<PAGE> 1
As filed with the Securities and Exchange Commission on March 18, 1999
Registration No. 333-69973
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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FIRST CAPITAL BANK HOLDING CORPORATION
(Name of small business issuer in its charter)
------------------------------
FLORIDA 6712 59-3532208
---- ----------------------
(State or other (Primary Standard Industrial (IRS Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization) ------------------------------
1875A SOUTH 14TH STREET
FERNANDINA BEACH, FLORIDA 32034
(904) 321-0400
(Address and telephone number
of principal executive offices)
---------------------------------
MICHAEL G. SANCHEZ
1875A SOUTH 14TH STREET
FERNANDINA BEACH, FLORIDA 32034
(904) 321-0400
(Name, address and telephone
number of agent for service)
---------------------------------
Copies Requested to:
ROBERT C. SCHWARTZ, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 815-3758
---------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
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<PAGE> 2
1,000,000 SHARES
COMMON STOCK
FIRST CAPITAL BANK HOLDING CORPORATION
[LOGO]
A BANK HOLDING COMPANY FOR
FIRST NATIONAL BANK OF NASSAU COUNTY
First Capital Bank Holding Corporation is conducting this initial
public offering of shares of its common stock to raise capital to form First
National Bank of Nassau County, a proposed national bank in Fernandina Beach,
Florida. First Capital is offering a minimum of 610,000 shares and a maximum of
1,000,000 shares at a price of $10.00 per share. The shares will be marketed
through Allen C. Ewing & Co. as sales agent for First Capital. Although the
sales agent will use its best efforts to market and sell the shares, there is no
guarantee that the required minimum number of shares will be sold. The minimum
subscription amount is 100 shares per investor.
We will deposit all subscription funds in an interest-bearing escrow
account with our escrow agent, The Bankers Bank, until we have received
subscriptions for 610,000 shares. If we do not receive subscriptions for 610,000
shares by ________, 1999, we will terminate the offering and promptly return all
subscription funds to subscribers, with any interest earned on the funds. We
may, however, at our option, extend the offering until ___________, 2000,
without giving notice to investors. We reserve the right to reject all or part
of any subscription for any reason. Our sales agent will receive commissions of
$0.25 for shares sold in the Nassau County community offering and $0.50 for
shares sold to the general public. No commissions will be paid for the 330,000
shares to be sold to the organizers of First Capital.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. WE URGE
YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5, ALONG WITH
THE REST OF THIS PROSPECTUS, BEFORE YOU MAKE YOUR INVESTMENT DECISION.
<TABLE>
<CAPTION>
Minimum Maximum
Per Share Offering Offering
--------- ---------- -----------
<S> <C> <C> <C>
Price to Public....................... $10.00 $6,100,000 $10,000,000
Maximum Sales Commissions............. $ 0.50 $ 0 $ 335,000
Proceeds to First Capital............. $ 9.50 $6,100,000 $ 9,665,000
</TABLE>
- - 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.
- - THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
ALLEN C. EWING & CO.
Sales Agent
The date of this prospectus is _____________, 1999.
<PAGE> 3
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. It does not contain all of the information you should consider
before investing in our common stock. To fully understand this offering, you
should read the entire prospectus carefully, including the risk factors and the
financial statements.
THE COMPANY
We formed First Capital to operate as a bank holding company and as the
sole shareholder of First National Bank of Nassau County, a proposed national
bank. We anticipate that we will receive all necessary regulatory approvals and
be able to begin business operations of First National Bank in July of 1999. Our
temporary mailing address is 1875A South 14th Street, Fernandina Beach, Florida
32034, and our temporary telephone number is (904) 321-0400.
STRATEGY
Our business strategy is to create a community-oriented financial
institution focused on providing personalized service to clients and offering
products designed to meet their specific needs. We believe that First National
Bank can attract clients who prefer to conduct business with a locally-managed
institution that demonstrates a continuing, active interest in its clients'
business and personal objectives.
We believe First National Bank will be able to generate
competitively-priced loans and deposits in the Nassau County market and
anticipate that our staff will use data processing systems selected to deliver
high-quality products and provide responsive service to clients. We anticipate
that First National Bank will contract with third-party service providers to
provide customers with convenient electronic access to their accounts and other
competitive bank products. Such an arrangement should allow First National Bank
to use current technology while minimizing the costs of providing these
services. We expect this approach to our operations to be appealing to clients
who have been receiving banking services in the depersonalized environment of
larger competitors. See "Business of First National Bank" beginning on page 19.
MARKET AREA
Fernandina Beach is located in Nassau County, Florida, which is within
the Jacksonville, Florida metropolitan area. Nassau County is an integral part
of the Jacksonville metropolitan area and has participated in the growth
experienced by Jacksonville in recent years. First National Bank's primary
service area will include the Florida communities of Fernandina Beach, Amelia
Island, O'Neil, and Yulee, as well as St. Mary's, Georgia. Amelia Island is
considered to be one of the foremost residential and retirement areas in
Florida, and the Ritz-Carlton Hotel and the Amelia Island Plantation are among
the premier resort hotels on Florida's East Coast. As of June 30, 1998, total
bank deposits in Nassau County were approximately $369 million.
COMPETITION
The banking industry in First National Bank's market area has
experienced significant consolidation in recent years principally as the result
of the liberalization of interstate banking and branching laws. Many of our
area's former community banks have been acquired by large regional financial
institutions headquartered outside our market area. This consolidation has
resulted in
<PAGE> 4
- the repricing of products and services,
- the elimination of local boards of directors,
- adjustments in management and branch personnel, and
- a change in the level of personalized customer service
Because of recent changes in interstate banking regulations, we expect this type
of consolidation to continue.
We believe that this competitive situation, when coupled with our
area's stable family income and growing economic business base, creates a
favorable opportunity for a new commercial bank. In addition, we believe that
our management experience and our dedicated local board of directors will
attract customers to our locally-managed community bank. We believe that these
attributes will allow us to offer highly professional, personalized attention
and timely response to product and service requests due to an active interest in
our customers' business and personal financial needs. Once we open for business,
First National Bank will be the only independent commercial bank headquartered
in our market area.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered................... 1,000,000 shares. To complete this offering, we must sell a
minimum of 610,000 shares. Each investor must purchase a
minimum of 100 shares. See "Terms of the Offering"
beginning on page 10.
Common Stock to be
Outstanding after the Offering......... Minimum-610,000 shares
Maximum-1,000,000 shares
Price to Public........................ $10.00 per share
Plan of Distribution................... Shares of the common stock of First Capital will be marketed
through Allen C. Ewing & Co., our sales agent, which will receive
no more than a 5% commission on any particular sale. Although the sales
agent will use its best efforts to market and sell the common
stock, we cannot guarantee that the required minimum number of
shares will be sold.
The sales agent will offer the common stock to three different
groups of investors:
- the organizers
- the Nassau County community, and
- the general public
As indicated in the following table, the amount of commissions to
be paid to Allen Ewing will vary depending upon the amount of
common stock purchased by each group.
</TABLE>
2
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<TABLE>
<CAPTION>
No. of Shares Commission
Investors to be Purchased to be Paid
--------- --------------- -----------
<S> <C> <C>
Organizers 330,000 0%
Members of
the Nassau County
Community 280,000-670,000 2.5%
General Public
Offering 0-670,000 5.0%
</TABLE>
<TABLE>
<S> <C>
The sales agent will first market the shares to members of the
Nassau community. Any shares remaining after the shares have been
offered to the Nassau County community will be available for sale
to the general public. See "Plan of Distribution" beginning on page 13.
Offering Conditions.................... We must satisfy the following conditions to complete the offering:
- at least $6,100,000 must be deposited in an escrow account
with The Bankers Bank
- the Federal Reserve Board must approve First Capital's
application to become a bank holding company
- the organizers must receive preliminary approval from the
Office of the Comptroller of the Currency to charter
First National Bank
- the Federal Deposit Insurance Corporation must approve
First National Bank's application for deposit insurance
- we must not have canceled this offering before funds are
withdrawn from the subscription escrow account
Escrow Arrangements.................... Until we have satisfied all of the offering conditions, we will
place all funds in an escrow account. If we have not satisfied the
offering conditions by______________________________, we will
return to the subscribers all funds placed in the escrow account,
along with any interest earned on the funds.
Once we have satisfied all of the offering conditions, The
Bankers Bank will release all funds to First Capital. Any funds
received after this time will not be placed in escrow, but will
be immediately available for use by First Capital. At this point, all
subscribers may lose a portion of their investment if either First
Capital or First National Bank does not receive final regulatory
approval. Prior to the release of the funds, The Bankers Bank may
invest the funds in short-term investments upon instruction by
the President of First Capital. See "Terms of the Offering--Escrow
of Subscription Funds" beginning on page 11.
</TABLE>
3
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<TABLE>
<S> <C>
Use of Proceeds........................ We will use proceeds of the offering:
- to purchase all of the issued and outstanding First
National Bank stock,
- to provide working capital for First National Bank to
begin its business operations, including officers'
and employees' salaries and construction of permanent
office facilities,
- to pay expenses in connection with the formation of
First Capital, the organization of First National
Bank, and this securities offering, and
- for other general corporate purposes
Twenty-five percent of all funds received in excess of $6 million
will be reserved by First Capital for growth of First National
Bank; the remainder will be reserved for general corporate
purposes at the holding company level. See "Use of Proceeds"
beginning on page 15.
</TABLE>
4
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RISK FACTORS
An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully these risk factors
together with all of the other information included in this prospectus before
you decide to purchase shares of our common stock.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR FUTURE
SUCCESS.
First National Bank, which initially will be the sole subsidiary of
First Capital, is in organization and neither First National Bank nor First
Capital has any operating history on which to base any estimate of future
performance. The financial statements presented in this prospectus may not be as
meaningful as those of a company which does have a history of operations. In
addition, the success of our operations must be considered in light of the
expenses, complications, and delays frequently encountered in connection with
the development of a new bank. Because of our lack of operating history, you do
not have access to the type and amount of information that would be available to
a purchaser of the securities of a financial institution with an operating
history.
IF WE FAIL TO RECEIVE NECESSARY REGULATORY APPROVALS, YOU COULD LOSE A PORTION
OF YOUR INVESTMENT.
If you invest in our common stock and we release the funds from the
escrow account and incur start-up expenses, but fail to receive final regulatory
approval, we would seek to dissolve and liquidate First Capital. Upon
liquidation, we would return to subscribers all of their funds with interest,
less all expenses incurred by First Capital. See "Terms of the Offering--Failure
of First National Bank to Begin Operations" at page 12.
IF WE DO NOT RECEIVE REGULATORY APPROVALS IN A TIMELY MANNER, IT COULD DELAY THE
DATE ON WHICH FIRST NATIONAL BANK OPENS FOR BUSINESS WHICH WOULD INCREASE OUR
PRE-OPENING EXPENSES AND WOULD POSTPONE ANY REALIZATION OF REVENUES.
Although we expect to receive all regulatory approvals and to open for
business in the third quarter of 1999, we can give no assurance as to when, if
at all, these events will occur. Any delay in beginning First National Bank's
operations will increase pre-opening expenses and postpone First National Bank's
realization of potential revenues. Such a delay will cause our accumulated
deficit to increase as a result of continuing operating expenses, such as
salaries and other administrative expenses, and our lack of revenue.
IF OUR PROPOSED CHIEF EXECUTIVE OFFICER, MICHAEL SANCHEZ, WERE TO BECOME
UNAVAILABLE, IT COULD DELAY OR PREVENT OUR OPENING FOR BUSINESS.
Regulatory approval to establish and operate a national bank partially
depends upon the approval of the bank's proposed chief executive officer by the
bank's primary regulator, the Office of the Comptroller of the Currency.
Generally, the chief executive officer of a start-up financial institution is
considered vital to the potential success of the new institution. In our charter
application to the OCC, we proposed Michael G. Sanchez as First National Bank's
chief executive officer. If Mr. Sanchez were to become unavailable for any
reason, final regulatory approval to begin banking operations would be
delayed until the OCC approved a suitable replacement. It is possible that we
would not be able to find a suitable replacement for Mr. Sanchez. See
"Management" beginning on page 31.
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WE WILL INCUR SUBSTANTIAL START-UP EXPENSES AND WE DO NOT EXPECT TO BE
PROFITABLE IN THE NEAR FUTURE.
Initially, First Capital will merely act as the sole shareholder of
First National Bank. Thus, the profitability of First Capital will depend upon
the successful operation of First National Bank. Typically, new banks are not
profitable in the first year of operation and sometimes are not profitable for
several years. First National Bank will incur substantial expenses in
establishing itself as a going concern, and we can offer no assurance that it
will be profitable or that future earnings, if any, will meet the levels of
earnings prevailing in the banking industry.
THE OPERATION OF FIRST NATIONAL BANK MAY IN THE FUTURE REQUIRE MORE CAPITAL THAN
WE WILL RAISE IN THIS OFFERING AND WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL
CAPITAL ON TERMS WHICH ARE FAVORABLE TO INVESTORS.
We intend to capitalize First National Bank at $6,000,000 regardless of
whether the minimum or the maximum number of shares are sold. We will reserve at
the holding company level twenty-five percent of all funds received in excess of
the $6,000,000 capitalization for the growth of First National Bank in
compliance with OCC regulations. We will hold the remainder of the funds at the
holding company level for general corporate purposes. Although we anticipate
that the minimum amount of capital to be raised by this offering will be
sufficient to support First National Bank's immediate capital needs, we may, in
the future, issue additional shares of our common stock or other securities to
obtain additional capital. We can give no assurance that we will be able to
access the capital markets in the future in order to obtain additional capital.
WE WILL BE COMPETING IN NASSAU COUNTY WITH MANY OTHER, LARGER FINANCIAL
INSTITUTIONS WHICH HAVE GREATER FINANCIAL RESOURCES THAN US.
First National Bank will be a full service commercial bank in
Fernandina Beach, Nassau County, Florida. The Nassau County market is served by
six banks and three credit unions. Our relatively small size may affect our
ability to compete effectively with larger institutions in offering financial
services. In addition, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 has further increased competition by eliminating
interstate branching barriers for certain financial institutions and enabling
financial institutions located outside Florida to more easily access the market
served by First National Bank. If we are unable to successfully compete for
deposits, loans, and other banking business, this inability would likely have an
adverse effect on our potential for growth and profitability. See "Business of
First National Bank--Market Area and Competition" beginning on page 19.
OUR SUCCESS WILL DEPEND SIGNIFICANTLY UPON GENERAL ECONOMIC CONDITIONS IN NASSAU
COUNTY.
