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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-68307
1,000,000 SHARES
COMMUNITY CAPITAL BANCSHARES, INC.
A Proposed Bank Holding Company for
ALBANY BANK & TRUST N.A. (IN ORGANIZATION)
COMMON STOCK
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Community Capital Bancshares, Inc. is offering shares of its common stock
to organize Albany Bank & Trust N.A., a proposed new national bank. We will be
the holding company and sole shareholder of Albany Bank after it is organized.
This is a firm commitment underwriting. Prior to this offering, there has been
no public market for the shares. We expect that quotations for the common stock
will be reported on the Nasdaq OTC Bulletin Board under the symbol "ALBY."
INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense. The shares of common stock offered are not deposits, savings
accounts, or other obligations of a bank or savings association and are not
insured by the FDIC or any other governmental agency.
------------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price..................................... $10.00 $10,000,000
Underwriting discount..................................... $ .64 $ 635,680
Proceeds to the company, before expenses.................. $ 9.36 $ 9,364,320
</TABLE>
The underwriter has the right to purchase up to an additional 150,000
shares at the public offering price, less an underwriting discount of $.75 per
share, within 30 days from the date of this prospectus to cover over-allotments.
The underwriter has the right to reject orders in whole or in part and withdraw,
cancel or modify the offer without notice.
------------------------------
INTERSTATE/JOHNSON LANE
CORPORATION
The date of this prospectus is March 11, 1999.
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COMMUNITY CAPITAL BANCSHARES, INC.
MARKET AREA
[INSERT A MAP DEPICTING ALBANY BANK'S LOCATION WITHIN A MAP OF GEORGIA SHOWING
DOUGHERTY AND LEE COUNTIES AND THE CITY OF ALBANY]
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SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all the information you should consider before
investing in the common stock. You should read carefully the entire prospectus.
IN GENERAL
Community Capital Bancshares, Inc. is a Georgia corporation that was
incorporated on August 19, 1998 to organize and serve as the holding company for
Albany Bank & Trust N.A., a proposed national bank. Albany Bank will operate as
a community bank emphasizing prompt, personalized customer service to the
individuals and businesses located in Dougherty County, including the City of
Albany, and adjacent Lee County in Georgia. After receiving all necessary
regulatory approvals, we anticipate beginning operations out of a temporary
facility in the spring of 1999 and expect construction of our permanent facility
to be completed in the fall of 1999.
THE ALBANY MARKET
We believe the Albany market presents a growing and highly diversified
economic environment that will support the formation of Albany Bank. Albany
serves as the commercial, retail and major medical center for communities in
Southwest Georgia and is considered the key economic focal point of the
Dougherty/Lee County area. According to National Decision Systems, the
population within the 30-mile radius surrounding Albany is expected to grow
approximately 9.4% from 170,000 in 1990 to 186,000 by 2002. We anticipate that
the deposit base in the Dougherty/Lee County area will grow as Albany's
population and economic activity continue to increase.
We believe an attractive opportunity exists in the Albany market for a
locally headquartered community bank that focuses on personalized service to
individuals and businesses located within the community. Over the past few
years, the banking industry in Southwest Georgia, including Albany, has been
consolidating. Since 1995, the following financial institutions have entered the
Albany market through the acquisition of community banks located in Albany:
BankAmerica Corp., the largest bank in the United States, headquartered in
Charlotte, North Carolina; Regions Financial Corp., a $35 billion institution
headquartered in Birmingham, Alabama; and ABC Bancorp, approximately a $700
million institution headquartered in Moultrie, Georgia. At least 11 financial
institutions currently operate within the Dougherty/Lee County area. As a result
of these acquisitions, no community bank remains headquartered in Dougherty or
Lee County.
Acquisitions of community banks by larger regional banks often result in
the dissolution of local boards of directors and in significant turnover in
management and customer service personnel who possess extensive banking
experience and strong ties to the local community. We believe that we have a
unique opportunity to attract and retain experienced and talented individuals
who are familiar with the banking needs of the local community. Bank mergers and
acquisitions also necessitate the consolidation of data processing systems which
often create disruptions in customer service. As the only community bank
headquartered in Albany, we will offer convenient service, local decision-
making and competitive loans. Additionally, by focusing our operations on the
community we serve, we believe that we will be able to respond to changes in the
Albany market more quickly than large, centralized institutions.
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PRODUCTS AND SERVICES
We plan to offer our products and services through high quality,
personalized delivery systems while providing our customers with the financial
sophistication and array of products typically offered by a larger bank. Albany
Bank's lending services will include consumer loans to individuals, commercial
loans to small to medium-sized businesses and professional concerns and real
estate-related loans. Albany Bank will offer a broad array of competitively
priced deposit services including demand deposits, regular savings accounts,
money market deposits, certificates of deposit and individual retirement
accounts. To complement our lending and deposit services, we will also provide
cash management services, safe-deposit boxes, travelers checks, direct deposit,
automatic drafts, and courier services to commercial customers. We intend to
offer our services through a variety of delivery systems including branch
offices, automated teller machines, telephone banking and internet banking.
DIRECTORS AND OFFICERS
Our management team includes individuals who have significant experience in
the banking industry in Georgia. Robert E. Lee is the President of Community
Capital and will serve as the President and the Chief Executive Officer of
Albany Bank. He has held numerous senior banking positions in Southwest Georgia
during his 25-year banking career, including Executive Vice President and Chief
Financial Officer of First State Corporation, which was recently acquired by
Regions Financial Corporation, prior to our organization. Charles M. Jones, III,
the Chairman of the Board of Directors and Chief Executive Officer of Community
Capital, and David C. Guillebeau, who will be the Chief Lending Officer of
Albany Bank, collectively have over 30 years of experience in the banking and
lending industries and are both natives of Southwest Georgia. David J. Baranko,
our Chief Financial Officer, has over 13 years of banking experience in the
areas of finance and operations. Albany Bank also has hired a Vice President of
Consumer Lending and intends to hire a Vice President of Commercial Real Estate,
both of whom are expected to possess significant experience in their respective
positions and within the Albany market area.
The Board of Directors of Community Capital consists of 15 organizers who
will also be the directors of Albany Bank. All of the directors are residents of
the Dougherty/Lee County area and are active participants in the community. The
directors intend to utilize their diverse backgrounds and their extensive local
business relationships to attract customers from all segments of the community.
The directors and executive officers intend to purchase approximately 285,800
shares of common stock, representing an amount equal to 28.6% of the shares of
stock to be outstanding after this offering. The directors' financial interest
in Community Capital should encourage active participation in growing our
franchise. See "Management" (page 36).
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BUSINESS STRATEGY
Our strategy as an independent bank holding company will be carried out
through the operations and growth of Albany Bank. In an effort to emphasize
prompt, responsive service to our target customers and expand our presence in
the Albany market, our strategies are to:
Operating Strategy:
- Hire and retain highly experienced and qualified banking personnel.
- Provide individualized attention with local decision-making authority.
- Capitalize on the directors' and officers' diverse community involvement
and business experience.
- Establish a community identity.
- Implement an aggressive marketing program.
Growth Strategy:
- Leverage our position as the only community bank headquartered in Albany.
- Open additional branch offices in downtown/east Albany, the southern
portion of Lee County and other strategic locations as appropriate.
- Seek to hire employees with established customer relationships.
- Construct a building that will support the hiring of additional lending
officers and the addition of other departments, such as a mortgage
banking department.
- Utilize technology and strategic outsourcing to provide a broad array of
banking products and services.
- Evaluate strategic acquisition opportunities on an ongoing basis.
EXECUTIVE OFFICES
Our offices are located at 2815 Meredyth Drive, Albany, Georgia 31707. Our
telephone number is (912) 446-2265.
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THE OFFERING
Common stock offered............ 1,000,000 shares of Community Capital common
stock
Common stock to be outstanding
after the offering............ 1,000,000 shares
Use of proceeds................. To capitalize Albany Bank, to pay
organizational, offering and pre-opening
expenses, to construct Albany Bank's main
office and to provide working capital for
Community Capital to be used for business
purposes, including making loans and other
investments. See "Use of Proceeds" (page
15).
Proposed trading symbol......... "ALBY"
The number of shares of common stock offered does not include the exercise
of the underwriter's over-allotment option to purchase up to 150,000 additional
shares of the common stock. The number of shares to be outstanding after the
offering does not include up to 225,000 shares of common stock issuable upon the
exercise of the warrants issued to the organizers or 90,000 shares of common
stock issuable upon the exercise of options that may be granted under the
Community Capital's stock incentive plan. See "Executive Compensation" (page
43).
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RISK FACTORS
An investment in the common stock involves a significant degree of risk.
You should not invest in the common stock unless you can afford to lose your
entire investment. You should consider carefully the following risk factors and
other information in this prospectus before deciding to invest in the common
stock.
The following paragraphs describe all of the material risks of an
investment in the common stock presently known to us. You should also carefully
read the cautionary statement following the Risk Factors regarding the use of
forward-looking statements.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR FUTURE
EARNING PROSPECTS
Neither Community Capital nor Albany Bank has any operating history on
which to base any estimate of their future earning prospects. Community Capital
was only recently formed, and Albany Bank will not receive final approval from
the Office of the Comptroller of the Currency to begin operations until after
this offering is completed. Consequently, you will not have access to historical
information that would be helpful in deciding whether to invest in Community
Capital.
YOU MAY NOT RECOVER ALL OR ANY PART OF YOUR INVESTMENT IF WE DO NOT BECOME
PROFITABLE
Typically, most new banks incur substantial start-up expenses, are not
profitable in the first year of operation and, in some cases, are not profitable
for several years. If we are ultimately unsuccessful, you may not recover all or
any part of your investment in the common stock. Additionally, many of Albany
Bank's loans initially will be unseasoned -- new loans to new borrowers.
Accordingly, it will take several years to determine the borrowers' payment
histories, and as a result, management will not be able to evaluate reliably the
quality of the loan portfolio until that time. Our profitability will depend on
Albany Bank's profitability, and we can give no assurance that Albany Bank will
ever operate profitably. See "Management's Discussion and Analysis of Financial
Condition and Plan of Operations" (page 18).
FAILURE TO IMPLEMENT OUR BUSINESS STRATEGIES MAY ADVERSELY AFFECT OUR FINANCIAL
PERFORMANCE
If we cannot implement our business strategy, we will be hampered in our
ability to develop business and serve our customers, which could have an adverse
affect on our financial performance. The organizers have developed a business
plan that details the strategy that we intend to implement in our efforts to
achieve profitable operations. The strategy includes hiring and retaining
experienced and qualified employees and opening two branch offices within the
first 36 months of operation. Even if these strategies are successfully
implemented, they may not have the favorable impact on operations that we
anticipate. See "Proposed Business of Community Capital and Albany
Bank -- Business Strategy" (page 26).
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DEPARTURES OF OUR KEY PERSONNEL OR DIRECTORS MAY IMPAIR OUR OPERATIONS
Robert E. Lee, David J. Baranko and David C. Guillebeau are important to
our success and, if any of them terminates his employment with us, our financial
condition and results of operations may be adversely affected. Mr. Lee has been
instrumental in our organization and will be the key management official in
charge of our daily business operations. Mr. Baranko will be principally
responsible for our financial and accounting operations. Mr. Guillebeau will be
the key officer of Albany Bank in charge of lending operations. We have entered
into employment agreements with Messrs. Lee and Guillebeau, but cannot be
assured of their continued service. Additionally, our directors' community
involvement, diverse backgrounds and extensive local business relationships are
important to our success. Our growth could be adversely affected if the
composition of our Board of Directors changes materially. See "Management" (page
36).
A DELAY IN BEGINNING ALBANY BANK'S OPERATIONS WILL RESULT IN ADDITIONAL LOSSES
Any delay in the start of Albany Bank's operations will increase
pre-opening expenses and postpone Albany Bank's realization of potential
revenues. This could cause our accumulated deficit to increase as a result of
continuing operating expenses, such as salaries and other administrative
expenses, coupled with our lack of revenue. Although we expect to receive all
regulatory approvals and to begin business in April of 1999, we can give no
assurance as to when, if at all, these events will occur.
IF REGULATORY CONDITIONS ARE NOT SATISFIED, WE MAY DISSOLVE AND LIQUIDATE AND
YOU MAY ONLY RECEIVE A PORTION, IF ANY, OF YOUR INVESTMENT
If we do not receive final approval for Albany Bank to start its banking
operations by August 9, 2000 or other regulatory requirements are not satisfied,
then we will solicit shareholder approval for the dissolution and liquidation of
Community Capital. If we dissolve and liquidate after the close of the offering,
shareholders will receive only a portion, if any, of their original investment
because we will have used the proceeds of the offering to pay all expenses and
capital costs incurred. These expenses include the expenses of the offering, the
organizational and pre-opening expenses and the claims of creditors. We will
distribute to our shareholders net assets remaining after payment or provision
for payment of all claims against Community Capital. Although Community Capital
and Albany Bank have applied for all regulatory approvals required to begin
operations and Albany Bank has received approval from the FDIC and preliminary
approval from the Office of the Comptroller of the Currency, final approval from
the Office of the Comptroller of the Currency may not be granted in a timely
manner if at all. The closing of this offering is not conditioned upon the
receipt of the final approval to begin business.
INDUSTRY COMPETITION MAY HAVE AN ADVERSE EFFECT ON OUR SUCCESS
The banking business is highly competitive. Our profitability will depend
on our ability to compete successfully. Albany Bank will compete with numerous
other lenders and deposit-takers, including other commercial banks, savings and
loan associations, credit unions, finance companies, mutual funds, insurance
companies and brokerage and investment banking firms. Although no independent
community banks are currently headquartered in Albany, we could face increased
competition if another community bank were to open in our market area. We will
compete primarily with other financial institutions in the Albany market, but
may also compete with internet banks and financial
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institutions located throughout the United States for products such as large
certificates of deposit. All of our competitors actively solicit business from
residents of Dougherty County and Lee County, Georgia. Some of these
institutions are not subject to the same degree of regulation as we will be and
have greater resources than will be available to us. See "Proposed Business of
Community Capital and Albany Bank -- Market Opportunities -- Competition" (page
24).
CHANGES IN INTEREST RATES MAY DECREASE OUR NET INTEREST INCOME
An increase or decrease in interest rates could have a material adverse
effect on Albany Bank's net interest income, capital and liquidity. Albany
Bank's operations depend substantially on its net interest income, which is the
difference between the interest income earned on its interest-earning assets and
the interest expense paid on its interest-bearing liabilities. Like most
depository institutions, Albany Bank's earnings and net interest income are
affected by changes in market interest rates and other economic factors beyond
its control. While we intend to take measures to decrease interest rate risk,
these measures may not be effective in minimizing the exposure to interest rate
risk. Also, Albany Bank's results of operations will be affected by credit
policies of monetary authorities, particularly the Federal Reserve Board of
Governors. See "Management's Discussion and Analysis of Financial Condition and
Plan of Operations -- Liquidity and Interest Rate Sensitivity" (page 18).
UNPREDICTABLE ECONOMIC CONDITIONS MAY HAVE AN ADVERSE EFFECT ON OUR FINANCIAL
PERFORMANCE
The majority of Albany Bank's borrowers and depositors will be individuals
and businesses located and doing business in the Dougherty/Lee County area.
Albany Bank's success will therefore depend on the general economic conditions
in Dougherty County and Lee County, Georgia, which management cannot predict
with certainty. Factors that adversely affect the Dougherty/Lee County economy
could adversely affect Albany Bank's financial performance. For example, an
adverse change in the local economy could make it more difficult for borrowers
to repay their loans, which could lead to loan losses for Albany Bank. See
"Proposed Business of Community Capital and Albany Bank" (page 21).
LOWER LENDING LIMITS THAN MANY OF OUR COMPETITORS MAY LIMIT OUR ABILITY TO
ATTRACT BORROWERS
At least during its first years of operations, Albany Bank's legally
mandated lending limits will be lower than those of many of its competitors
because initially it will have less capital than many of its competitors. Our
lower lending limits may discourage potential borrowers who have lending needs
that exceed our limits, which may restrict our ability to grow. We may try to
serve the needs of these borrowers by selling loan participations to other
institutions, but this strategy may not succeed. See "Proposed Business of
Community Capital and Albany Bank -- Lending Services" (page 28).
OUR ABILITY TO PAY DIVIDENDS IS LIMITED AND DEPENDS ON ALBANY BANK'S ABILITY TO
PAY DIVIDENDS
Community Capital will initially have no source of income other than
dividends that it receives from Albany Bank. Our ability to pay dividends to you
will therefore depend on Albany Bank's ability to pay dividends to Community
Capital.
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Additionally, bank holding companies and national banks are both subject to
significant regulatory restrictions on the payment of cash dividends. In light
of these restrictions and the need for Community Capital and Albany Bank to
retain and build capital, it will be the policy of each of their Boards of
Directors to reinvest earnings for the period of time necessary to help support
the success of their operations. As a result, we do not plan to pay dividends
until we recover any losses that we may have incurred and become profitable.
Additionally, our future dividend policy will depend on our earnings, capital
requirements, financial condition and other factors that the Boards of Directors
of Community Capital and Albany Bank consider relevant. See "Dividends" (page
17).
ARBITRARILY DETERMINED PUBLIC OFFERING PRICE MAY BE HIGHER OR LOWER THAN THE
MARKET PRICE OF THE COMMON STOCK AFTER THE OFFERING
Because we were only recently formed and Albany Bank is in the process of
being organized, the public offering price could not be set with reference to
historical measures of Community Capital's financial performance. Therefore, the
public offering price may not indicate the market price for the common stock
after the offering. Community Capital and the underwriter negotiated the public
offering price based on several factors. These factors included prevailing
market conditions, the price to earnings and price to book value multiples of
comparable publicly traded companies, and Albany Bank's growth potential and
cash flow and earnings prospects. See "Underwriting" (page 55).
IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP, IT MAY BE DIFFICULT FOR YOU TO
SELL YOUR SHARES OF COMMON STOCK
Prior to the offering, there has been no public market for Community
Capital's common stock, and an active trading market may not develop. If an
active trading market does not develop or continue after the offering, you may
not be able to sell your shares at or above the price at which these shares are
being offered to the public. Although we have applied to list the common stock
on the Nasdaq OTC Bulletin Board, an active trading market may not develop or
continue after the offering. You should consider carefully the limited liquidity
of your investment before purchasing any shares of our common stock.
The underwriter has advised us that, upon completion of the offering, it
intends to use reasonable efforts to initiate quotations of the common stock on
the Nasdaq OTC Bulletin Board and to act as a market maker in the common stock,
subject to applicable laws and regulatory requirements, although it is not
obligated to do so. Even with a market maker, an active and liquid market for
our common stock may not develop in the foreseeable future because of the
limited size of our offering, our lack of an earnings history and the absence of
a reasonable expectation that we will pay dividends within the near future.
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
our control or the control of any market maker. Market makers on the Nasdaq OTC
Bulletin Board are not required to maintain a continuous two-sided market, are
required to honor firm quotations for only a limited number of shares and are
free to withdraw firm quotations at any time.
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MARKET PRICE OF THE COMMON STOCK MAY BE VOLATILE
If a market develops for the common stock after the offering, we may
experience significant volatility in the market price of our common stock.
Factors that may affect the price of our common stock include the depth and
liquidity of the market for the common stock, investor perception of our
financial strength, conditions in the banking industry such as credit quality
and monetary policies, and general economic and market conditions. Our quarterly
operating results, changes in analysts' earnings estimates, changes in general
conditions in the economy or financial markets or other developments affecting
Community Capital could cause the market price of the common stock to fluctuate
substantially. In addition, from time to time the stock market experiences
extreme price and volume fluctuations. This volatility may significantly affect
the market price of the common stock for reasons unrelated to our operating
performance.
