more than fifteen (15)
directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the Corporation.
3
<PAGE> 55
However, this paragraph shall not be construed to limit the authority of the
shareholders of the Corporation to increase the number of directors in
accordance with the Bylaws of the Corporation.
SECTION 2 - ELECTION AND TERM: Directors shall be elected by a plurality
of the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present. The term of the initial directors of the Corporation
expires at the first shareholders' meeting at which directors are elected.
SECTION 3 - CLASSES: The directors shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class (Class I) to expire at the 1998 Annual Meeting of Shareholders, the
term of office of the second class (Class II) to expire at the 1999 Annual
Meeting of Shareholders and the term of office of the third class (Class III) to
expire at the 2000 Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding Annual Meeting of Shareholders
after their election.
SECTION 4 - VACANCIES: Subject to the rights of the holders of any series
of Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the Board
of Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum. Directors so chosen shall
hold office for a term expiring at the next Annual Meeting of Shareholders. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
SECTION 5 - NOTICE: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
SECTION 6 - REMOVAL BY SHAREHOLDERS: Subject to the rights of the holders
of any series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time by the affirmative
vote of the holders of at least 60% of the
4
<PAGE> 56
voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
ARTICLE IX - SPECIAL VOTING PROVISIONS FOR AFFILIATED
TRANSACTIONS AND BUSINESS COMBINATIONS
SECTION 1 - DEFINITIONS: The terms defined below shall apply for purposes
of this Article IX:
A. "Affiliated Transaction," when used in reference to the
Corporation and any Interested Shareholder (as hereinafter defined), means
any of the following situations:
(l) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Shareholder or (ii) any other corporation (whether or not itself
an Interested Shareholder) which is, or after such merger or
consolidation would be, an Affiliate of an Interested Shareholder.
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
of assets of the Corporation or any Subsidiary of the Corporation
to or with any Interested Shareholder, or any Affiliate or
Associate of any Interested Shareholder:
a. Having an aggregate fair market value equal to 5% or
more of the aggregate fair market value of all assets,
determined on a consolidated basis, of the Corporation; or
b. Having an aggregate fair market value equal to 5% or
more of the aggregate fair market value of all outstanding
shares of the Corporation; or
c. Representing 5% or more of the earning power or net
income determined on a consolidated basis, of the Corporation.
(3) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
shares of the Corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in
exchange for cash, securities or other property (or a combination
5
<PAGE> 57
thereof) having an aggregate Fair Market Value (as hereinafter
defined) equaling or exceeding 5% or more of all the outstanding
shares of the Corporation and its Subsidiaries, except pursuant to
the exercise of warrants or rights to purchase stock offered, or a
dividend or distribution paid or made, pro rata to all
shareholders of the Corporation.
(4) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate of any Interested
Shareholder.
(5) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or into
or otherwise involving an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which
is, directly or indirectly, owned by any Interested Shareholder or
any Affiliate of any Interested Shareholder.
(6) any receipt by the Interested Shareholder or any Affiliate
or Associate of the Interested Shareholder of the benefit,
directly or indirectly (except proportionately as a shareholder of
the Corporation), of any loans, advances, guaranties, pledges, or
other financial assistance or any tax credits or other tax
advantages provided by or through the Corporation.
B. "Interested Shareholder" means any Person who is the
Beneficial Owner, directly or indirectly, of more than 10% of the
outstanding voting shares of the corporation. However, the term
"Interested Shareholder" shall not include the Corporation or any
Subsidiary; any savings, employee stock ownership, or other employee
benefit plan of the Corporation or any Subsidiary; or any fiduciary of any
such plan when acting in such capacity. For the purpose of determining
whether a person is an Interested Shareholder pursuant to this Section,
the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned through application of Article III, Section
6
<PAGE> 58
3, but shall not include any other shares of Voting Stock that may be
issuable pursuant to any contract, arrangement or understanding, upon
exercise of conversion rights, warrants, options, or otherwise.
C. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Shareholder set forth in Paragraph B of this Section 1, the
term "Subsidiary" shall mean only a corporation of which a majority of
each class of equity security is owned, directly or indirectly, by the
Corporation.
D. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a
member of the Board of Directors prior to the time that the Interested
Shareholder became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested Shareholder
and is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board of Directors.
E. "Fair Market Value" means: (i) the Fair Market Value of a
share on the date in question shall be determined by a majority of
Disinterested Directors, appropriately adjusted for any dividend or
distribution in shares of such stock or any combination or
reclassification of outstanding shares of such stock into a smaller number
of shares of such stock; and (ii) in the case of property other than cash
or shares, the Fair Market Value of such property on the date in question
as determined by a majority of the Disinterested Directors.
F. Reference to "Highest Per Share Price" shall in each case with
respect to any class of stock reflect an appropriate adjustment for any
dividend or distribution in shares of such stock or any stock split or
reclassification of outstanding share of such stock into a greater number
of shares of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such
stock.
G. "Affiliate" shall have the meaning set forth in Section
607.0901, Florida Statutes.
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H. "Person" shall mean any individual, a group acting in concert,
a corporation, a partnership, an association, a joint venture, an
investors' pool, a joint stock company, a trust, an unincorporated
organization or similar company, a syndicate or any other group formed for
the purpose of acquiring, holding or disposing of the equity securities of
the Corporation.
I. "Beneficial Ownership" is defined herein to mean a Person who,
directly or indirectly, has the:
(1.) voting power, which includes the power to vote or to
direct the voting of the "Voting Stock" as that term is defined
herein;
(2.) investment power, which includes the power to dispose of
or to direct the disposition of the Voting Stock; or
(3.) the right to acquire the voting power or investment
power, whether such right is exercisable immediately or only after
the passage of time, pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, warrants
or options, or otherwise.
J. "Acting in Concert" means (i) knowing participation in a joint
activity or conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or (ii) a combination or pooling of
voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement
or other arrangements, whether written or otherwise.
K. "Voting Stock" means the outstanding shares of all classes or
series of the Corporation entitled to vote generally in the election of
directors.
SECTION 2 - AFFILIATED TRANSACTIONS: In addition to any affirmative vote
required by law or these Articles of Incorporation, and except as otherwise
expressly provided in this Section, any Affiliated Transaction shall be approved
by the affirmative vote of the holders of two-thirds of the Voting Stock, voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law or in any agreement with any national
securities exchange or otherwise.
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SECTION 3 - EXCEPTIONS: The voting provisions of Section 2 of this Article
IX shall not be applicable to a particular Affiliated Transaction if all of the
conditions specified in either of the following Paragraphs A and B are met:
A. The Affiliated Transaction has been approved by a majority of
the Disinterested Directors; or
B. In the Affiliated Transaction, consideration shall be paid to
the holders of each class of voting shares and all of the following
conditions shall be met:
(1) The aggregate amount of the cash and the Fair Market
Value, as of the valuation date of consideration, other than cash
to be received per share by the holders of Common Stock in such
Affiliated Transaction are at least equal to the higher of the
following:
a. if applicable, the Highest Per Share Price (as
previously defined herein), including any brokerage
commissions, transfer taxes and soliciting dealers' fees, paid
by the Interested Shareholder for any shares of Common Stock
acquired by it (i) within the two-year period immediately
prior to the first public announcement date of the Affiliated
Transaction ("Announcement Date"), or (ii) in the transaction
in which it became an Interested Shareholder, whichever is
higher;
b. the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter date
is referred to in this Article IX as the "Determination
Date"), whichever is higher;
c. if applicable, the price per share equal to the Fair
Market Value per share of such class or series determined
pursuant to sub-paragraph b. of this Section 3, multiplied by
the ratio of the Highest Per Share Price, including any
brokerage commissions, transfer taxes and soliciting dealers'
fees, paid by the Interested
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Shareholder for any shares of Voting Stock acquired by it
within the two-year period immediately prior the Announcement
Date (the numerator), to the Fair Market Value per share of
such class or series on the first day in such two-year period
on which the Interested Shareholder acquired the Voting Stock
(the denominator); or
d. if applicable, the highest preferential amount per
share to which the holders of shares of such Voting Stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
(2) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common
Stock) shall be in cash or in the same form as the Interested
Shareholder has previously paid for shares of such Voting Stock.