Our success will depend significantly upon general economic conditions
in Nassau County. A prolonged economic dislocation or recession affecting Nassau
County could cause First National Bank's non-performing assets to increase,
causing operating losses, impaired liquidity and the erosion of capital. Such an
economic dislocation or recession could result from a variety of causes,
including natural disasters such as hurricanes, floods or tornadoes, or a
prolonged downturn in various industries upon which the economy of Nassau County
depends. Moreover, as many of our shareholders will most likely be residents of
the Nassau County community, a prolonged downturn in the economy of Nassau
County could result in sales of large amounts of our common stock.
6
<PAGE> 9
RAPIDLY RISING OR FALLING INTEREST RATES COULD SIGNIFICANTLY HARM OUR BUSINESS.
Our results of operations, and the results of most other banks and bank
holding companies, will be significantly affected by changes in market interest
rates. Our profitability will depend substantially on our net interest income,
which is the difference between the interest income earned on our
interest-bearing assets, such as loans, and the interest paid on our
interest-bearing liabilities, such as deposits and borrowings. To the extent
that the maturities of these assets and liabilities differ, rapidly rising or
falling interest rates could have a material effect on our earnings. Based on
the anticipated mix of our loan portfolio, it is more likely that rapidly
falling interest rates would have a greater adverse effect on our operations.
See "Business of First National Bank--Asset/Liability Management" at page 24.
OUR INITIAL LENDING LIMIT WILL BE LOWER THAN MANY OF OUR COMPETITORS WHICH MAY
DISCOURAGE POTENTIAL CUSTOMERS AND LIMIT OUR GROWTH.
At least during our first years of operation, our legally mandated
lending limit will be lower than that of many of our competitors because during
this period we will have less capital than many of our competitors. Initially,
we will have a legal lending limit for unsecured loans of $900,000 to any one
borrower. Our lower lending limit may discourage potential borrowers who have
lending needs that exceed our limit, 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.
WE COULD BE ADVERSELY AFFECTED BY ANY CHANGES IN THE LAW, ESPECIALLY CHANGES
DEREGULATING THE BANKING INDUSTRY.
Both First Capital and First National Bank will operate in a highly
regulated environment and will be subject to supervision and examination by
several regulatory agencies. As a bank holding company, First Capital will be
subject to regulation and supervision by the Federal Reserve Board. As a
national bank, First National Bank will be subject to regulation and supervision
primarily by the OCC and, to a lesser extent, by the Federal Deposit Insurance
Corporation. These regulations are intended primarily for the protection of
depositors, not for the benefit of investors, and they may restrict or limit the
manner in which we may conduct business and obtain financing. First Capital and
First National Bank will be subject to changes in federal and state law,
regulations, governmental policies, income tax laws and accounting principles.
In particular, legislation and regulations deregulating the banking industry and
allowing interstate expansion of financial services firms could adversely affect
our business along with that of the entire banking industry by creating
additional competition. The effects of any potential changes cannot be
predicted, but they could adversely affect our future operations. See
"Supervision and Regulation" beginning on page 26.
THE SHARES OF COMMON STOCK ARE NOT INSURED BANK DEPOSITS.
Although deposits at First National Bank will be insured by the FDIC to
the maximum amount permitted by law, shares of First Capital common stock are
not bank or deposit accounts. Thus, our common stock is not insured by the FDIC
or any other governmental agency.
7
<PAGE> 10
THE ORGANIZERS AS A GROUP WILL BE ABLE TO EXERCISE GREATER CONTROL OVER FIRST
CAPITAL'S MANAGEMENT AND AFFAIRS THAN WILL ANY INDIVIDUAL INVESTOR AND THEY MAY
HAVE INTERESTS THAT ARE DIFFERENT FROM YOUR AS AN INVESTOR.
The organizers intend to purchase 330,000 shares or $3,300,000 in the
offering, which will equal approximately 54.1% of the 610,000 shares to be
outstanding upon completion of the minimum offering or 33.0% of the 1,000,000
shares to be outstanding should the maximum number of shares be sold. As a
result of their ownership, the organizers will be able to exercise significant
control over the management and affairs of First Capital and First National
Bank. The organizers may have interests that are different from yours as an
investor. See "Security Ownership of Certain Beneficial Owners and Management"
at page 37.
WE INTEND TO GRANT WARRANTS AND STOCK OPTIONS TO THE ORGANIZERS AND SOME OF OUR
EMPLOYEES WHICH, IF EXERCISED, WOULD REDUCE YOUR PERCENTAGE OWNERSHIP IN FIRST
CAPITAL.
Once the offering is complete, First Capital will grant to the
organizers warrants to purchase additional shares of common stock in
consideration for their services in forming First Capital and First National
Bank. Each warrant will entitle the organizer to purchase one additional share
of common stock. The actual number of warrants granted will vary depending upon
the number of shares actually sold in the offering. The number of warrants
granted will be capped so that each organizer will receive no more than one
warrant for every two shares he or she purchases in the offering. Given the
organizers' intent to purchase 330,000 shares in the offering, they will receive
up to a maximum of 165,000 warrants. For additional information regarding the
terms of the warrants, see "Terms of the Offering--Purchases by Organizers of
First Capital" at page 12.
In addition, we have established an incentive stock option plan which
will allow us to grant stock options to employees who are contributing
significantly to the management or operation of the business of First Capital or
First National Bank. Under this plan, we have reserved 100,000 shares of common
stock for the issuance of options, of which Michael G. Sanchez, the President of
First Capital and First National Bank, will receive options to purchase 30,000
shares or 5% of the number of shares sold in the offering, whichever is less.
See "Management--Stock Option Plans" at page 36. Any future exercise of the
organizers' warrants or options under the option plan would dilute your
percentage ownership interest in First Capital. For example, prior to the
exercise of their warrants, the organizers will own 33% of the shares
outstanding after the maximum offering. Assuming all of the warrants were
exercised, the organizers would own approximately 42.5% of the outstanding
shares.
OUR ARTICLES OF INCORPORATION CONTAIN PROVISIONS WHICH COULD DETER OR PREVENT
TAKE-OVER ATTEMPTS BY A POTENTIAL PURCHASER OF SHARES OF OUR COMMON STOCK WHO
WOULD BE WILLING TO PAY A PREMIUM OVER THE MARKET PRICE.
First Capital's Articles of Incorporation contain provisions that could
deter and make it more difficult for a third party to bring about a merger, sale
of control, or similar transaction, even if a majority of shareholders vote in
favor of such a transaction. In addition, our Articles of Incorporation
establish three classes of directors with staggered terms, which means that only
one-third of the members of the board of directors is elected each year and each
director serves for a term of three years. Our Articles of Incorporation also
authorize the board of directors to issue a series of preferred stock without
shareholder action. The issuance of preferred stock by First Capital could
discourage a third party from attempting to acquire, or make it more difficult
for a third party to acquire, a controlling interest in First Capital, and could
adversely affect the voting power or other rights of holders of its common
stock. These provisions also make it more difficult for a third party to achieve
a change in control of First
8
<PAGE> 11
Capital through the acquisition of a large block of its common stock without
approval by the board of directors. 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. See "Description of Capital Stock" beginning on page
38.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, YOU MAY NOT BE ABLE TO SELL
YOUR SHARES.
Since the size of this offering is relatively small, it is unlikely
that an active and liquid trading market for the shares will develop and be
maintained. You should only invest in the common stock if you have a long-term
investment intent. If an active market does not develop, you may not be able to
sell your shares promptly or perhaps at all. Although we expect to list the
common stock on the Nasdaq SmallCap Stock Market at some time in the future, at
this time, we do not intend to apply for such listing.
WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK FOR AT LEAST SEVERAL
YEARS.
We intend to retain future earnings, if any, to improve First National
Bank's capital structure to support future growth. Dividend distributions of
national banks are restricted by statute and regulation. Our future dividend
policy will depend on First National Bank's earnings, capital requirements,
financial condition and other factors considered relevant by our board of
directors. See "Dividend Policy" at page 17.
THE OFFERING PRICE WAS ARBITRARILY SET BY THE ORGANIZERS AND MAY NOT ACCURATELY
REFLECT THE VALUE OF AN INVESTMENT IN OUR COMMON STOCK.
There is no established market for our common stock, nor was there an
established market prior to this offering. The offering price was arbitrarily
determined by the organizers, and does not bear any relationship to First
Capital's assets, book value, net worth or any other recognized criteria of
value. In determining the offering price of the common stock, the organizers
considered the OCC's capital requirements for First National Bank and general
market conditions for the sale of securities. Should a market develop for our
common stock after this offering is complete, there is no guarantee that the
market price will be greater than or equal to the public offering price.
INVESTING IN THIS OFFERING WILL NOT GIVE YOU THE RIGHT TO PARTICIPATE IN ANY
FUTURE OFFERINGS OF OUR CAPITAL STOCK.
As a shareholder of First Capital, if we decide to issue additional
shares of common stock, you will not automatically be entitled to purchase
additional shares to maintain your percentage ownership in First Capital.
IT IS POSSIBLE THAT EITHER OUR COMPUTER SYSTEMS, OR THOSE OF OUR DATA PROCESSING
VENDOR OR LOAN CUSTOMERS, WILL FAIL TO OPERATE PROPERLY BEGINNING JANUARY 1,
2000.
As the year 2000 approaches, an important business issue has emerged
regarding existing application software programs and operating systems. Many
existing application software products were designed to accommodate a two-digit
year. For example, "98" is stored on the system and represents 1998. As a
result, any computer programs or equipment that are date dependent may, for
example, recognize a date stored as "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruption of operations.
9
<PAGE> 12
We will utilize a third-party vendor to provide our primary banking
applications, including core processing systems. If we, our data processing
vendor or our loan customers do not successfully and timely achieve Year 2000
compliance, our business, future prospects, financial condition or results of
operations could be materially adversely affected. See "Business of First
National Bank--Year 2000." beginning on page 25.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue," or
other similar words. These statements discuss future expectations, contain
projections of results of operations or of financial condition or state other
"forward-looking" information. When considering such forward-looking statements,
you should keep in mind the risk factors and other cautionary statements in this
prospectus. The risk factors noted in this section and other factors noted
throughout this prospectus, including certain risks and uncertainties, could
cause our actual results to differ materially from those contained in any
forward-looking statement.
TERMS OF THE OFFERING
GENERAL
First Capital is offering 1,000,000 shares of its common stock for cash
at a price of $10.00 per share. The common stock will be marketed through Allen
C. Ewing as sales agent for First Capital. Although the sales agent will use its
best efforts to market and sell the shares, there is no guarantee that the
required minimum number of shares will be sold. Each investor must purchase a
minimum of 100 shares. The purchase price of $10.00 per share must be paid in
full upon execution and delivery of a subscription agreement. All subscriptions
tendered by investors are subject to acceptance by the board of directors of
First Capital, and First Capital reserves the absolute and unqualified right to
reject or reduce any subscription for any reason prior to acceptance. Rejected
subscriptions will be returned to the subscriber without interest. An investor
whose subscription is reduced may withdraw his or her subscription within ten
days after being notified of the reduction by First Capital. First Capital
reserves the right to cancel this offering at any time, for any reason
whatsoever, prior to the time it withdraws funds from the subscription escrow
account.
Prior to this offering there has been no established public market for
the common stock. Furthermore, there can be no assurance that an established
market for such stock will develop. The offering price has been arbitrarily
determined and is not a reflection of First Capital's book value, net worth or
any other such recognized criteria of value. In determining the offering price
of the common stock, the board of directors considered the capital requirements
of the Office of the Comptroller of the Currency and general market conditions
for the sale of securities. There can be no assurance that, if a market should
develop for the common stock, the post-offering market price will equal or
exceed the offering price.
CONDITIONS OF THE OFFERING
This offering will expire at 5:00 p.m. Eastern Time, on _______, 1999,
unless such date is extended by First Capital. The expiration date of the
offering may be extended by First Capital without notice to subscribers for up
to three consecutive 90-day periods, or no later than __________, 2000. The
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<PAGE> 13
offering is expressly conditioned upon fulfillment of the following conditions
on or prior to the expiration date of the offering. The offering conditions,
which may not be waived, are as follows:
- at least $6,100,000 must be deposited with the escrow agent in
the subscription escrow account;
- First Capital must receive approval from the Federal Reserve
Board of its application to become a bank holding company;
- the organizers must receive preliminary approval from the OCC
to charter First National Bank;
- First National Bank must receive approval of its application
for deposit insurance from the FDIC; and
- First Capital must not have canceled this offering prior to
the time funds are withdrawn from the subscription escrow
account.
ESCROW OF SUBSCRIPTION FUNDS
Until the offering conditions above have been met, all subscriptions
and documents tendered by investors will be placed in an escrow account with our
escrow agent, The Bankers Bank. Under the terms of the escrow agreement, if all
of the offering conditions are met, First Capital may certify this fact to the
escrow agent and the escrow agent will release all funds, with interest earned
on the funds, to First Capital. The funds in the escrow account are not insured
by the FDIC or any other governmental agency.
Prior to the release of the funds from the escrow account, the escrow
agent is authorized, upon written instructions from Michael G. Sanchez, to
invest the funds in interest-bearing bank accounts, including saving accounts
and bank money market accounts, short-term direct obligations of the United
States Government and/or in short-term FDIC insured bank certificates of
deposit, with maturities not to exceed 90 days. First Capital will invest all
funds obtained after the release of the funds from the escrow account and before
it infuses capital into First National Bank in a similar manner. First Capital
will use the offering proceeds to purchase capital stock of First National Bank
and to repay expenses incurred in the organization. See "Use of Proceeds"
beginning on page 15.
If the offering conditions are not met by the expiration date, the
escrow agent will promptly return to the subscribers their proportionate share
of the funds from the escrow account. First Capital will also return to the
subscribers their proportionate share of any interest earned on the funds. If
the offering conditions are not satisfied, the expenses incurred by First
Capital will be borne by the organizers and not by the shareholders.
NO ASSURANCE CAN BE GIVEN THAT THE FUNDS IN THE ESCROW ACCOUNT CAN OR
WILL BE INVESTED AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY PROFITS
WILL BE REALIZED FROM THE INVESTMENT OF THESE FUNDS.
If all of the offering conditions are satisfied, and First Capital
withdraws the funds from the subscription escrow account, all profits and
earnings on such account will belong to First Capital. If the minimum offering
of 610,000 shares of common stock are sold before the expiration date, a minimum
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<PAGE> 14
closing will be held at First Capital's offices. At that minimum closing, the
funds will be released from the subscription escrow account to First Capital and
investors will become shareholders of First Capital.
The Bankers Bank, by accepting appointment as escrow agent under the
escrow agreement, in no way endorses the purchase of First Capital's common
stock.