GOVERNMENT REGULATION MAY HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY AND GROWTH
Bank holding companies and banks are subject to extensive state and federal
government supervision and regulation. Our ability to achieve profitability and
to grow could be adversely affected by state and federal banking laws and
regulations. These and other restrictions limit the manner in which we may
conduct our business and obtain financing, including Albany Bank's ability to
attract deposits, make loans and achieve satisfactory interest spreads. Many of
these regulations are intended to protect depositors, the public, and the FDIC,
not shareholders. In addition, the burden imposed by federal and state
regulations may place us at a competitive disadvantage compared to competitors
who are less regulated. Applicable laws, regulations, interpretations and
enforcement policies have been subject to significant, and sometimes
retroactively applied, changes in recent years, and may be subject to
significant future changes. Future legislation or government policy may also
adversely affect the banking industry or our operations. See "Supervision and
Regulation" (page 56).
EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE DILUTION
The organizers, officers and employees may exercise warrants or options to
purchase common stock, which would result in the dilution of your proportionate
interests in Community Capital. Upon completion of this offering, we will issue
to the organizers warrants to purchase an aggregate of up to 225,000 shares of
common stock, and will issue to our executive officers and employees options to
purchase an aggregate of 79,400 shares of common stock. The warrants and options
will vest in annual increments of 20% over five years and will be exercisable at
a price of $10.00 per share. The organizers, officers and employees will have
the opportunity to profit from any rise in the market value of the common stock
or any increase in our net worth.
In addition, the exercise of the warrants or options could adversely affect
the terms on which we can obtain additional capital. For instance, the holders
of the warrants or options could exercise the warrants or options when we could
obtain capital by offering additional securities on terms more favorable to us
than those provided for by the warrants or options. See "Executive Compensation"
(page 43).
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WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL
In the future, should we need additional capital, we may not be able to
raise additional funds through the issuance of additional shares of common stock
or other securities. Even if we are able to obtain additional capital through
the issuance of additional shares of common stock or other securities, we may
not issue these securities at prices or on terms better than or equal to the
public offering price and terms of this offering. The issuance of new securities
could dilute your ownership interest in Community Capital.
IF OUR ARTICLES OF INCORPORATION AND BYLAWS DETER A CHANGE IN CONTROL, YOU MAY
BE DEPRIVED OF AN OPPORTUNITY TO SELL YOUR SHARES AT A PREMIUM OVER MARKET
PRICES
Our Articles of Incorporation and Bylaws contain provisions that may deter
an attempt to change or gain control of Community Capital. As a result, you may
be deprived of opportunities to sell some or all of your shares at prices that
represent a premium over market prices. These provisions include the existence
of preferred stock, staggered terms for the directors, restrictions on the
ability to change the number of directors or to remove a director, supermajority
voting requirements, and flexibility in evaluating acquisition proposals. See
"Certain Provisions of the Articles of Incorporation and Bylaws" (page 49).
DIRECTORS AND OFFICERS COULD HAVE THE ABILITY TO INFLUENCE SHAREHOLDER ACTIONS
Our directors and executive officers together may be able to control the
outcome of director elections or block a significant transaction that might
otherwise be approved by the shareholders. We anticipate that after this
offering, our directors and executive officers will directly or indirectly own
285,800 shares, representing 28.6%, of the outstanding common stock. These
persons may acquire additional shares of common stock after the offering, which
will increase this percentage. See "Certain Provisions of the Articles of
Incorporation and Bylaws" (page 49).
OUR COMPUTER SYSTEMS, OR THOSE OF OUR SERVICE PROVIDERS, SUPPLIERS OR CUSTOMERS,
MAY NOT OPERATE PROPERLY ON YEAR 2000-SENSITIVE DATES
The year 2000 issue common to most corporations concerns the inability of
certain software and databases to recognize the year 2000 and other year
2000-sensitive dates. If Community Capital, Albany Bank or any of their service
providers, correspondents, vendors or customers experiences a disruption of
business resulting from a year 2000 problem, the financial condition, results of
operations and liquidity of Community Capital and Albany Bank could be
materially adversely affected. Albany Bank, like most banks, will be heavily
dependent on complex computer systems for most phases of its operations. If not
corrected, a year 2000 problem could result in a disruption to the operations of
Albany Bank as well as other financial institutions, which are particularly
sensitive to these disruptions. These disruptions could include events ranging
from electrical or water failure to computer systems failure, with any of these
events potentially resulting in a cessation of Albany Bank's activities until
the problem is resolved.
Community Capital and Albany Bank will rely on software and hardware
developed by independent third parties to provide the information systems used
by us. As a result, Albany Bank will depend on the efforts of those vendors to
ensure that their data processing systems accommodate year 2000 information.
Although we intend to require
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vendor certification regarding year 2000 readiness before we purchase any
equipment, we cannot verify independently that the equipment will in fact be
year 2000 compliant. Additionally, Albany Bank could be adversely affected by
year 2000 problems experienced by others, including its customers, service
providers, vendors, customers' vendors, correspondent banks, government
agencies, and the financial services industry in general, over which it has no
control. If, for example, one of Albany Bank's major borrowers is unable to
conduct its operations as a result of a year 2000 problem, that borrower could
be unable to maintain its cash flow and could therefore default on its loan,
which would lead to loan losses for Albany Bank. See "Proposed Business of
Community Capital and Albany Bank -- Information Systems and the Year 2000"
(page 32).
FUTURE RESALES OF COMMON STOCK MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
COMMON STOCK
After the close of this offering, 1,000,000 shares of common stock will be
outstanding, assuming the underwriter does not exercise its over-allotment
option. The sale of a large block of the shares outstanding after the close of
the offering could adversely affect the market price of the common stock. All of
the outstanding shares will be freely tradable without restriction except for
285,800 shares that we anticipate the organizers and the executive officers will
purchase in the offering. The organizers and the executive officers have agreed,
for a period of 180 days from the date of this prospectus, not to sell or
otherwise transfer, either directly or indirectly, any shares of common stock
without the prior consent of the underwriter. As a result, 714,200 shares of
common stock will be freely tradable without restriction upon completion of the
offering. Additionally, 285,800 shares of common stock held by the organizers
and the executive officers will be eligible for sale beginning 180 days from the
date of this prospectus under resale limitations of Rule 144 of the Securities
Act of 1933, as currently in effect. See "Shares Eligible for Future Sale" (page
54).
WE MAY NOT ALLOCATE ALL OF THE NET PROCEEDS IN THE MOST PROFITABLE MANNER
After capitalizing Albany Bank with $7.5 million, our Board of Directors
and management will have broad discretion in allocating a total of approximately
$1.7 million, or 18.2%, of the net proceeds of the offering. We cannot predict
the extent to which we will allocate these funds to income-generating assets,
capital assets or liquidity. The allocation will directly affect our earnings,
and as a result, it will be difficult to predict our results of operations.
Although we intend to utilize the funds to serve Community Capital's best
interest we cannot assure you that our allocation will ultimately reflect the
most profitable application of these proceeds. See "Use of Proceeds" (page 15).
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CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus under the captions "Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and Plan
of Operations" and "Proposed Business of Community Capital and Albany Bank" and
elsewhere in this prospectus are "forward-looking statements." Forward-looking
statements include, among other things, statements about the competitiveness of
the banking industry, potential regulatory obligations, our strategies and other
statements that are not historical facts. When used in this prospectus, the
words "anticipate," "believe," "estimate" and similar expressions generally
identify forward-looking statements. Because forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by the
forward-looking statements. These factors include, among other things, risks
associated with starting a new business, a potential delay in beginning
operations, the risk that Community Capital will be dissolved if regulatory
conditions are not satisfied, our dependence on our directors and key personnel,
the potential adverse effect of competition, interest rate risks, the potential
adverse effect of unpredictable economic conditions, potential limitations on
growth resulting from low lending limits, risks associated with the year 2000
and other factors discussed under "Risk Factors."
14
<PAGE> 15
USE OF PROCEEDS
We estimate that the net proceeds of the offering will be $9.2 million,
after deducting the underwriting discount of $635,680 and estimated offering
expenses of $200,000. If the underwriter exercises its over-allotment option in
full, we estimate net proceeds of the offering will be $10.6 million, after
deducting the underwriting discount of $748,180 and offering expenses of
$200,000. The following table illustrates how we intend to use the net proceeds
of this offering.
<TABLE>
<CAPTION>
AMOUNT PERCENT
---------- -------
<S> <C> <C>
Repay advances by organizers...................... $ 80,000 0.9%
Repay amounts drawn on line of credit............. 535,000 5.8
Working capital................................... 8,549,320 93.3
---------- -----
Total........................................ $9,164,320 100.0%
========== =====
</TABLE>
Community Capital will contribute $7.5 million of its working capital to
Albany Bank as capital when Albany Bank receives final regulatory approval.
Albany Bank intends to use these proceeds for the following purposes:
<TABLE>
<CAPTION>
AMOUNT PERCENT
---------- -------
<S> <C> <C>
Reimbursement of advances from Community
Capital..................................... $ 300,000(1) 4.0%
Purchase of land for Albany Bank's main office
from Community Capital...................... 315,000 4.2
Construction of the main office building...... 1,300,000 17.4
Furniture, fixtures and equipment for Albany
Bank's main office.......................... 250,000 3.3
Funds to be used for loans to customers,
investments and other general purposes...... 5,335,000 71.1
---------- -----
Total.................................... $7,500,000 100.0%
========== =====
</TABLE>
- -------------------------
(1) Consists of $160,000 in salaries and benefits (estimated through Albany
Bank's target opening date in April 1999), $100,000 in legal and
professional fees and $40,000 in other pre-opening expenses. As of
December 31, 1998, Community Capital had paid approximately $250,000 of
these expenses.
We plan to use any working capital that Community Capital does not use to
capitalize Albany Bank principally to build additional branches at a cost of
approximately $500,000 to $800,000 per branch and to maintain appropriate
liquidity. We plan to use any amounts not applied to expansion or liquidity to
pay operating expenses, provide additional capital for Albany Bank, purchase
certificates of deposit of Albany Bank to the extent we deem necessary and for
other general purposes. Our anticipated allocation of working capital could
change if we are unable to obtain suitable sites for new branches at a
reasonable price or if we are faced with unexpected liquidity issues.
Until we apply the net proceeds of this offering to the specific purposes
described above, we plan to invest the net proceeds in short-term,
investment-grade securities, certificates of deposit or guaranteed obligations
of the United States government.
15
<PAGE> 16
CAPITALIZATION
The following table shows Community Capital's capitalization as of December
31, 1998 and its pro forma consolidated capitalization, as adjusted to give
effect to the receipt of the net proceeds from the sale of 1,000,000 shares of
common stock in the offering. This table assumes that the underwriter will not
exercise the over-allotment option.
Upon Community Capital's incorporation Robert E. Lee, the President of
Community Capital and Albany Bank and Chief Executive Officer of Albany Bank,
purchased one share of common stock at the price of $1.00. Community Capital
will redeem this share for $1.00 upon the issuance of shares in this offering.
The number of shares shown as outstanding after giving effect to the offering,
and the book valve of those shares, do not include shares of common stock
issuable upon the exercise of the warrants or pursuant to options that may be
granted under Community Capital's stock incentive plan. For additional
information regarding the number and terms of these warrants and options, see
"Executive Compensation -- Organizers' Warrants" and "-- Stock Incentive Plan."
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY ACTUAL AS ADJUSTED
- -------------------- --------- -----------
<S> <C> <C>
Preferred stock, par value not stated; 2,000,000
shares authorized, no shares issued and
outstanding......................................... $ -- $ --
Common stock, par value $1.00 per share; 10,000,000
shares authorized; 1 share issued ($1.00) and
outstanding; 1,000,000 shares issued ($10.00 each)
and outstanding as adjusted......................... 1 1,000,000
Additional paid-in capital(1)......................... 3,514 8,164,320
Accumulated deficit................................... (200,048)(2) (300,000)(3)
--------- ----------
Total shareholders' equity............................ $(196,533) $8,864,320
========= ==========
Book value per share(4)............................... N/A $ 8.86
==========
</TABLE>
- -------------------------
(1) The expenses of the offering will be charged against this account. We
estimate that the offering expenses will be $835,680, which includes
$635,680 in underwriting discounts and $200,000 in other offering
expenses, including legal, accounting and printing expenses and
registration fees.
(2) This deficit reflects pre-opening expenses incurred through December
31, 1998, consisting primarily of salaries and employee benefits.
(3) The "As Adjusted" accumulated deficit results from estimated
organizational and pre-opening expenses of $300,000 incurred through
Albany Bank's target opening date in April 1999. Actual organizational
and pre-opening expenses may be higher and may therefore increase the
deficit accumulated during the pre-opening stage and further reduce
shareholders' equity.
(4) After giving effect to the receipt of the net proceeds from this
offering, there is an immediate dilution in the book value per share of
$1.14, resulting from recognition of organizational and pre-opening
expenses and charging the offering expenses against additional paid-in
capital.
16
<PAGE> 17
DIVIDENDS
Community Capital will initially have no source of income other than
dividends that Albany Bank pays to it. Community Capital's ability to pay
dividends to its shareholders will therefore depend on Albany Bank's ability to
pay dividends to Community Capital. In the future, Community Capital may begin
income-producing operations independent from those of Albany Bank, which may
provide another source of income from which Community Capital could pay
dividends to you. However, we can give you no assurance as to when, if at all,
these operations may begin or whether they will be profitable.
Bank holding companies and national banks are both subject to significant
regulatory restrictions on the payment of cash dividends. In light of these
restrictions and the need for Community Capital and Albany Bank to retain and
build capital, the Boards of Directors of Community Capital and Albany Bank plan
to reinvest earnings for the period of time necessary to support successful
operations. As a result, Community Capital does not plan to pay dividends until
it recovers any losses incurred and becomes profitable, and its future dividend
and policy will depend on the earnings, capital requirements and financial
condition of Community Capital and Albany Bank and on other factors that
Community Capital's Board of Directors considers relevant.
Additionally, regulatory authorities may determine, under certain
circumstances relating to the financial condition of Albany Bank or Community
Capital, that the payment of dividends would be an unsafe or unsound practice
and may prohibit dividend payment. See "Supervision and
Regulation -- Dividends."
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
Community Capital's financial statements and related notes, which are
included in this prospectus, provide additional information relating to the
following discussion of its financial condition. See "Index to Financial
Statements."
Community Capital was organized on August 19, 1998 to serve as a holding
company for a proposed national bank. Since it was organized, Community
Capital's main activities have been centered on seeking, interviewing and
selecting its directors and officers, applying for a national bank charter,
applying for FDIC deposit insurance, applying to become a bank holding company
and raising equity capital through this offering.
Community Capital's operations from August 19, 1998 through the close of
the offering have been and will continue to be funded through a line of credit
from The Bankers Bank and advances received from the organizers. The total
amount available on the line of credit is $750,000, of which approximately
$485,000 was outstanding at December 31, 1998. This loan has been guaranteed by
the organizers, bears interest at the prime rate as published in the Money Rates
section of The Wall Street Journal, and is due on October 6, 1999. As of
December 31, 1998 advances from the organizers totaled $80,000. Community
Capital plans to repay the line of credit and any advances from the organizers
after the closing of this offering.
From August 19, 1998 to December 31, 1998, the net loss amounted to
$200,048. The estimated net loss for the period from August 19, 1998 through
April 30, 1999, the anticipated opening date of Albany Bank, is $300,000, which
is attributable to the following estimated noninterest expenses:
<TABLE>
<S> <C>
Salaries and benefits....................................... $160,000
Legal and professional fees................................. 100,000
Other pre-opening expenses.................................. 40,000
--------
Total.................................................. $300,000
========
</TABLE>
On November 20, 1998, Community Capital purchased approximately two acres
of land at 2815 Meredyth Drive to be used as the site for the main office of
Albany Bank. The land was purchased at a price of $315,000 from Cross Family
Limited, Ruth Cross Hayes and Wilma C. Depaz Living Trust Agreement, 3006 Old
Dawson Road, Albany, Georgia 31707. In connection with the purchase of this
land, the seller paid commissions in the amount of $12,600 to each of ReMax of
Albany, Inc. and Walden & Kirkland, Inc. Community Capital funded the purchase
of this land primarily through its line of credit with The Bankers Bank, which
is described above. We began construction of Albany Bank's main office in
January, 1999. Albany Bank will fund the construction of the main building,
estimated at $1.3 million, with the net proceeds received from the issuance of
its common stock to Community Capital. Additionally, Community Capital has
obtained financing from a finance company for the purchase of an automobile with
a total cost of $28,934.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since Community Capital has been in the organizational stage, there are no
results to present at this time. Nevertheless, once Albany Bank begins
operations, net interest
18
<PAGE> 19
income, Community Capital's primary source of earnings, will fluctuate with
significant interest rate movements. To lessen the impact of these margin
swings, we intend to structure the balance sheet so that repricing opportunities
exist for both assets and liabilities in roughly equal amounts at approximately
the same time intervals. Imbalance in these repricing opportunities at any point
in time constitute interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of interest-bearing
assets and liabilities to change in market interest rates. The rate sensitive
position, or gap, is the difference in the volume of rate sensitive assets and
liabilities at a given time interval. The general objective of gap management is
to manage actively rate sensitive assets and liabilities in order to reduce the
impact of interest rate fluctuations on the net interest margin. We will
generally attempt to maintain a balance between rate sensitive assets and
liabilities as the exposure period is lengthened to minimize Albany Bank's
overall interest rate risks.
We will evaluate regularly the balance sheet's asset mix in terms of
several variables: yield, credit quality, appropriate funding sources and
liquidity. To manage effectively the balance sheet's liability mix, we plans to
focus on expanding our deposit base and converting assets to cash as necessary.
As Albany Bank continues to grow, we will continuously structure its rate
sensitivity position in an effort to hedge against rapidly rising or falling
interest rates. Albany Bank's Asset and Liability Management Committee will meet
on a quarterly basis to develop a strategy for the upcoming period. The
committee's strategy will include anticipating future interest rate movements.
Liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations. We can obtain these funds by converting assets to cash or by
attracting new deposits. Albany Bank's ability to maintain and increase deposits
will serve as its primary source of liquidity.
We knows of no trends, demands, commitments, events or uncertainties that
should result in or are reasonably likely to result in Community Capital's
liquidity increasing or decreasing in any material way in the foreseeable
future, other than this offering.
CAPITAL ADEQUACY
There are now two primary measures of capital adequacy for banks and bank
holding companies: (1) risk-based capital guidelines and (2) the leverage ratio.
The risk-based capital guidelines measure the amount of a bank's required
capital in relation to the degree of risk perceived in its assets and its
off-balance sheet items. Under the risk-based capital guidelines, capital is
divided into two "tiers." Tier 1 capital consists of common shareholders'
equity, noncumulative and cumulative perpetual preferred stock and minority
interests. Goodwill is subtracted from the total. Tier 2 capital consists of the
allowance for loan losses, hybrid capital instruments, term subordinated debt
and intermediate term preferred stock. Banks are required to maintain a minimum
risk-based capital ratio of 8.0%, with at least 4.0% consisting of Tier 1
capital.
The second measure of capital adequacy relates to the leverage ratio. The
Office of the Comptroller of the Currency has established a 3.0% minimum
leverage ratio
19
<PAGE> 20
requirement. The leverage ratio is computed by dividing Tier 1 capital into
total assets. In the case of Albany Bank and other banks that have not received
the highest regulatory rating by their primary regulator, the minimum leverage
ratio should be 3.0% plus an additional cushion of at least 1% to 2%, depending
upon risk profiles and other factors.