If the Interested Shareholder has paid for shares of any class of
Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash
or the form used to acquire the largest number of shares of such
class of Voting Stock previously acquired by it. The consideration
to be received pursuant to this provision shall be subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination of shares or similar event.
(3) During such portion of the three-year period preceding the
announcement date that such Interested Shareholder has become an
Interested Shareholder and except as approved by a majority of the
Disinterested Directors:
a. there shall have been no failure to declare and pay at
the regular date any full quarterly dividends (whether or not
cumulative) on any outstanding stock having preference over
the Common Stock as to dividends or liquidation;
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b. there shall have been (i) no reduction in the annual
rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock), and
(ii) an increase in such annual rate of dividends as necessary
to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, and (iii) no such
Interested Shareholder who has become the Beneficial Owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Shareholder
becoming an Interested Shareholder.
(4) Unless approved by a majority of the Disinterested
Directors, no Interested Shareholder shall have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Affiliated Transaction or otherwise, during
the three-year period preceding the date the Interested
Shareholder became an Interested Shareholder.
(5) A proxy or information statement describing the proposed
Affiliated Transaction and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules
or regulations) shall be mailed to shareholders of the Corporation
at least 30 days prior to the consummation of such business
combination (whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent
provisions).
SECTION 4 - BOARD DISCRETION: A majority of the Disinterested Directors of
the Corporation shall have the power and duty to determine for the purposes of
this Article IX, on the basis of information known to them after reasonable
inquiry, (i) whether a person is an Interested Shareholder; (ii) the number of
shares of Voting Stock beneficially owned by any person; (iii)
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whether a person is an Affiliate or Associate of another; and (iv) whether the
assets which are the subject of any Affiliated Transaction have, or the
consideration to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Affiliated Transaction has, an aggregate
Fair Market Value equal to or greater than 25% of the combined assets of the
Corporation and its Subsidiaries. A majority of the Disinterested Directors
shall have the further power to interpret all of the terms and provisions of
this Article IX.
SECTION 5 - INTERESTED SHAREHOLDER'S DUTY: Nothing contained in this
Article IX shall be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
SECTION 6 - AMENDMENT: Notwithstanding any other provisions of these
Articles of Incorporation, or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the Voting Stock required by law, these
Articles of Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least 66% of the voting power of all of the
then-outstanding shares of the Voting Stock (after giving effect to the
provisions of Article III of these Articles of Incorporation), voting together
as a single class, shall be required to alter, amend or repeal this Article IX.
ARTICLE X - CONTROL SHARE ACQUISITIONS
It is the intent of the Organizers of the Corporation that the provisions
of the "Florida Control-Share Acquisitions" statute, Section 607.0902, Florida
Statutes shall apply to acquisitions of the Corporation's shares by a person
acting alone or as part of a group which would result in an Acquiring Person, as
defined herein, owning Control Shares of the Company, except for those
acquisitions defined in Section 1 F.(2) and (3) of this Article.
SECTION 1 - DEFINITIONS: The following terms when used in this section
shall mean:
A. "Acquiring Person" means a person who makes or proposes to
make, or persons acting as a "group" as defined in sec. 13(d)(3) of the
Securities Exchange Act of 1934 who make or propose to make, a
Control-Share Acquisition; but "Acquiring Person" does not include the
Corporation.
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B. "Acquiring Person Statement" means the statement provided for
in Section 607.0902(6), Florida Statutes which shall set forth all of the
following:
(1) The identity of the Acquiring Person and each other member
of any group of which the Acquiring Person is a part for purposes
of determining Control Shares.
(2) A statement that the Acquiring Person Statement is given
pursuant to Section 607.0902(6), Florida Statutes.
(3) The number of shares of the Corporation owned, directly or
indirectly following the acquisition, by the Acquiring Person and
each other member of the group.
(4) The range of voting power under which the Control-Share
Acquisition falls or would, if consummated, fall.
(5) If the Control-Share Acquisition has not taken place:
(i) A description in reasonable detail of the terms of the
proposed Control-Share Acquisition; and
(ii) Representations of the Acquiring Person, together
with a statement, in reasonable detail of the facts upon which
they are based, that the proposed Control-Share Acquisition,
if consummated, will not be contrary to law and that the
Acquiring Person, has the financial capacity to make the
proposed Control-Share Acquisition, including the acquisition
of dissenter's shares, if any.
C. "Affiliate" means a person who directly or indirectly controls
the Corporation. "Control" means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of the Corporation, whether through the ownership of voting securities, by
contract, or otherwise. A person's beneficial ownership of ten percent or
more of the voting power of a Corporation's outstanding shares entitled to
vote in the election of directors (except a person holding voting power in
good faith as an agent, bank, broker, nominee, custodian or trustee for
one or more beneficial owners who do not individually or as a group
control the Corporation) creates a presumption that the person controls
the Corporation.
D. "All voting power" means the aggregate voting power that the
shareholders of the Corporation would have in the election of directors,
except for this Article.
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E. "Control Shares" means issued and outstanding shares of the
Corporation that, except for this section, would have voting power when
added to all other shares of the Corporation owned of record or
beneficially by an Acquiring Person or in respect to which that Acquiring
Person may exercise or direct the exercise of voting power, that would
entitle the Acquiring Person, immediately after acquisition of the shares
(directly or indirectly), to exercise or direct the exercise of the voting
power of the Corporation in the election of directors within any of the
following ranges of voting power:
(1) One-fifth (1/5) or more but less than one-third (1/3) of
all voting power;
(2) One-third (1/3) or more but less than a majority of all
voting power; or
(3) A majority or more of all voting power.
F. (1) "Control-Share Acquisition" means acquisition by any
person of ownership of, or the power to direct the exercise of voting
power with respect to, Control Shares.
(2) A person who acquires shares in the ordinary course of
business for the benefit of others in good faith and not for the
purpose of circumventing this section has not made a
Control-Shares Acquisition of shares in respect of which that
person is not able to exercise or direct the exercise of votes
without further instruction from others.
(3) The acquisition of any Control Shares does not constitute
a Control-Share Acquisition if the acquisition is made in good
faith and not for the purpose of circumventing this section in any
of the following circumstances:
a. Shares acquired in any distribution conducted by the
Corporation through any public or private offering or acquired
pursuant to any warrant certificate, stock option plan or
other employee benefit plan.
b. Pursuant to the laws of descent and distribution.
c. By a donee under an inter vivos gift.
d. Pursuant to a transfer between or among immediate
family members, or between or among persons under direct
common control. An "immediate family member" is any relative
or spouse of a person, or any relative of such spouse, who has
the same home as such person.
e. Pursuant to the satisfaction of a pledge or other
security interest.