FAILURE OF FIRST NATIONAL BANK TO BEGIN OPERATIONS
The OCC requires that a new national bank obtain its charter and open
for business within 18 months after receiving of preliminary approval from the
OCC. The organizers anticipate that First National Bank will open for business
in July 1999. Because final approval of First National Bank's charter is
conditioned on First Capital's raising funds to capitalize First National Bank
at $6,000,000, First Capital expects to issue the shares of common stock before
it has obtained all final regulatory approvals for First National Bank. First
National Bank received preliminary approval from the OCC on January 27, 1999.
Therefore, if First Capital issues the shares of common stock and the OCC does
not grant final regulatory approval by July 2000, First Capital will seek
shareholder approval for its dissolution and liquidation. Upon liquidation,
First Capital will promptly return to subscribers all funds, with interest, less
all expenses incurred by us, including the expenses of the offering and the
organizational and pre-opening expenses of First Capital and First National
Bank. Therefore, if either First Capital or First National Bank does not receive
final regulatory approval, subscribers whose funds were originally placed in
escrow but became available to First Capital may lose a portion of their
investment. It is possible that the amount returned to subscribers may be
further reduced by amounts paid to satisfy claims of creditors, as discussed in
the following paragraph.
Once First Capital issues the shares of common stock, the offering
proceeds will be considered part of general corporate funds and may be subject
to the claims of creditors of First Capital, including claims against First
Capital that may arise out of actions of its officers, directors, or employees.
It is possible, therefore, that one or more creditors may seek to attach the
proceeds of the offering before First National Bank begins banking operations.
If such an attachment occurred and it became necessary to return funds to
shareholders because of failure to obtain all necessary regulatory approvals,
the payment process might be delayed. Further, if it became necessary to pay
creditors from the subscription funds, the payment to shareholders might be
further reduced.
PURCHASES BY ORGANIZERS OF FIRST CAPITAL
The organizers will purchase 330,000 shares of the common stock in this
offering, which will constitute approximately 54.1% of the 610,000 shares to be
outstanding upon completion of the minimum offering, or 33.0% of the 1,000,000
shares to be outstanding should the maximum number of shares be sold. All
purchases of shares by the organizers will be made at the same public offering
price, $10.00 per share, as that paid by other investors and will count toward
the achievement of the minimum offering. The organizers have represented to
First Capital that any such purchases will be made for investment purposes only
and not with a view to resell such shares. See "Security Ownership of Certain
Beneficial Owners and Management" beginning at page 37.
In addition, in consideration of their efforts in organizing First
Capital and First National Bank, upon the opening of business of First National
Bank, each of the organizers will be granted warrants to purchase additional
shares of the common stock. Each warrant will entitle the organizer to purchase
one additional share of common stock. The actual number of warrants granted will
vary depending on the number of shares actually sold in the offering. If greater
than 900,000 shares are sold in the offering, the ratio of warrants to shares
will be capped so that each
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<PAGE> 15
organizer will receive no more than one warrant for every two shares each
organizer purchases in this offering. However, if fewer than 900,000 shares are
sold in the offering, the organizers will receive fewer warrants so that the
total number of warrants to be granted to the organizers plus the number of
options to be granted under the incentive stock option plan (100,000) will not
exceed 23% of the total number of shares outstanding after the offering.
Therefore, given the intent of the organizers to purchase 330,000 shares in the
offering, the organizers will be granted warrants to purchase 165,000 shares of
common stock upon completion of the maximum offering. Upon completion of the
minimum offering, the organizers will receive warrants to purchase 82,207 shares
of common stock.
Any warrants granted will become exercisable in equal amounts beginning
on the date First National Bank opens for business and on each of the four
succeeding anniversaries of that date. No warrants will be granted unless First
National Bank receives final regulatory approval to begin banking operations.
All warrants granted will expire five years after the date on which First
National Bank opens for business. An organizer exercising his or her warrants
will pay the public offering price of $10.00 per share. The warrants will
provide the organizers with the opportunity to profit from any future increase
in the market value of the common stock or any increase in the net worth of
First National Bank without presently paying for the warrant shares initially.
Any future exercise of the warrants will reduce your percentage ownership
interest in First Capital. For example, prior to the exercise of their warrants,
the organizers will own 33% of the shares outstanding after the maximum
offering. Assuming all of the warrants were exercised, the organizers would own
approximately 42.5% of the outstanding shares.
PLAN OF DISTRIBUTION
Shares of the common stock of First Capital will be marketed on a
610,000 share minimum basis through Allen C. Ewing & Co., 50 North Laura Street,
Jacksonville, Florida 32202 (904-354-5573), as sales agent for First Capital.
Although the sales agent will use its best efforts to market and sell the
shares, there is no guarantee that the required minimum number of shares will be
sold. The sales agent may, however, engage other broker-dealers to participate
in the selling effort.
The common stock will be offered directly to the public at the public
offering price set forth on the cover page of this prospectus. As demonstrated
in the table below, the common stock will be offered to three different groups
of investors -- organizers, the Nassau County community, and the general public
- -- and the amount of commissions to be paid to the sales agent will vary
depending upon the amount of common stock purchased by each group. The sales
agent will receive no commissions for the 330,000 shares of common stock to be
purchased by the organizers. The sales agent will be paid a commission of 2.5%
on all shares of common stock sold in the community offering, and will be paid a
commission of 5.0% on all of the shares of common stock sold in the public
offering. Although the offerings will be conducted at the same time, the sales
agent will first target the Nassau County community and will give investors in
the community the opportunity to purchase shares of the common stock. Any shares
remaining once the shares have been offered to the Nassau County community will
be available for sale to the general public. However, once the shares of common
stock become available for sale to the general public, it is expected that
investors in the Nassau County community will continue to purchase shares of the
common stock.
The table below provides the range of the number of shares that may be
sold in the Nassau County community offering and to the general public. The
number of shares available for sale to the general public will depend on the
number of shares sold in the Nassau County community offering and will range
from 0, if all shares are purchased by the Nassau County community, to 670,000
if no shares are purchased by the Nassau County community.
<TABLE>
<CAPTION>
No. of Shares Commission
Investors to be Purchased to be Paid
- --------- --------------- ----------
<S> <C> <C>
Organizers 330,000 0%
Members of the Nassau County Community 280,000 - 670,000 2.5%
General Public Offering 0 - 670,000 5.0%
</TABLE>
Commissions will be paid from funds received in this offering only to the extent
that such funds exceed $6,100,000. In the event that the sales agent decides to
form a selling group by enlisting additional broker-dealers, it may reallow to
such additional registered broker-dealer up to $.25 per share of the commission
to be paid to the sales agent for shares sold in the public offering. The sales
agent will be reimbursed for legal fees and out-of-pocket expenses it incurs in
the offering.
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<PAGE> 16
Subject to certain limitations, First Capital and the sales agent have
agreed to indemnify each other against certain liabilities, including certain
civil liabilities, under the Securities Act of 1933, or to contribute to
payments that First Capital or the sales agent may be required to make. The
sales agent has informed First Capital that it does not intend to exercise its
discretionary authority to purchase shares of common stock for any account over
which it holds discretionary authority.
In the event that the offering conditions have not been satisfied by
the expiration date of the offering, First Capital will terminate this offering
and promptly return funds to the subscribers, together with their allocated
share of profits, if any, earned on the investment of the subscription escrow
account as described above. See "Terms of the Offering-Escrow of Subscription
Funds" at page 11.
As soon as practicable, but no more than ten business days after First
Capital receives a subscription, First Capital will accept or reject the
subscription. Subscriptions not rejected by First Capital within this ten day
period will be deemed accepted. Once a subscription is accepted by First
Capital, it cannot be withdrawn by the subscriber. Payment from any subscriber
for shares in excess of the number of shares allocated to such subscriber will
be refunded by mail, without interest, within ten days of the date of rejection.
Certificates representing shares of common stock of First Capital, duly
authorized and fully paid, will be issued as soon as practicable after funds are
released to First Capital from the subscription escrow account.
Subscriptions to purchase shares of common stock can be made by
completing the subscription agreement attached to this prospectus and delivering
it to First Capital's offices at 1875A South 14th Street, Fernandina Beach,
Florida 32034, or mailing the same in the enclosed self-addressed, stamped
envelope. Full payment of the purchase price must accompany the subscription.
First Capital reserves the right to disregard any subscription which is not
fully paid when First Capital receives it. No subscription agreement is binding
until accepted by First Capital, and First Capital may refuse to accept any
subscription for shares, in whole or in part, for any reason whatsoever. After a
subscription is accepted and proper payment received, First Capital shall not
cancel it unless all accepted subscriptions are canceled.
All subscription amounts must be paid in United States currency by
check, bank draft or money order payable to "The Bankers Bank, Escrow Agent for
First Capital Bank Holding Corporation." Any subscriptions received by the sales
agent and any other broker-dealer participating in the offering will be
transmitted directly to the escrow agent by noon of the next business day after
receipt. A subscription will be accepted in writing by First Capital in the form
of acceptance attached to this prospectus.
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<PAGE> 17
USE OF PROCEEDS
The gross proceeds from the sale of shares of common stock offered by
First Capital will be $6,100,000 assuming the sale of a minimum of 610,000
shares, and $10,000,000 assuming the sale of a maximum of 1,000,000 shares.
However, if 610,000 shares are not sold prior to the expiration date of the
offering, then First Capital will terminate the offering and promptly return all
funds received from subscribers. See "Terms of the Offering" beginning on page
10.
The estimated expenses of this offering are as follows:
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
-------- --------
<S> <C> <C>
Registration fees, including blue
sky fees and expenses .......... $ 10,280 $ 10,280
Legal fees and expenses ......... 35,000 35,000
Commissions to the Sales Agent .. 0* 335,000
Accounting fees and expenses .... 3,500 3,500
Printing and engraving expenses . 5,000 5,000
Advertising ..................... 5,500 5,500
Mailing and distribution ........ 960 960
Entertainment ................... 3,500 3,500
Miscellaneous ................... 5,000 5,000
Total Expenses ............. $ 68,740 $ 403,740
========== ==========
Net proceeds .................... $6,031,260 $9,596,260
</TABLE>
- ----------
* Commissions will be paid out of funds received in the offering only to the
extent such funds exceed $6,100,000, which is the amount expected to be received
in the minimum offering.
The net proceeds of this offering as well as any interest earned on the
subscription funds will be used by First Capital, after breaking escrow,
primarily for the purchase of all of the issued and outstanding capital stock of
First National Bank. First National Bank will, in turn, use the funds as capital
to begin its business operations, including officers' and employees' salaries
and construction of its permanent facilities, and to repay expenses incurred in
the organization of First Capital and First National Bank.
As indicated in the charter application of First National Bank filed by
First Capital with the Office of the Comptroller of the Currency, First Capital
intends to capitalize First National Bank at $6,000,000. Twenty-five percent of
all funds received in excess of the $6,000,000 required to capitalize First
National Bank will be held by First Capital to be available for the future
growth of First National Bank in compliance with OCC regulations. The remainder
of the funds will be held by First Capital and reserved for general corporate
purposes at the holding company level.
A portion of the net proceeds of this offering beyond the minimum will
be retained by First Capital for the purpose of funding any required additions
to the capital of First National Bank. Since
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<PAGE> 18
national banks are regulated with respect to the ratio that their total assets
may bear to their total capital, if First National Bank experiences greater
growth than anticipated, it may require the infusion of additional capital to
support that growth. Management anticipates, however, that the proceeds of this
offering will be sufficient to support First National Bank's immediate capital
needs and will seek, if necessary, long- and short-term debt financing to
support any additional needs; however, management can give no assurance that
such financing, if needed, will be available or if available will be on terms
acceptable to management.
The following is a schedule of the estimated use by First National Bank
of the proceeds from the sale of the common stock of First Capital, including
its estimated operating expenses for its first 12 months of operation.
<TABLE>
<S> <C>
Organizational and pre-opening expenses of First National Bank including
salaries, legal and accounting fees(1) ......................... $ 500,000 *
Land purchase and construction of permanent bank facility(2) ........... 1,115,000 +
Lease and set-up costs of temporary bank facility and
occupancy expenses(3) .......................................... 174,000 *
Salaries and benefits(4) ............................................... 648,000 +
General and administrative expenses, composed primarily of
data processing, marketing and advertising, telephone
and casualty and deposit insurance(5) .......................... 228,000 +
Furniture, fixtures and equipment(6) ................................... 600,000 *
Working capital ........................................................ 2,735,000
$6,000,000
==========
</TABLE>
- ----------
* Represents expenses which will be incurred prior to the opening for
business of First National Bank.
+ Represents operating expenses which will be incurred during First
National Bank's first 12 months of operations.
(1) These expenses will be incurred prior to the opening for business
of First National Bank and are being funded from a line of credit in
the principal amount of $700,000 that First Capital has obtained from
The Bankers Bank, Atlanta, Georgia.
(2) Costs for construction of First National Bank's permanent facility are
based on estimates from an architect. The land upon which the facility
will be located has been purchased for $265,000 from Bosco Enterprises.
See "Certain Transactions" at page 38. The construction on the facility
has begun and is expected to be completed in August 1999. See "Business
of First Capital -- Premises" at page 18.
(3) Upon final approval from the OCC, First National Bank will open in a
temporary facility until such time as a permanent facility can be
constructed.
(4) Salaries and benefits are based on management's estimates of the number
and types of employees which will be required during the first 12
months of operations of First National Bank. It is presently
anticipated that First National Bank will employ 16 persons during such
12 months, including 5 officers.
(5) These expenses are based on the experiences of similar size banks in
the region and on management's previous banking experience.
(6) Furniture and equipment cost is based on the organizers' estimates and
upon information from suppliers of bank equipment of the costs required
to furnish and equip First National Bank for the expected level of
operations.
The expenses described above are estimates only and assume First National Bank
will open for business in July 1999, or as soon thereafter as practicable.
Actual expenses may exceed these amounts. A portion of these expenses will be
offset by revenues generated by First National Bank during its first year of
operation.
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<PAGE> 19
DIVIDEND POLICY
First Capital and First National Bank are both start-up operations. The
Board of Directors of First Capital intends to reinvest earnings for such period
of time as is necessary to ensure the success of the operations of First
National Bank. There are no current plans to initiate payment of cash dividends,
and future dividend policy will depend on First National Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of First Capital.
First National Bank will be restricted in its ability to pay dividends
under the national banking laws and by regulations of the Office of the
Comptroller of the Currency. Under 12 U.S.C. ss. 56 of the National Bank Act, a
national bank may not pay dividends from its capital. In addition, no dividends
may be made in an amount greater than a national bank's undivided profits,
subject to other applicable provisions of law. Payments of dividends out of
undivided profits is further limited by 12 U.S.C. ss. 60(a), which prohibits a
bank from declaring a dividend on its shares of common stock until its surplus
equals its stated capital, unless there has been transferred to surplus not less
than 1/10 of First National Bank's net income of the preceding two consecutive
half year periods (in the case of an annual dividend). Under 12 U.S.C. ss.