The Federal Reserve Board of Governors, the Office of the Comptroller of
the Currency and the FDIC recently established a new rule that adds a measure of
interest rate risk to the determination of supervisory capital adequacy. In
connection with this new rule, the agencies have also proposed a measurement
process to measure interest rate risk. Under this proposal, banks would report
all items on the balance sheet, as well as off-balance sheet items, according to
maturity, repricing dates and cash flow characteristics. The bank would then
multiply its reporting position by duration-based risk factors and weight its
position according to rate sensitivity. The appropriate supervisory agency would
assess capital adequacy using this net risk weighted position. The objective of
this complex proposal is to determine a bank's sensitivity to various rising and
falling interest rate scenarios.
We believe that the net proceeds of this offering will satisfy our cash
requirements for at least the three-year period following the opening of Albany
Bank. Accordingly, we do not anticipate that it will be necessary to raise
additional funds to operate Community Capital or Albany Bank over the next three
years. For additional information about planned expenditures, see "Use of
Proceeds." For additional information about our plan of operations, see
"Proposed Business of Community Capital and Albany Bank."
20
<PAGE> 21
PROPOSED BUSINESS OF COMMUNITY CAPITAL AND ALBANY BANK
BACKGROUND
COMMUNITY CAPITAL. Community Capital was incorporated as a Georgia
corporation on August 19, 1998 to serve as a bank holding company for Albany
Bank. Community Capital plans to use $7.5 million of the net proceeds of this
offering to capitalize Albany Bank. In return, Albany Bank will issue all of its
common stock to Community Capital, and Community Capital will be Albany Bank's
sole shareholder. Initially, Albany Bank will be Community Capital's sole
operating subsidiary. Community Capital has applied to the Federal Reserve and
the Georgia Department of Banking and Finance for prior approval to capitalize
Albany Bank. If these agencies grant the necessary approvals, Community Capital
will become a bank holding company within the meaning of the Bank Holding
Company Act of 1956, as currently in effect, and the Georgia Bank Holding
Company Act upon its purchase of Albany Bank's common stock. See "Supervision
and Regulation -- Bank Holding Company Regulation."
Community Capital has been organized to make it easier for Albany Bank to
serve its future customers. The holding company structure will provide
flexibility for expansion of Community Capital's banking business through the
possible acquisition of other financial institutions and the provision of
additional capital and banking-related services. A holding company structure
will make it easier for Community Capital to raise capital for Albany Bank
because Community Capital will be able to issue securities without the need for
prior banking regulatory approval and the proceeds of debt securities issued by
Community Capital can be invested in Albany Bank as primary capital.
ALBANY BANK. The organizers filed applications on behalf of Albany Bank
with the Office of the Comptroller of the Currency and with the FDIC on
September 21, 1998 for authority to organize as a national bank with federally
insured deposits. Albany Bank will not be authorized to conduct its banking
business until it obtains a charter from the Office of the Comptroller of the
Currency. The issuance of the charter will depend, among other things, upon
Albany Bank's receipt of at least $7.5 million in capital from Community Capital
and upon compliance with other standard conditions expected to be imposed by the
FDIC and the Office of the Comptroller of the Currency. These conditions are
generally designed to familiarize Albany Bank with certain operating
requirements and to prepare it to begin business operations. The Office of the
Comptroller of the Currency requires that a new national bank obtain a charter
and open for business within 18 months after receipt of preliminary approval
from the Office of the Comptroller of the Currency. Albany Bank received
preliminary approval of its application from the Office of the Comptroller of
the Currency on February 10, 1999 and received approval of its application for
deposit insurance from the FDIC on March 3, 1999, but is awaiting final approval
from the Office of the Comptroller of the Currency and receipt of a charter.
MARKET OPPORTUNITIES
PRIMARY SERVICE AREA. Albany Bank's initial primary service area is the
ten-mile radius surrounding its main office. The primary service area represents
a geographic area that includes the majority of the City of Albany, Dougherty
County, and the southern half of Lee County. Albany is served by several major
thoroughfares, including Georgia
21
<PAGE> 22
Highway 82 and U.S. Highways 19 and 300. Albany is located approximately 170
miles south of Atlanta, Georgia and approximately 100 miles north of
Tallahassee, Florida.
ECONOMIC AND DEMOGRAPHIC FACTORS. Albany is the key economic focal point of
the Dougherty and Lee County metropolitan statistical area as well as Albany
Bank's primary service area, which encompasses a smaller geographic area than
the metropolitan statistical area. The Dougherty and Lee County metropolitan
statistical area is the largest in Southwest Georgia. Additionally, Albany is
considered to be the commercial center of Southwest Georgia, with a majority of
the area's retail sales and activity conducted in its marketplace. Albany also
serves as the primary medical center for Southwest Georgia. We believe the
Dougherty and Lee County metropolitan statistical area represents a dynamic and
unique market in the sense that it serves a wide geographic area encompassing
most of Southwest Georgia.
RETAIL. As reported by Demographics USA County Edition "1996 Data For A New
Era," Albany surpassed $1 billion in 1994 in retail sales, making Albany one of
the nation's top 135 retail markets measured by household retail expenditures.
This represents a 22.0% increase from 1990 and places Albany third in Georgia
with Atlanta and Macon the only metropolitan cities surpassing Albany in per
household retail sales. Although Albany is the focal point of economic activity
in the Dougherty and Lee County metropolitan statistical area and in Albany
Bank's primary service area, its economy is supported by the spending power and
labor force of the entire Dougherty and Lee County area.
POPULATION. According to information published by National Decision
Systems, the population within a 10-mile radius from Albany Bank's main office,
encompassing Albany Bank's primary service area, was approximately 104,000 in
1990, while the population within a 30-mile radius surrounding Albany Bank's
main office was approximately 170,000. The projected 2002 population for the
primary service area is 115,000 and for the 30-mile radius is 186,000. This
represents approximately 10.6% and 9.4% growth in population from 1990 to 2002
within a 10-mile and a 30-mile radius, respectively. Additionally, the number of
households within the primary service area has increased from 36,588 according
to the 1990 census to an estimated 40,048 in 1997. The estimated median
household income for the area as reported by National Decision Systems was
$29,129 for 1997. The median age of the population is 33 years.
INDUSTRY, LABOR AND EMPLOYMENT. According to data published by the
Dougherty County Chamber of Commerce, the following employment sectors are
considered basic industries in the county: manufacturing, construction,
transportation and public utilities, retail and wholesale trade, finance and
insurance, medical services, agriculture, and government. According to a 1995
report by the Georgia Department of Labor, over 10,000 people, representing 19%
of the work force, were employed in retail trade and over 8,000 or 15% of the
work force were employed in manufacturing. Other general services industries
employed 17,000 with the largest service areas being the health industry and
education.
According to this 1995 report, the medical facilities located in Dougherty
County employ approximately 5,600 employees or approximately 10% of the
Dougherty County work force and serve all of Southwest Georgia. In addition,
with three secondary schools in the county, educational services employs
approximately 3,700 employees or 7% of the work force.
22
<PAGE> 23
With over 248 construction firms located in Dougherty County, the county is
well diversified for construction-related purposes. These companies employ
approximately 2,900 people or 5% of the work force. In addition, there are
approximately 70 agricultural related companies located in the area that employ
approximately 540 people, or 1% of the work force.
The following tables, which were compiled by the Dougherty County Chamber
of Commerce, list the top ten manufacturing employers in the Dougherty County
area and the top ten non-manufacturing employers for the area as of July 16,
1998. These tables illustrate the diversification of business and trade in the
area.
TOP TEN MANUFACTURING EMPLOYERS
<TABLE>
<CAPTION>
TOTAL EMPLOYEES INDUSTRY
--------------- ----------------
<S> <C> <C>
Procter & Gamble............................... 1,500 Paper Products
Cooper Tire & Rubber Co........................ 1,024 Tires
Miller Brewing Co.............................. 655 Malt Beverages
Bobs Candies................................... 638 Candy
Ayres Corporation.............................. 550 Aircraft
Merck & Co..................................... 493 Pharmaceuticals
Coats & Clark.................................. 493 Textiles
M & M Mars..................................... 395 Candy
Flint River Textiles........................... 391 Textiles
Georgia Pacific................................ 217 Containers
</TABLE>
TOP TEN NON-MANUFACTURING EMPLOYERS
<TABLE>
<CAPTION>
TOTAL EMPLOYEES INDUSTRY
--------------- ----------------
<S> <C> <C>
U.S. Marine Corps Logistic Base (Civilian)..... 3,433 National Defense
Dougherty County Board of Education............ 2,850 Education
Pheobe Putney Memorial Hospital................ 3,036 Medical Service
City of Albany................................. 2,093 Public Service
Dougherty County............................... 650 Public Service
Palmyra Medical Centers........................ 550 Medical Service
Albany Area Community Service Board............ 515 Medical Service
Burlington Motor Carriers...................... 510 Transportation
Albany State University........................ 504 Education
Turner Job Corps............................... 326 Education
</TABLE>
CONSTRUCTION ACTIVITY. According to information published in the January
1998 edition of Greater Albany Area Business, a publication of the Albany Area
Chamber of Commerce, the aggregate value of the properties relating to
residential construction permits for the third quarter of 1997 was up 17.8% from
the third quarter of 1996. Additionally, the total value of building permits for
the Dougherty area, including the city of Albany, increased by 12.5%, while
commercial building permits increased by 25.0% for the same period. The total
value of permits does not reflect the building activities at
23
<PAGE> 24
Albany State University, which, according to the contractor, when complete
should amount to approximately $110.0 million in construction costs.
We believe the Albany market presents a growing and highly diversified
economic environment that will support Albany Bank's formation. As a community
bank, Albany Bank will be designed to serve the needs of the citizens and
businesses within this growing economy. We believe continued economic growth in
the Albany market will be important to Albany Bank's long-term success.
COMPETITION. The banking business is highly competitive. Albany Bank will
compete with other commercial banks, savings and loan associations, credit
unions, and money market mutual funds operating in the Albany market. The
Dougherty/Lee County area is currently served by at least eight commercial banks
with a total of 24 offices, two thrifts and one credit union. A number of these
competitors are well established in the Dougherty/Lee County area.
Some of Albany Bank's competitors have substantially greater resources and
lending limits than Albany Bank and provide other services, such as extensive
and established branch networks and trust services, that Albany Bank does not
expect to provide initially. As a result of these competitive factors, Albany
Bank may have to pay higher interest rates to attract depositors or extend
credit with lower interest rates to attract borrowers.
Several of the larger regional banks have a presence in the Albany market
through branch offices. Many of their customer service functions, as well as
authority for loan approval, however, are located outside of the Albany market.
Several community banks also have branches in the Albany market; however, no
other community banks are headquartered in the Albany market.
24
<PAGE> 25
The following table illustrates the June 1996 deposit base by financial
institution within a 10-mile, 20-mile and 30-mile radius of Albany Bank's
proposed main office, based on data reported by National Decision Systems.
<TABLE>
<CAPTION>
10-MILE RADIUS 20-MILE RADIUS 30-MILE RADIUS
--------------- --------------- -----------------
FINANCIAL INSTITUTION $ % $ % $ %
- --------------------- ------ ----- ------ ----- -------- -----
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
SunTrust Bank........... $212.3 25.6% $219.1 22.3% $ 264.4 21.1%
First State Bank and
Trust Company......... 183.7 22.1 197.2 20.1 197.3 15.8
NationsBank............. 157.5 19.0 157.5 16.1 157.5 12.6
Security Bank & Trust... 138.1 16.6 138.1 14.0 138.1 11.0
First Union Bank........ 88.5 10.6 88.5 9.0 88.5 7.1
First National Bank of
South Georgia......... 51.1 6.1 51.1 5.2 51.1 4.1
Bank of Dawson.......... -- -- 62.4 6.4 62.4 5.0
Bank of Terrell......... -- -- 60.4 6.1 60.4 4.8
Planters & Citizens
Bank.................. -- -- -- -- 55.2 4.4
Bank of Camilla......... -- -- -- -- 42.7 3.4
Sylvester Banking
Company............... -- -- -- -- 40.7 3.2
Bank of Worth........... -- -- -- -- 35.3 2.8
Southwest Georgia
Bank.................. -- -- -- -- 12.0 1.0
American Banking
Company............... -- -- -- -- 11.6 0.9
Sumter Bank & Trust
Company............... -- -- -- -- 10.0 0.8
Family Federal Savings
Bank.................. -- -- -- -- 8.8 0.7
First State Bank of
Randolph City......... -- -- -- -- 8.2 0.7
Jordan Banking Company.. -- -- 7.7 0.8 7.7 0.6
------ ----- ------ ----- -------- -----
Totals.................. $831.2 100.0% $982.0 100.0% $1,251.9 100.0%
====== ===== ====== ===== ======== =====
</TABLE>
As reported by National Decision Systems, total deposits in the 10-mile
radius surrounding Albany Bank's main office increased from $768 million to $831
million from 1994 to 1996. Of the total deposits reported in 1996, SunTrust Bank
with 26% had the greatest share of the market. They were followed by First State
Bank and Trust Company, which is now Regions Bank, with 22% of the market. In
addition to the above regional and community banks, Albany Bank will compete
with AGE Credit Union. AGE Credit Union operates in six locations throughout the
Albany market. We anticipate that AGE Credit Union along with the other regional
banks operating in the Albany market will be Albany Bank's primary source of
competition. We believe, however, that operating as a community bank
headquartered in Albany will provide Albany Bank with a unique opportunity to
obtain a share of those institutions' deposits.
25
<PAGE> 26
In 1996, First Union Corp. exited the Albany market by selling its
Dougherty County branches to First State Bank and Trust Company, which was later
purchased by Regions Financial Corporation of Birmingham. Additionally, First
National Bank of South Georgia was purchased in 1996 by ABC Bancorp, which is
located in Moultrie, Georgia. Although three small banks have branched into the
Albany market since 1996, no commercial banks are currently headquartered in
this market. Consequently, all of the deposits in this market are controlled by
financial institutions located outside of the market. As a result of the various
mergers that have taken place in the Albany market over the past years, we
believe an attractive opportunity exists in the Albany market for a new bank
that positions itself as a community bank prepared to take advantage of changes
occurring in the regional banking structure. We intend to differentiate Albany
Bank from other financial institutions primarily through personal service and
strong involvement in the Albany market.
BUSINESS STRATEGY
MANAGEMENT PHILOSOPHY. Albany Bank's philosophy will be to operate as a
community bank emphasizing prompt, personalized customer service to the
individuals and businesses located in Albany, Georgia and surrounding
communities. Albany Bank has adopted this philosophy in order to attract
customers and acquire market share now controlled by other financial
institutions in the Albany market. We believe that local ownership and control
will allow Albany Bank to serve customers more efficiently and will aid in
Albany Bank's growth and success. Additionally, we believe that the expansion
and growth of Albany Bank's operations will be a significant factor in Community
Capital's success. Accordingly, we will implement the following operating and
growth strategies.
OPERATING STRATEGY. In order to achieve the level of prompt, responsive
service that we believe will be necessary to attract customers and to develop
Albany Bank's image as a local bank with an individual focus, we will employ the
following operating strategies:
- QUALITY EMPLOYEES. We will strive to hire highly trained and seasoned
staff. We plan to train the staff to answer questions about all of our
products and services so that the first employee the customer encounters
can resolve customer questions. We are committed to hiring experienced
and qualified staff, although this may result in higher personnel costs
than are typically experienced by similar financial institutions.
- EXPERIENCED SENIOR MANAGEMENT. Albany Bank's senior management possesses
extensive experience in the banking industry as well as substantial
business and banking contacts in the Albany market. For example,
Community Capital's President, Robert E. Lee, has over 25 years of
banking experience, its Chief Financial Officer, David J. Baranko, has
over 13 years of banking experience, and Albany Bank's Chief Lending
Officer, David C. Guillebeau, has over 12 years of banking experience.
See "Management."
- COMMUNITY-ORIENTED BOARD OF DIRECTORS. The Board of Directors consists of
long-time residents of the Albany area who represent Albany Bank's target
markets and will be sensitive and responsive to the needs of the
community. Additionally, the Board of Directors represents a wide array
of business experience and community involvement. We expect that the
directors will bring substantial business and banking contacts to Albany
Bank as a result of their experience and involvement.
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- COMMUNITY INVOLVEMENT. All of Community Capital's officers and directors
are active in the Dougherty/Lee County community, and their continued
active community involvement will provide an opportunity to promote
Albany Bank and its products and services.
- OFFICER AND DIRECTOR CALL PROGRAM. We intend to implement an active
officer and director call program to promote Albany Bank's philosophy.
The purpose of this call program will be to visit prospective customers
and describe Albany Bank's products, services and philosophy.
- HIGHLY VISIBLE SITE. Albany Bank's main office location is highly visible
and near a high concentration of its targeted commercial businesses and
residential areas. We believe this will enhance Albany Bank's image as a
strong competitor.
- BRANCHING. Albany Bank intends to open two branches within the first 36
months of operations. Branching will give Albany Bank the ability to
diversify and provide the entire Albany market with convenient banking
services.
- INDIVIDUAL CUSTOMER FOCUS. Albany Bank will focus on providing
individualized service and attention to its target customers, which
include individuals and small to medium-sized businesses. As its
employees, officers and directors become familiar with its customers on
an individual basis, Albany Bank will be able to respond to credit
requests more quickly and be more flexible in approving loans based on
collateral quality and personal knowledge of the customer.
- LOCAL DECISION MAKING. As Albany Bank branches into other communities, it
will maintain its policy of making decisions locally and will utilize
local advisory boards. This will allow Albany Bank to be more responsive
to customer requests and to the needs of customers within the particular
community.
- MARKETING AND ADVERTISING. Community Capital has retained Broad Street
Productions, a local marketing firm, to promote Albany Bank and to
develop its image as a community oriented bank with an emphasis on
quality service and personal contact. Albany Bank will also use media
services such as local newspapers, drive-time radio, direct mail
campaigns and television to promote its products and services.
GROWTH STRATEGY. Because we believe that growth and expansion of Albany
Bank's operations will be a significant factor in Community Capital's success,
we plan to implement the following growth strategies:
- CAPITALIZE ON TREND TOWARD CONSOLIDATION. Albany Bank will capitalize on
its position as the only community bank headquartered in the Albany
market to attract individual and small to medium-sized business customers
that may be underserved as a result of recent bank consolidations.
- OPEN ADDITIONAL BRANCHES. We intend to expand Albany Bank's presence in
the Albany market by opening two new offices within the first 36 months
of operations. One branch is planned for the downtown/east Albany area,
while the other is planned for the southern Lee County area. We also plan
to add branches in other strategic locations as appropriate. By adding
these branches, Albany Bank will gain new channels through which it can
build its deposit base and solicit new customers.
- ATTRACT EMPLOYEES WITH ESTABLISHED CUSTOMER RELATIONSHIPS. We will seek
to hire employees who have, through their experience in banking,
established significant
27
<PAGE> 28
customer relationships. By hiring employees with established customer
relationships, Albany Bank will be able to grow much more rapidly than it
would if it were to hire employees who would require time to develop a
customer base.
- ALLOW SPACE FOR EXPANSION. Albany Bank will construct a main office
building with sufficient room to allow for future expansion. The size of
its proposed main office will allow for additional loan officers and for
the addition of a mortgage lending department.
- OFFER FEE-GENERATING PRODUCTS AND SERVICES. Albany Bank's range of
services, pricing strategies, interest rates paid and charged, and hours
of operation will be structured to attract its target customers and
increase its market share. Albany Bank will strive to offer small
businesses, professionals, entrepreneurs and consumers the best loan
services available while charging aggressively for such services and
using technology and engaging third-party service providers to perform
certain functions at a lower cost to increase fee income.