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f. Pursuant to a merger or plan of consolidation or share
exchange effected in compliance with the Florida Statutes, if
the Corporation is a party to the agreement of merger or plan
of consolidation or share exchange.
g. From any person whose previous acquisition of Control
Shares would have constituted a Control-Shares Acquisition but
for this Section 1(e)(3) (other than this subsection
1(e)(3)(G), provided the acquisition does not result in the
Acquiring Person holding voting power within a higher range of
voting power than that of the person from whom the Control
Shares were acquired.
h. Acquisition by a person of additional shares within the
range of voting power for which such person has received
approval pursuant to the Control Share Statute or within the
range of voting power resulting from shares acquired in a
transaction described in Section 1 E.(3) herein.
i. An increase in voting power resulting from any action
taken by the Corporation, provided the person whose voting
power is thereby affected is not an Affiliate of the
Corporation.
j. Pursuant to the solicitation of proxies subject to
Regulation 14A under the Securities Exchange Act of 1934 or
Chapter 607, Florida Statutes.
G. "Interested Shares" means the shares of the Corporation in
respect of which any of the following persons may exercise or direct the
exercise, as of the applicable record date, of the voting power of the
Corporation in the election of directors, other than solely by the
authority of a revocable proxy:
(1) The Acquiring Person.
(2) Any officer of the Corporation.
(3) Any employee of the Corporation who is also a director of
the Corporation.
H. "Person" means any individual, Corporation, partnership,
unincorporated association or other entity.
SECTION 2 - VOTING RIGHTS: Control Shares of the Corporation acquired in a
Control-Share Acquisition shall have only such voting rights as are granted by
resolution approved by the holders of other than Interested Shares of the
Corporation, as provided for in Section 607.0902(a), Florida Statutes.
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SECTION 3. - REDEMPTION OF CONTROL SHARES BY THE COMPANY: Control Shares
acquired in a Control-Share Acquisition with respect to which no Acquiring
Person Statement has been filed with the Corporation are subject to redemption
by the Corporation at any time during the period ending sixty (60) days after
the last acquisition of Control Shares by such Acquiring Person or persons. Such
shares are also subject to redemption by the Corporation in the event the
Control Shares are not accorded full voting rights by the shareholders as
provided for in Section 607.0902 (10)(b) and Section 607.0902(9) of the Florida
Statutes. Such shares shall be subject to redemption at the fair value thereof.
Fair value shall be the higher of, the average price paid for all shares of the
Corporation, exclusive of the Control Shares, for the ninety (90) days prior to
the date of redemption by the Corporation or book value of the Corporation's
shares on the last day of the month preceding the date of redemption by the
Corporation, as calculated by Generally Accepted Accounting Procedures ("GAAP").
SECTION 4 - RIGHTS OF DISSENTING SHAREHOLDERS: If the Control-Share
Acquisition is approved by the required vote at the meeting of shareholders at
which it was voted upon, then any shareholder who did not vote in favor of the
Control-Share Acquisition shall have the right to file with the Corporation a
written demand for payment for his/her shares within ten (10) days after the
date of the shareholder meeting. A shareholder may demand payment for less than
all of the shares registered in his/her name. The Corporation shall deliver all
such demands for payment to the Acquiring Person immediately following the
expiration of the ten (10) day period. The Acquiring Person shall then be
obligated to purchase all shares subject to the demand for payment for the
highest amount he has proposed to pay per share in the Control-Share
Acquisition. Payment to shareholders making demand must be made on the day upon
which the Control-Share Acquisition is consummated or upon surrender of the
certificate or certificates representing shares for which demand has been made
to the Acquiring Person, whichever is later. Any shareholder failing to make
demand within the applicable ten (10) day period shall remain a shareholder of
the Corporation.
SECTION 5 - ALTERATION OR REPEAL OF THIS SECTION: This Section shall not
be altered, amended, or repealed, except by an affirmative vote of at least
66 2/3% of the total number of shares of the Corporation entitled to vote on
such matter.
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ARTICLE XI - ACQUISITION OFFERS
The Board of Directors of the Corporation, when evaluating any offer of
another Person to (i) make a tender or exchange offer for any equity security of
the Corporation, (ii) merge or consolidate the Corporation with another
corporation or entity or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its shareholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effect
of acceptance of such offer on the Corporation's present and future customers
and employees and those of its Subsidiaries (as defined in Article IX); on the
communities in which the Corporation and its Subsidiaries operate or are
located; on the ability of the Corporation to fulfill its corporate objectives
as a financial institution holding company and on the ability of its subsidiary
financial institutions to fulfill the objectives of such institutions under
applicable statutes and regulations.
ARTICLE XII - INDEMNIFICATION
SECTION 1 - GENERAL: The Corporation shall indemnify any officer,
director, employee or agent of the Corporation to the fullest extent authorized
by Section 607.0850, Florida Statutes (1995) as it now exists or may hereafter
be amended, but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment. This
includes, but is not limited to, any person who was or is made a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("Proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is or
was a director or officer of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such Proceeding is alleged action in an official capacity as a
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director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, reasonably incurred or suffered by such
person in connection therewith. Such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnity in connection with an action, suit or Proceeding (or part thereof)
initiated by such person only if such action, suit or Proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. Such right
shall be a contract right and shall include the right to be paid by the
Corporation for all expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it should be determined ultimately that such director or officer
is not entitled to be indemnified under this Article or otherwise.
SECTION 2 - FAILURE TO PAY CLAIM: If a claim under Section 1 of this
Article is not paid in full by the Corporation within ninety (90) days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
Section 607.0850, Florida Statutes, for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
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applicable standard of conduct set forth in Section 607.0850, Florida Statutes,
nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that claimant has not met the applicable standard of
conduct.
SECTION 3 - OTHER RIGHTS: The rights conferred on any individual by
Sections 1 and 2 of this Article shall not be exclusive of any other right which
such individual may have or hereafter acquire under any statute, provision of
these Articles of Incorporation, Bylaws of the Corporation, agreement, vote of
shareholders or Disinterested Directors or otherwise.
SECTION 4 - INSURANCE: The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under Section 607.0850, Florida Statutes.
SECTION 5 - PERSONAL LIABILITY: A director of the Corporation shall not be
personally liable to the Corporation or its shareholders for monetary damages
for any statement, vote, decision or failure to act regarding corporate
management or policy except as provided in Section 607.0850, Florida Statutes.
If Section 607.0850, Florida Statutes, is amended after adoption of these
Articles of Incorporation and such amendment further eliminates or limits the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
Section 607.0850, Florida Statutes, as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders
or the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by the
laws of the State of Florida, and all rights conferred upon shareholders are
granted subject to this reservation; provided, however, that, notwithstanding
any other provision of these Articles of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, the affirmative vote of
the holders of at least 66%
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of the voting power of all of the then-outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of directors
(after giving effect to the provisions of Article III), voting together as a
single class, shall be required to amend or repeal this Article XII, Section 3
of Article VII, Article VIII, Article IX or Article XI.
In witness of the foregoing, the undersigned has executed these Amended
Articles of Incorporation on behalf of the Board of Directors this 22nd day of
October, 1997.
/s/ A. George Igler
-----------------------------------------
A. GEORGE IGLER
GENERAL COUNSEL
STATE OF FLORIDA )
COUNTY OF LEON )
BEFORE ME, the undersigned Notary Public, in and for the State of Florida
at large, personally appeared A. George Igler, known personally to me to be the
individual described in and who executed the foregoing Amended Articles of
Incorporation of Jacksonville Bancorp, Inc. and after being duly sworn,
acknowledged that he executed the same for the uses and purposes therein
expressed.