60(b), the approval of the OCC is required if the total of all dividends
declared by First National Bank in any calendar year exceeds the total of its
net income for that year combined with its retained net income for the preceding
two years, less any required transfers to surplus or a fund for the retirement
of any preferred stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
First Capital is still in the development stage, and will remain in
that stage until the offering of the common stock is complete. First Capital
initially funded its start-up and organization costs through advances from the
organizers in the amount of $75,000. First Capital subsequently obtained a line
of credit in the amount of $700,000 from The Bankers Bank, a portion of the
proceeds of which were used to repay, without interest, the $75,000 advanced by
the organizers. A portion of the proceeds of this offering will be used to repay
the line of credit, to the extent that such repayment is reasonable and not
detrimental to the operations of First Capital, and to the extent that such
repayment is allowed by the Office of the Comptroller of the Currency and other
appropriate regulatory authorities. See "Use of Proceeds" beginning on page 15.
Total organizational costs as of December 31, 1998, amounted to approximately
$175,396. These costs include consultant fees ($54,102) and regulatory
application fees ($21,144).
All subscription funds received during the offering will be placed in
an escrow account and invested in bank accounts, including savings accounts and
bank money market accounts, in direct obligations of the United States
Government, and in short-term insured bank certificates of deposit with
maturities not to exceed 90 days.
In the opinion of First Capital, the minimum net proceeds of $6,000,000
from the minimum offering will be adequate capital to support the growth of both
First Capital and First National Bank for their first five years of operation.
It is not anticipated that First Capital will need to raise additional funds to
meet expenditures required to operate the business of First Capital and First
National Bank over the next 12 months. All anticipated material expenditures for
such period have been identified and provided for out of the proceeds of this
offering. See "Use of Proceeds" beginning on page 15.
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<PAGE> 20
BUSINESS OF FIRST CAPITAL
GENERAL
First Capital was incorporated as a Florida corporation on July 29,
1998 for the purpose of organizing First National Bank and purchasing 100% of
the outstanding capital stock of First National Bank. First National Bank will
conduct a general banking business in Fernandina Beach, Florida. First Capital
has filed an application with the Federal Reserve Board to become a bank holding
company. First Capital has been organized as a mechanism to enhance First
National Bank's ability to serve its future customers' requirements for
financial services. The holding company structure will provide flexibility for
expansion of First Capital's banking business through acquisition of other
financial institutions and provision of additional banking-related services
which the traditional commercial bank may not provide under present laws. For
example, banking regulations require that First National Bank maintain a minimum
ratio of capital to assets. In the event that First National Bank's growth is
such that this minimum ratio is not maintained, First Capital may borrow funds,
subject to the capital adequacy guidelines of the Federal Reserve Board, and
contribute them to the capital of First National Bank and otherwise raise
capital in a manner which is unavailable to First National Bank under existing
banking regulations.
First Capital has no present plans to acquire any operating
subsidiaries other than First National Bank; however, it is expected that First
Capital may make additional acquisitions in the event that First National Bank
becomes profitable and such acquisitions are deemed to be in the best interests
of First Capital and its shareholders. Such acquisitions, if any, will be
subject to certain regulatory approvals and requirements. See "Supervision and
Regulation" beginning on page 26.
PREMISES
On June 16, 1998, First Capital entered into a contract to acquire 1.28
acres of land located at 1891 South 14th Street at its intersection with Island
Walk Way in Fernandina Beach, Nassau County, Florida 32034, for a total purchase
price of $265,000. The property was purchased from Bosco Enterprises. One of the
principals of Bosco Enterprises is the husband of one of the organizers, Lorie
L. McCarroll. The organizers have received an appraisal from an independent
third party appraising the value of the property at $265,000. First Capital
intends to construct its headquarters building on this property. The building
will contain approximately 6,500 square feet of finished space at a cost of
approximately $800,000. The building is expected to contain one vault, an
automated teller machine, seven offices, two loan closing rooms, five teller
stations, four drive-in windows and a loan operations area.
Until construction of the permanent bank building is complete, First
Capital and First National Bank will temporarily operate out of offices located
at 1875A South 14th Street, Fernandina Beach, Florida 32034. First Capital will
lease the approximately 1,584 square foot facility pursuant to an 11-month lease
at the monthly rate of $1,200, or $9.09 per square foot. It is estimated that
First Capital and First National Bank will operate out of this temporary
facility for approximately twelve months until construction of the headquarters
building is complete. First Capital is leasing its temporary offices from
Miller, Lee & McCarroll, Inc., of which David F. Miller and Lorie L. McCarroll,
two of the organizers, are principals. For additional information, see "Certain
Transactions" at page 38.
In addition to its headquarters facility, First National Bank plans to
open a small branch office facility, at a location to be determined, in the
third year of its operations. Management expects that the
18
<PAGE> 21
land for this branch facility will be acquired for a purchase price of
approximately $150,000 and the building will be constructed for approximately
$650,000. This facility is expected to contain a safe, two offices, four teller
stations, and two drive-in windows. First Capital does not anticipate any
material expenditures in connection with its compliance with environmental laws.
The mailing address of First Capital's temporary office is 1875A South
14th Street, Fernandina Beach, Florida 32034, and its temporary telephone number
is (904) 321-0400.
BUSINESS OF FIRST NATIONAL BANK
GENERAL
The organizers received preliminary approval from the Office of the
Comptroller of the Currency to charter First National Bank on January 27, 1999.
The organizers expect to receive approval of First National Bank's application
for deposit insurance from the FDIC by the end of March 1999.
First National Bank anticipates that it will begin business operations
in July 1999 in a temporary facility located at 1875A South 14th Street,
Fernandina Beach, Florida 32034. First National Bank plans to be a full service
commercial bank, without trust powers. First National Bank will offer a full
range of interest bearing and non-interest bearing accounts, including
commercial and retail checking accounts, money market accounts, individual
retirement accounts, regular interest bearing statement savings accounts,
certificates of deposit, commercial loans, real estate loans, home equity loans
and consumer/installment loans. In addition, First National Bank will provide
such consumer services as U.S. Savings Bonds, travelers checks, cashiers checks,
safe deposit boxes, bank by mail services, direct deposit, credit cards and
automatic teller services.
The philosophy of management of First National Bank with respect to its
initial operations will emphasize prompt and responsive personal service to
members of the business and professional community of Nassau County, Florida, in
order to attract customers and acquire market share now controlled by other
financial institutions in First National Bank's market area. First National
Bank's prime location and range of banking services, as well as its emphasis on
personal attention and service, prompt decision making and consistency in
banking personnel, will be major tools in First National Bank's efforts to
capture such market share. In addition, First National Bank's executive officers
have substantial banking experience, which will be an asset in providing both
products and services designed to meet the needs of First National Bank's
customer base. Several of the organizers are active members of the business
community in and around the Fernandina Beach area, and continued active
community involvement will provide an opportunity to promote First National Bank
and its products and services. The organizers intend to utilize target marketing
and superior selling efforts in order to build a distinct institutional image
for First National Bank and to capture a customer base.
MARKET AREA AND COMPETITION
The primary market area for the proposed bank in Fernandina Beach,
Nassau County, Florida, is within the Jacksonville metropolitan area, which
includes the five counties of Duval, Nassau, St. Johns, Clay, and Baker. Nassau
County is an integral part of the Jacksonville metropolitan area and has
participated in the growth experienced by the Jacksonville metropolitan area in
recent years. The Jacksonville market has a current population in excess of
1,000,000 people and is projected to grow to a population of 1,200,000 by 2010.
Fernandina Beach's strategic location within the Jacksonville
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<PAGE> 22
metropolitan area, along with its coastal setting, makes it a location of choice
for many residents taking advantage of the resources and job opportunities in
the metropolitan market of Jacksonville.
The five-county area has a lower unemployment rate than the State of
Florida which, in turn, is lower than the national average. The climate and
geography of the area have encouraged strong population and economic growth and
the new NFL football team, the Jacksonville Jaguars, has given the five-county
area a higher profile regionally and nationally.
First National Bank's primary service area represents a geographic area
which includes the communities of Amelia Island, Fernandina Beach, O'Neil, and
Yulee, Florida, and St. Mary's, Georgia. The boundaries of the primary service
area are the St. Mary's River and the State of Georgia to the North, the
Atlantic Ocean to the East, Duval County to the South, and Baker County to the
West.
Nassau County has many positive attributes that contribute to the
area's business growth and stability. These include easy access to two
interstates, an extensive rail service network, Jacksonville International
Airport, and the Port of Fernandina, which is the deepest natural port on the
southeastern coast of the United States. The paper, timber, and resort
industries form the core of the area's economy and, as an indication of recent
growth, commercial building permits have increased 237% over the past ten years.
Amelia Island is considered to be one of the foremost residential and retirement
areas in Florida as it attracts affluent retirees and second homeowners from the
Eastern states of the country. The Ritz-Carlton Hotel with its 300 rooms and the
Amelia Island Plantation are among the premier resort hotels on Florida's East
Coast.
The 1990 census estimate of the population within a fifteen-mile radius
of the proposed bank site was approximately 51,000, a 67.5% increase over the
1980 population. The population within the fifteen-mile radius is approximately
70,000 currently, projected to be approximately 80,000 by 2004. From 1988 to
1998, residential building permits increased from 609 to 996, an increase of
63.5%, with much of that growth occurring in the last five years. The estimated
average family income in Nassau County is $55,294 within a five-mile radius of
the proposed bank site and $49,102 within a fifteen-mile radius. Median home
values within a five-mile radius are $97,386, and $88,245 within a fifteen-mile
radius.
First National Bank will target its products and services to meet the
needs of the area's customer base and will be a full-service bank, initially
focusing on providing small- to middle-market business loans, residential
mortgages, and consumer loans to these customers. The organizers estimate that
more than 75% of First National Bank's proposed customer base will be businesses
and/or residents located in the primary service area. The primary service area
represents a diverse market with a growing population and economy.
Competition in First National Bank's primary service area is intense.
As of June 30, 1998, total bank deposits in Nassau County were approximately
$369 million; the market is served by six banks and three credit unions. The
regional bank holding companies represented in Nassau County are NationsBank
Corporation with a market share of 28.6% total deposits, First Union Corporation
with 28.5%, SouthTrust Bank Corporation with 11.8%, Synovus Financial
Corporation with 14.0%, and Compass Bancshares, Inc. with 7.2%.
There are no existing locally-owned community banks in Nassau County, as
SouthTrust and Synovus recently entered the Nassau County market via the
acquisition of the two remaining
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independent community banks. Therefore, upon opening for business in 1999, First
National Bank will be the sole independent commercial bank headquartered in its
primary service area.
Financial institutions primarily compete with one another for deposits.
In turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the designing of
unique financial services products. First National Bank will be competing with
financial institutions which have much greater financial resources than it will
have, and which may be able to offer more and unique services and possibly
better terms to their customers. However, the organizers of First National Bank
believe that it will be able to attract sufficient deposits to enable it to
compete effectively with other area financial institutions. The organizers
believe that First National Bank will have the advantage of being locally owned
and managed, enabling it to benefit from the high visibility and excellent
business contacts of its organizers.
First National Bank will be in competition with existing area
financial institutions other than commercial banks and savings and loan
associations, including insurance companies, consumer finance companies,
brokerage houses, credit unions and other business entities which have recently
been invading the traditional banking markets. Due to the growth of First
National Bank's market area, it is anticipated that additional competition will
continue to be created by new entrants to the market.
DEPOSITS
First National Bank will offer a full range of interest-bearing and
non-interest-bearing accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest-bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of businesses within First
National Bank's market area, obtained through the personal solicitation of its
officers and directors, direct mail solicitation, and advertisements published
in the local media. First National Bank will pay competitive interest rates on
time and savings deposits up to the maximum permitted by law or regulation. In
addition, First National Bank will implement a service charge fee schedule
competitive with other financial institutions in its market area, covering such
matters as maintenance fees on checking accounts, per item processing fees on
checking accounts, returned check charges and the like.
LOAN PORTFOLIO
First National Bank will engage in a full complement of lending
activities, including commercial loans, consumer and installment loans
and real estate loans. First National Bank intends to generally allocate its
loan portfolio as follows: commercial loans, 40%, real estate loans, 40% and
consumer loans, 20%. Initially, First National Bank will have a legal lending
limit for unsecured loans of up to $900,000 to any one person. Management
intends to originate loans and to participate with other banks with respect to
loans which exceed First National Bank's lending limits. Management does not
believe that loan participations will necessarily pose any greater risk of loss
than loans which First National Bank originates. See "Supervision and
Regulation" beginning on page 26.
Lending will be directed primarily towards individuals and businesses
whose demands for funds fall within First National Bank's legal lending limits
and which are potential deposit customers of First National Bank. First National
Bank does not anticipate any foreign loans in First National Bank's loan
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portfolio. The following is a description of each of the major categories of
loans anticipated in First National Bank's portfolio and the anticipated risks
associated with each type of loan:
Commercial and Industrial Loans
Commercial lending will be directed principally towards businesses
whose demands for funds fall within First National Bank's legal lending limits
and who are potential deposit customers of First National Bank. This category of
loans includes loans made to individual, partnership or corporate borrowers, and
obtained for a variety of business purposes. Particular emphasis will be placed
on loans to small- and medium-sized businesses and professionals. Risks of these
types of loans depend on the general business conditions of the local economy
and the local business borrower's ability to sell its products and services in
order to generate sufficient business profits to repay First National Bank under
the agreed upon terms and conditions. The value of the collateral held by First
National Bank as a measure of safety against loss is most volatile in this loan
category.
Consumer and Installment Loans
First National Bank's consumer loans are projected to comprise
approximately 20% of First National Bank's loan portfolio. The majority of
consumer loans will include lines of credit and term loans secured by second
mortgages on the residences of borrowers for a variety of purposes including
home improvements, education, and other personal expenditures. The remaining
consumer loans will consist primarily of installment loans to individuals for
personal, family and household purposes, including automobile loans to
individuals and pre-approved lines of credit. Loss or decline of income by the
borrower due to layoffs, divorce or unexpected medical expenses represent
unplanned occurrences that may represent risk of default to First National Bank.
In the event of default, a shortfall in the value of the collateral may pose a
loss to First National Bank in this loan category.
Real Estate Loans
First National Bank's real estate loans will consist of residential
first and second mortgage loans, residential construction loans, and, to a
limited degree, commercial real estate loans. These loans will be made
consistent with First National Bank's appraisal policy and real estate lending
policy which will detail maximum loan-to-value ratios and maturities. These
loan-to-value ratios will be sufficient to compensate for fluctuations in the
real estate market to minimize the risk of loss to First National Bank.