LENDING SERVICES
LENDING POLICY. Albany Bank is being established to support Albany and
surrounding areas of Dougherty/Lee County. Consequently, Albany Bank will
aggressively seek to lend money to creditworthy borrowers within a limited
geographic area. Albany Bank's primary lending function will be to make consumer
loans to individuals and commercial loans to small and medium-sized businesses
and professional concerns. In addition, Albany Bank plans to make real
estate-related loans, including construction loans for residential and
commercial properties, and primary and secondary mortgage loans for the
acquisition or improvement of personal residences.
Albany Bank intends to maintain a balanced loan portfolio. We estimate that
consumer loans to individuals will comprise 20% of the portfolio, commercial
loans to small to medium-sized businesses will comprise 40% of the portfolio,
and real estate related loans will comprise 40% of the portfolio. None of these
categories represents a significantly higher risk than the other. Additionally,
Albany Bank plans to avoid concentrations of loans to a single industry or based
on a single type of collateral.
LOAN APPROVAL AND REVIEW. Albany Bank's loan approval policies will provide
for various levels of officer lending authority. When the amount of total loans
to a single borrower exceeds that individual officer's lending authority, an
officer with a higher lending limit or Albany Bank's Loan Committee will
determine whether to approve the loan request. Initially, however, all loans
regardless of amount will go to the Loan Committee. Albany Bank will not make
any loans to any of its directors or executive officers unless its Board of
Directors approves the loan and the terms of the loan are no more favorable than
would be available to any other applicant.
LENDING LIMITS. Albany Bank's lending activities will be subject to a
variety of lending limits imposed by federal law. Differing limits apply in
certain circumstances based on the type of loan or the nature of the borrower,
including the borrower's relationship to the bank. In general, however, Albany
Bank will be able to loan any one borrower a maximum amount equal to either: (1)
15% of Albany Bank's capital and surplus or (2) 25% of its capital and surplus
if the excess over 15% is within the federal guidelines, which provide an
exception to the 15% limit for certain secured debt. Based on its proposed
capitalization and projected pre-opening expenses, Albany Bank's initial lending
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<PAGE> 29
limit will be approximately $1.1 million for loans not fully secured plus an
additional $750,000, or a total of approximately $1.9 million, for loans that
meet the federal guidelines. Albany Bank has not yet established any minimum or
maximum loan limits other than the statutory lending limits described above.
These limits will increase or decrease as Albany Bank's capital increases or
decreases as a result of its earnings or losses, among other reasons. Albany
Bank will need to sell participations in its loans to other financial
institutions in order to meet all of the lending needs of loan customers
requiring extensions of credit above these limits.
CREDIT RISKS. The principal economic risk associated with each category of
loans that Albany Bank expects to make is the creditworthiness of the borrower.
Borrower creditworthiness is affected by general economic conditions and the
strength of the services and retail market segments. General economic factors
affecting a borrower's ability to repay include interest, inflation and
employment rates, as well as other factors affecting a borrower's customers,
suppliers and employees.
The well established financial institutions in the Albany market are likely
to make proportionately more loans to medium to large-sized businesses than
Albany Bank will make. Many of Albany Bank's anticipated commercial loans will
likely be made to small to medium-sized businesses that may be less able to
withstand competitive, economic and financial pressures than larger borrowers.
REAL ESTATE LOANS. Albany Bank will make commercial real estate loans,
construction and development loans, and residential real estate loans. These
loans include certain commercial loans where Albany Bank takes a security
interest in real estate out of an abundance of caution and not as the principal
collateral for the loan, but will exclude home equity loans, which are
classified as consumer loans.
- COMMERCIAL REAL ESTATE. Commercial real estate loan terms generally will
be limited to five years or less, although payments may be structured on a
longer amortization basis. Interest rates may be fixed or adjustable, although
rates will not be fixed for a period exceeding 60 months. Albany Bank will
generally charge an origination fee. We will attempt to reduce credit risk on
our commercial real estate loans by emphasizing loans on owner-occupied office
and retail buildings where the ratio of the loan principal to the value of the
collateral as established by independent appraisal does not exceed 80% and net
projected cash flow available for debt service equals 120% of the debt service
requirement. In addition, Albany Bank may require personal guarantees from the
principal owners of the property supported by a review by Albany Bank's
management of the principal owners' personal financial statements. Risks
associated with commercial real estate loans include fluctuations in the value
of real estate, new job creation trends, tenant vacancy rates and the quality of
the borrower's management. Albany Bank will limit its risk by analyzing
borrowers' cash flow and collateral value on an ongoing basis. Albany Bank will
compete for real estate loans with competitors that are well established in the
Albany market.
- CONSTRUCTION AND DEVELOPMENT LOANS. Construction and development loans
will be made both on a pre-sold and speculative basis. If the borrower has
entered into an agreement to sell the property prior to beginning construction,
then the loan is considered to be on a pre-sold basis. If the borrower has not
entered into an agreement to sell the property prior to beginning construction,
then the loan is considered to be on a speculative basis. Construction and
development loans are generally made with a term of nine months and interest is
paid quarterly. The ratio of the loan principal to the value of the collateral
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<PAGE> 30
as established by independent appraisal will not exceed 75%. Speculative loans
will be based on the borrower's financial strength and cash flow position. Loan
proceeds will be disbursed based on the percentage of completion and only after
the project has been inspected by an experienced construction lender or
appraiser. Risks associated with construction loans include fluctuations in the
value of real estate and new job creation trends.
- RESIDENTIAL REAL ESTATE. Albany Bank's residential real estate loans will
consist of residential first and second mortgage loans and residential
construction loans. We will offer fixed and variable rates on our mortgages with
the amortization of first mortgages generally not to exceed 15 years and the
rates not to be fixed for over 60 months. These loans will be made consistent
with Albany Bank's appraisal policy and with the ratio of the loan principal to
the value of collateral as established by independent appraisal not to exceed
90%. We expect these loan to value ratios will be sufficient to compensate for
fluctuations in real estate market value and to minimize losses that could
result from a downturn in the residential real estate market. Albany Bank plans
to open a mortgage department to process home loans within the first 18 months
of operation, which will allow it to originate long term mortgages to be sold on
the secondary market. Albany Bank intends to limit interest rate risk and credit
risk on these loans by locking in the interest rate for each loan with the
secondary market investor and receiving the investor's underwriting approval
before originating the loan.
COMMERCIAL LOANS. We expect that loans for commercial purposes in various
lines of businesses will be one of the primary components of Albany Bank's loan
portfolio. The terms of these loans will vary by purpose and by type of
underlying collateral, if any. Albany Bank will typically make equipment loans
for a term of five years or less at fixed or variable rates, with the loan fully
amortized over the term. Equipment loans generally will be secured by the
financed equipment, and the ratio of the loan principal to the value of the
financed equipment or other collateral will generally be 80% or less. Loans to
support working capital will typically have terms not exceeding one year and
will usually be secured by accounts receivable, inventory or personal guarantees
of the principals of the business. For loans secured by accounts receivable or
inventory, principal will typically be repaid as the assets securing the loan
are converted into cash, and for loans secured with other types of collateral,
principal will typically be due at maturity. The quality of the commercial
borrower's management and its ability both to evaluate properly changes in the
supply and demand characteristics affecting its markets for products and
services and to respond effectively to such changes are significant factors in a
commercial borrower's creditworthiness.
CONSUMER LOANS. Albany Bank will make a variety of loans to individuals for
personal, family and household purposes, including secured and unsecured
installment and term loans, home equity loans and lines of credit. Consumer loan
repayments depend upon the borrower's financial stability and are more likely to
be adversely affected by divorce, job loss, illness and personal hardships.
Because many consumer loans are secured by depreciable assets such as boats,
cars, and trailers the loan should be amortized over the useful life of the
asset. To minimize the risk that the borrower cannot afford the monthly
payments, all fixed monthly obligations should not exceed 38% of the borrower's
gross monthly income. The borrower should also be employed for at least 12
months prior to obtaining the loan. The loan officer will review the borrower's
past credit history, past income level, debt history and, when applicable, cash
flow and determine the impact of all
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<PAGE> 31
these factors on the ability of the borrower to make future payments as agreed.
We expect that the principal competitors for consumer loans will be the
established banks in the Albany market.
LENDING OFFICERS. Albany Bank intends to hire an experienced commercial
real estate lender and consumer lender in order to develop its loan portfolios.
Each lender will have experience within the Albany market and will be expected
to bring substantial contacts to Albany Bank.
INVESTMENTS
In addition to loans, Albany Bank will make other investments primarily in
obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable securities. No investment in any
of those instruments will exceed any applicable limitation imposed by law or
regulation. The Asset and Liability Management Committee will review the
investment portfolio on an ongoing basis in order to ensure that the investments
conform to Albany Bank's policy as set by the Board of Directors. Members of the
Asset and Liability Management Committee will be chaired by Corinne C. Martin
and will also include Bennett D. Cotten, Jr., Robert E. Lee, Robert M.
Beauchamp, Mark M. Shoemaker and John P. Ventulett, Jr.
ASSET AND LIABILITY MANAGEMENT
The Asset and Liability Management Committee will manage Albany Bank's
assets and liabilities and will strive to provide an optimum and stable net
interest margin, a profitable after-tax return on assets and return on equity
and adequate liquidity. The committee will conduct these management functions
within the framework of written loan and investment policies that Albany Bank
will adopt. The committee will attempt to maintain a balanced position between
rate sensitive assets and rate sensitive liabilities. Specifically, it will
chart assets and liabilities on a matrix by maturity, effective duration and
interest adjustment period and attempt to manage any gaps in maturity ranges.
DEPOSIT SERVICES
Albany Bank will seek to establish solid core deposits, including checking
accounts, money market accounts, a variety of certificates of deposit and IRA
accounts. To attract deposits, Albany Bank will employ an aggressive marketing
plan in the overall service area and feature a broad product line and
competitive services. The primary sources of deposits will be residents of, and
businesses and their employees located in, the Albany market. Albany Bank plans
to obtain these deposits through personal solicitation by its officers and
directors, direct mail solicitations and advertisements published in the local
media. It plans to generate deposits by offering a broad array of competitively
priced deposit services, including demand deposits, regular savings accounts,
transaction and investment money market deposits, certificates of deposit,
retirement accounts and other legally permitted deposit or funds transfer
services that may be offered to remain competitive in the market.
OTHER BANKING SERVICES
Other anticipated bank services include cash management services,
safe-deposit boxes, travelers checks, direct deposit of payroll and social
security checks, and automatic drafts for various accounts. Albany Bank plans to
become associated with a shared network of
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<PAGE> 32
automated teller machines that its customers will be able to use throughout
Georgia and other regions. Albany Bank plans to offer annuities, mutual funds
and other financial services through a third party that has not yet been chosen.
We also plan to offer MasterCard(R) and VISA(R) credit card services through a
correspondent bank as an agent for Albany Bank. Albany Bank does not plan to
exercise trust powers during its initial years of operation. It may in the
future offer a full-service trust department, but cannot do so without the prior
approval of the Office of the Comptroller of the Currency.
Albany Bank will also offer its targeted commercial customers a courier
service that will pick up non-cash deposits from the customer's place of
business and deliver them to the bank. We believe that this will be an important
service for our customers because Albany Bank will initially have only one
location.
FUTURE SERVICES
In addition to the services described above, we anticipate that at some
time in the future we will also offer to our customers discount brokerage
services. We will probably not offer these services until both Community Capital
and Albany Bank are operating profitably.
MARKETING AND ADVERTISING
Albany Bank's target customers will be the residents and the small to
medium-sized businesses and their employees located in the Albany market.
Several of our directors and officers have developed business contacts with
numerous professionals within the medical service industry. We intend to develop
a niche in providing banking services to these and other medical providers.
We plan to use a targeted marketing approach through local newspapers,
radio advertisements during peak driving times, direct mail campaigns, and
television spots as necessary. Additionally, we plan to sponsor community
activities on an active, ongoing basis. We have retained Broad Street
Productions in order to coordinate our advertising and marketing efforts.
INFORMATION SYSTEMS AND THE YEAR 2000
THE YEAR 2000 PROBLEM. The year 2000 issue confronting Community Capital,
Albany Bank and their suppliers, customers, customers' suppliers and competitors
centers on the inability of computer systems to recognize the year 2000 and
other year 2000-sensitive dates, including September 9, 1999, December 31, 1999
and February 29, 2000. Many existing computer programs and systems originally
were programmed with six-digit dates that provided only two digits to identify
the calendar year in the date field. With the impending new millennium, these
programs and computers will recognize "00" as the year 1900 rather than the year
2000. Like most financial service providers, Community Capital and its
operations may be affected significantly by the year 2000 issue because it
depends on computer-generated financial information. Software, hardware and
equipment both within and outside of our direct control, and third parties with
whom we electronically or operationally interface are likely to be affected.
These third parties include customers and third party vendors providing data
processing, information systems management, computer system maintenance and
credit bureau information. If computer systems are not able to identify the year
2000, many computer applications could fail or create incorrect results.
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Consequently, many calculations that rely on date-related information, such as
interest, payment or due dates and other operating functions, could generate
significantly misstated results, and we could lose our ability to process
transactions, prepare statements or engage in similar normal business
activities. In addition, under certain circumstances, failure to address
adequately the year 2000 issue could adversely affect the viability of Albany
Bank's suppliers and creditors and the creditworthiness of its borrowers. If not
adequately addressed, the year 2000 issue could ultimately have a significant
adverse impact on our products, services and competitive condition and, in turn,
our financial condition and results of operations.
REGULATORY OVERSIGHT. Financial institution regulators recently have
increased their focus on year 2000 compliance issues and have issued guidance
concerning the responsibilities of senior management and directors. The Federal
Financial Institutions Examination Council has issued several interagency
statements on Year 2000 Project Management Awareness. These statements require
financial institutions to, among other things, examine the year 2000
implications of their reliance on vendors and with respect to data exchange and
the potential impact of the year 2000 issue on their customers, suppliers and
borrowers. These statements also require each federally regulated financial
institution to survey its exposure, measure its risk and prepare a plan to
address the year 2000 issue. In addition, the federal banking regulators have
issued safety and soundness guidelines to be followed by insured depository
institutions to ensure resolution of any year 2000 problems. The federal banking
agencies have asserted that year 2000 testing and certification is a key safety
and soundness issue in conjunction with regulatory examinations. Consequently,
an institution's failure to address appropriately the year 2000 issue could
result in supervisory action, including the reduction of the institution's
supervisory ratings, the denial of applications for approval of mergers or
acquisitions or the imposition of civil money penalties.
Because Community Capital is still pending regulatory approval regarding
its status as a bank holding company and Albany Bank has not yet commenced
operations, federal banking regulators are focusing on Community Capital's and
Albany Bank's year 2000 readiness as part of the regulatory approval process.
Once Community Capital and Albany Bank have obtained the necessary regulatory
approvals, the federal banking regulators will continue to monitor their status
on year 2000 issues as described above.
OUR READINESS. Because Community Capital is a start-up entity and Albany
Bank has not yet commenced business, we do not have existing systems or
equipment requiring year 2000 testing and remediation. Rather, we are purchasing
all of our office equipment, hardware and software and obtaining outsourcing
service commitments only from vendors and service providers that can certify
that their products and services are year 2000 compliant. For example, we will
purchase applications software, microcomputers, teller equipment and a network
file server only from vendors that can provide year 2000 compliance certificates
with respect to those products. We plan to obtain our data processing services,
automatic teller machine applications, voice response system, internet banking
services, document imaging solutions and bond accounting systems from third
party service providers that can certify that the products and services they
provide will be year 2000 compliant. We believe that we will be able to obtain
these products and services from vendors and service providers that can supply
the necessary certification. If we are unable to do so, however, we will either
forego acquiring the product or service until we
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<PAGE> 34
receive the required certification or, if the product or service is essential to
our operations, arrange for independent testing and verification of year 2000
compliance.
As we acquire equipment and systems and commence operations, we will test
our year 2000 readiness on an ongoing basis. Although we do not anticipate
encountering difficulties in this area, we will require our vendors and service
providers to upgrade or replace any equipment that proves to be non-compliant.
If we do not receive the necessary upgrades or equipment, we will obtain new
equipment or engage a new service provider with demonstrated year 2000
compliance.
Although our internal systems, equipment and operations require significant
oversight with respect to year 2000 issues, we believe that our customers' year
2000 readiness could also have a significant effect on our operations. For
example, if a customer with an outstanding loan from Albany Bank is unable to
maintain its cash flow as a result of disruption caused by its own or its
customers' year 2000 problems, the customer could default in the repayment of
the loan, which would lead to increased loan losses for Albany Bank. Although we
plan to consider this possibility when we establish the loan loss reserve for
Albany Bank, the potential losses could exceed our estimate and ultimately cause
a net loss to Albany Bank and Community Capital. To address this concern, we
will communicate with customers on an ongoing basis regarding our year 2000
readiness and attempt to identify at the earliest opportunity those customers
that are likely to encounter year 2000 problems. We plan to work with these
customers to ensure, to the greatest extent possible, that their year 2000
compliance issues do not disrupt our operations.
RESOURCES ALLOCATED. To ensure that senior members of management continue
to monitor our year 2000 readiness on a consistent basis, Community Capital's
Board of Directors established a Year 2000 Committee on November 9, 1998. The
members of the committee will establish guidelines for the acquisition of new
equipment and services that will be year 2000 compliant; communicate with
potential borrowers, vendors and service providers regarding year 2000 issues;
and monitor our progress in this area. Members of the committee will also attend
conferences and information sharing sessions to gain additional insight into the
year 2000 issue and potential strategies for addressing it. The committee's work
will continue until the year 2000 and, in the event a year 2000 problem occurs,
thereafter until the problem is resolved. The committee is comprised of Robert
E. Lee, David C. Guillebeau, Charles M. Jones, III, Corinne C. Martin, Lawrence
B. Willson and James D. Woods.
Because our year 2000 compliance program will principally involve acquiring
systems, equipment and outsourced services that are year 2000 compliant, we do
not expect that Community Capital or Albany Bank will incur material year 2000
compliance or remediation costs. Rather, these costs will be included in the
initial cost of obtaining the equipment or services that we will need in order
to begin operations. As a result, we have not established a separate budget for
year 2000 compliance expenses. The Year 2000 Committee will, however, monitor
our needs in this area and will establish a budget for year 2000 expenses if it
believes that our year 2000 costs will prove to be material.
CONTINGENCY PLANS. We believe that our only mission-critical, or "core,"
system is our host application processing system, which will be provided and
operated by a third party service provider. If this system is unable to process
data reliably, we will be forced to obtain the same services from another
service provider or, in the alternative, cease operations until the existing
system becomes year 2000 compliant. A failure in this system
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or any other date sensitive system could have a material adverse effect on our
results of operations, liquidity and financial condition. To address this
contingency, we are negotiating with a disaster recovery service that will run
our data processing systems if our primary service provider is unable to do so.
We will require that the disaster recovery service certify that its systems are
year 2000 compliant before we engage the service. We also plan to store optical
copies of our computerized records and will be prepared to print paper copies of
those records on December 31, 1999.
EMPLOYEES
When it begins operations, Albany Bank will have approximately 15 employees
and two part-time employees. We do not expect that Community Capital will have
any employees who are not also employees of Albany Bank.
Robert E. Lee is the President of Community Capital and will be the
President and Chief Executive Officer of Albany Bank. Mr. Lee has over 25 years
of banking experience, including extensive experience in the areas of finance
and operations.
David J. Baranko is the Chief Financial Officer of Community Capital and
will be the Chief Financial Officer of Albany Bank. Mr. Baranko has over 13
years of banking experience including extensive experience in finance and
operations and a thorough understanding of the technological issues relating to
the operation of a bank.
David C. Guillebeau will be the Chief Lending Officer of Albany Bank. Mr.
Guillebeau has over 12 years of banking experience, including extensive lending
and management experience. See "Management" for additional information about our
executive officers and their qualifications.