(SEAL) /s/ Cristina H. Marshall
-----------------------------------------
NOTARY PUBLIC
Cristina H. Marshall
-----------------------------------------
NAME TYPED OR PRINTED
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CERTIFICATE DESIGNATING
REGISTERED AGENT/REGISTERED OFFICE
In accordance with Section 48.091, Florida Statutes, the following
designation and acceptance are being submitted in compliance thereof.
DESIGNATION:
Pursuant to the provision of Section 607.0501, Florida Statutes,
Jacksonville Bancorp, Inc. (Corporation") desires to organize under the laws of
the State of Florida, and in connection therewith, hereby designates Igler &
Dougherty, P.A. as its registered agent whose address is 1501 Park Avenue East,
Tallahassee, Florida 32301, which address shall also be the address of the
Registered Office of the Corporation.
ACCEPTANCE:
Having been named to accept service of process for the above-stated
corporation, at the place designated in this certificate, we hereby agree to act
in this capacity, and we further agree to comply with the provisions of all
statutes relative to the proper and complete performance of our duties, and we
accept the duties and obligations of Section 607.0501, Florida Statutes.
IGLER & DOUGHERTY, P.A.
By: /s/ A. George Igler
----------------------------------
A. George Igler
Dated: October 22, 1997
<PAGE> 73
APPENDIX "B"
ESCROW AGREEMENT
<PAGE> 74
Independent Bankers' Bank of Florida
ESCROW AGREEMENT
This Escrow Agreement is entered into and effective this _________ day
of January, 1999, by and between Jacksonville Bancorp,
Inc., a Florida corporation ( the "Company") and the Independent Bankers' Bank
of Florida ("Escrow Agent" or "Agent").
W I T N E S S E T H:
WHEREAS, the Company, proposes to offer for sale up to 1,500,000
shares of its $ 0.01 par value common stock (the "Common Stock"), which shares
shall be registered under the Securities Act of 1933, as amended, at a price of
$10.00 each, in minimum subscriptions of 250 shares ("Offering"); and
WHEREAS, the Company has requested the Escrow Agent to serve as the
depository for the payment of subscription proceeds ("Subscription Payment(s)
or Funds") received by the Company from investor(s) who are subscribing to
purchase shares of Common Stock in the Company pursuant to, and in accordance
with, the terms and conditions contained in the Company's Prospectus dated
February __, 1999 and an executed Stock Order Form and Certification ("Stock
Order Form"); and
WHEREAS, the Offering will terminate at 5:00 P.M., Local Time, 45 Days
after the Effective Date of the Company's Registration Statement, unless
extended by the Company for up to an additional 133 days ("Offering Period").
NOW THEREFORE, in consideration of the premises and understandings contained
herein, the parties agree as follows:
(1) The Company hereby appoints and designates the Escrow Agent
for the purposes set forth herein. The Escrow Agent acknowledges and accepts
said appointment and designation. The Company understands that the Escrow
Agent, by accepting said appointment and designation, in no way endorses the
merits of the offering of the shares described herein. The Company agrees to
notify any person acting on its behalf that the position of Escrow Agent does
not constitute such an endorsement, and to prohibit said persons from the use
of the Agent's name as an endorser of such offering. The Company further agrees
to allow the Escrow Agent to review any sales literature in which the Agent's
name appears and which is used in connection with such offering.
(2) All Stock Order Forms and payments (the "Subscription Funds")
shall be made directly to the Escrow Agent (Independent Bankers' Bank of
Florida, Attn: Customer Service Group). The Escrow Agent shall provide completed
copies of the Stock Order Forms to the Company the next business day after their
receipt. The Company and/or the Sales Agent shall deliver to the Escrow Agent
within thirty (30) calendar days copies of written acceptances of the Company or
of the Sales Agent for shares in the Company for which the Subscription Funds
represent payment.
(3) Subscription Funds shall be held and disbursed by the Escrow
Agent in accordance with the terms of this Agreement.
(4) In the event any Subscription Payment is dishonored for
payment for any reason, the Escrow Agent agrees to orally notify the Company
thereof as soon as practicable and to confirm same in writing and to return the
dishonored Subscription Funds to the Company in the form in which they were
delivered.
(5) Should the Company elect to accept a subscription for less
than the number of shares shown in the purchaser's Stock Order Form, by
indicating such lesser number of shares on the written acceptance of the
Company transmitted to the Escrow Agent, the Escrow Agent shall, upon separate
instruction from the Company, remit within five (5) days to such subscriber at
the address shown in his Stock Order Form that amount of his Subscription
Payment
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in excess of the amount which constitutes full payment for the number of
subscribed shares accepted by the Company as shown in the Company's written
acceptance, without interest or diminution. Said address shall be provided by
the Company to the Escrow Agent as requested.
(6) Definitions as used herein:
(a) "Total Receipts" shall mean the sum of all
Subscription Payments delivered to the Escrow Agent pursuant to Paragraph (3)
hereof, less: (i) all Subscription Funds returned pursuant to Paragraphs (4)
and (5) hereof; and (ii) all Subscription Funds which have not been paid by the
financial institution upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Local Time,
45 days after the Effective Date of the Company's Registration Statement dated
February __, 1999; provided, however, in the event that the Escrow Agent is
given oral notification followed in writing, by the Company that it has elected
to extend the offering to a date not later than 130 additional days, then the
Expiration Date shall mean 5:00 P.M., Local Time, on the date to which the
offering has been extended. The Company will notify the Escrow Agent of the
effective date of the Prospectus as soon as practicable after such date has
been determined.
(c) "Closing Date" shall mean the business day on which
the Company, after determining that all of the Offering conditions have been
met, selects in its sole discretion. The Closing Date shall be confirmed to the
Escrow Agent in writing by the Company.
(d) "Escrow Release Conditions" shall mean that (i) the
Company has not canceled the Offering, and (ii) that the Company has received
preliminary approval from the appropriate regulatory entity to charter the Bank
as well as preliminary approval for deposit insurance from the FDIC.
(7) If, on or before the Expiration Date, (i) the Total Receipts
held by the Escrow Agent equal or exceed $8,000,000 and (ii) the Company has
certified to the Agent that, upon receipt of the net proceeds of the offering
(after the deduction of all fees, commissions, and other expenses of the
offering): (a) the Company will have stockholders' equity of at least
$6,400,000; and (b) the Escrow Release Conditions have been consummated, the
Escrow Agent shall:
(a) No later than 10:00 A.M., Local Time, one day prior
to Closing Date (as that term is defined herein), deliver to the Company all
Subscription Documents provided to the Escrow Agent; and
(b) On the Closing Date, no later than 10:00 o'clock
A.M., Local Time, upon receipt of 24-hour written instructions from the
Company, remit all amounts representing Subscription Funds, plus any profits or
earnings, held by the Escrow Agent pursuant hereto to the Company in accordance
with such instructions.
(8) If (i) the Escrow Release Conditions are not met by the
Expiration Date, (ii) the offering is canceled by the company at any time prior
to the Expiration Date, or (iii) total receipts held by the Escrow Agent do not
equal or exceed $8,000,000, then the Escrow Agent shall promptly remit to each
subscriber at the address set forth in his Stock Order Form an amount equal to
the amount of his Subscription Payments thereunder, plus any profits or
earnings thereon. The earnings accruing to any individual subscriber under this
paragraph shall be a prorated share of the gross earnings on all funds under
escrow, weighted by the amount and the duration of the funds tendered for the
individual subscription. Under no circumstances will earnings accrue to any
subscription canceled for any reason other than those provided for in this
paragraph.