Residential Mortgage
These loans will be granted to qualified individuals for the purchase
of existing single family residences in First National Bank's market area. Both
fixed and variable rate loans will be offered with competitive terms and fees
consistent with national mortgage investor guidelines. These loans will be made
consistent with First National Bank's appraisal policy and real estate lending
policy which will detail maximum loan-to-value ratios and maturities. Management
expects that these loan-to-value ratios will be sufficient to compensate for
fluctuations in the real estate market to minimize the risk of loss. Mortgage
loans that do not conform to First National Bank's asset/liability mix policies
will be sold in the secondary markets. The risk of this type of activity depends
on the salability of the loan to national investors and interest rate changes.
Delivering these loans to the end investor on a mandatory basis and meeting the
investor's quality control procedures limits First National Bank's risk of
making adjustable rate mortgage loans. The risk assumed by First National Bank
will be conditioned upon its internal controls, loan underwriting and market
conditions in the national mortgage market. First National Bank
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will retain loans for its portfolio when it has sufficient liquidity to fund the
needs of the established customers and when rates are favorable to retain the
loans. The loan underwriting standards and policies will generally be the same
for both loans sold in the secondary market and those retained in First National
Bank's portfolio.
Residential Construction
These loans will be made for the construction of single family
residences in First Capital's market area. The loans will be granted to
qualified individuals with down payments of at least 20% of the appraised value
or contract price, whichever is less. The interest rates are expected to
fluctuate at 1% to 2% above First National Bank's prime interest rate during the
six month construction period. First National Bank will also charge a fee of 1%
to 2% in addition to the normal closing costs. These loans generally command
higher rates and fees commensurate with the risk warranted in the construction
lending field. The risk in construction lending is dependent upon the
performance of the builder in building the project to the plans and
specifications of the borrower and First National Bank's ability to administer
and control all phases of the construction disbursements. Upon completion of the
construction period, management anticipates that the mortgage will be converted
to a permanent loan and normally sold to an investor in the secondary mortgage
market.
Commercial Real Estate
To a limited extent, First National Bank anticipates that it will also
offer commercial real estate loans to developers of both commercial and
residential properties. In making these loans, First National Bank intends to
manage its credit risk by actively monitoring such measures as advance rate,
cash flow, collateral value and other appropriate credit factors. Management
will attempt to reduce credit risk in the commercial real estate portfolio be
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, does not exceed 80%.
In addition, First National Bank may require personal guarantees of the
principal owners.
The organizers believe First National Bank's market offers a
significant opportunity for residential real estate mortgage lending. This
opportunity includes residential construction loans to buyers and owners as well
as to creditworthy contractors for custom-built homes with purchase contracts in
place. First National Bank anticipates that permanent mortgage loans would be
offered with terms that parallel purchase commitments from permanent investors.
While risk of loss in First National Bank's loan portfolio is primarily
tied to the credit quality of the various borrowers, risk of loss may also
increase due to factors beyond its control, such as local, regional and/or
national economic downturns. General conditions in the real estate market may
also impact the relative risk in First National Bank's real estate portfolio. Of
First National Bank's target areas of lending activities, commercial loans are
generally considered to have greater risk than real estate loans or consumer
installment loans.
The organizers intend to originate loans and to participate with other
banks with respect to loans which exceed First National Bank's lending limits.
Management does not believe that loan participations will necessarily pose any
greater risk of loss than loans which First National Bank originates.
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INVESTMENTS
In its first year of operation, management anticipates that investment
securities will comprise approximately 27% of First National Bank's assets,
other investments will comprise approximately 5% of its assets and loans will
comprise approximately 63% of its assets. First National Bank intends to invest
primarily in direct obligations of the United States, obligations guaranteed as
to principal and interest by the United States, obligations of agencies of the
United States, and certificates of deposit issued by commercial banks. In
addition, First National Bank will enter into Federal Funds transactions with
its principal correspondent banks and anticipates that it will primarily act as
a net seller of such funds. The sale of Federal Funds amounts to a short-term
loan from First National Bank to another bank.
ASSET AND LIABILITY MANAGEMENT
It is the objective of First National Bank to manage its assets and
liabilities to provide a satisfactory, consistent level of profitability. First
National Bank's executive officers and the Asset/Liability Committee of the
board of directors of the bank will be responsible for monitoring
interest-bearing assets and interest-bearing liabilities to ensure stability of
earnings. It is the overall philosophy of management to support asset growth
primarily through growth of core deposits, which include deposits of all
categories made by individuals, partnerships and corporations. Management will
seek to invest the largest portion of First National Bank's assets in
commercial, consumer and real estate loans.
First National Bank's asset/liability mix likely will be monitored on a
daily basis with a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to the board of
directors. The objective of this policy is to control interest-sensitive assets
and liabilities so as to minimize the impact of substantial movements in
interest rates on First National Bank's earnings.
CORRESPONDENT BANKING
Correspondent banking involves the providing of services by one bank to
another bank which, from an economic or practical standpoint, cannot provide
that service for itself. First National Bank may purchase correspondent services
offered by larger banks, including check collections, purchase of Federal Funds,
security safekeeping, investment services, coin and currency supplies, overline
and liquidity loan participations, and sales of loans to or participations with
correspondent banks.
First National Bank anticipates that it will sell loan participations
to correspondent banks with respect to loans which exceed its lending limit. As
compensation for services provided by a correspondent, First National Bank may
maintain certain balances with such correspondents in non-interest bearing
accounts.
DATA PROCESSING
First National Bank intends to enter into a data processing servicing
agreement with a third party vendor which has not been identified at this time.
It is expected that this servicing agreement will provide First National Bank
with a full range of data processing services, including an automated general
ledger, deposit accounting, commercial, real estate and installment lending,
data processing, and central information filing.
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YEAR 2000
As the year 2000 ("Year 2000") approaches, an important business issue
has emerged regarding existing application software programs and operating
systems. To save computing time and disk space, many existing application
software products were designed to accommodate only a two-digit year rather than
a four-digit year. For example, "98" is stored on the system and represents 1998
and "00" represents 1900. As a result, software or equipment that is date
dependent may, for example, recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruption of operations, a temporary inability to process transactions,
send invoices, or engage in similar normal business activity.
Communications and information systems, including systems which monitor
deposit and lending accounts, are critical to First Capital's and First National
Bank's business. Software and hardware developed by independent third parties
will be installed to provide primary banking applications, including core
processing systems. First National Bank intends to choose a source for these
systems that has modified or upgraded its computer applications to become Year
2000 compliant. In addition, First Capital and First National Bank intend to
implement a Year 2000 compliance program whereby First National Bank will review
the Year 2000 issue that may be faced by its other third-party vendors and loan
and deposit customers. Under such program, First Capital will examine the need
for modifications or replacement of all non-Year 2000 compliant pieces of
software. First Capital does not currently expect that the cost of its and First
National Bank's Year 2000 compliance program will be material to its financial
conditions and expects that it will satisfy such compliance program without
material disruption of its operations. Management of First Capital intends to
evaluate the potential effect on its third-party vendor's data processing
systems resulting from Year 2000 issues and to obtain a representation from such
vendor that its core processing systems will be fully Year 2000 compliant prior
to the opening of First National Bank for business. In the event that First
Capital, First National Bank, such vendor or its other significant vendors or
loan customers do not successfully and timely achieve Year 2000 compliance,
First National Bank's business, future prospects, financial condition or results
of operations could be materially adversely affected.
An area of concern to First Capital, First National Bank, and its
primary regulator, the Office of the Comptroller of the Currency, is the effect
of Year 2000 issues on its loan customers. Failure to address Year 2000 related
issues could have significant impact on the ability of certain customers to
continue operations. First National Bank's loan portfolio could be negatively
impacted if customers are unable to honor loan agreements and defaults occur as
a result of failure to address Year 2000. These customer relationships will be
monitored to ensure that the necessary systems modifications will be made on a
timely basis. In addition, First National Bank will review Year 2000 related
issues as part of its normal underwriting criteria and loan approval process. It
also will include Year 2000 compliance requirements and covenants requiring
compliance within its standard loan agreements. Nevertheless, there can be no
assurance that these customers will be Year 2000 compliant. Failure of certain
customers to adequately address these issues could result in loan defaults which
would negatively impact First Capital's earnings.
Although First Capital and First National Bank will take extensive
steps to address Year 2000 related issues, there can be no assurance that all
necessary modifications will be identified and made or that unforeseen
difficulties or costs will not arise. In addition, there can be no assurance
that the failure of First National Bank's internal systems or the systems
provided by its data processing vendor or other companies on which First
Capital's systems rely will not negatively impact First National Bank's systems
or operations.
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EMPLOYEES
In their first year of operation, First Capital and First National Bank
anticipate that they will employ 16 persons, including 5 officers. First
National Bank will hire additional persons as needed, including additional
tellers and financial service representatives.
MONETARY POLICIES
The results of operations of First National Bank will be affected by
credit policies of monetary authorities, particularly the Federal Reserve Board.
The instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. Government securities, changes in the discount
rate on member bank borrowings, changes in reserve requirements against member
bank deposits and limitations on interest rates which member banks may pay on
time and savings deposits. In view of changing conditions in the national
economy and in the money markets, as well as the effect of action by monetary
and fiscal authorities, including the Federal Reserve Board, no prediction can
be made as to possible future changes in interest rates, deposit levels, loan
demand, or the business and earnings of First National Bank.
SUPERVISION AND REGULATION
First Capital and First National Bank will operate in a highly
regulated environment, and their business activities will be governed by
statute, regulation, and administrative policies. The business activities of
First Capital and First National Bank will be closely supervised by a number of
regulatory agencies, including the Federal Reserve Board, the Office of the
Comptroller of the Currency, the Florida Banking Department and the FDIC.
First Capital will be regulated by the Federal Reserve Board under the
federal Bank Holding Company Act, which requires every bank holding company to
obtain the prior approval of the Federal Reserve Board before acquiring more
than 5% of the voting shares of any bank or all or substantially all of the
assets of a bank, and before merging or consolidating with another bank holding
company. The Federal Reserve Board (pursuant to regulation and published policy
statements) has maintained that a bank holding company must serve as a source of
financial strength to its subsidiary banks. In adhering to the Federal Reserve
Board policy, First Capital may be required to provide financial support to a
subsidiary bank at a time when, absent such Federal Reserve Board policy, First
Capital may not deem it advisable to provide such assistance.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994, which became effective in November 1994, the restrictions on interstate
acquisitions of banks by bank holding companies were repealed on September 29,
1995. The effect of the repeal of these restrictions is that First Capital and
any other bank holding company located in Florida are able to acquire a bank
located in any other state, and a bank holding company located outside Florida
can acquire any Florida-based bank, in either case subject to certain deposit
percentage and other restrictions. The legislation also provides that, unless an
individual state elects beforehand either
- to accelerate the effective date or
- to prohibit out-of-state banks from operating interstate
branches within its territory, on or after June 1, 1997,
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adequately capitalized and managed bank holding companies will be able to
consolidate their multistate bank operations into a single bank subsidiary and
to branch interstate through acquisitions. De novo branching by an out-of-state
bank would be permitted only if it is expressly permitted by the laws of the
host state. The authority of a bank to establish and operate branches within a
state will continue to be subject to applicable state branching laws.
A bank holding company is generally prohibited from acquiring control
of any company which is not a bank and from engaging in any business other than
the business of banking or managing and controlling banks. However, there are
certain activities which have been identified by the Federal Reserve Board to be
so closely related to banking as to be a proper incident thereto and thus
permissible for bank holding companies, including the following activities:
- acting as investment or financial advisor to subsidiaries
and certain outside companies;
- leasing personal and real property or acting as a broker
with respect thereto;
- providing management consulting advice to nonaffiliated
banks and nonbank depository institutions;
- operating collection agencies and credit bureaus;
- acting as a futures commission merchant;
- providing data processing and data transmission services;
- acting as an insurance agent or underwriter with respect to
limited types of insurance;
- performing real estate appraisals;
- arranging commercial real estate equity financing;
- providing securities brokerage services; and
- underwriting and dealing in obligations of the United
States, the states and their political subdivisions.
In determining whether an activity is so closely related to banking as
to be permissible for bank holding companies, the Federal Reserve Board is
required to consider whether the performance of such activities by a bank
holding company or its subsidiaries can reasonably be expected to produce such
benefits to the public as greater convenience, increased competition and gains
in efficiency that outweigh such possible adverse effects as undue concentration
of resources, decreased or unfair competition, conflicts of interest and unsound
banking practices. Generally, bank holding companies are required to obtain
prior approval of the Federal Reserve Board to engage in any new activity not
previously approved by the Federal Reserve Board.
As a national bank, First National Bank is subject to the supervision
of the OCC and, to a limited extent, the FDIC and the Federal Reserve Board.
With respect to expansion, national banks with a home state of Florida may
establish branch banks to the same extent that any Florida state-chartered bank
may do so.
First National Bank is also subject to the Florida banking and usury
laws restricting the amount of interest which it may charge in making loans or
other extensions of credit. In addition, First National Bank, as a subsidiary of
First Capital, is subject to restrictions under federal law in dealing with
First Capital and other affiliates, if any. These restrictions apply to
extensions of credit to an affiliate, investments in the securities of an
affiliate and the purchase of assets from an affiliate.
Loans and extensions of credit by national banks are subject to legal
lending limitations. Under federal law, a national bank may grant unsecured
loans and extensions of credit in an amount up to 15% of its unimpaired capital
and surplus to any person if the loans and extensions of credit are not fully
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secured by collateral having a market value at least equal to their face amount.
In addition, a national bank may grant loans and extensions of credit to a
single person up to 10% of its unimpaired capital and surplus, provided that the
transactions are fully secured by readily marketable collateral having a market
value determined by reliable and continuously available price quotations, at
least equal to the amount of funds outstanding. This 10% limitation is separate
from, and in addition to, the 15% limitation for unsecured loans. Loans and
extensions of credit may exceed the general lending limit if they qualify under
one of several exceptions. Such exceptions include certain loans or extensions
of credit arising from the discount of commercial or business paper, the
purchase of bankers' acceptances, loans secured by documents of title, loans
secured by U.S. obligations and loans to or guaranteed by the federal
government.