FACILITIES
Albany Bank is located at 2815 Meredyth Drive in Albany, Georgia in
Dougherty County. On November 20, 1998, Community Capital purchased
approximately two acres of land at 2815 Meredyth Drive at a purchase price of
$315,000. Construction of the permanent facility began in January 1999, with the
completion date set for the fall of 1999. The permanent facility will be a
two-story, Colonial style building. The building will consist of approximately
10,700 square feet and will include three drive-up windows and one automated
teller machine. The estimated construction costs of the building total $1.3
million.
Albany Bank's proposed location offers high visibility in an area with
significant traffic, and is located within one-half mile of the main shopping
and retail area in Dougherty County. This area is the central location for
business, residential, commuting and shopping in Dougherty County and is near a
major highway serving the community.
Albany Bank will operate initially out of a modular facility that we plan
to locate on the site of the permanent facility. The rental fee for the modular
facility will be approximately $3,650 per month for 12 months.
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MANAGEMENT
PROPOSED EXECUTIVE OFFICERS AND DIRECTORS OF COMMUNITY CAPITAL AND ALBANY BANK
The following table sets forth, for the directors and executive officers of
both Community Capital and Albany Bank, (1) their names, addresses and ages at
December 31, 1998, (2) their respective positions with Community Capital and
Albany Bank, (3) the number of shares of common stock they intend to purchase in
the offering, (4) the percentage of outstanding shares such number will
represent, and (5) the number of shares subject to warrants and options that
they will receive when we complete this offering. The directors and executive
officers may collectively purchase up to a total of 300,000 shares of common
stock in the offering, but have indicated that they intend to purchase a total
of 285,800 shares as listed below.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES SHARES
POSITION(S) NUMBER OUTSTANDING SUBJECT TO SUBJECT TO
NAME AND ADDRESS (AGE) TO BE HELD OF SHARES SHARES WARRANTS OPTIONS
- ---------------------- ------------------------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS I DIRECTORS:
(Initial term expiring in
1999)
Charles M. Jones, III (48).... Chairman of the Board of 30,000 3.0% 15,000 0
907 W. Third Ave. Directors of Community
Albany, GA 31707 Capital and Albany Bank
and Chief Executive
Officer of Community
Capital
Van Cise Knowles (58)......... Director 15,000 1.5 15,000 0
3503 Old Dawson Rd.
Albany, GA 31707
Robert E. Lee (46)............ President of Community 50,000 5.0 15,000 50,000
5101 Old Dawson Road Capital and Albany
Albany, GA 31707 Bank, Chief Executive
Officer of Albany
Bank, and Director
Corinne C. Martin (56)........ Director 21,000 2.1 15,000 0
2344 Winchester Dr.
Albany, GA 31707
William F. McAfee (61)........ Director 15,000 1.5 15,000 0
1705 Pinecrest Dr.
Albany, GA 31707
CLASS II DIRECTORS:
(Initial term expiring in
2000)
C. Richard Langley (50)....... Director 11,700 1.2 11,700 0
2811 W. Doublegate Dr.
Albany, GA 31707
Bennett D. Cotten, Jr. (45)... Director 10,000 1.0 10,000 0
2608 Kenilworth Dr.
Albany, GA 31707
Jane Anne D. Sullivan (39).... Director 20,000 2.0 15,000 0
3707 Hidden Hill Ct.
Albany, GA 31707
John P. Ventulett, Jr. (50)... Director 15,000 1.5 15,000 0
2504 Cooleewahee Cove
Albany, GA 31707
</TABLE>
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<TABLE>
<CAPTION>
PERCENTAGE OF SHARES SHARES
POSITION(S) NUMBER OUTSTANDING SUBJECT TO SUBJECT TO
NAME AND ADDRESS (AGE) TO BE HELD OF SHARES SHARES WARRANTS OPTIONS
- ---------------------- ------------------------- --------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James D. Woods (55)........... Director 15,000 1.5 15,000 0
3402 Wexford Rd.
Albany, GA 31707
CLASS III DIRECTORS:
(Initial term expiring 2001)
Robert M. Beauchamp (36)...... Director 20,000 2.0 15,000 0
757 Highway 32
Leesburg, GA 31763
Glenn A. Dowling (66)......... Director 15,000 1.5 15,000 0
880 Tallahassee Rd.
Albany, GA 31707
Mary Helen Dykes (48)......... Secretary of Community
1618 Valencia Dr. Capital and Director 10,000 1.0 10,000 0
Albany, GA 31707
Mark M. Shoemaker (44)........ Director 15,000 1.5 15,000 0
920 Third Ave.
Albany, GA 31707
Lawrence B. Willson (48)...... Director 15,000 1.5 15,000 0
627 5(th) Ave.
Albany, GA 31707
EXECUTIVE OFFICERS WHO ARE NOT
ALSO DIRECTORS:
David J. Baranko (43)......... Chief Financial
111 Tocaste Lane Officer 3,100 0.3 0 4,000
Albany, Georgia 31707
David C. Guillebeau (37)...... Executive Vice President 5,000 0.5 0 20,000
5009 Barrington Drive and Senior Loan Officer
Albany, GA 31707 of Albany Bank
------- ---- ------- ------
All Proposed Directors and 285,800 28.6% 211,700 74,000
Executive Officers as a Group
(17 persons)
</TABLE>
- ---------------
Except for David J. Baranko and David C. Guillebeau, each person listed
above has been a director of Community Capital since August 19, 1998 and is a
proposed director of Albany Bank. Directors of Community Capital serve staggered
terms, which means that one-third of the directors will be elected each year at
Community Capital's annual meeting of shareholders. The initial term of the
Class I directors expires in 1999, the initial term of the Class II directors
expires in 2000, and the initial term of the Class III directors expires in
2001. Thereafter, each director will serve for a term of three years. As is
required under Community Capital's Bylaws, the Board of Directors includes, and
will continue to include, at least two independent directors. Community
Capital's officers are appointed by the Board of Directors and hold office at
the will of the Board. See "Certain Provisions of the Articles of Incorporation
and Bylaws."
Each of Albany Bank's proposed directors will, upon approval of the Office
of the Comptroller of the Currency, serve until Albany Bank's first shareholders
meeting, which will convene shortly after Albany Bank receives its charter.
Community Capital, as the sole shareholder of Albany Bank, will nominate each
proposed director to serve as director of Albany Bank at that meeting. After the
first shareholders meeting, directors of Albany Bank will serve for a term of
one year and will be elected by Community Capital each
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<PAGE> 38
year at Albany Bank's annual meeting of shareholders. Albany Bank's officers
will be appointed by its Board of Directors and will hold office at the will of
its Board.
ROBERT M. BEAUCHAMP. Bob Beauchamp is a native of Albany. He is a graduate
of the Cumberland School of Law of Samford University and of Mercer University
in Macon, Georgia. Mr. Beauchamp has practiced law in Albany since 1990 and
currently is a partner at the law firm of Beauchamp-Associate LLC.
BENNETT D. COTTEN, JR. Bennett Cotten is a native of Albany. He is an
orthopedic surgeon and a co-owner of Southwest Georgia Orthopedic and Sports
Medicine. Dr. Cotten received his Bachelor of Science degree from the University
of Georgia and his Medical Doctorate from the Medical College of Georgia. He
completed an Orthopedic Residency Program at the University of Louisville in
1984. Dr. Cotten practiced medicine at Orthopedic Associates located in Albany
from 1984 until 1996. He has practiced medicine at Southwest Georgia Orthopedic
and Sports Medicine in Albany since February 1996.
GLENN A. DOWLING. Glenn Dowling has been a resident of Albany for the past
40 years. He attended Valdosta State University and received his Doctor of
Podiatric Medicine degree from Illinois College of Podiatric Medicine. Dr.
Dowling has practiced podiatry since 1960 in Albany. Currently, he is managing
partner of Albany Ambulatory Surgery Center and Albany Podiatry Associates, a
five-doctor group practice. He is owner and developer of Partridge Pea
Plantation, a private conservation preserve. He has been active in community
activities, including Kiwanis, Chehaw Park, Cancer Society, Heart Association,
Easter Seal, Habitat for Humanity, Boys and Girls Clubs, Boy Scouts, Girl
Scouts, City Recreation Department, and Albany Football Officials Association.
He is a 1998 recipient of Albany Sertoma Club's "Good Citizen of the Year
Award."
MARY HELEN DYKES. Mary Helen Dykes is a native of Albany. She is a graduate
of Manhattanville College in Purchase, New York. Ms. Dykes has served as the
Secretary and Treasurer of Bob's Candies, Inc., an Albany manufacturer of candy,
since 1977.
CHARLES M. JONES, III. Chuck Jones is a native of Albany. He will serve as
the Chairman of the Board of Directors of Community Capital and Albany Bank and
as the Chief Executive Officer of Community Capital. Mr. Jones has served as the
Chief Executive Officer of Consolidated Loan & Mortgage Co., located in Albany,
since 1971. Mr. Jones is also a co-owner of other Albany businesses, including
Consolidated Loan Co., a corporation; Consolidated Loan Co., a partnership; and
Delta Partners, Inc.
Mr. Jones is a member of Georgia Industrial Loan Association and has served
as the past President, Chairman of the Executive Committee and Chairman of the
Board of the Georgia Financial Services Association. He has been an active
member in the community through his service on the Boards of Directors of Albany
Tomorrow, Inc., Mount Zion Civil Rights Museum and Thronateeska Heritage Center.
Currently, Mr. Jones is the Chairman of the Board of the Better Business
Bureau of Southwest Georgia and serves on the Executive Board of the Better
Business Bureau of West Georgia and East Alabama (Columbus, Georgia office). He
has also held board/officer positions with numerous social and civic clubs and
organizations including: Albany Symphony Orchestra, Theatre of Albany, Albany
Museum of Art, Community Cancer Association, Halcyon Club, Albany Toastmasters
Club, Albany Sertoma Club and Friends of Chehaw.
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<PAGE> 39
VAN CISE KNOWLES. Van Knowles is a native of Albany. He is a surgeon and is
the sole owner of his medical practice, Van C. Knowles MD, P.C. Dr. Knowles
received his Bachelor of Science degree from the University of Georgia and his
Medical Doctorate from the Medical College of Georgia. Dr. Knowles has practiced
medicine in Albany as a sole practitioner since 1973. He is a member of numerous
professional associations, including the Dougherty County Medical Society, the
Medical Association of Georgia, and the American Medical Association. Dr.
Knowles has served as the President of the Dougherty County Medical Society, the
Moretz Surgical Society, and has served as Chairman of the Tissue Committee and
on the Board of Trustees of the Palmyra Medical Center. He is also involved in
numerous community associations, including serving on the Board of Directors of
the Doublegate Country Club and serving as Secretary and Past President of the
Albany Sertoma Club.
C. RICHARD LANGLEY. Rick Langley is a native of Albany. He is a graduate of
the University of Georgia School of Law and Emory University. Mr. Langley has
practiced law in Albany since 1973. He has practiced law as a partner with the
law firm of Langley & Lee in Albany since 1991.
ROBERT E. LEE. Bob Lee is the President of Community Capital and will be
the President and Chief Executive Officer of Albany Bank. He is a resident of
Albany, and his career in banking began in 1973 with Columbus Bank & Trust Co.
Between 1973 and 1979, he held various positions at the bank, including
Operations Manager and Electronic Data Processing Auditor. From 1979 to 1980,
Mr. Lee served as Auditor for C&S National Bank. In June 1980, Mr. Lee joined
First State Corporation, where he held various positions of increasing
responsibility until May 1998. He began in 1980 as a General Auditor for the
bank and was promoted in 1985 to Vice President of Accounting. In 1987, he was
given additional responsibility for the Operations and Data Processing functions
of the bank and in 1992, he was promoted to Senior Vice President over
Operations, Data Processing and Accounting. Mr. Lee was promoted to Executive
Vice President and Chief Financial Officer in 1993, and held this position until
May 1998, when he resigned from First State Corporation, now Regions Financial
Corporation, to pursue organization of Community Capital and Albany Bank.
Mr. Lee earned a Bachelor of Science degree from Columbus College in
Columbus, Georgia and a graduate degree from the University of Wisconsin School
of Bank Administration. Mr. Lee is also actively involved in various community
and civic associations. He is currently serving a second term as the Chairman of
the Administrative Board for the First United Methodist Church and over the past
ten years has served as the Chairman of various other committees for the church.
Mr. Lee is also a member of the Albany Rotary Club and will serve as the
Treasurer for the 1998-1999 year. Mr. Lee has served on the Board of the
American Cancer Society for the past eight years and during that time has
annually chaired the Knights of Columbus Touring Pro-Am Golf Tournament to
benefit the American Cancer Society. Additionally, Mr. Lee is the Chairman of a
capital funds drive for Sherwood Christian Academy, a private school in Albany.
CORINNE C. MARTIN. Corinne Martin is a native of Albany. Since 1972 Ms.
Martin has been a co-owner of Carlton Co., a family owned business that
distributes Caterpillar equipment in South Georgia. She also has been an owner
of various businesses in the Albany area since 1996, including Coldwater Inv.
Co., doing business as Budget Rent-A-
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<PAGE> 40
Car, and Covey Pointe Shooting Preserve, a commercial hunting property. Ms.
Martin is a graduate of Darton College-School of Nursing and holds a current
license as a Registered Professional Nurse.
WILLIAM F. MCAFEE. Bill McAfee is a native of Albany. He is a graduate of
Auburn University. Mr. McAfee is the sole owner of Bill McAfee Leasing, which
provides truck leasing and financing services. He has also been a Sales Manager
for Allstar International in Albany since 1975.
MARK M. SHOEMAKER. Mark Shoemaker has been a resident of Albany since 1985.
He came to Georgia in 1972 to attend Emory University. Dr. Shoemaker graduated
from Emory University and received a MMSC-ICU PA from Emory University School of
Medicine. Dr. Shoemaker received his Medical Doctorate from the Medical College
of Georgia. Dr. Shoemaker has been a shareholder of Albany Anesthesia Associates
and has practiced medicine in Albany since 1989.
JANE ANNE D. SULLIVAN. Jane Anne Sullivan is a resident of Albany and a
graduate of Valdosta State College. Ms. Sullivan has been a co-owner of
Buildings Exchange, a real estate holding company located in Blakely, Georgia,
since 1981.
JOHN P. VENTULETT, JR. Jay Ventulett is a native of Albany and a graduate
of Georgia State University. He has served as Vice President and Executive
Insurance Agent of Howard, Ventulett & Bishop Insurers, Inc. since 1979.
LAWRENCE B. WILLSON. Larry Willson is a resident of Albany. He has served
as a Vice President and Farm Manager for Sunnyland Farms, Inc., in Albany since
1978. Mr. Willson is a graduate of Trinity College in Hartford, Connecticut and
received a Masters of Business Administration from Georgia State University.
JAMES D. WOODS. Jim Woods is a resident of Albany. He has been a partner in
the Drs. Adams and Woods, MD P.C. Medical Practice in Albany since 1976. Dr.
Woods received his Doctor of Medicine Degree form Meharry Medical College. He
received his Certificate of Internship from Naval Hospital in Great Lakes,
Illinois and received his Certificate of Residency from Naval Hospital in
Oakland, California. Additionally, Dr. Woods received a Bachelor of Arts degree
in Biology from Lincoln University.
DAVID J. BARANKO. David Baranko is the Chief Financial Officer of Community
Capital and will be the Chief Financial Officer of Albany Bank. Mr. Baranko is a
resident of Albany. He is a certified public accountant and earned a Bachelor of
Business Administration degree in accounting from the University of Georgia. Mr.
Baranko has over 13 years of banking experience. From November 1997 until
January 1999, he was Vice President and the Year 2000 Coordinator of ABC Bancorp
in Moultrie, Georgia. From April 1995 until November 1997, Mr. Baranko was Vice
President and Cashier of First National Bank of South Georgia in Albany. From
March 1987 until March 1995, he served as an Assistant Controller at First State
Bank and Trust Company in Albany. From September 1985 until March 1987, he was
the Controller of Athens Federal Savings Bank in Athens, Georgia. Mr. Baranko is
a member of the 1998 Class of Leadership Albany, the Board of Directors of
Goodwill Industries of Albany, the American Institute of Certified Public
Accountants and the Georgia Society of Certified Public Accountants.
DAVID C. GUILLEBEAU. David Guillebeau will be the Chief Lending Officer of
Albany Bank. Mr. Guillebeau is a native of Albany and is a graduate of the
University of Georgia. Mr. Guillebeau comes to Albany Bank with 13 years of
banking experience. From
40
<PAGE> 41
1986 until September 1998, Mr. Guillebeau has held various positions with
Security Bank located in Albany. Ultimately, Mr. Guillebeau held the position of
Vice President and was responsible for a loan portfolio of approximately $28
million, consisting of consumer and commercial loans. For over ten years, Mr.
Guillebeau served as the branch manager of the bank and was responsible for
approximately 20 employees and the audit and sales function of the bank, which
was approximately a $200 million institution.
Mr. Guillebeau is also actively involved in the community. He has served as
both an Elder and Deacon of Covenant Presbyterian Church and has served on the
Finance and Grounds Committee for a number of years. Mr. Guillebeau has also
served as the Chairman of the Board of the American Cancer Society for two years
as well as the Crusade Chairman, President and Vice President. Currently, Mr.
Guillebeau serves on the Trade and Tourism committee of the Albany Chamber of
Commerce as well as on the board for the Albany Symphony Association.
Additionally, Mr. Guillebeau has served as President and as a member of the
board of the Bank of America's Institute of Southwest Georgia.
COMMITTEES OF THE BOARDS OF DIRECTORS
Community Capital's Board of Directors has established the committees
described below. The members of each committee will be the same for Albany Bank
as they are for Community Capital.
COMPENSATION COMMITTEE. The Compensation Committee establishes compensation
levels for officers of Community Capital and Albany Bank, reviews management
organization and development, reviews significant employee benefit programs and
establishes and administers executive compensation programs, including the 1998
Stock Incentive Plan as described below. The Compensation Committee is chaired
by Van Cise Knowles and also includes Charles M. Jones, III, Robert E. Lee and
Jane Anne D. Sullivan.
EXECUTIVE COMMITTEE. The Executive Committee has authority to exercise the
powers of the Board of Directors in managing the affairs and assets of Community
Capital and Albany Bank between Board meetings, except for the powers
exclusively reserved to the Board of Directors of Community Capital or Albany
Bank. The Executive Committee is also responsible for making recommendations to
the Board of Directors regarding matters relating to the management and
expansion of Albany Bank. The Executive Committee is chaired by Charles M.
Jones, III and also includes Robert E. Lee, Corinne C. Martin, Lawrence B.
Willson and James D. Woods.
AUDIT AND COMPLIANCE COMMITTEE. The Audit and Compliance Committee
recommends to the Board of Directors the independent public accountants to be
selected to audit Community Capital's and Albany Bank's annual financial
statements and approves any special assignments given to the independent public
accountants. The Audit and Compliance Committee also reviews the planned scope
of the annual audit, any changes in accounting principles and the effectiveness
and efficiency of Community Capital's and Albany Bank's internal accounting
staff. Additionally, the Audit and Compliance Committee provides oversight to
Community Capital's and Albany Bank's compliance with regulatory rules and
regulations, including the Community Reinvestment Act. The Audit and Compliance
Committee is chaired by William F. McAfee and also includes Glenn A. Dowling and
C. Richard Langley.
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LOAN COMMITTEE. The Loan Committee reviews any loan request made by a
potential borrower over a certain credit threshold for compliance with Albany
Bank's lending policies and federal and state rules and regulations governing
extensions of credit and decides whether to extend credit to the potential
borrower. The Loan Committee is chaired by Robert E. Lee and also includes Mary
Helen Dykes, Charles M. Jones, III, William F. McAfee, John P. Ventulett, Jr.
and James D. Woods.