(9) Pending disposition of the Subscription Funds under this
Agreement, the Escrow Agent will invest collected Subscription Funds, in $1,000
increments above a maintained balance of $50,000, in overnight repurchase
agreements collateralized at 102% with obligations of the United States
Treasury or United States Government Agencies. These repurchase agreement
transactions will earn interest at a rate of 35 basis points below the daily
Overnight Fed Funds Sold rate. The Escrow Agent shall pay such investment
interest to the Company upon written instruction from the Company for the
purpose of paying or reimbursing the Company for pre-opening or organizing
expenses.
(10) The obligations as Escrow Agent hereunder shall terminate
upon the Agents transferring all funds held hereunder pursuant to the terms of
Paragraphs (7) or (8) herein, as applicable.
Page 2 of 6
<PAGE> 76
(11) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, certificate, receipt, authorization,
or other paper or document which the Agent believes to be genuine and what it
purports to be.
(12) The Escrow Agent shall not be liable for anything which the
Agent may do or refrain from doing in connection with this Escrow Agreement,
except for the Agent's own gross negligence or willful misconduct.
(13) The Escrow Agent may confer with legal counsel in the event
of any dispute or questions as to the construction of any of the provisions
hereof, or the Agent's duties hereunder, and shall incur no liability and shall
be fully protected in acting in accordance with the opinions and instructions
of such counsel. Any and all expenses and legal fees in this regard will be
paid by the Company.
(14) In the event of any disagreement between the Company and any
other person resulting in adverse claims and demands being made in connection
with any Subscription Funds involved herein or affected hereby, the Agent shall
be entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held under this Agreement which are
the subject of such disagreement, and in so doing shall be entitled to continue
to refrain from acting until (i) the right of adverse claimants shall have been
finally settled by binding arbitration or finally adjudicated in a court in
Orange County, Florida assuming and having jurisdiction of the Subscription
Funds involved herein or affected hereby or (ii) all differences shall have been
adjusted by agreement and the Agent shall have been notified in writing of such
agreement signed by the parties hereto. In the event of such disagreement, the
Agent may, but need not, tender into the registry or custody of any court of
competent jurisdiction in Orange County, Florida all money or property in the
Agent's hands under the terms of this Agreement, together with such legal
proceedings as the Agent deems appropriate and thereupon to be discharged from
all further duties under this Agreement. The filing of any such legal
proceeding shall not deprive the Agent of compensation earned prior to such
filing. The Escrow Agent shall have no obligation to take any legal action in
connection with this Agreement or towards its enforcement, or to appear in,
prosecute or defend any action or legal proceeding which would or might involve
the Agent in any cost, expense, loss or liability unless indemnification shall
be furnished.
(15) The Escrow Agent may resign for any reason, upon thirty (30)
days written notice to the Company. Upon the expiration of such thirty (30) day
notice period, the Escrow Agent may deliver all Subscription Funds and Stock
Order Forms in possession under this Escrow Agreement to any successor Escrow
Agent appointed by the Company, or if no successor Escrow Agent has been
appointed, to any court of competent jurisdiction. Upon either such delivery,
the Escrow Agent shall be released from any and all liability under this Escrow
Agreement. A termination under this paragraph shall in no way change the terms
of Paragraphs (14) and (16) affecting reimbursement of expenses, indemnity and
fees.
(16) The Escrow Agent will charge the Company for services
hereunder a fee of $1,500, plus an additional fee of $5.00 for each check
issued, $10.00 for each wire and $.50 for each photo copy necessitated in the
performance of duties, with total fees for services not to exceed $2,500. All
actual expenses and costs incurred by the Agent in performing obligations under
this Escrow Agreement will be paid by the Company. All fees and expenses shall
be paid on the Closing Date by the Company. Any subsequent fees and expenses
will be paid by the Company upon receipt of invoice.
(17) The Escrow Agent will notify the Iowa Securities Bureau at
304 East Maple Street, Des Moines, Iowa 50319-0066, when funds are released
from escrow.
(18) The Securities Commission or Administrator of each state
participating in the Coordinated Equity Review in connection with the
registration of the Company's Common stock for sale in the Offering shall have
the right to inspect and make copies of the records of the Escrow Agent
relating to the escrow services performed under this Agreement at any
reasonable time at the place where such records are located.
(19) The funds held by the Escrow Agent pursuant to the terms of
this agreement shall not be subject to claims by creditors of the issuer or
affiliates, associates or selling agents of the issuer until such funds have
been released to the issuer pursuant to the terms of this Agreement.
Page 3 of 6
<PAGE> 77
(20) All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if sent by registered or certified mail,
return receipt requested, to the respective addresses set forth herein. The
Escrow Agent shall not be charged with knowledge of any fact, including but not
limited to performance or non-performance of any condition, unless the Escrow
Agent has actually received written notice thereof from the Company or its
authorized representative clearly referring to this Escrow Agreement.
(21) The rights created by this Escrow Agreement shall inure to
the benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the Escrow Agent and the parties hereto.
(22) This Escrow Agreement shall be construed and enforced
according to the laws of the State of Florida.
(23) This Escrow Agreement shall terminate and the Escrow Agent
shall be discharged of all responsibility hereunder at such time as the Escrow
Agent shall have completed all duties hereunder.
(24) This Escrow Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
(25) This Escrow Agreement constitutes the entire understanding
and agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
(26) If any provision of this Escrow Agreement is declared by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.
(27) The Company shall provide the Escrow Agent with its Employer
Identification Number as assigned by the Internal Revenue Service.
Additionally, the Company shall complete and return to the Escrow Agent any and
all tax forms or reports required to be maintained or obtained by the Escrow
Agent.
(28) The authorized signature of the Escrow Agent hereto is
consent that a signed copy hereof may be filed with the various regulatory
authorities of the State of Florida and with any Federal regulatory
authorities.
Page 4 of 6
<PAGE> 78
IN AGREEMENT AND ACCEPTANCE OF THE INDEPENDENT BANKERS' BANK OF FLORIDA ESCROW
AGREEMENT BETWEEN JACKSONVILLE BANCORP, INC. (COMPANY), FOR THE PURPOSE OF
ORGANIZING A FINANCIAL INSTITUTION TO BE KNOWN AS THE JACKSONVILLE BANK, AND
THE INDEPENDENT BANKERS' BANK OF FLORIDA (ESCROW AGENT).
JACKSONVILLE BANCORP, INC.
Address: 13245 Atlantic Boulevard
Suite 5
Jacksonville, Florida 32225
Phone: (904) 220-3003
ATTEST:
By: By:
--------------------------- -----------------------------
Authorized Signature
Title: Title: Victor M. George, President
--------------------------- -----------------------------
(Type Name and Title) (Type Name and Title)
ATTEST: ADDITIONAL AUTHORIZED SIGNER
By: By:
--------------------------- -----------------------------
Authorized Signature
Title: Title:
--------------------------- -----------------------------
(Type Name and Title) (Type Name and Title)
(CORPORATE SEAL)
Page 5 of 6
<PAGE> 79
IN AGREEMENT AND ACCEPTANCE OF THE INDEPENDENT BANKERS' BANK OF FLORIDA ESCROW
AGREEMENT BETWEEN JACKSONVILLE BANCORP, INC. (COMPANY), FOR THE PURPOSE OF
ORGANIZING A FINANCIAL INSTITUTION TO BE KNOWN AS THE JACKSONVILLE BANK, AND
THE INDEPENDENT BANKERS' BANK OF FLORIDA (ESCROW AGENT).