Both First Capital and First National Bank are subject to regulatory
capital requirements imposed by the Federal Reserve Board and the OCC. In 1989,
both the Federal Reserve Board and the OCC issued new risk-based capital
guidelines for bank holding companies and banks which make regulatory capital
requirements more sensitive to differences in risk profiles of various banking
organizations. The capital adequacy guidelines issued by the Federal Reserve
Board are applied to bank holding companies on a consolidated basis with the
banks owned by the holding company. The OCC's risk capital guidelines apply
directly to national banks regardless of whether they are a subsidiary of a bank
holding company. Both agencies' requirements (which are substantially similar),
provide that banking organizations must have capital equivalent to 8% of
weighted risk assets. The risk weights assigned to assets are based primarily on
credit risks. Depending upon the riskiness of a particular asset, it is assigned
to a risk category. For example, securities with an unconditional guarantee by
the United States government are assigned to the lowest risk category. A risk
weight of 50% is assigned to loans secured by owner-occupied one to four family
residential mortgages, provided that certain conditions are met. The aggregate
amount of assets assigned to each risk category is multiplied by the risk weight
assigned to that category to determine the weighted values, which are added
together to determine total risk-weighted assets. Both the Federal Reserve Board
and the OCC have also implemented new minimum capital leverage ratios to be used
in tandem with the risk-based guidelines in assessing the overall capital
adequacy of banks and bank holding companies. Under these rules, banking
institutions are required to maintain a ratio of 3% "Tier 1" capital to total
assets (net of goodwill). Tier 1 capital includes common shareholders equity,
noncumulative perpetual preferred stock and minority interests in the equity
accounts of consolidated subsidiaries.
Both the risk-based capital guidelines and the leverage ratio are
minimum requirements, applicable only to top-rated banking institutions.
Institutions operating at or near these levels are expected to have
well-diversified risk, high asset quality, high liquidity, good earnings and in
general, have to be considered strong banking organizations, rated composite 1
under the CAMELS rating system for banks. Institutions with lower ratings and
institutions with high levels of risk or experiencing or anticipating
significant growth would be expected to maintain ratios 100 to 200 basis points
above the stated minimums.
The OCC has amended the risk-based capital guidelines applicable to
national banks in an effort to clarify certain questions of interpretation and
implementation, specifically with regard to treatment of originated and
purchased mortgage servicing rights and other intangible assets. The OCC's
guidelines provide that intangible assets are generally deducted from Tier 1
capital in calculating a bank's risk-based capital ratio. However, certain
intangible assets which meet specified criteria ("qualifying intangibles") such
as mortgage servicing rights are retained as a part of Tier 1 capital. The OCC
currently maintains that only mortgage servicing rights and purchased credit
card relationships meet the criteria to be considered qualifying intangibles.
The OCC's guidelines formerly provided that the amount of such
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qualifying intangibles that may be included in Tier 1 capital was strictly
limited to a maximum of 25% of total Tier 1 capital. The OCC has amended its
guidelines to increase the limitation on such qualifying intangibles from 25% to
50% of Tier 1 capital and further to permit the inclusion of purchased credit
card relationships as a qualifying intangible asset.
In addition, the OCC has adopted rules which clarify treatment of asset
sales with recourse not reported on a bank's balance sheet. Among assets
affected are mortgages sold with recourse under Fannie Mae, Freddie Mac and
Farmer Mac programs. The rules clarify that even though those transactions are
treated as asset sales for bank Call Report purposes, those assets will still be
subject to a capital charge under the risk-based capital guidelines.
The OCC, the Federal Reserve Board and the FDIC have adopted final
regulations revising their risk-based capital guidelines to further ensure that
the guidelines take adequate account of interest rate risk. Interest rate risk
is the adverse effect that changes in market interest rates may have on a bank's
financial condition and is inherent to the business of banking. Under the new
regulations, when evaluating a bank's capital adequacy, the agency's capital
standards now explicitly include a bank's exposure to declines in the economic
value of its capital due to changes in interest rates. The exposure of a bank's
economic value generally represents the change in the present value of its
assets, less the change in the value of its liabilities, plus the change in the
value of its interest rate off-balance sheet contracts. Concurrently, the
agencies issued a joint policy statement to bankers, effective June 26, 1996, to
provide guidance on sound practices for managing interest rate risk. In the
policy statement, the agencies emphasize the necessity of adequate oversight by
a bank's board of directors and senior management and of a comprehensive risk
management process. The policy statement also describes the critical factors
affecting the agencies' evaluations of a bank's interest rate risk when making a
determination of capital adequacy. The agencies' risk assessment approach used
to evaluate a bank's capital adequacy for interest rate risk relies on a
combination of quantitative and qualitative factors. Banks that are found to
have high levels of exposure and/or weak management practices will be directed
by the agencies to take corrective action.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"Act"), enacted on December 19, 1991, provides for a number of reforms relating
to the safety and soundness of the deposit insurance system, supervision of
domestic and foreign depository institutions and improvement of accounting
standards. One aspect of the Act involves the development of a regulatory
monitoring system requiring prompt action on the part of banking regulators with
regard to certain classes of undercapitalized institutions. While the Act does
not change any of the minimum capital requirements, it directs each of the
federal banking agencies to issue regulations putting the monitoring plan into
effect. The Act creates five "capital categories" ("well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized") which are defined in the Act and which will
be used to determine the severity of corrective action the appropriate regulator
may take in the event an institution reaches a given level of
undercapitalization. For example, an institution which becomes
"undercapitalized" must submit a capital restoration plan to the appropriate
regulator outlining the steps it will take to become adequately capitalized.
Upon approving the plan, the regulator will monitor the institution's
compliance. Before a capital restoration plan will be approved, any entity
controlling a bank (i.e., holding companies) must guarantee compliance with the
plan until the institution has been adequately capitalized for four consecutive
calendar quarters. The liability of the holding company is limited to the lesser
of five percent of the institution's total assets or the amount which is
necessary to bring the institution into compliance with all capital standards.
In addition, "undercapitalized" institutions will be restricted from paying
management fees, dividends and other
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capital distributions, will be subject to certain asset growth restrictions and
will be required to obtain prior approval from the appropriate regulator to open
new branches or expand into new lines of business.
As an institution drops to lower capital levels, the extent of action
to be taken by the appropriate regulator increases, restricting the types of
transactions in which the institution may engage and ultimately providing for
the appointment of a receiver for certain institutions deemed to be critically
undercapitalized.
The Act also provides that banks have to meet new safety and soundness
standards. In order to comply with the Act, the Federal Reserve Board, the OCC
and the FDIC have adopted regulations defining operational and managerial
standards relating to internal controls, loan documentation, credit
underwriting, interest rate exposure, asset growth, and compensation, fees and
benefits.
Both the capital standards and the safety and soundness standards which
the Act seeks to implement are designed to bolster and protect the deposit
insurance fund.
In response to the directive issued under the Act, the regulators have
established regulations which, among other things, prescribe the capital
thresholds for each of the five capital categories established by the Act. The
following table reflects the capital thresholds:
<TABLE>
<CAPTION>
TOTAL RISK-BASED TIER 1 RISK-BASED TIER 1
CAPITAL RATIO CAPITAL RATIO LEVERAGE RATIO
------------- ------------- --------------
<S> <C> <C> <C>
Well capitalized(1)....................... 10.0% 6.0% 5.0%
Adequately Capitalized(1)................. 8.0% 4.0% 4.0%(2)
Undercapitalized(3)....................... < 8.0% < 4.0% < 4.0%(4)
Significantly Undercapitalized(3)......... < 6.0% < 3.0% < 3.0%
Critically Undercapitalized............... -- -- < 2.0%(5)
</TABLE>
- ---------------------------
(1) An institution must meet all three minimums.
(2) 3.0% for composite 1-rated institutions, subject to appropriate federal
banking agency guidelines.
(3) An institution falls into this category if it is below the specified
capital level for any of the three capital measures.
(4) Less than 3.0% for composite 1-rated institutions, subject to
appropriate federal banking agency guidelines.
(5) Ratio of tangible equity to total assets.
As a national bank, First National Bank is subject to examination and
review by the OCC. This examination is typically completed on-site at least
annually and is subject to off-site review at call. The OCC, at will, can access
quarterly reports of condition, as well as such additional reports as may be
required by the national banking laws.
As a bank holding company, First Capital is required to file with the
Federal Reserve Board an annual report of its operations at the end of each
fiscal year and such additional information as the Federal Reserve Board may
require pursuant to the Act. The Federal Reserve Board may also make
examinations of First Capital and each of its subsidiaries.
The scope of regulation and permissible activities of First Capital and
First National Bank is subject to change by future federal and state
legislation. In addition, regulators sometimes require higher capital levels on
a case-by-case basis based on such factors as the risk characteristics or
management of a
30
<PAGE> 33
particular institution. First Capital and First National Bank are not aware of
any attributes of their operating plan that would cause regulators to impose
higher requirements.
ORGANIZERS AND PRINCIPAL SHAREHOLDERS
The following persons comprise the organizers of First Capital and
First National Bank: Ron Anderson, Christina H. Bryan, C. Brett Carter, Suellen
Rodeffer Garner, Dr. William K. Haley, Lorie L. McCarroll, David F. Miller,
William J. Mock, Jr., Marlene J. Murphy, Robert L. Peters, Lawrence Piper,
Michael G. Sanchez, Harry R. Trevett, Edward E. Wilson, and Marshall E. Wood.
All of the organizers reside in or near Fernandina Beach, Florida. The
organizers as a group intend to subscribe for 330,000 shares or $3,300,000 in
the offering, which will equal approximately 54.1% of the 610,000 shares to be
outstanding upon completion of the minimum offering or 33.0% of the 1,000,000
shares to be outstanding upon completion of the maximum offering.
Upon the opening for business of First National Bank, Michael G.
Sanchez will receive options to purchase shares of First National Bank's common
stock equal to the lesser of 30,000 shares or 5% of the amount of common stock
sold in this offering, at an exercise price of $10.00 per share. Twenty percent
of these options shall vest when First National Bank opens for business and
twenty percent shall vest on each of the four successive anniversaries of First
National Bank's opening for business. See "Management--Employment Agreement"
beginning on page 34.
Each of the organizers intends to purchase shares of the common stock
of First Capital in the offering. See "Security Ownership of Certain Beneficial
Owners and Management" at page 37 for a table setting forth specific numbers of
shares to be purchased and the percentage of common stock to be owned by the
organizers after completion of the minimum offering.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF FIRST CAPITAL AND FIRST NATIONAL BANK
First Capital's directors and executive officers and First National
Bank's proposed directors and executive officers are as follows:
<TABLE>
<CAPTION>
Proposed Position
Name Position with First Capital with First National Bank
---- --------------------------- ------------------------
<S> <C> <C>
Ron Anderson Class II Director Director
Christina H. Bryan Class I Director Director
C. Brett Carter Class II Director Director
Suellen Rodeffer Garner Chairman of the Board Chairman of the Board
and Class I Director and Director
Dr. William K. Haley Class II Director Director
Lorie L. McCarroll Treasurer and
Class II Director Director
David F. Miller Class II Director Director
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
Proposed Position
Name Position with First Capital with First National Bank
---- --------------------------- ------------------------
<S> <C> <C>
William J. Mock, Jr. Class III Director Director
Marlene J. Murphy Class III Director Director
Robert L. Peters Secretary and
Class III Director Director
Lawrence Piper Class III Director Director
Michael G. Sanchez President, Chief Executive President, Chief Executive
Officer and Class I Director Officer and Director
Harry R. Trevett Class I Director Director
Edward E. Wilson Class III Director Director
Marshall E. Wood Class I Director Director
</TABLE>
Each of the above persons, with the exception of Suellen Rodeffer
Garner and Michael G. Sanchez, has been a director of First Capital since August
1, 1998. Ms. Garner and Mr. Sanchez have served as directors since inception.
First Capital has a classified Board of Directors whereby one-third of the
members will be elected each year at its Annual Meeting of Shareholders. Upon
such election, each director of First Capital will serve for a term of three
years. See "Description of Capital Stock--Board of Directors" beginning on page
39. First Capital's officers are appointed by the board of directors and hold
office at the will of the board.
Each of First National Bank's proposed directors will, upon approval of
the Office of the Comptroller of the Currency, serve until First National Bank's
first shareholders' meeting, which meeting will be held shortly after First
National Bank receives its charter. At that meeting, First Capital, as sole
shareholder of First National Bank, intends to elect each interim director to
First National Bank's board of directors, and intends to elect Michael G.
Sanchez as President and Chief Executive Officer of First National Bank. After
the first shareholders' meeting, directors of First National Bank will serve for
a term of one year and will be elected each year at its Annual Meeting of
Shareholders. First National Bank's officers will be appointed by its board of
directors and will hold office at the will of the board.
RON ANDERSON, age 54, has served as a director of First Capital since
August 1, 1998. Prior to his service with First Capital, Mr. Anderson served as
managing general partner of Marel Enterprises, a family limited partnership,
since 1997. Mr. Anderson is also the President of several automobile-related
businesses, including Ron Anderson Chevrolet-Olds, Anderson
Pontiac-Buick-Olds-GMC, Inc., Ron Anderson Pontiac-Buick-GMC, Rontex-Douglas,
and Anderson Enterprises. Mr. Anderson served as a director of Bank South,
Douglas, Georgia from 1985 to 1986.
CHRISTINA H. BRYAN, age 53, has served as a director of First Capital
since August 1, 1998. Ms. Bryan is a co-owner of several businesses, serving in
the following capacities: director and Treasurer of Rex Packing, Inc. since
1972; President of Florida Petroleum Corp. since 1984; Secretary and Treasurer
of Island Seafood Co. since 1972; Director and Vice President of YCG, Inc. since
1980; and director and Vice President of YE Hall, Inc. since 1972.
32
<PAGE> 35
C. BRETT CARTER, age 38, has served as a director of First Capital
since August 1, 1998. Mr. Carter has served as President of Brett's Waterway
CAFE, Inc. since 1989 and as President of Fernandina Improvements, Inc. since
1997. Mr. Carter has also served as a director of Amelia's Restaurant, Inc.
since 1989.
SUELLEN RODEFFER GARNER, age 42, has served as a director of First
Capital since July 31, 1998, and served as Secretary and Treasurer of First
Capital from Inception to July 1998. Ms. Garner served as a director of Barnett
Bank of Nassau County from 1990 to 1998. In addition, Ms. Garner is a licensed
orthodontist and has been co-owner of Suellen Rodeffer and David Tod Garner
D.D.S., P.A. since 1983.
DR. WILLIAM K. HALEY, age 42, has served as a director of First Capital
since August 1, 1998. Dr. Haley is a general surgeon who has been in active
practice in Fernandina since 1988. He is past President of the Nassau County
Medical Society and former medical advisor to the Nassau County Division of the
American Cancer Society. He is currently on the executive board of the Florida
Surgical Society. Dr. Haley served as President of the medical staff at Nassau
Baptist Hospital from 1996 to 1998.
LORIE L. MCCARROLL, age 33, has served as a director of First Capital
since August 1, 1998 and as its Treasurer since July 1998. Ms. McCarroll is a
Certified Public Accountant and has served in that capacity for Lorie L.
McCarroll, CPA since 1992. Ms. McCarroll has also served as an officer with
several rental real estate companies, including Lee-McCarroll, Inc. (Vice
President since 1997); Miller Trevett, McCarroll, Inc. (Treasurer since 1996);
and Miller, Lee & McCarroll, Inc. (Vice President and Secretary since 1997).