ASSET AND LIABILITY MANAGEMENT COMMITTEE. The Asset and Liability
Management Committee provides guidance to Community Capital and Albany Bank in
balancing the yields and maturities in Albany Bank's loans and investments to
its deposits. The Asset and Liability Management Committee is chaired by Corinne
C. Martin and also includes Bennett D. Cotten, Jr., Robert E. Lee, Robert M.
Beauchamp, Mark M. Shoemaker and John P. Ventulett, Jr.
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EXECUTIVE COMPENSATION
1998 COMPENSATION
The following table shows information for 1998 with regard to compensation
for services rendered in all capacities to Community Capital by its Chief
Executive Officer and by its President. No other executive officer earned more
than $100,000 in salary and bonus in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
- ------------------ ---- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Charles M. Jones, III................ 1998 -0- -0- -0-
Chairman and Chief Executive Officer
Robert E. Lee........................ 1998 45,832 -0- -0-
President
</TABLE>
EMPLOYMENT AGREEMENTS
Effective August 1, 1998 and October 1, 1998, respectively, Community
Capital and Albany Bank entered into an employment agreement with each of Robert
E. Lee and David C. Guillebeau (each an "Employee") regarding Mr. Lee's
employment as President of Community Capital and Albany Bank and Chief Executive
Officer of Albany Bank, and Mr. Guillebeau's employment as Executive Vice
President of Community Capital and Albany Bank and Senior Loan Officer of Albany
Bank. Under the terms of the agreements, Mr. Lee will receive a salary of
$110,000 per year and Mr. Guillebeau will receive a salary of $80,000 per year.
Each agreement provides that at the end of each year of operation, the Employee
will be entitled to receive a cash bonus, to be awarded by the Compensation
Committee based on Albany Bank's earnings. Additionally, the agreements provide
that Community Capital will grant Mr. Lee an incentive stock option to purchase
a number of shares of common stock equal to 5% of the shares of common stock
sold in this offering and that Community Capital will grant Mr. Guillebeau an
incentive stock option to purchase a number of shares of common stock equal to
2% of the shares of common stock sold in this offering. The options will become
exercisable in equal annual increments of 20% beginning on the one-year
anniversary of the date of this prospectus and will have an exercise price of
$10.00 per share. Community Capital will also provide an automobile to Mr. Lee.
The initial term of Mr. Lee's employment commenced on August 1, 1998 and
will continue for a period of five years. The initial term of Mr. Guillebeau's
employment commenced on October 1, 1998 and will continue for a period of three
years. At the end of the initial term of each agreement and at the end of each
succeeding 12-month period, each agreement will be extended for a successive
12-month period unless either of the parties to each of the agreements notifies
the other party to the agreement of his or its intent not to extend the
agreement. If (1) an Employee dies or (2) Community Capital or Albany Bank
abandons its organizational efforts or certain other terms and conditions are
not met by December 31, 1999, neither Community Capital nor Albany Bank will
have any further obligations under the applicable agreement. Employment may be
terminated
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<PAGE> 44
(1) by Albany Bank or Community Capital if it elects to terminate employment for
cause, (as defined in each agreement; (2) by the Employee if Albany Bank or
Community Capital breaches any material provision of the agreement or if the
Employee's powers, responsibilities or duties are materially diminished; or (3)
upon the Employee's death or disability. If Community Capital or Albany Bank
terminates employment without cause or the Employee terminates employment with
cause, Community Capital or Albany Bank will be required to pay the compensation
and provide the health and dental insurance coverage due under the agreement for
a period equal to the greater of 12 months from the date of termination or the
remaining term of the agreement. If Community Capital or Albany Bank terminates
employment with cause, or the Employee terminates employment without cause or in
connection with a change in control as defined in the each agreement, the
Employee will be prohibited from competing with Community Capital or Albany Bank
or soliciting its customers or employees within the geographic area set forth in
the agreement for a period of 12 months from the date of termination. If
employment is terminated by the Employee within six months following a change of
control, Community Capital will have to pay the Employee in cash a premium over
the sum of the Employee's annual base salary and the Employee's annual incentive
compensation.
DIRECTOR COMPENSATION
The directors of the Community Capital and Albany Bank will not be
compensated separately for their services as directors until net profits of the
Community Capital and Albany Bank exceed their net losses since inception on a
cumulative basis. Thereafter, Community Capital and Albany Bank will adopt
compensatory policies for their directors that conform to applicable law.
ORGANIZERS' WARRANTS
The organizers intend to purchase a total of 277,700 shares of common stock
in the offering at a price of $10.00 per share. This represents 27.8% of the
shares that will be outstanding after the offering, or 24.1% if the
underwriter's over-allotment option is exercised in full. The organizers have
guaranteed a line of credit from The Bankers Bank for an amount up to $750,000
and made cash advances to Community Capital for organizing expenses of Community
Capital and Albany Bank.
In recognition of the efforts made and financial risks undertaken by the
organizers in organizing Community Capital and Albany Bank, Community Capital
will issue to the organizers warrants to purchase additional shares of common
stock. Community Capital will issue to each organizer a warrant to purchase one
share of common stock for each share the organizer purchases in the offering, up
to a limit of 15,000 shares per warrant for any one organizer. The organizers
may purchase up to 225,000 shares through the exercise of these warrants. The
warrants will become exercisable in 20% annual increments beginning on the
one-year anniversary of the date of this prospectus so long as the holder
remains on Community Capital's Board of Directors. Exercisable warrants will
remain exercisable for the ten-year period following the date of this prospectus
or for 90 days after a warrant holder ceases to be a director, whichever is
shorter. Each warrant will be exercisable at a price of $10.00 per share subject
to adjustment for stock splits, recapitalizations or other similar events.
Additionally, if Albany Bank's capital falls below the minimum level as
determined by the Office of the Comptroller of the Currency,
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<PAGE> 45
Community Capital may be directed to require the organizers to exercise or
forfeit their warrants.
STOCK INCENTIVE PLAN
GENERAL. Community Capital's 1998 Stock Incentive Plan provides Community
Capital with the flexibility to grant the stock incentives described in this
section of the prospectus to key employees, officers and directors of Community
Capital or Albany Bank for the purpose of giving them a proprietary interest in,
and to encourage them to remain in the employ of, Community Capital or Albany
Bank. The Board of Directors has reserved 90,000 shares of common stock, an
amount equal to 9.0% of the shares of common stock sold in the offering, for
issuance under the plan. The number of shares reserved for issuance may change
in the event of a stock split, recapitalization or similar event as described in
the plan.
ADMINISTRATION. Community Capital's Compensation Committee, which is
comprised of at least two directors appointed by its Board of Directors, will
administer the plan. The Board of Directors will consider the standards
contained in both Section 162(m) of the Internal Revenue Code of 1986, as
currently in effect and Rule 16(b)(3) under the Securities Exchange Act of 1934,
as currently in effect, when appointing members to the committee. The committee
or, as the case may be, the Board of Directors, will have the authority to grant
awards under the plan, to determine the terms of each award, to interpret the
provisions of the plan and to make all other determinations that it may deem
necessary or advisable to administer the plan.
The plan permits the Compensation Committee to grant stock options to
eligible persons. The committee may grant these options on an individual basis
or design a program providing for grants to a group of eligible persons. The
Compensation Committee determines, within the limits of the plan, the number of
shares of common stock subject to an option, to whom an option is granted and
the exercise price and forfeiture or termination provisions of each option. A
holder of a stock option generally may not transfer the option during his or her
lifetime.
OPTION TERMS. The plan provides for incentive stock options and
non-qualified stock options. The Compensation Committee will determine whether
an option is an incentive stock option or a non-qualified stock option when it
grants the option, and the option will be evidenced by an agreement describing
the material terms of the option.
The Compensation Committee determines the exercise price of an option. The
exercise price of an incentive stock option may not be less than the fair market
value of the common stock on the date of the grant, or less than 110% of the
fair market value if the participant owns more than 10% of Community Capital's
outstanding common stock. When the incentive stock option is exercised,
Community Capital will be entitled to place a legend on the certificates
representing the shares of common stock purchased upon exercise of the option to
identify them as shares of common stock purchased upon the exercise of an
incentive stock option. The exercise price of non-qualified stock options may
not be less than 85% of the fair market value of the common stock on the date
that the option is awarded, based upon any reasonable measure of fair market
value. The committee may permit the exercise price to be paid in cash, by the
delivery of previously owned shares of common stock, through a cashless exercise
executed through a broker or by having a number of shares of common stock
otherwise issuable at the time of exercise
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<PAGE> 46
withheld. The Compensation Committee may make cash awards designed to cover tax
obligations of employees that result from the receipt or exercise of a stock
option.
The Compensation Committee will also determine the term of an option. The
term of an incentive stock option may not exceed ten years from the date of
grant, but any incentive stock option granted to a participant who owns more
than 10% of the outstanding common stock will not be exercisable after the
expiration of five years after the date the option is granted. Subject to any
further limitations in the applicable agreement, if a participant's employment
terminates, an incentive stock option will terminate and become unexercisable no
later than three months after the date of termination of employment. If,
however, termination of employment is due to death or disability, one year will
be substituted for the three-month period. Incentive stock options are also
subject to the further restriction that the aggregate fair market value,
determined as of the date of the grant, of common stock as to which any
incentive stock option first becomes exercisable in any calendar year is limited
to $100,000 per recipient. If incentive stock options covering more than
$100,000 worth of common stock first become exercisable in any one calendar
year, the excess will be non-qualified options. For purposes of determining
which options, if any, have been granted in excess of the $100,000 limit,
options will be considered to become exercisable in the order granted.
TERMINATION OF OPTIONS. The terms of particular options may provide that
they terminate, among other reasons, upon the holder's termination of employment
or other status with Community Capital or Albany Bank, upon a specified date,
upon the holder's death or disability, or upon the occurrence of a change in
control of Community Capital. An agreement may provide that if the holder dies
or becomes disabled, the holder's estate or personal representative may exercise
the option. The committee may, within the terms of the plan and the applicable
agreement, cancel, accelerate, pay or continue an option that would otherwise
terminate for the reasons discussed above.
CERTAIN REORGANIZATIONS. The plan provides for appropriate adjustment, as
determined by the Compensation Committee, in the number and kind of shares
subject to unexercised options in the event of any change in the outstanding
shares of common stock by reason of a stock split, stock dividend, combination
or reclassification of shares, recapitalization, merger or similar event. In the
event of certain corporate reorganizations, the committee may, within the terms
of the plan and the applicable agreement, substitute, cancel, accelerate, cancel
for cash or otherwise adjust the terms of an option.
AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors has the
authority to amend or terminate the plan. The Board of Directors is not required
to obtain shareholder approval to amend or terminate the plan, but may condition
any amendment or termination of the plan upon shareholder approval if it
determines that shareholder approval is necessary or appropriate under tax,
securities, or other laws. The Board's action may not adversely affect the
rights of a holder of a stock option without the holder's consent.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion outlines
generally the federal income tax consequences of participation in the plan.
Individual circumstances may vary and each participant should rely on his or her
own tax counsel for advice regarding federal income tax treatment under the
plan.
INCENTIVE STOCK OPTIONS. A participant who exercises an incentive stock
option will not be taxed when he or she exercises the option or a portion of the
option. Instead, the
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<PAGE> 47
participant will be taxed when he or she sells the shares of common stock
purchased upon exercise of the incentive stock option. The participant will be
taxed on the difference between the price he or she paid for the common stock
and the amount for which he or she sells the common stock. If the participant
does not sell the shares of common stock prior to two years from the date of
grant of the incentive stock option and one year from the date the common stock
is transferred to him or her, the gain will be a capital gain and Community
Capital will not get a corresponding deduction. If the participant sells the
shares of common stock at a gain before that time, the difference between the
amount the participant paid for the common stock and the lesser of its fair
market value on the date of exercise or the amount for which the stock is sold
will be taxed as ordinary income. If the participant sells the shares of common
stock for less than the amount he or she paid for the stock prior to the one- or
two-year period indicated, no amount will be taxed as ordinary income and the
loss will be taxed as a capital loss. Exercise of an incentive stock option may
subject a participant to, or increase a participant's liability for, the
alternative minimum tax.
NON-QUALIFIED OPTIONS. A participant will not recognize income upon the
grant of a non-qualified option or at any time before the exercise of the option
or a portion of the option. When the participant exercises a non-qualified
option or portion of the option, he or she will recognize compensation taxable
as ordinary income in an amount equal to the excess of the fair market value of
the common stock on the date the option is exercised over the price paid for the
common stock, and Community Capital will then be entitled to a corresponding
deduction.
Depending upon the time period for which shares of common stock are held
after exercise of an option, the sale or other taxable disposition of shares
acquired through the exercise of a non-qualified option generally will result in
a short- or long-term capital gain or loss equal to the difference between the
amount realized on the disposition and the fair market value of such shares when
the non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified option
by paying the exercise price, in whole or in part, by the transfer of shares of
common stock to Community Capital and to a participant who is subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934, as
currently in effect.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Community Capital and Albany Bank may have banking and other business
transactions in the ordinary course of business with directors and officers of
Community Capital and Albany Bank, including members of their families or
corporations, partnerships or other organizations in which these directors and
officers have a controlling interest. If transactions between Community Capital
or Albany Bank and any of their directors or officers occur, the transaction:
(1) will be on substantially the same terms, including price or interest rate
and collateral, as those prevailing at the time for comparable transactions with
unrelated parties, and any banking transactions will not be expected to involve
more than the normal risk of collectibility or present other unfavorable
features to Community Capital and Albany Bank, (2) will be on terms no less
favorable than could be obtained from an unrelated third party, and (3) will be
approved by a majority of the directors, including a majority of the directors
who do not have an interest in the transaction.
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DESCRIPTION OF CAPITAL STOCK OF COMMUNITY CAPITAL
COMMON STOCK
Community Capital's Articles of Incorporation authorize Community Capital
to issue up to 10,000,000 shares of common stock, par value $1.00 per share, of
which 1,000,000 shares will be issued pursuant to this offering. As of the date
of this prospectus, 90,000 shares of common stock, or an amount equal to 9.0% of
the shares of common stock sold in the offering, were reserved for issuance upon
the exercise of stock options to be issued under the 1998 Stock Incentive Plan
and 225,000 shares of common stock were reserved for issuance upon the exercise
of the warrants to be issued to the organizers.
All shares of common stock will be entitled to share equally in dividends
from legally available funds, when, as and if declared by the Board of
Directors. Upon Community Capital's voluntary or involuntary liquidation or
dissolution, all shares of common stock will be entitled to share equally in all
of Community Capital's assets that are available for distribution to the
shareholders. We do not anticipate that Community Capital will pay any cash
dividends on the common stock in the near future. Each holder of common stock
will be entitled to one vote for each share on all matters submitted to the
shareholders. Holders of common stock will not have any right to acquire
authorized but unissued capital stock of Community Capital whenever it issues
new shares of capital stock. No cumulative voting, redemption, sinking fund or
conversion rights or provisions apply to the common stock. All shares of the
common stock issued in the offering as described in this prospectus will be
fully paid and non-assessable.
PREFERRED STOCK
Community Capital's Articles of Incorporation also authorize its Board of
Directors to issue up to 2,000,000 shares of preferred stock, par value not
stated. The Board of Directors may determine the terms of the preferred stock.
Preferred stock may have voting rights, subject to applicable law and
determination by the Board of Directors. Community Capital has not issued any
preferred stock and will not issue preferred stock to the organizers except on
the same terms as it is offered to all other existing shareholders or to new
shareholders. Although Community Capital has no present plans to issue any
preferred stock, the ownership and control of Community Capital by the holders
of the common stock would be diluted if Community Capital were to issue
preferred stock that had voting rights.
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
PROTECTIVE PROVISIONS
GENERAL. Shareholders' rights and related matters are governed by the
Georgia Business Corporation Code and Community Capital's Articles of
Incorporation and Bylaws. Community Capital's Articles of Incorporation and
Bylaws contain certain protective provisions that would have the effect of
impeding an attempt to change or remove Community Capital's management or to
gain control of Community Capital in a transaction not supported by its Board of
Directors. These provisions are discussed in more detail below. In general, one
purpose of these provisions is to assist Community Capital's Board of Directors
in playing a role in connection with attempts to acquire control of Community
Capital. They allow the Board of Directors to further and protect Community
Capital's interests and those of its shareholders as appropriate under the
circumstances, including if the Board of Directors determines that a sale of
control is in the best interests of Community Capital and its shareholders, by
enhancing the Board's ability to maximize the value to be received by the
shareholders upon a sale.
Although Community Capital's management believes the protective provisions
are beneficial to Community Capital's shareholders, they also may tend to
discourage some takeover bids. As a result, Community Capital's shareholders may
be deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the protective provisions discourage undesirable
proposals, Community Capital may be able to avoid those expenditures of time and
money.
The protective provisions also may discourage open market purchases by a
potential acquirer. These purchases could increase the market price of the
common stock temporarily, enabling shareholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the provisions
could decrease the market price of the common stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The provisions also could make it
more difficult and time consuming for a potential acquirer to obtain control of
Community Capital by replacing its Board of Directors and management.
Furthermore, the provisions could make it more difficult for Community Capital's
shareholders to replace the Board of Directors or management, even if a majority
of the shareholders believes that replacing them would be in Community Capital's
best interests. As a result, the protective provisions could tend to keep the
incumbent Board of Directors and management in place.
Community Capital's Articles of Incorporation also contain a provision that
eliminates the potential personal liability of directors for monetary damages in
certain circumstances. In addition, Community Capital's Bylaws contain certain
provisions that provide indemnification for Community Capital's directors,
employees and agents. The protective provisions and the provisions relating to
elimination of liability and indemnification of directors, employees and agents
are discussed more fully below.
PREFERRED STOCK. The existence of preferred stock could impede a takeover
of Community Capital without the approval of its Board of Directors. This is
because the Board of Directors could issue shares of preferred stock to persons
friendly to current
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management, which could render more difficult or discourage any attempt to gain
control of Community Capital through a proxy contest, tender offer, merger or
otherwise. In addition, the issuance of shares of preferred stock with voting
rights may adversely affect the rights of the holders of common stock and, in
certain circumstances, could decrease the market price of the common stock.
STAGGERED TERMS FOR BOARD OF DIRECTORS. Article 7 of the Articles of
Incorporation provides that Community Capital's Board of Directors will be
divided into three classes. Directors serve staggered terms, which means that
one-third of the directors will be elected each year at Community Capital's
annual meeting of shareholders. The initial term of the Class I directors
expires in 1999, the initial term of the Class II directors expires in 2000 and
the initial term of the Class III directors expires in 2001. Thereafter, each
director will serve for a term of three years. This means that unless the
existing directors were to resign, it would take at least two annual meetings of
Community Capital's shareholders to replace a majority of its directors.
Under Georgia law, directors are elected annually for a term of one year
unless the articles of incorporation provide otherwise.
CHANGE IN NUMBER OF DIRECTORS. Article 8 of Community Capital's Articles of
Incorporation provides that any change in the number of directors, as set forth
in its Bylaws, would have to be made by the affirmative vote of 2/3 of the
entire Board of Directors or by the affirmative vote of the holders of at least
2/3 of the outstanding shares of common stock.
Under Georgia law, the number of directors may be increased or decreased by
amendment to the Bylaws adopted by the Board of Directors at a meeting at which
a quorum is present, unless the articles of incorporation provide otherwise or
unless the number of directors is otherwise fixed by a majority of the
shareholders. To adopt the amendment, more directors must vote for it than
against it.