<TABLE>
<S> <C>
INDEPENDENT BANKERS' BANK OF FLORIDA
Address: 109 E. Church Street
Suite BB
P.O. Box 4998
Orlando, FL 32802-4998
Phone: (407) 423-2002
ATTEST: Fax: (407) 843-4817
By: By:
------------------------------ ----------------------------------------
Authorized Signature
Title: Title: James H. McKillop, Senior Vice President
------------------------------ ----------------------------------------
(Type Name and Title) (Type Name and Title)
ATTEST: ADDITIONAL AUTHORIZED SIGNER
By: By:
------------------------------ ----------------------------------------
Authorized Signature
Title: Title:
------------------------------ -----------------------------------------
(Type Name and Title) (Type Name and Title)
(CORPORATE SEAL)
</TABLE>
Page 6 of 6
<PAGE> 80
APPENDIX "C"
STOCK ORDER FORM
<PAGE> 81
STOCK ORDER FORM & JACKSONVILLE BANCORP, INC.
CERTIFICATION
(Holding Company for The Jacksonville Bank)
Note: Please read the Stock Order Form Guide and Instructions on the back of
this form before completion
- --------------------------------------------------------------------------------
DEADLINE: The Offering began __________, 1999. A condition of the Offering is
that the Minimum Offering (sale of 800,000 shares of Common Stock) must be
completed on or before ______________, 1999, or the Offering will be terminated.
If the Minimum Offering is consummated, the Offering will continue so long as
shares remain available or until 5:00 p.m. Local Time, on ___________, 1999,
whichever occurs first, unless terminated by the Company beforehand.
- --------------------------------------------------------------------------------
(1) NUMBER OF SHARES BEING PURCHASED
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
(1) Number of Shares Price Per Unit (2) Total Amount Due
------------------- ----------------
x $10.00 = $
------------------- ----------------
</TABLE>
The minimum number of shares that may be subscribed for is 250. The maximum any
individual and their Related Party may subscribe for in the Offering (other
than individual Organizers and Directors) is 40,000 shares or 5% of the total
number of shares sold in the Offering at the time of the purchase, whichever is
greater. See the Section entitled "THE OFFERING -- General" on page 11 of the
Prospectus dated __________, 1999.
- --------------------------------------------------------------------------------
METHOD OF PAYMENT AND PURCHASER INFORMATION
- --------------------------------------------------------------------------------
(2) [ ] Enclosed is a check, bank draft or money order payable to "IBBF, FOR
JACKSONVILLE BANCORP, INC." of $___________.
(3) [ ] Check here if you are an Organizer, director, or employee of JBI or a
member of such person's immediate family.
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
(4) [ ] If purchasing through a broker/dealer, Name:
please list the name, address, and --------------------------------------------------------------------------
phone number in the space provided. Street Address:
----------------------------------------------------------------
City:
--------------------------------------------------------------------------
State: Zip Code:
------------------------------------------------- --------------
Phone Number ( )
------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
STOCK REGISTRATION
- --------------------------------------------------------------------------------
(5) Form of stock ownership
<TABLE>
<S> <C> <C>
[ ] Individual [ ] Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] Uniform Gift to Minors [ ] Individual Retirement Account
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary/Trust (Under Agreement Dated ________)
</TABLE>
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------- --------------------------------------------
Name Social Security or Tax I.D.
----------------------------------------------------------------------------- --------------------------------------------
Name Daytime Telephone
-------------------------------------------------------- -----------------------------------------------------------------
Street Address Evening Telephone
----------------------------------------------------------------------------- --------------------------------------------
City State Zip Code State of Residence
----------------------------------------------------------------------------- --------------------------------------------
</TABLE>
================================================================================
OFFICE USE Batch # _______
Date Rec'd ___/____/____ Order # ____________
Check # _____________ Category ____________
Amount $____________ Initials ____________
================================================================================
<PAGE> 82
- --------------------------------------------------------------------------------
NASD AFFILIATION (This section only applies to those individuals who meet the
delineated criteria)
- --------------------------------------------------------------------------------
[ ] Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation with Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance, and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- --------------------------------------------------------------------------------
ACKNOWLEDGMENTS
- --------------------------------------------------------------------------------
1. By signing below, I understand that I may not change or revoke my order
once it is received by JBI. I also certify that this stock order is for
my account and there is no agreement or understanding regarding any
further sale or transfer of these shares.
2. Under penalties of perjury, I further certify that:
(i) the social security number or taxpayer identification number given
above is correct; and
(ii) I am not subject to backup withholding.
If you have been notified by the Internal Revenue Service that you are
subject to backup withholding because of under-reporting interest or
dividends on your tax return, you must cross out Item (ii) above.
3. By signing below, I also acknowledge that I have not waived any rights
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
4 By signing below, I hereby represent to JBI that the purchase of shares
subscribed for complies with the "Purchase Limitation" set forth in the
Prospectus dated __________, 1999.
5. By signing below, I certify that before purchasing the Common Stock of JBI
that I received a copy of the Prospectus dated, ___________, 1999, which
discloses the nature of the Common Stock being offered thereby and
describes certain risks involved in an investment in the Common Stock under
the heading "Risk Factors" beginning on page 5 of the Prospectus.
- --------------------------------------------------------------------------------
SIGNATURE
- --------------------------------------------------------------------------------
THIS FORM MUST BE SIGNED AND DATED. THIS ORDER IS NOT VALID IF THE STOCK ORDER
FORM IS NOT SIGNED. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS
OF THE PROSPECTUS.
When purchasing as a custodian, corporate officer, etc.; include your full
title. An additional signature is required only if payment is by withdrawal from
an account that requires more than one signature to withdraw funds.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
<S> <C> <C>
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
</TABLE>
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
RETURN THIS FORM TO: Independent Bankers' Bank of Florida
Attn: James H. McKillop, III
Senior Vice President
615 Crescent Executive Court
Lake Mary, Florida 32795-8423
<PAGE> 83
JACKSONVILLE STOCK ORDER FORM GUIDE
BANCGROUP, INC. AND INSTRUCTIONS
- --------------------------------------------------------------------------------
INSTRUCTIONS
- --------------------------------------------------------------------------------
ITEMS 1 AND 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the Subscription Price of $10.00 per share. The minimum purchase is
250 shares. With the exception of employees and Organizers of the Company, the
maximum amount any participant may purchase in the Offering is 75,000 shares. In
addition, no person, together with associates of, and persons acting in concert
with such person, may purchase more than 5% of the total number of shares
outstanding following the completion of the Offering.
JBI has reserved the right to reject the subscription of any order received in
the Offering, if any, in whole or in part.
ITEM 3 - Please check this box if you are an Organizer, director, officer, or
employee of JBI or a member of such person's immediate family.
ITEM 4 - If purchasing through a broker/dealer, please list the name, address
and phone number in this box.
ITEM 5 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of JBI common stock.
Print the name(s) in which you want the shares registered and the mailing
address of the registration. Include the first name, middle initial and last
name of the shareholder. Avoid the use of two initials. Please omit words that
do not affect ownership rights, such as "Mrs.," "Mr.," "Dr.," "special account,"
etc.
SEE YOUR LEGAL OR FINANCIAL ADVISOR IF YOU ARE UNSURE ABOUT THE CORRECT
REGISTRATION OF YOUR STOCK.
INDIVIDUAL - The shares are to be registered in an individual's name only.
You may not list beneficiaries for this ownership.
TENANTS IN COMMON - Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
INDIVIDUAL RETIREMENT ACCOUNT - Individual Retirement Account ("IRA") holders
may make share purchases from their deposits through a pre-arranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
The Jacksonville Bank does not offer a self-directed IRA. Please contact the
Stock Sales Center if you have any questions about your IRA account. There will
be no early withdrawal or IRS penalties incurred in these transactions.