DAVID F. MILLER, age 69, has served as a director of First Capital
since August 1, 1998. He has owned Amelia Service Center, Inc., a real estate
business in Fernandina Beach, Florida, since 1991. Mr. Miller served as
President and Vice- Chairman of the Board of Directors of J.C. Penny Co. from
1953 to 1990, and as a director of Barnett Bank of Jacksonville, Florida from
1990 to 1996. Mr. Miller has also served as a director of Winn-Dixie Stores,
Inc. since 1986 and for Suiza Corp. since 1997.
WILLIAM J. MOCK, JR., age 30, has served as a director of First Capital
since August 1, 1998. Mr. Mock is the owner of Prudential Island Realty, a real
estate sales company which he opened in January 1994. Mr. Mock also serves as
President of two real estate investment companies, The Centre Street Company
since 1998, and Mock Land Company since 1996.
MARLENE J. MURPHY, age 57, has served as a director of First Capital
since August 1, 1998. Ms. Murphy has been a co-owner of and served as President
of Tilted Anchor Inc., a retail store located in Fernandina Beach, Florida,
since 1983.
ROBERT L. PETERS, age 38, has served as a director of First Capital
since August 1, 1998, and as its Secretary since July 1998. Mr. Peters has been
as an attorney with the law firm of Jacobs and Peters in Fernandina Beach,
Florida, since 1993. Mr. Peters holds a B.S. in accounting and real estate and
received his J.D. from Florida State University.
LAWRENCE PIPER, age 42, has served as a director of First Capital since
August 1, 1998. Mr. Piper has owned and managed Coastal Telephone Systems, a
telephone sales and service company, since 1991.
MICHAEL G. SANCHEZ, age 49, has served as President and Chief Executive
Officer of First Capital since July 31, 1998 and as a director since inception.
Mr. Sanchez will continue to serve as First
33
<PAGE> 36
Capital's President and Chief Executive Officer after First National Bank
begins operations and will serve in the same capacity for First National Bank
once elected, as intended, by the Board of Directors. Mr. Sanchez has entered
into an employment agreement with First Capital and First National Bank. Prior
to founding First Capital, Mr. Sanchez served as Group President of Lending for
Tucker Federal Bank, Tucker, Georgia, from 1997 to 1998. He also served as
President, Chief Executive Officer and director of Premier Bank, Acworth,
Georgia, from 1995 to 1996 and for Summerville National Bank, Summerville, South
Carolina, from 1993 to 1995. Mr. Sanchez also served as a senior vice president
with Prime Bank, Decatur, Georgia, from 1990 to 1993; with Enterprise National
Bank, Atlanta, Georgia, from 1988 to 1990; and with National City Bank, Rome,
Georgia, from 1972 to 1983. Prior to his service with Enterprise National Bank,
Mr. Sanchez served as Vice President and Regional Manager for Bank South, N.A.,
Atlanta, Georgia, from 1983 to 1988. Mr. Sanchez has over 25 years of experience
in the banking industry.
HARRY R. TREVETT, age 43, has served as a director of First Capital
since August 1, 1998. Mr. Trevett is a certified general contractor and a
licensed real estate broker in the state of Florida. Mr. Trevett owns and serves
as President of several businesses in the real estate and construction
industries, including Trevett & Associated Realty (since 1979); Trevett Homes,
Inc. (since 1982); and Trevett Construction Group (since 1988).
EDWARD E. WILSON, age 47, has served as a director of First Capital
since August 1, 1998. Mr. Wilson is a licensed insurance agent. He is part-owner
and has served as an officer of several Florida insurance agencies comprising
Morrow Insurance Group, Inc., including agencies located in Madison (Secretary
and Treasurer since 1985); Dowling Park (Secretary and Treasurer since 1988);
Fernandina Beach (President since 1987); and Yulee (President since 1998).
MARSHALL E. WOOD, age 52, has served as a director of First Capital
since August 1, 1998. Mr. Wood is an attorney licensed in the states of Florida
and Tennessee. In addition, Mr. Wood served as a director of Barnett Bank of
Nassau County from 1981 to 1998. Mr. Wood has served as President and sole
director of Marshall E. Wood, P.A., Amelia Island, Florida since 1995 and served
as Vice President and Director for Wood & Poole, P.A. from 1986 to 1995.
There are no family relationships between any director or executive
officer and any other director or executive officer of First Capital.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by First Capital to or on behalf of its Chief
Executive Officer for the year ended December 31, 1998. No other officers or
directors of the Board have received compensation in excess of $100,000 for
services to First Capital.
34
<PAGE> 37
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and
Principal Position Year Salary Bonus
------------------ ---- ------ -----
<S> <C> <C> <C>
Michael G. Sanchez 1998 $32,000(1) $-0-
President and
Chief Executive
Officer
</TABLE>
- ----------
(1) Salary figure pro-rated from September 1, 1998, the date Mr. Sanchez
was first employed by First National Bank.
EMPLOYMENT AGREEMENT
On September 1, 1998, the organizers entered into an employment
agreement with Michael G. Sanchez pursuant to which Mr. Sanchez is employed as
President and Chief Executive Officer of First National Bank for a period
beginning on August 15, 1998, and ending on August 15, 2003. Under the
employment agreement, Mr. Sanchez is entitled to receive a minimum annual base
salary of $96,000, which may be increased from time to time in the sole
discretion of the board of directors of First National Bank. In addition, Mr.
Sanchez will be provided with an automobile, at a cost not to exceed $25,000, as
soon as First Capital's initial public offering is completed, and will receive a
bonus of $10,000 as soon as practicable after First National Bank opens for
business.
Beginning on the first anniversary of First National Bank's opening for
business and on each successive anniversary until it is profitable on a
cumulative basis, Mr. Sanchez shall be eligible to receive in addition to his
base salary such performance bonuses as determined in the discretion of the
board of directors of First National Bank. Beginning on the end of the first
year in which First National Bank becomes profitable on a cumulative basis and
continuing in each successive year thereafter during the term of the employment
agreement, Mr. Sanchez shall receive a bonus equal to five percent of the net
income of First National Bank.
The employment agreement provides for the grant of stock options to Mr.
Sanchez in the amount of the lesser of 30,000 shares or five percent of the
common stock of First Capital sold in its initial public offering, at a purchase
price of $10.00 per share pursuant to an incentive stock option plan which was
adopted by the board of directors of First Capital in November of 1998. Twenty
percent of these options will vest beginning on the date First National Bank
opens for business, and twenty percent will vest on each of the four successive
anniversaries of its opening for business. All such options will be exercisable
for a period of ten years from the date of grant.
The employment agreement also provides that Mr. Sanchez will receive
any and all benefits, such as health, hospitalization, disability, and term life
insurance, generally made available to other senior executives of First Capital
and First National Bank.
Mr. Sanchez has agreed to a non-compete and non-solicitation provision
pursuant to which he agrees that, through the actual date of termination of the
employment agreement and for a period of twelve months after that time, he will
not, without the prior written consent of First National Bank, either
35
<PAGE> 38
directly or indirectly serve as an executive officer of any bank, bank holding
company, or other financial institution within a 35-mile radius of First
National Bank.
The employment agreement further provides that First National Bank may
terminate the employment of Mr. Sanchez for any reason, and, upon termination,
Mr. Sanchez would be entitled to the payment of his base salary for a period of
twelve months.
COMPENSATION OF DIRECTORS
Directors will not receive any compensation during First National
Bank's first year of operations.
STOCK OPTION PLANS
First Capital's board of directors has adopted an incentive stock
option plan to cover Mr. Sanchez' options and for employees who are contributing
significantly to the management or operation of the business of First Capital or
its subsidiaries as determined by a committee designated by the board of
directors to administer the plan. The plan is contingent upon approval by the
shareholders of First Capital. The plan provides for the grant of options at the
discretion of the committee administering the plan. No person may serve as a
member of the committee who is then eligible for a grant of options under the
plan or has been so eligible for a period of one year prior to his or her
service on the committee. The option exercise price must be at least 100% (110%
in the case of a holder of 10% or more of the common stock) of the fair market
value of the stock on the date the option is granted. The options are
exercisable by the holder thereof in full at any time prior to their expiration
in accordance with the terms of the plan. Stock options granted pursuant to the
plan will expire on or before
- the date which is the tenth anniversary of the date the
option is granted, or
- the date which is the fifth anniversary of the date the
option is granted in the event that the option is granted to
a key employee who owns more than 10% of the total combined
voting power of all classes of stock of First Capital or any
of its subsidiaries, if any.
The board of directors may, at First Capital's first annual meeting of
shareholders after First National Bank opens for business, propose for
shareholder approval a directors' stock option plan, which will be designed to
provide incentive compensation to directors in the event that First Capital's
common stock increases in value during the term of such options. The details of
this directors' option plan have not yet been determined, but these details will
be disclosed to shareholders in First Capital's proxy statement issued in
connection with solicitation of shareholder approval of such plan.
36
<PAGE> 39
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Each of the organizers of First Capital intends to purchase a number of
the shares of common stock of First Capital offered hereby, as set forth in the
following table, which specifies the percentage of common stock to be owned by
the organizers assuming completion of the minimum offering of 610,000 shares. In
addition to the number of shares below, each of the organizers will be granted
warrants to purchase additional shares of common stock. For additional
information regarding the terms of the warrants, see "Terms of the Offering--
Purchases by Organizers of First Capital" beginning on page 12.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
NAME OF BENEFICIAL OWNER SHARES SHARES
------------------------ ----------- -------
<S> <C> <C>
Ron Anderson 15,000 2.46%
Christina H. Bryan 25,000 4.10
C. Brett Carter 40,000 6.56
Suellen Rodeffer Garner 40,000 6.56
Dr. William K. Haley 10,000 1.64
Lorie L. McCarroll 15,000 2.46
David F. Miller 40,000 6.56
William J. Mock 20,000 3.28
Marlene J. Murphy 10,000 1.64
Robert L. Peters 20,000 3.28
Lawrence Piper 5,000 0.82
Michael G. Sanchez 10,000 1.64
Harry R. Trevett 40,000 6.56
Edward E. Wilson 20,000 3.28
Marshall E. Wood 20,000 3.28
------- -----
TOTAL 330,000 54.10%
</TABLE>
37
<PAGE> 40
CERTAIN TRANSACTIONS
Once First National Bank opens for business, it is anticipated that it
will extend loans from time to time to certain of its directors, executive
officers, their associates, and members of the immediate families of the
directors. These loans will be made in the ordinary course of business on
substantially the same terms, including interest rates, collateral and repayment
terms, as those prevailing at the time for comparable transactions with persons
not affiliated with First Capital or First National Bank, and will not involve
more than the normal risk of collectibility or present other unfavorable
features.
The rental real estate firm of Miller, Lee & McCarroll, Inc., of which
David F. Miller is part-owner and Lorie L. McCarroll is Vice President,
Secretary, and part-owner, is lessor of First Capital's temporary office space
at 1875 South 14th Street, Fernandina Beach, Florida 32034, and receives monthly
rental payments of $1,200 thereon from First Capital. Based on available market
data, the board of directors has determined that the lease rate is competitive.
Ms. McCarroll and Mr. Miller are directors of First Capital and First National
Bank.
The real property on which the permanent facility will be built was
acquired from Bosco Enterprises. One of the principals of Bosco Enterprises is
the husband of organizer and Director Lorie McCarroll. The organizers have
received an appraisal from an independent third party appraising the value of
the property at the purchase price, $265,000.
First Capital has acquired key-man life insurance on the life of
Michael G. Sanchez from Morrow Insurance Group, Inc. Edward E. Wilson, an
organizer and director of First Capital and First National Bank, is the owner of
Morrow Insurance Group, Inc. Although the policy is being underwritten by an
independent insurance company, it is expected that Mr. Wilson will receive
commissions as an agent for his involvement with the transaction.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of First Capital consists of 10,000,000
shares of common stock, $.01 par value, and 1,000,000 shares of preferred stock,
$.01 par value. No shares of either type are presently issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to elect the members of the
board of directors of First Capital and such holders are entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of First Capital.
No holder of any class of stock of First Capital has preemptive rights
with respect to the issuance of shares of that or any other class of stock and
the common stock is not entitled to cumulative voting rights with respect to the
election of directors.
The holders of common stock are entitled to dividends and other
distributions if, as, and when declared by the board of directors out of assets
legally available therefor. Upon the liquidation, dissolution, or winding up of
First Capital, the holder of each share of common stock will be entitled to
share equally in the distribution of First Capital's assets. The holders of
common stock are not entitled to the benefit of any sinking fund provision. The
shares of common stock of First Capital are not subject
38
<PAGE> 41
to any redemption provisions, nor are they convertible into any other security
or property of First Capital. All outstanding shares of each class of common
stock are, and the shares to be outstanding upon completion of this offering
will be, fully paid and nonassessable.
PREFERRED STOCK
The board of directors may, without approval of First Capital's
shareholders, from time to time authorize the issuance of preferred stock in one
or more series for such consideration and, within certain limits, with such
relative rights, preferences and limitations as the board of directors may
determine. The relative rights, preferences and limitations that the board of
directors has the authority to determine as to any such series of preferred
stock include, among other things, dividend rights, voting rights, conversion
rights, redemption rights and liquidation preferences. Because the board of
directors has the power to establish the relative rights, preferences and
limitations of each series of preferred stock, it may afford to the holders of
any such series preferences and rights senior to the rights of the holders of
shares of common stock. Although the board of directors has no intention at the
present time of doing so, it could cause the issuance of preferred stock that
could discourage an acquisition attempt or other transactions that some, or a
majority of, the shareholders might believe to be in their best interests or in
which the shareholders might receive a premium for their shares of common stock
over the market price of such shares.
BOARD OF DIRECTORS
The initial board of directors of First Capital consists of fifteen
directors. The directors are divided into three classes, designated Class I,
Class II and Class III. Each class will consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire board of
directors. The term of First Capital's initial Class I directors will expire at
its first annual meeting of shareholders; the term of its initial Class II
directors will expire at the second annual meeting of shareholders; and the term
of its initial Class III directors will expire at the third annual meeting of
shareholders. At each annual meeting of shareholders, successors to the class of
directors whose term expires at the annual meeting will be elected for a
three-year term. If the number of directors is changed, an increase or decrease
will be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class will
hold office for a term that will coincide with the remaining term of that class,
but in no event will a decrease in the number of directors shorten the term of
any incumbent director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors will have the same remaining term as
that of his predecessor. Except in the case of removal from office, any vacancy
on the board of directors, will be filled by a majority vote of the remaining
directors then in office.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and his or her position
filled by another person nominated and elected for that purpose by the holders
of 75 percent of the outstanding shares of First Capital's common stock.