REMOVAL OF DIRECTORS. Article 9 of Community Capital's Articles of
Incorporation provides that one or more directors may be removed for cause
during their terms only by the affirmative vote of the holders of a majority of
the issued and outstanding shares of common stock entitled to vote in an
election of directors. Article 9 also provides that directors may be removed
during their terms without cause only by the affirmative vote of the holders of
2/3 of the issued and outstanding shares of common stock entitled to vote in an
election of directors.
Under Georgia law, one or more directors of a corporation may be removed
with or without cause by the affirmative vote of a majority of the shares
present and entitled to vote at a meeting at which a quorum is present, unless
the articles of incorporation or a bylaw adopted by the shareholders provides
otherwise.
SUPERMAJORITY VOTING ON CERTAIN TRANSACTIONS. Under Article 13 of Community
Capital's Articles of Incorporation, with certain exceptions, any merger or
consolidation involving Community Capital or any sale or other disposition of
all or substantially all of its assets will require the affirmative vote of a
majority of Community Capital's directors then in office and the affirmative
vote of the holders of at least 2/3 of the outstanding shares of common stock.
However, if Community Capital's Board of Directors has approved the particular
transaction by the affirmative vote of 2/3 of the entire Board, then the
applicable provisions of Georgia law would govern and shareholder approval of
the
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transaction would require the affirmative vote of the holders of only a majority
of the outstanding shares of common stock entitled to vote on the transaction.
EVALUATION OF AN ACQUISITION PROPOSAL. Article 14 of Community Capital's
Articles of Incorporation provides the factors that the Board of Directors must
consider in evaluating whether an acquisition proposal made by another party is
in the best interests of Community Capital and its shareholders. The term
"acquisition proposal" refers to any offer of another party (1) to make a tender
offer or exchange offer for the common stock or any other equity security of
Community Capital, (2) to merge or consolidate Community Capital with another
corporation, or (3) to purchase or otherwise acquire all or substantially all of
the properties and assets owned by Community Capital.
Article 14 charges the Board, in evaluating an acquisition proposal, to
consider all relevant factors, including (1) the expected social and economic
effects of the transaction on the employees, customers and other constituents,
such as suppliers of goods and services, of Community Capital and Albany Bank,
(2) the expected social and economic effects on the communities within which
Community Capital and Albany Bank operate, and (3) the payment being offered by
the other corporation in relation (a) to the current value of Community Capital
at the time of the proposal as determined in a freely negotiated transaction and
(b) to the Board of Directors' estimate of Community Capital's future value as
an independent company at the time of the proposal. The Board may also consider
other relevant factors.
This Article is included in Community Capital's Articles of Incorporation
because Albany Bank is charged with providing support to and being involved with
the communities it serves. As a result, the Board believes its obligations in
evaluating an acquisition proposal extend beyond evaluating merely the payment
being offered in relation to the market or book value of the common stock at the
time of the proposal. Georgia law does not specifically list the factors a
corporation's board of directors should consider in the event the corporation is
presented with an acquisition proposal.
While the value of what is being offered to shareholders in exchange for
their stock is the main factor when weighing the benefits of an acquisition
proposal, the Board believes it is appropriate also to consider all other
relevant factors. For example, this Article directs the Board to evaluate what
is being offered in relation to the current value of Community Capital at the
time of the proposal as determined in a freely negotiated transaction and in
relation to the Board's estimate of the future value of Community Capital as an
independent concern at the time of the proposal. A takeover bid often places the
target corporation virtually in the position of making a forced sale, sometimes
when the market price of its stock may be depressed. The Board believes that
frequently the payment offered in such a situation, even though it may be exceed
the value at which shares are then trading, is less than that which could be
obtained in a freely negotiated transaction. In a freely negotiated transaction,
management would have the opportunity to seek a suitable partner at a time of
its choosing and to negotiate for the most favorable price and terms that would
reflect not only Community Capital's current value, but also its future value.
One effect of this Article may be to discourage a tender offer in advance.
Often an offeror consults the Board of a target corporation before or after
beginning a tender offer in an attempt to prevent a contest from developing. In
the Board's opinion, this provision will strengthen its position in dealing with
any potential offeror that might attempt to acquire
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Community Capital through a hostile tender offer. Another effect of this Article
may be to dissuade shareholders who might be displeased with the Board's
response to an acquisition proposal from engaging Community Capital in costly
litigation.
Article 14 of the Articles of Incorporation would not make an acquisition
proposal regarded by the Board as being in Community Capital's best interests
more difficult to accomplish. It would, however, permit the Board to determine
that an acquisition proposal was not in Community Capital's best interests, and
thus to oppose it, on the basis of the various factors that the Board deems
relevant. In some cases, such opposition by the Board might have the effect of
maintaining incumbent management.
INDEMNIFICATION
Community Capital's Bylaws contain certain indemnification provisions that
provide that directors, officers, employees or agents of Community Capital
(collectively, the "insiders") will be indemnified against expenses that they
actually and reasonably incur if they are successful on the merits of a claim or
proceeding. In addition, the Bylaws provide that Community Capital will advance
to its insiders reasonable expenses of any claim or proceeding so long as the
insider furnishes Community Capital with (1) a written affirmation of his or her
good faith belief that he or she has met the applicable standard of conduct and
(2) a written statement that he or she will repay any advances if it is
ultimately determined that he or she is not entitled to indemnification.
When a case or dispute is settled or otherwise not ultimately determined on
its merits, the indemnification provisions provide that Community Capital will
indemnify insiders when they meet the applicable standard of conduct. The
applicable standard of conduct is met if the insider acted in a manner he or she
in good faith believed to be in or not opposed to Community Capital's best
interests and, in the case of a criminal action or proceeding, if the insider
had no reasonable cause to believe his or her conduct was unlawful. Community
Capital's Board of Directors, its shareholders or independent legal counsel
determines whether the insider has met the applicable standard of conduct in
each specific case.
Community Capital's Bylaws also provide that the indemnification rights
contained in the Bylaws do not exclude other indemnification rights to which an
insider may be entitled under any bylaw, resolution or agreement, either
specifically or in general terms approved by the affirmative vote of the holders
of a majority of the shares entitled to vote. Community Capital can also provide
for greater indemnification than is provided for in the Bylaws if it chooses to
do so, subject to approval by its shareholders. Community Capital may not,
however, indemnify an insider for liability arising out of circumstances that
would cause the insider to remain liable for his or her actions as described
under "-- Limitation of Liability" below.
The indemnification provisions of the Bylaws specifically provide that
Community Capital may purchase and maintain insurance on behalf of any director
against any liability asserted against and incurred by him or her in his or her
capacity as a director, whether or not Community Capital would have had the
power to indemnify against such liability.
Community Capital is not aware of any pending or threatened action, suit or
proceeding involving any of its insiders for which indemnification from
Community Capital may be sought.
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Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Community Capital under the foregoing provisions, or otherwise, Community
Capital 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 Community Capital of expenses
incurred or paid by a director, officer or controlling person of Community
Capital 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, Community Capital will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
LIMITATION OF LIABILITY
Article 11 of Community Capital's Articles of Incorporation, eliminates,
with certain exceptions, the potential personal liability of a director for
monetary damages to Community Capital and to its shareholders for breach of a
duty as a director. There is no elimination of liability for (1) a breach of
duty involving appropriation of a business opportunity of Community Capital, (2)
an act or omission not in good faith or involving intentional misconduct or a
knowing violation of law, (3) a transaction from which the director derives an
improper material tangible personal benefit, or (4) as to any payment of a
dividend or approval of a stock repurchase that is illegal under the Georgia
Business Corporation Code. Article 11 does not eliminate or limit the right of
Community Capital or its shareholders to seek injunctive or other equitable
relief not involving monetary damages.
The Georgia Business Corporation Code allows Georgia corporations to
include in their Articles of Incorporation a provision eliminating or limiting
the liability of directors, except in the circumstances described above. As a
result, and to encourage qualified individuals to serve and remain as directors,
Community Capital included Article 11 in its Articles of Incorporation. While
Community Capital has not experienced any problems in locating directors, it
could experience difficulty in the future as its business activities increase
and diversify. Community Capital also adopted Article 11 to enhance its ability
to secure liability insurance for its directors at a reasonable cost. Community
Capital intends to obtain liability insurance covering actions taken by its
directors in their capacities as directors. The Board of Directors believes that
Article 11 will enable Community Capital to obtain such insurance on terms more
favorable than if it were not included in the Articles of Incorporation.
AMENDMENTS
Any amendment of Articles 7, 9, 11, 13 and 14 of Community Capital's
Articles of Incorporation requires the affirmative vote of the holders of at
least 2/3 of the outstanding shares of common stock, unless 2/3 of the entire
Board of Directors approves the amendment. If 2/3 of the Board approves the
amendment, the applicable provisions of Georgia law would govern, and the
approval of only a majority of the outstanding shares of common stock would be
required.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, Community Capital will have 1,000,000
shares of common stock outstanding, or 1,150,000 if the underwriter exercises
its over-allotment option in full. These shares of common stock will be freely
tradable without restriction, except that "affiliates" of Community Capital must
comply with the resale limitations of Rule 144 under the Securities Act of 1933,
as currently in effect. Rule 144 defines an "affiliate" of a company as a person
who directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the company. Affiliates of a
company generally include its directors, officers and principal shareholders. A
total of 285,800 shares owned directly or indirectly by affiliates of Community
Capital will be eligible for public sale under Rule 144, subject to the
contractual and volume restrictions discussed below, beginning 180 days after
the date of this prospectus.
Purchasers of common stock in this offering or on the open market may
resell those shares immediately, although affiliates of Community Capital will
be subject to the volume and other limitations of Rule 144. In general, under
Rule 144, as currently in effect, affiliates will be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the outstanding shares of common stock or the average weekly trading volume
during the four calendar weeks preceding his or her sale. Sales under Rule 144
are also subject to certain manner of sale provisions, notice requirements and
the availability of current public information about Community Capital.
Affiliates will not be subject to the volume restrictions and other limitations
under Rule 144 beginning 90 days after their status as an affiliate terminates.
Even though Rule 144 would otherwise permit the sale of shares held by
affiliates beginning 90 days after the date of this prospectus, Community
Capital and the organizers have each agreed with the underwriter that they will
not sell, contract to sell, or otherwise dispose of any shares of common stock
or any securities convertible into or exchangeable for any shares of common
stock for a period of 180 days from the date of this prospectus without the
underwriter's, prior written consent except in limited circumstances.
Community Capital intends to issue warrants to purchase up to a total of
225,000 shares of common stock, representing an amount equal to 22.5% of the
common stock sold in the offering. Community Capital also intends to grant
options to purchase up to a total of 90,000 shares of common stock, representing
an amount equal to 9.0% of the common stock sold in the offering, under its 1998
Stock Incentive Plan. Community Capital intends to register the shares issuable
upon exercise of warrants and options granted under the plan. Upon registration,
these shares will be eligible for resale in the public market without
restriction by persons who are not affiliates of Community Capital, and to the
extent they are held by affiliates, under Rule 144 without a holding period.
Prior to the offering, there has been no public market for the common
stock, and we cannot predict the effect, if any, that the sale of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Nevertheless, sales of substantial amounts of common stock in the
public market could adversely affect prevailing market prices and our ability to
raise equity capital in the future.
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among
Community Capital and the underwriter named below, the underwriter has agreed to
purchase from Community Capital, and Community Capital has agreed to sell to the
underwriter, the number of shares of common stock listed opposite the
underwriter's name below.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF OVER-ALLOTMENT
UNDERWRITER FIRM SHARES SHARES
- ----------- ----------- --------------
<S> <C> <C>
Interstate/Johnson Lane Corporation..................... 1,000,000 150,000
</TABLE>
The underwriting agreement provides that the underwriter's obligations are
subject to approval of certain legal matters by counsel and to various other
conditions customary in a firm commitment underwritten public offering. The
underwriter is required to purchase and pay for the shares offered by this
prospectus other than those covered by the over-allotment option described
below.
The underwriting discount that will apply to shares not purchased by
Community Capital's directors and executive officers in this offering will equal
7.5% of the public offering price listed on the cover page of this prospectus,
or $.75 per share. The underwriting discount that will apply to shares purchased
in this offering by Community Capital's directors and executive officers will
equal 3.5% of the public offering price, or $.35 per share.
The underwriter proposes to offer the common stock directly to the public
at the public offering price listed on the cover page of this prospectus and to
certain securities dealers at that price less a concession not in excess of $.45
per share. The underwriter may allow, and the selected dealers may reallow, a
concession not in excess of $.10 per share to certain other brokers and dealers.
We expect that the shares of common stock will be ready for delivery on or about
March 16, 1999. After the offering, the offering price and other selling terms
may change.
The public offering price was determined by negotiations between Community
Capital and the underwriter based on several factors. These factors include
prevailing market conditions, the price to earnings and price to book value
multiples of comparable publicly traded companies and Albany Bank's growth
potential and cash flow and earnings prospects.
Community Capital has granted the underwriter an option, exercisable within
30 days after the date of this prospectus, to purchase up to 150,000 additional
shares of common stock to cover over-allotments, if any, at the public offering
price listed on the cover page of this prospectus, less the 7.5% underwriting
discount. The underwriter may purchase these shares only to cover
over-allotments made in connection with this offering.
The underwriter does not intend to sell shares of common stock to any
account over which it exercises discretionary authority.
Community Capital and the organizers have each agreed with the underwriter
that they will not sell, contract to sell, or otherwise dispose of any shares of
common stock or any securities that can be converted into or exchanged for
shares of common stock for a period of 180 days from the date of this prospectus
without the underwriter's prior written consent, except in limited
circumstances. The underwriter may on occasion be a customer
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of, engage in transactions with, and perform services for Community Capital or
Albany Bank in the ordinary course of business.
Community Capital has agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
currently in effect, or to contribute to payments that the underwriter may be
required to make in connection with these liabilities.
In connection with this offering, the underwriter may purchase and sell
common stock in the open market. These transactions may include over-allotment
and stabilizing transactions, and purchases to cover syndicate short positions
created in connection with this offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the common stock, and syndicate short positions involve
the underwriter's sale of a greater number of shares of common stock than it is
required to purchase from Community Capital in the offering. These activities
may stabilize, maintain or otherwise affect the market price of the common
stock, which may be higher than the price that might otherwise prevail in the
open market. The underwriter may effect these transactions on the Nasdaq OTC
Bulletin Board or otherwise and may discontinue them at any time.
SUPERVISION AND REGULATION
The following discussion describes the material elements of the regulatory
framework that applies to banks and bank holding companies and provides certain
specific information related to Community Capital.
GENERAL
Community Capital will be a bank holding company registered with the Board
of Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as currently in effect. As a result, Community Capital and any future
non-bank subsidiaries will be subject to the supervision, examination, and
reporting requirements of the Bank Holding Company Act and the regulations of
the Federal Reserve.
The Bank Holding Company Act requires every bank holding company to obtain
the Federal Reserve's prior approval before: (1) it may acquire direct or
indirect ownership or control of any voting shares of any bank if, after the
acquisition, the bank holding company will directly or indirectly own or control
more than 5% of the bank's voting shares; (2) it or any of its non-bank
subsidiaries may acquire all or substantially all of the assets of any bank; or
(3) it may merge or consolidate with any other bank holding company.
The Bank Holding Company Act further provides that the Federal Reserve may
not approve any transaction that would result in or tend to create a monopoly
or, substantially lessen competition or otherwise function as restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. The Federal Reserve's consideration of financial resources generally
focuses on capital adequacy, which is discussed below.
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Community Capital and any other bank holding company located in Georgia may
acquire a bank located in any other state, and any bank holding company located
outside of Georgia may acquire any Georgia-based bank, regardless of state law
to the contrary. In each case, certain deposit-percentage, aging requirements
and other restrictions will apply. National and state-chartered banks may branch
across state lines by acquiring banks in other states. By adopting legislation
prior to June 1, 1997, a state could elect either to "opt in" and accelerate the
date after which interstate branching would be permissible or "opt out" and
prohibit interstate branching altogether. The Georgia Interstate Banking Act
provides that interstate acquisitions by or of institutions located in Georgia
are permitted in states that also allow national interstate acquisitions. The
Georgia Interstate Branching Act permits Georgia-based banks and bank holding
companies owning or acquiring banks outside of Georgia and all non-Georgia banks
and bank holding companies owning or acquiring banks in Georgia to merge any
lawfully acquired bank into an interstate branch network. The Georgia Interstate
Branching Act also allows banks to establish new start-up branches throughout
Georgia, which removes a barrier to competition.
The Bank Holding Company Act generally prohibits Community Capital from
engaging in activities other than banking or managing or controlling banks or
other permissible subsidiaries and from acquiring or keeping direct or indirect
control of any company engaged in any activities other than those activities
that the Federal Reserve determines to be closely related to banking or managing
or controlling banks. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. For example, the Federal Reserve has determined that factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
conducting discount securities brokerage activities, performing certain data
processing services, acting as agent or broker in selling credit life insurance
and certain other types of insurance in connection with credit transactions, and
performing certain insurance underwriting activities are permissible activities
of bank holding companies. The Bank Holding Company Act does not place
territorial limitations on permissible non-banking activities of bank holding
companies. Despite prior approval, the Federal Reserve may order a holding
company or its subsidiaries to terminate any activity or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the holding company's continued ownership, activity or control constitutes
a serious risk to the financial safety, soundness, or stability of any of its
bank subsidiaries.
Albany Bank's deposits will be insured by the FDIC to the maximum extent
provided by law. Albany Bank will also be subject to numerous state and federal
statutes and regulations that will affect its business, activities and
operations, and it will be supervised and examined by one or more state or
federal bank regulatory agencies.
The Office of the Comptroller of the Currency will regularly examine Albany
Bank's operations and has the authority to approve or disapprove mergers, the
establishment of branches and similar corporate actions. The Office of the
Comptroller of the Currency also has the power to prevent the continuance or
development of unsafe or unsound banking practices or other violations of law.
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PAYMENT OF DIVIDENDS
Community Capital is a legal entity separate and distinct from Albany Bank.
The principal sources of Community Capital's cash flow, including cash flow to
pay dividends to its shareholders, are dividends that Albany Bank pays to its
sole shareholder, Community Capital. Statutory and regulatory limitations apply
to Albany Bank's payment of dividends to Community Capital as well as to
Community Capital's payment of dividends to its shareholders.
If, in the opinion of the Office of the Comptroller of the Currency, Albany
Bank were engaged in or about to engage in an unsafe or unsound practice, the
Office of the Comptroller of the Currency could require, after notice and a
hearing, Albany Bank to cease and desist from the practice. The federal banking
agencies have indicated that paying dividends that deplete a depository
institution's capital base to an inadequate level would be an unsafe and unsound
banking practice. Under the Federal Deposit Insurance Corporation Improvement
Act of 1991, a depository institution may not pay any dividend if payment would
cause it to become undercapitalized or if it already is undercapitalized.
Moreover, the federal agencies have issued policy statements that provide that
bank holding companies and insured banks should generally only pay dividends out
of current operating earnings. See "-- Prompt Corrective Action."
The payment of dividends by Community Capital and Albany Bank may also be
affected by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines.
CAPITAL ADEQUACY
Community Capital and Albany Bank will be required to comply with the
capital adequacy standards established by the Federal Reserve in the case of
Community Capital and the Office of the Comptroller of the Currency in the case
Albany Bank. The Federal Reserve has established two basic measures of capital
adequacy for bank holding companies -- a risk-based measure and a leverage
measure. A bank holding company must satisfy all applicable capital standards to
be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items,
such as letters of credit and unfunded loan commitments, are assigned to broad
risk categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets, or
"Tier 1 Capital." The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves, or "Tier 2
Capital."