(Front)
<PAGE> 84
UNIFORM GIFT TO MINORS - For residents of many states, shares may be held in
the name of a custodian for the benefit of a minor under the Uniform Transfers
to Minors Act. For residents in other states, shares may be held in a similar
type of ownership under the Uniform Gift to Minors Act of the individual states.
For either type of ownership, the minor is the actual owner of the shares with
the adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
USE THE MINOR'S SOCIAL SECURITY NUMBER. Only one custodian and one minor may be
designated.
JOINT TENANTS - Joint Tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
CORPORATION/PARTNERSHIP - Corporations/Partnerships may purchase shares. Please
provide the Corporation's/Partnership's legal name and Tax I.D.
FIDUCIARY/TRUST - Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
On the first "NAME" line, print the first name, middle initial and last name of
the fiduciary if the fiduciary is an individual. If the fiduciary is a
corporation, list the corporate title on the first "NAME" line. Following the
name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated," fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: "John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated June 9, 1987."
- --------------------------------------------------------------------------------
DEFINITION OF ASSOCIATE
- --------------------------------------------------------------------------------
A person's Associates consist of the following: (a) any corporation or other
organization (other than Jacksonville Bancorp, Inc. ["JBI"] or The Jacksonville
Bank ["Bank"]) of which such person is a director, officer or partner or is
directly or indirectly the beneficial owner of 10% or more of any class of
equity securities; (b) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, provided, however, that such term shall not in
include any tax-qualified employee stock benefit plan of JBI or the Bank in
which such person has a substantial beneficial interest or serves as a trustee
or in a similar fiduciary capacity; and (c) any relative or spouse of such
person, or any relative of such person, who either has the same home as such
person or who is a director or officer of JBI or the Bank.
<PAGE> 85
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE SHARES TO WHICH IT RELATES, OR ANY OFFER OF SUCH
SHARES TO ANY PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ANY OF THE DATES AS OF
OFFERS OR SALES ARE BEING MADE HEREUNDER, THE COMPANY IS REQUIRED TO UPDATE THE
PROSPECTUS TO REFLECT ANY FACTS OR EVENTS ARISING AFTER THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WHICH REPRESENT A FUNDAMENTAL CHANGE IN THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT.
UNTIL JULY 30, 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE SHARES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY...................................................................................................4
RISK FACTORS.........................................................................................................7
THE COMPANY..........................................................................................................10
TERMS OF THE OFFERING................................................................................................11
USE OF PROCEEDS......................................................................................................14
CAPITALIZATION.......................................................................................................17
DIVIDEND POLICY......................................................................................................18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS...................................................................................................19
BUSINESS OF THE COMPANY..............................................................................................21
REGULATION AND SUPERVISION...........................................................................................26
ORGANIZERS AND PRINCIPAL SHAREHOLDERS................................................................................30
MANAGEMENT...........................................................................................................31
CERTAIN TRANSACTIONS.................................................................................................36
SALES AGENT..........................................................................................................37
SUMMARY OF ARTICLES OF INCORPORATION ................................................................................37
LEGAL PROCEEDINGS....................................................................................................39
LEGAL MATTERS........................................................................................................39
EXPERTS..............................................................................................................39
ADDITIONAL INFORMATION...............................................................................................39
INDEX TO FINANCIAL STATEMENTS........................................................................................F-1
</TABLE>
APPENDIX A - ARTICLES OF INCORPORATION
APPENDIX B - ESCROW AGREEMENT
APPENDIX C - STOCK ORDER FORM
================================================================================
MINIMUM 800,000 SHARES
MAXIMUM 1,500,000 SHARES
[LOGO]
JACKSONVILLE BANCORP, INC.
KEEFE, BRUYETTE & WOODS, INC.
J. P. TURNER & CO., L.L.C.
CAPITAL RESEARCH
AND
ASHTIN KELLY & CO.
-----------------------------------------------------
PROSPECTUS
-----------------------------------------------------
FEBRUARY __, 1999
-----------------------------------------------------
<PAGE> 86
PART - II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24: INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act (Chapter 607, Florida Statutes)
["Florida Act"] authorizes Florida corporations to indemnify any person who was
or is a party to any proceeding (other than an action by, or in the right of,
the corporation) by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation or other entity, against liability incurred in connection
with such proceeding, including any appearance thereof, if he or she acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action by or on behalf of a
corporation, indemnification may not be made if the person seeking
indemnification is ad- judged liable, unless the court in which such action was
brought determines such person is fairly and reasonably entitled to
indemnification. The indemnification provisions of the Florida Act require
indemnification if a director or officer has been successful on the merits or
otherwise in defense of any action, suit or proceeding to which he or she was
party by reason of the fact that he or she is or was a director or officer of
the Corporation. The indemnification authorized under Florida law is not
exclusive and is in addition to any other rights granted to officers and
directors under the Articles of Incorporation or Bylaws of the corporation or
any agreement between officers and directors under the Articles of
Incorporation or Bylaws of the corporation or any agreement between officers
and directors and the corporation. A corporation may purchase and maintain
insurance or furnish similar protection on behalf of any officer or director
against any liability asserted against the director or officer and incurred by
the director or officer in such capacity, or arising out of the status, as an
officer or director, whether or not the corporation would have the power to
indemnify him or her against such liability under the Florida act.
The Articles of Incorporation of Jacksonville Bancorp, Inc.
("Jacksonville Bancorp") provide for the indemnification of directors and
executive officers to the maximum extent permitted by Florida law as authorized
by the Board of Directors, and for the advancement of expenses incurred in
connection with the defense of any action, suit or proceeding that the director
or executive officer was a party to be reason of the fact that he or she is or
was a director of Jacksonville Bancorp upon the receipt of an undertaking to
repay such amount, unless it is ultimately determined that such director is not
entitled to indemnification.
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the sale of the Common Stock, other
than the sales agents' commissions are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 4,425
National Association of Securities Dealers, Inc. filing fee 2,000
Printing and engraving 8,000
Legal fees and expenses 30,000
Accounting fees and expenses 2,000
Blue Sky qualifications 5,000
Miscellaneous 5,000
---------
Total $ 56,425
=========
</TABLE>
II-1
<PAGE> 87
ITEM 27: EXHIBITS
(a) Listing of Exhibits
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page
------- -------------
<S> <C> <C>
* 1.1 Form of Sale Agency Agreement with Keefe, Bruyette &
Woods, Inc.
* 1.2 Form of Sale Agency Agreement with Robert W. Baird &
Co.
+ 3.1 Articles of Incorporation of Jacksonville Bancorp
* 3.2 Bylaws of Jacksonville Bancorp
* 4.0 Specimen Common Stock certificate
* 5.0 Opinion of Igler & Dougherty, P.A. regarding legality of
shares of Jacksonville Bancorp
* 10.1 Employment Agreement between Jacksonville Bancorp and
Victor M. George
* 10.2 Agreement between McAllen Capital Partners, Inc. and
Jacksonville Bancorp
++ 10.3 Escrow Agreement with Independent Bankers' Bank of
Florida
* 10.4 Outsourcing Agreement with M&I Data Services
* 21.0 Subsidiaries of Jacksonville Bancorp
* 23.1 Consent of Igler & Dougherty, P.A.
23.2 Consent of McAllen Capital Partners, Inc.
23.3 Consent of Hacker, Johnson, Cohen & Grieb
* 24.0 Power of Attorney
24.1 Excerpt of the Minutes of the Board of Directors' September
1998 Meeting
* 27.0 Financial Data Schedule (for SEC use only)
* 99.1 Letter to Prospective Investor
+++ 99.2 Stock Order Form
</TABLE>
- ------------------------------------
* Denotes previously EDGAR filed as part of this Registration
Statement, File No. 333-64815.
+ (Incorporated within as Appendix A of Prospectus)
++ (Incorporated within as Appendix B of Prospectus)
+++ (Incorporated within as Appendix C of Prospectus)
II-2
<PAGE> 88
ITEM 28: UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that it will:
(1) for determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of this registration statement as of
the time the Commission declared it effective.
(2) for determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time, as the initial
bona fide offering of those securities.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers,
and controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 2 to Form SB-2 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 22nd day of January, 1999.
JACKSONVILLE BANCORP, INC.
By: /s/ VICTOR M. GEORGE
---------------------------------
Victor M. George, President
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to Form SB-2 Registration Statement has been signed by the
following persons in the capacities and as of the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
C. Michael Carter
/s/ Victor M. George Chairman of the Board, January 22, 1999
- ------------------------------------------- Chief Executive Officer,
Victor M. George President and Chief Financial
Officer
(Principal Accounting Officer)
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
George H. Groves
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
James M. Healey
*/s/ John C. Kowkabany
- ------------------------------------------- Director January 22, 1999
John C. Kowkabany
</TABLE>
- ------------------------------------------------------------------------------
* Pursuant to Power of Attorney filed September 30, 1998, authorizing
Victor M. George and Lynn H. Sandberg, or either of them, as the true
and lawful attorneys-in-fact to sign all amendments to the Form SB-2
Registration Statement.
II-4
<PAGE> 90
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- -----
<S> <C> <C>
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
Rudolph A. Kraft
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
R. C. Mills
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
John W. Rose
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
John R. Schultz
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
Charles F. Spencer
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
Bennett A. Tavar
*/s/ Victor M. George Director January 22, 1999
- -------------------------------------------
Gary L. Winfield, M.D.
</TABLE>
- ------------------------------------------------------------------------------
* Pursuant to Power of Attorney filed September 30, 1998, authorizing
Victor M. George and Lynn H. Sandberg, or either of them, as the true
and lawful attorneys-in-fact to sign all amendments to the Form SB-2
Registration Statement.
II-5
<PAGE> 91
EXHIBIT INDEX
FORM SB-2
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page
------- -------------
<S> <C> <C>
*1.1 Form of Sale Agency Agreement with Keefe, Bruyette &
Woods, Inc.
*1.2 Form of Sale Agency Agreement with Robert W. Baird &
Co.
+3.1 Articles of Incorporation of Jacksonville Bancorp
*3.2 Bylaws of Jacksonville Bancorp
*4.0 Specimen Common Stock certificate
*5.0 Opinion of Igler & Dougherty, P.A. regarding legality of
shares of Jacksonville Bancorp
*10.1 Employment Agreement between Jacksonville Bancorp and
Victor M. George
*10.2 Agreement between McAllen Capital Partners, Inc. and
Jacksonville Bancorp
++10.3 Escrow Agreement with Independent Bankers' Bank of
Florida
*10.4 Outsourcing Agreement with M&I Data Services
*21.0 Subsidiaries of Jacksonville Bancorp
*23.1 Consent of Igler & Dougherty, P.A.
23.2 Consent of McAllen Capital Partners, Inc.
23.3 Consent of Hacker, Johnson, Cohen & Grieb
*24.0 Power of Attorney
24.1 Excerpt of the Minutes of the Board of Directors' September,
1998 Meeting
*27.0 Financial Data Schedule (for SEC use only)
*99.1 Letter to Prospective Investor
+++99.2 Stock Order Form
</TABLE>
- ------------------------------------
* Denotes previously EDGAR filed as part of this Registration
Statement, File No. 333-64815.
+ (Incorporated within as Appendix A of Prospectus)
++ (Incorporated within as Appendix B of Prospectus)
+++ (Incorporated within as Appendix C of Prospectus)
<PAGE> 1
EXHIBIT 23.2
CONSENT OF MCALLEN CAPITAL PARTNERS, INC.
<PAGE> 2
MCALLEN CAPITAL PARTNERS, INC.
December 30, 1998
Board of Directors
Jacksonville Bancorp, Inc.
13245 Atlantic Boulevard, Suite #5
Jacksonville, Florida 32225
Gentlemen:
We hereby consent to the references to this firm in Amendment No. 2 to
the Registration Statement on Form SB-2 filed by Jacksonville Bancorp, Inc.
("Company"), and all amendments thereto regarding the issuance and registration
of shares of common stock by the Company.
Sincerely,
MCALLEN CAPITAL PARTNERS, INC.
/S/ ALAN P. CARRUTHERS
<PAGE> 1
EXHIBIT 23.3
CONSENT OF HACKER, JOHNSON, COHEN & GRIEB
<PAGE> 2
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in Amendment No. 2 to the registration
statement on Form SB-2 of our report dated August 28, 1998, on our audit of
the financial statements of Jacksonville Bancorp, Inc. as of December 31, 1997
and for the period from October 24, 1997 (Date of Incorporation) to December
31, 1997, and to the reference to our firm under the caption "Experts."
HACKER, JOHNSON, COHEN & GRIEB PA
Orlando, Florida
December 30, 1998
<PAGE> 1
EXHIBIT 24.1
JACKSONVILLE BANCORP, INC.
Excerpt of the Minutes
of the
Board of Directors' September 1998 Meeting
THE UNDERSIGNED hereby certifies that he is the Chairman of the Board,
President/Chief Executive Officer of Jacksonville Bancorp, Inc. and that at the
regularly scheduled Board of Directors Meeting held in September 1998, the
Board of Directors reviewed the Form SB-2 Registration Statement for
Jacksonville Bancorp, Inc. (the "SB-2"), authorizing the submission and filing
of the SB-2 with the Securities and Exchange Commission.
THE UNDERSIGNED further certifies that the following resolutions were
adopted at the September Meeting:
BE IT RESOLVED that Victor M. George, as the President and Chief Executive
Officer of Jacksonville Bancorp, Inc., along with Corporate Counsel, is
hereby authorized to take whatever action is necessary to finalize the SB-2
and the Exhibits thereto, and to file the same with the Securities and
Exchange Commission;
BE IT FURTHER RESOLVED that the President/Chief Executive Officer and
Corporate Counsel are hereby authorized to file the necessary notices or
registrations ("Blue Sky filings") with the Securities Divisions of the
States that have been selected as the States in which Jacksonville Bancorp,
Inc. will be offering shares of its common stock;
BE IT FURTHER RESOLVED that Corporate Counsel is hereby authorized to make
the necessary NASD filings on behalf of the Sales Agent(s) selected to sell
the stock on behalf of Jacksonville Bancorp, Inc.;
BE IT FURTHER RESOLVED that the Board of Directors has reviewed the Power
of Attorney dated September 29, 1998, and, as evidenced by the signatures
affixed thereto, have authorized Victor M. George, President and Chief
Executive Officer of Jacksonville Bancorp, Inc., to serve as their
attorney-in-fact with full power and authority to execute and file any
amendments to the SB-2 with the Securities and Exchange Commission the Blue
Sky States.
The foregoing Certification is being executed on this 22nd day of January
1999.
/s/ /s/
- ------------------------------------- -------------------------------------
Attest Victor M. George
Chairman of the Board, President/
Chief Executive Officer