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets, of 3% for bank
58
<PAGE> 59
holding companies that meet certain specified criteria, including having the
highest regulatory rating. All other bank holding companies generally are
required to maintain a leverage ratio of at least 3%, plus an additional cushion
of 100 to 200 basis points. The guidelines also provide that bank holding
companies experiencing internal growth, as will be the case for Community
Capital, or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without significant
reliance on intangible assets. Furthermore, the Federal Reserve has indicated
that it will consider a bank holding company's Tier 1 Capital leverage ratio,
after deducting all intangibles, and other indicators of capital strength in
evaluating proposals for expansion or new activities.
Albany Bank will be subject to risk-based and leverage capital requirements
adopted by the Office of the Comptroller of the Currency, which are
substantially similar to those adopted by the Federal Reserve for bank holding
companies.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed on FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "-- Prompt
Corrective Action."
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Community Capital is expected to act as a
source of financial strength for, and to commit resources to support, Albany
Bank. This support may be required at times when, without this Federal Reserve
policy, Community Capital might not be inclined to provide it. In addition, any
capital loans by a bank holding company to Albany Bank will be repaid only after
its deposits and certain other indebtedness are repaid in full. In the event of
a bank holding company's bankruptcy, any commitment by the bank holding company
to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system, the federal banking regulators
have established five capital categories (well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized), are required to take certain mandatory supervisory actions,
and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories. The severity of the
action will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the banking regulator must appoint a
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency. A
bank holding company must guarantee that a
59
<PAGE> 60
subsidiary depository institution meets its capital restoration plan, subject to
certain limitations. The controlling holding company's obligation to fund a
capital restoration plan is limited to the lesser of 5% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches or engaging in any new line of business, except under an accepted
capital restoration plan or with FDIC approval. In addition, the appropriate
federal banking agency may test an undercapitalized institution in the same
manner as it treats a significantly undercapitalized institution if it
determines that those actions are necessary.
FDIC INSURANCE ASSESSMENTS
The FDIC has adopted 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 system assigns an
institution to one of three capital categories: (1) well capitalized; (2)
adequately capitalized; and (3) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. The FDIC also assigns an
institution to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation that the institution's primary federal regulator provides
to the FDIC and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. The FDIC then determines an institution's insurance assessment rate based
on the institution's capital category and supervisory category. Under the
risk-based assessment system, there are nine combinations of capital groups and
supervisory subgroups to which different assessment rates are applied.
Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institution's capital group and supervisory subgroup.
In addition, effective January 1, 1997, the FDIC imposed assessments to
help pay off the $780 million in annual interest payments on the $8 billion
Financing Corporation bonds issued in the late 1980s as part of the government
rescue of the thrift industry. The FDIC will assess banks at a rate of 1.3 cents
per $100 deposits until December 31, 1999. Thereafter, it will add approximately
2.4 cents per $100 of deposits to each assessment.
The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.
PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot be predict
whether or in what form any proposed regulation or statute will be adopted or
the extent to which our business may be affected by any new regulation or
statute.
60
<PAGE> 61
LEGAL MATTERS
Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia will pass upon the
validity of the shares of common stock offered by this prospectus for Community
Capital. Troutman Sanders LLP, Atlanta, Georgia is acting as counsel for the
underwriter in connection with certain legal matters relating to the shares of
common stock offered by this prospectus.
EXPERTS
Community Capital's audited financial statements at December 31, 1998, and
for the period from August 19, 1998 through December 31, 1998, included in this
prospectus have been included in reliance on the report of Mauldin & Jenkins,
LLC, independent certified public accountants, given on the authority of that
firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that
registers the shares of common stock offered by this prospectus with the
Securities and Exchange Commission, Community Capital will be subject to the
reporting requirements of the Securities Exchange Act of 1934, as currently in
effect, which include requirements to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities and Exchange Commission.
This reporting obligation will exist for at least one year and will continue for
successive fiscal years, except that these reporting obligations may be
suspended for any subsequent fiscal year if at the beginning of such year the
common stock is held of record by less than 300 persons.
At any time that Community Capital is not a reporting company, it will
furnish its shareholders with annual reports containing audited financial
information for each fiscal year on or before the date of the annual meeting of
shareholders as required by Rule 80-6-1-.05 of the Georgia Department of Banking
and Finance. Community Capital's fiscal year ends on December 31. Additionally,
Community Capital will also furnish such other reports as it may determine to be
appropriate or as otherwise may be required by law.
ADDITIONAL INFORMATION
Community Capital has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act of 1933, as
currently in effect, with respect to the shares of common stock offered by this
prospectus. This prospectus does not contain all of the information contained in
the Registration Statement. For further information with respect to Community
Capital and the common stock, we refer you to the Registration Statement and the
exhibits to it. The Registration Statement may be examined and copied at the
public reference facilities maintained by the Securities and Exchange Commission
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the regional offices of the Securities and Exchange Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of the Registration Statement are available at prescribed rates from the
61
<PAGE> 62
Public Reference Section of the Securities and Exchange Commission, Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549. The Securities
and Exchange Commission also maintains a Web site (http://www.sec.gov) that
contains registration statements, reports, proxy and information statements and
other information regarding registrants, such as Community Capital, that file
electronically with the Securities and Exchange Commission.
Community Capital and the organizers have filed or will file various
applications with the FDIC, the Federal Reserve, the Georgia Department of
Banking and Finance and the Office of the Comptroller of the Currency. These
applications and the information they contain are not incorporated into this
prospectus. You should rely only on information contained in this prospectus and
in the related Registration Statement in making an investment decision. To the
extent that other available information not presented in this prospectus,
including information available from Community Capital and information in public
files and records maintained by the FDIC, the Federal Reserve, the Georgia
Department of Banking and Finance and the Office of the Comptroller of the
Currency, is inconsistent with information presented in this prospectus or
provides additional information, that information is superseded by the
information presented in this prospectus and should not be relied on.
Projections appearing in the applications are based on assumptions that the
organizers believe are reasonable, but as to which they can make no assurances
Community Capital specifically disaffirms those projections for purposes of this
prospectus and cautions you against relying on them for purposes of making an
investment decision.
62
<PAGE> 63
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditor's Report................................ F-2
Balance Sheet December 31, 1998............................. F-3
Statement of Loss and Accumulated Deficit Period from August
19, 1998, Date of Inception, to December 31, 1998......... F-4
Statement of Stockholders' Deficit Period from August 19,
1998, Date of Inception, to December 31, 1998............. F-5
Statement of Cash Flows Period from August 19, 1998, Date of
Inception, to December 31, 1998........................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 64
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Community Capital Bancshares, Inc.
Albany, Georgia
We have audited the accompanying balance sheet of Community Capital
Bancshares, Inc., a development stage company, as of December 31, 1998, and the
related statements of loss and accumulated deficit, stockholders' deficit and
cash flows for the period from August 19, 1998, date of inception, to December
31, 1998. 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 audits 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 Community Capital
Bancshares, Inc. as of December 31, 1998, and the results of its operations and
its cash flows for the period from August 19, 1998, date of inception, to
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ MAULDIN & JENKINS, LLC
Albany, Georgia
January 27, 1999
F-2
<PAGE> 65
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Cash in banks............................................... $ 5,220
Property (Note 2)........................................... 360,133
Deferred stock offering costs (Note 1)...................... 63,102
--------
$428,455
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Due to Organizers (Note 3).................................. $ 80,000
Note payable to bank (Note 4)............................... 485,000
Note payable to finance company (Note 5).................... 25,801
Deferred compensation....................................... 20,833
Other liabilities........................................... 13,354
--------
Total liabilities...................................... 624,988
--------
COMMITMENTS (Notes 2 and 6)
STOCKHOLDERS' DEFICIT
Preferred stock, par value not stated; 2,000,000 shares
authorized; no shares issued.............................. --
Common stock, $1.00 par value; 10,000,000 shares authorized;
one share issued and outstanding.......................... 1
Additional paid-in capital.................................. 3,514
Deficit accumulated during the development stage............ (200,048)
--------
Total stockholders' deficit............................ (196,533)
--------
$428,455
========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 66
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
PERIOD FROM AUGUST 19, 1998, DATE OF INCEPTION,
TO DECEMBER 31, 1998
<TABLE>
<S> <C>
INCOME...................................................... $ --
--------
EXPENSES:
Management salaries......................................... 65,122
Organization costs.......................................... 104,232
Preopening expenses......................................... 14,158
Interest.................................................... 7,898
Training and seminars....................................... 5,858
Automobile.................................................. 1,109
Postage and telephone....................................... 1,671
--------
200,048
--------
NET LOSS FOR THE PERIOD AND ACCUMULATED DEFICIT............. $200,048
========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 67
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
PERIOD FROM AUGUST 19, 1998, DATE OF INCEPTION,
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE TOTAL
-------------------- PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE CAPITAL STAGE DEFICIT
-------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Issue of common stock....... 1 $ 1 $ -- $ -- $ 1
Imputed interest on advances
from Organizers credited
to capital surplus........ -- -- 3,514 -- 3,514
Net loss for the period
August 19, 1998, date of
inception, to December 31,
1998...................... -- -- -- (200,048) (200,048)
-------- -------- -------- --------- ---------
Balance, December 31,
1998...................... 1 $ 1 $ 3,514 $(200,048) $(196,533)
======== ======== ======== ========= =========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 68
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 19, 1998, DATE OF INCEPTION,
TO DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(200,048)
Adjustments to reconcile net loss to net cash used in
operating activities:
Imputed interest on advances from Organizers.............. 3,514
Deferred compensation..................................... 20,833
Increase in accrued liabilities........................... 13,354
---------
Net cash used in operating activities.................. (162,347)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property........................................ (331,199)
---------
Net cash used in investing activities.................. (331,199)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances by Organizers........................ 80,000
Proceeds from advances under line of credit................. 485,000
Payment on installment loan................................. (3,133)
Proceeds from issuance of common stock...................... 1
Stock offering costs........................................ (63,102)
---------
Net cash provided by financing activities.............. 498,766
---------
Net increase in cash................................... 5,220
Cash at beginning of period................................. --
---------
Cash at end of period....................................... $ 5,220
=========
NONCASH TRANSACTION:
Note to finance company incurred for purchase of
automobile................................................ $ 28,934
=========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 69
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Community Capital Bancshares, Inc. (the "Company") was organized on August
19,1998, to operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended, and to purchase 100% of the issued and
outstanding capital stock of Albany Bank & Trust N.A. (the "Bank"), an
association to be organized under the laws of the United States, which will
conduct a general banking business in Albany, Georgia. The Organizers have filed
an application with the Office of the Comptroller of the Currency (the "OCC") to
charter the proposed bank. The Company has filed an application to become a bank
holding company with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") and the Georgia Department of Banking and Finance (the
"DBF"). Upon obtaining regulatory approval, the Company will be a registered
bank holding company subject to regulation by the Federal Reserve and the DBF.
Activities since inception have consisted of the Organizers of the Company
and the Bank engaging in organizational and preopening activities necessary to
obtain regulatory approvals and to prepare to commence business as a financial
institution.
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements have been prepared on the accrual basis in
accordance with generally accepted accounting principles.
Stock Offering Costs
Stock offering costs incurred through December 31, 1998 represent fees paid
to attorneys. Additional stock offering costs are expected to be incurred. Such
costs will be charged to additional paid-in capital upon completion of the stock
offering.
Income Taxes
The Company will be subject to Federal and state income taxes when taxable
income is generated. No income taxes have been accrued because of operating
losses incurred during the preopening period.
Fiscal Year
The Company will adopt a calendar year for both financial reporting and tax
reporting purposes.
F-7
<PAGE> 70
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. PROPERTY
The Company purchased a proposed site for the location of the Bank for
$317,734. It is anticipated that the cost of construction of the building will
be approximately $1,300,000 and that the total cost for the purchase of the
site, construction of the building, purchase of furniture, fixtures and
equipment will be approximately $1,865,000. At December 31, 1998, property
includes:
<TABLE>
<S> <C>
Land site for proposed bank building........................ $317,734
Other land costs............................................ 3,765
Temporary building.......................................... 5,000
Automobile.................................................. 28,934
Software.................................................... 4,700
--------
$360,133
========
</TABLE>
NOTE 3. DUE TO ORGANIZERS
The Organizers have advanced $80,000 to the Company to pay for
organizational expenses and other expenditures. The advances are noninterest
bearing. In the event that the requisite approvals are obtained and the proposed
stock offering is successfully completed, a portion of the proceeds of the
offering will be used to repay the Organizers' advances, without interest, to
the extent such repayment is allowed by the OCC and other regulatory
authorities. To the extent that repayment is not allowed by regulatory
authorities, such advances, if any, will be considered as contributed capital.
Interest on advances from Organizers has been imputed at the prime rate
(currently 7.75%), at which rate the Bank has received financing from a
financial institution under a line of credit. (See Note 4).
NOTE 4. NOTE PAYABLE TO BANK
The Company has obtained a revolving line of credit from The Bankers Bank
for $750,000 with interest payable at the prime rate. The note is due on October
6, 1999 in one payment of the outstanding principal balance plus all unpaid
accrued interest. The Company will pay regular quarterly interest payments of
unpaid accrued interest beginning January 15, 1999, with all subsequent interest
payments due on the same day of each quarter thereafter. The line of credit is
guaranteed by the organizers of the Company. The effective prime rate of
interest was 7.75% at December 31, 1998. As of December 31, 1998, the principal
balance under this line of credit amounted to $485,000.
NOTE 5. NOTE PAYABLE TO FINANCE COMPANY
The Company has obtained financing from a finance company for the purchase
of an automobile with a total cost of $28,934. Finance charges of $855 have been
included in the note at an annual rate of 1.917%. The loan is payable in 36
monthly payments of $827 each.
F-8
<PAGE> 71
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6. EMPLOYMENT AGREEMENTS
Effective August 1, 1998 and October 1, 1998, the Company and the Bank
entered into separate agreements with Robert E. Lee and David C. Guillebeau,
respectively, for the employment of Mr. Lee as President of the Company and
President and Chief Executive Officer of the Bank and for the employment of Mr.
Guillebeau as Executive Vice President of the Company and Executive Vice
President and Senior Loan Officer of the Bank. Under the terms of the employment
agreements, Mr. Lee will receive a salary of $110,000 per year and Mr.
Guillebeau will receive a salary of $80,000 per year. Each employee agreement
provides that at the end of each year of operation, the employee will be
entitled to receive a cash bonus, to be awarded by the Compensation Committee
based on earnings of the Bank. Additionally, the employment agreements provide
that the Company will grant Mr. Lee an incentive stock option to purchase a
number of shares of common stock equal to 5% of the shares of common stock sold
in the Company's Offering and that the Company will grant Mr. Guillebeau an
incentive stock option to purchase a number of shares of common stock equal to
2% of the shares of common stock sold in the Offering. The options will vest
ratable over five years at 20% per year with the first increment vesting on the
one-year anniversary of the date of the Prospectus accompanying the Company's
Offering. The options will have an exercise price of $10 per share. The Company
will also provide an automobile to Mr. Lee.
The initial term of Mr. Lee's employment commenced on August 1, l998 and
will continue for a period of five years. The initial term of Mr. Guillebeau's
employment commenced on October 1, 1998 and will continue for a period of three
years. At the end of the initial term of each employment agreement and at the
end of each succeeding twelve-month period, each employment agreement will be
extended for a successive twelve-month period unless either of the parties to
each of the employment agreements gives notice to the other party to the
employment agreement of its intent not to extend the employment agreement. In
the event the employee dies or the Company or the Bank abandons its
organizational efforts or certain terms and conditions are not met by December
31, 1999, neither the Company nor the Bank shall have any further obligations
under the employment agreements. Employment may be terminated (1) at the
election of the Bank and the Company for cause; (2) at the election of the
employee if the Bank or the Company breach any material provision of the
employment agreement or if there is a material diminution in the employee's
powers, responsibilities or duties; or (3) upon the employee's death or
disability. If employment is terminated by the Company without cause or
terminated by the employee with cause, the Company will be obligated to pay
specified termination benefits to the employee.
NOTE 7. YEAR 2000 ISSUES
The Company and the Bank will rely heavily upon computers for the conduct
of their business and for their information processing systems. Industry experts
have expressed concern that there may be widespread computer malfunctions on
January 1, 2000 if computers are unable to read the new year. The Company and
the Bank will generally rely on software and hardware developed by independent
third parties to provide the
F-9
<PAGE> 72
COMMUNITY CAPITAL BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
information systems used by them. The Company is currently negotiating with
vendors and intends to seek assurances from any selected third party hardware or
software systems providers that any products provided by them will be Year 2000
compliant.
The Company believes that any information systems purchased including
hardware and software products will be adequately programmed to address the Year
2000 issue. Based on information currently available, management believes that
it will not incur significant costs in connection with the Year 2000 issue.
Nevertheless, some of the hardware and software products that either the Company
or the Bank acquires may not be Year 2000 compliant, and one cannot predict with
certainty the costs the Company or the Bank will incur to respond to any Year
2000 issue.
NOTE 8. COMMON STOCK OFFERING
The Company has filed a Registration Statement on Form SB-2 with the
Securities and Exchange Commission offering for sale up to 1,150,000 shares of
the Company's $1.00 par value common stock at a price of $10.00 per share. The
Organizers intend to purchase an aggregate of 280,000 shares of common stock in
the Offering at a price of $10.00 per share.
In recognition of the efforts made and financial risks undertaken by the
Organizers in organizing the Company and the Bank, the Organizers will be issued
a warrant to purchase one share of common stock for each share the Organizer
purchases in the Offering, up to a limit of 15,000 shares per warrant for any
one Organizer. The Organizers may purchase up to 225,000 shares through the
exercise of these warrants. The issuance of these warrants is subject to
regulatory approval. The warrants will vest in 20% annual increments beginning
on the one-year anniversary of the date of the Prospectus accompanying the
Offering. Vested warrants will be exercisable for the ten-year period following
the date of the Prospectus or for 90 days after a warrant holder ceases to be a
director, whichever is shorter. Each warrant will be exercisable at a price of
$10.00 per share subject to adjustment for stock splits, recapitalization, or
other similar events.
NOTE 9. SUBSEQUENT EVENT
On January 6, 1999, the Company entered into a lease agreement for the
lease of a modular bank unit for a lease price of $3,650 a month for twelve
months. The aggregate lease price amounts to $43,800 to be paid in two payments
of $21,900. At the expiration of the original term, the Company has the option
to renew the lease on a month basis under the same terms by giving written
notice of the election to the lessor not later than sixty days prior to the
expiration of the original term. Under terms of the lease, the Company must pay
all taxes and charges levied against the leased property and maintain insurance
on the property.
F-10
<PAGE> 73
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NO ONE HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS
NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS
OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................. 3
Risk Factors........................ 7
Cautionary Statement About Forward-
Looking Statements................ 14
Use of Proceeds..................... 15
Capitalization...................... 16
Dividends........................... 17
Management's Discussion and Analysis
of Financial Condition and Plan of
Operations........................ 18
Proposed Business of Community
Capital and Albany Bank........... 21
Management.......................... 36
Executive Compensation.............. 43
Certain Relationships and Related
Transactions...................... 47
Description of Capital Stock of
Community Capital................. 48
Certain Provisions of the Articles
of Incorporation and Bylaws....... 49
Shares Eligible for Future Sale..... 54
Underwriting........................ 55
Supervision and Regulation.......... 56
Legal Matters....................... 61
Experts............................. 61
Reports to Shareholders............. 61
Additional Information.............. 61
Index to Financial Statements....... F-1
</TABLE>
UNTIL APRIL 20, 1999 (40 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
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1,000,000 SHARES
COMMUNITY CAPITAL
BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY
FOR
ALBANY BANK & TRUST N.A.
(IN ORGANIZATION)
COMMON STOCK
---------------------
PROSPECTUS
---------------------
INTERSTATE/JOHNSON LANE
CORPORATION
March 11, 1999
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