The effect of the staggered board of directors is to make it more
difficult for a person, entity or group to effect a change in control of First
Capital through the acquisition of a large block of its voting stock.
39
<PAGE> 42
REQUIREMENTS FOR SUPERMAJORITY APPROVAL OF TRANSACTIONS
First Capital's Articles of Incorporation contain provisions requiring
supermajority shareholder approval to effect certain extraordinary corporate
transactions which are not approved by the board of directors. The Articles of
Incorporation require the affirmative vote or consent of the holders of at least
two-thirds (66-2/3%) of the shares of each class of common stock of First
Capital entitled to vote in elections of directors to approve any merger,
consolidation, disposition of all or a substantial part of the assets of First
Capital or a subsidiary of First Capital, exchange of securities requiring
shareholder approval, or liquidation of First Capital, if any person who,
together with his affiliates and associates owns beneficially 5% or more of any
voting stock of First Capital, is a party to the transaction. However, this
supermajority requirement is waived if three-fourths (75%) of the entire board
of directors of First Capital approves the transaction. In addition, the
Articles of Incorporation require the separate approval by the holders of a
majority of the shares of each class of stock of First Capital entitled to vote
in elections of directors which are not beneficially owned, directly or
indirectly, by an "interested" person, of any merger, consolidation, disposition
of all or a substantial part of the assets of First Capital or a subsidiary of
First Capital, or exchange of securities requiring shareholder approval, if the
"interested" person is a party to such transaction. This separate approval is
not required if
- the consideration to be received by the holders of the stock of
First Capital meets certain minimal levels determined by a formula
under the Articles of Incorporation (generally the highest price
paid by the "interested" person for any shares which he has
acquired),
- there has been no reduction in the average dividend rate from that
which was obtained prior to the time the "interested" person became
such, and
- the consideration to be received by shareholders who are not
"interested" persons will be paid in cash or in the same form as
the "interested" person previously paid for shares of such class of
stock.
These Articles of First Capital's Articles of Incorporation, as well as
the Article establishing a classified board of directors, may be amended,
altered, or repealed only by the affirmative vote or consent of the holders of
at least 75 percent of the shares of each class of stock of First Capital
entitled to vote in elections of directors.
The effect of these provisions is to make it more difficult for a
person, entity or group to effect a change in control of First Capital through
the acquisition of a large block of its voting stock.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Florida law, First Capital's Articles of
Incorporation provide that a director shall not be personally liable to First
Capital or its shareholders for monetary damages for breach of duty of care or
any other duty owed to First Capital as a director, except that such provision
will not eliminate or limit the liability of a director
- for any appropriation, in violation of his duties, of any business
opportunity of First Capital,
- for acts or omissions which involve intentional misconduct or a
knowing violation of law,
40
<PAGE> 43
- for unlawful corporate distributions, or
- for any transaction from which the director received an improper
personal benefit.
Article VI of First Capital's Bylaws provides that First Capital shall
indemnify a director who has been successful in the defense of any proceeding to
which he was a party or in defense of any claim, issue or matter therein because
he is or was a director of First Capital, against reasonable expenses incurred
by him in connection with such defense.
First Capital's Bylaws also provide that First Capital is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred in
the proceeding if he acted in a manner he believed in good faith or to be in or
not opposed to the best interests of First Capital and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by
- a disinterested majority of the Board of Directors,
- a majority of a committee of disinterested directors,
- independent legal counsel, or
- an affirmative vote of a majority of shares held by disinterested
shareholders.
No indemnification may be made to or on behalf of a director, officer,
employee or agent
- in connection with a proceeding by or in the right of First Capital
in which such person was adjudged liable to First Capital, or
- in connection with any other proceeding in which such person was
adjudged liable on the basis that personal benefit was improperly
received by him.
First Capital may, if authorized by its shareholders by a majority of
votes which would be entitled to be cast in a vote to amend its Articles of
Incorporation, indemnify or obligate itself to indemnify a director, officer,
employee or agent made a party to a proceeding, including a proceeding brought
by or in the right of First Capital.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
First Capital has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
STATUTORY ANTI-TAKEOVER PROVISIONS
The State of Florida has statutory provisions relating to business
combinations between a Florida corporation and an "interested shareholder" that
outline the statutory requirements to effect such transactions. Florida also has
statutory provisions relating to "control-share acquisitions." However, these
statutory anti-takeover provisions do not apply to First Capital because it has
elected not to be governed by these provisions in its Articles of Incorporation.
41
<PAGE> 44
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which First Capital
or First National Bank is a party or of which any of their properties are
subject; nor are there material proceedings known to First Capital or First
National Bank to be contemplated by any governmental authority; nor are there
material proceedings known to First Capital or First National Bank, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of First Capital or First National Bank, or any associate of any
of the foregoing is a party or has an interest adverse to First Capital or First
National Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby have been passed upon for First Capital by Smith, Gambrell &
Russell, LLP, Atlanta, Georgia, counsel to First Capital.
EXPERTS
The financial statements of First Capital as of December 31, 1998
included in this Prospectus have been audited by Porter Keadle Moore LLP,
independent certified public accountants, as stated in their report, which is
included herein, and has been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
First Capital has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a registration statement under the Securities Act of
1933 with respect to the shares of common stock in this offering. This
prospectus does not contain all of the information included in the registration
statement and the exhibits and schedules thereto. For further information with
respect to First Capital and the common stock, reference is made to the
registration statement and the exhibits and schedules included with the
registration statement. In addition, First Capital will provide, without charge,
to each person who receives a prospectus, upon written or oral request of such
person, a copy of any of the information that was incorporated by reference in
the prospectus. Such request shall be directed to First Capital either at its
initial address at 1875A South 14th Street, Fernandina Beach, Florida 32034 or
at its initial telephone number at (904) 321-0400.
42
<PAGE> 45
FINANCIAL STATEMENTS
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
DECEMBER 31, 1998
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......................... F-3
Balance Sheet............................................................... F-4
Statement of Operations..................................................... F-5
Statement of Changes in Stockholder's Deficit............................... F-6
Statement of Cash Flows..................................................... F-7
Notes to Financial Statements............................................... F-8
</TABLE>
F-1
<PAGE> 46
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
(WITH INDEPENDENT ACCOUNTANTS' REPORT THEREON)
F-2
<PAGE> 47
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
First Capital Bank Holding Corporation
We have audited the accompanying balance sheet of First Capital Bank Holding
Corporation (a development stage corporation) as of December 31, 1998, and the
related statements of operations, changes in stockholder's deficit and cash
flows for the period from July 29, 1998 (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 audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Bank Holding
Corporation as of December 31, 1998 and the results of its operations and its
cash flows from July 29, 1998 (inception) to December 31, 1998 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that First
Capital Bank Holding Corporation will continue as a going concern. As discussed
in note 1 to the financial statements, the Company is in the organization stage
and has not commenced operations. Also, as discussed in note 3, the Company's
future operations are dependent on obtaining capital through an initial stock
offering and obtaining the necessary final regulatory approvals. These factors
and the expense associated with development of a new banking institution raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are described in note 3. The
financial statements do not include any adjustments relating to the
recoverability of reported asset amounts or the amount of liabilities that might
result from the outcome of this uncertainty.
/s/ Porter Keadle Moore, LLP
----------------------------
Porter Keadle Moore, LLP
Atlanta, Georgia
February 18, 1999
F-3
<PAGE> 48
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
DECEMBER 31, 1998
Assets
<TABLE>
<S> <C>
Cash $ 2,535
Premises and equipment, net 300,861
Deferred offering expenses 80,523
Other assets 793
---------
$ 384,712
=========
Liabilities and Stockholder's Deficit
Accrued interest payable $ 6,581
Accounts payable and accrued expenses 47,591
Note payable - line of credit 520,678
---------
Current liabilities 574,850
---------
Stockholder's deficit:
Preferred stock, par value $.01, 1,000,000 shares authorized;
no shares issued or outstanding --
Common stock, par value $.01, 10,000,000 shares authorized;
10 shares issued and outstanding --
Additional paid-in capital 500
Deficit accumulated during the development stage (190,638)
---------
Total stockholder's deficit (190,138)
---------
$ 384,712
=========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 49
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Expenses:
Salaries and employee benefits $ 54,674
Consulting fees 54,102
Application fees 21,144
Interest 12,921
Occupancy 8,152
Other operating 39,645
-----------
Net loss $ 190,638
===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 50
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Preferred Common Paid-in Development
Stock Stock Capital Stage Total
----------- -------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C>
Issuance of common stock
to organizer $ -- -- 500 -- 500
Net loss -- -- -- (190,638) (190,638)
----------- -------- --- -------- --------
Balance, December 31, 1998 $ -- -- 500 (190,638) (190,138)
=========== ======== === ======== ========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 51
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 29, 1998 (INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $(190,638)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation expense 2,321
Increase in other assets (793)
Increase in accrued interest payable 6,581
Increase in accounts payable and accrued expenses 47,591
---------
Net cash used in operating activities (134,938)
---------
Cash flows from investing activities:
Purchase of premises and equipment (303,182)
Payments for deferred stock offering expenses (80,523)
---------
Net cash used in investing activities (383,705)
---------
Cash flows from financing activities:
Proceeds from note payable 520,678
Proceeds from issuance of common stock 500
---------
Net cash provided by financing activities 521,178
---------
Net increase in cash 2,535
Cash at beginning of period --
----------
Cash at end of period $ 2,535
---------
Supplemental disclosure of cash flow information:
Interest paid $ 6,340
=========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 52
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
First Capital Bank Holding Corporation (the Company) was incorporated for
the purpose of becoming a bank holding company. The Company intends to
acquire 100% of the outstanding common stock of First National Bank of
Nassau County (the Bank) (in organization), which will operate in the
Fernandina Beach, Florida area. The organizers of the Bank filed a joint
application to charter the Bank with the Office of the Comptroller of
Currency and the Federal Deposit Insurance Corporation on September 30,
1998. Provided that the application is timely approved and necessary
capital is raised, it is expected that operations will commence in the
second quarter of 1999.
The Company plans to raise between $6,100,000 and $10,000,000 through an
offering of its common stock at $10 per share, of which $6,000,000 will be
used to capitalize the Bank. The organizers and directors expect to
subscribe for a minimum of approximately $3,000,000 of the Company's
stock.
In connection with the Company's formation and initial offering, warrants
will be issued to the organizing stockholders. The warrants allow each
holder to purchase one additional share of common stock for each two
shares purchased in connection with the initial offering and are
exercisable on each of the four succeeding anniversaries of the date of
opening of the Bank at the initial offering price of $10 per share. These
warrants expire five years after the date of grant. The actual number of
warrants granted will be limited so that the organizers will own no more
than 23% of the total number of shares outstanding on a fully diluted
basis. The Company has also reserved 100,000 shares for the issuance of
options under an employee incentive stock option plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Major additions and improvements are charged to the asset accounts while
maintenance and repairs that do not improve or extend the useful lives of
the assets are expensed currently. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed
from the accounts, and any gain or loss is reflected in earnings for the
period.
Depreciation expense on furniture, fixtures and equipment is computed
using the straight-line method over 5 to 7 years.
ORGANIZATION COSTS
Costs incurred for the organization of the Company and the Bank
(consisting principally of legal, accounting, consulting and incorporation
fees) are being expensed as incurred.
DEFERRED OFFERING EXPENSES
Costs incurred in connection with the stock offering, consisting of
direct, incremental costs of the offering, are being deferred and will be
offset against the proceeds of the stock sale as a charge to additional
paid in capital.
PRE-OPENING EXPENSES
Costs incurred for overhead and other operating expenses are included in
the current period's operating results.
F-8
<PAGE> 53
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROFORMA NET LOSS PER COMMON SHARE
Proforma net loss per common share is calculated by dividing net loss by
the minimum number (610,000) of common shares, which would be outstanding
should the offering be successful, as prescribed in Staff Accounting
Bulletin Topic 1:B. The proforma net loss per share for the period ended
December 31, 1998 was $.31 per share.
(3) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $190,638 for the period from July 29,
1998 (inception) to December 31, 1998. At December 31, 1998, liabilities
exceeded assets by $190,138.
Management believes that the current level of expenditures are well within
the financial capabilities of the organizers and adequate to meet existing
obligations and fund current operations, but obtaining final regulatory
approvals and commencing banking operations is dependent on successfully
completing the stock offering.
To provide permanent funding for its operation, the Company is currently
offering a minimum of 610,000 and a maximum of 1,000,000 shares of its
common stock, $.01 par value, at $10 per share in an initial public
offering. Costs related to the organization and registration of the Bank's
common stock will be paid from the gross proceeds of the offering. Shares
issued which are outstanding at December 31, 1998 will be redeemed
concurrently with the consummation of the offering. Should subscriptions
for the minimum offering not be obtained, amounts paid by the subscribers
with their subscriptions will be returned and the offer withdrawn.
(4) PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1998 are summarized as follows:
Land $ 265,000
Furniture, fixtures and equipment 29,572
Construction in progress 8,610
---------
303,182
Less accumulated depreciation 2,321
---------
$ 300,861
=========
Depreciation expense was $2,321 for the year ended December 31, 1998.
(5) LINE OF CREDIT
Organization, offering and pre-opening costs incurred prior to the opening
for business will be funded under a $700,000 line of credit. The terms of
the existing line of credit, which is guaranteed by the organizers,
include a maturity of July 29, 1999 and interest calculated at the prime
interest rate.
F-9
<PAGE> 54
FIRST CAPITAL BANK HOLDING CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(6) PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or more
series as established by resolution of the Board of Directors of the
Company. Each resolution shall include the number of shares issued,
preferences, special rights and limitations as determined by the Board.
(7) COMMITMENTS AND RELATED PARTY TRANSACTIONS
On August 19, 1998 the Company entered into an operating lease agreement
with two of the organizers for space which will serve as the temporary
main office of the Company and the Bank at a rate of $1,200 per month,
subject to increase after 6 months. The lease expires on June 30, 1999 and
can be canceled with a 30 day written notice.
Land on which the main office will be constructed was purchased from a
company owned by the spouse of one of the organizers.
The Company entered into an employment agreement with its President and
Chief Executive Officer, providing for an initial term of five years
commencing August 15, 1998. The agreement provides for a base salary, an
incentive bonus based on five percent of the Company's pre-tax earnings,
and annual stock options which vest equally over five years at $10 per
share equal to the lesser of 30,000 shares or five percent of the number
of shares sold in the initial public offering. Additionally, the Company
is to maintain a $1,000,000 key man life insurance policy, with $500,000
payable to the Company and $500,000 payable to the President's family. The
agreement further provides for other prerequisites, and subjects the
President to certain noncompete restrictions.
(8) INCOME TAXES
At December 31, 1998, the Company had a net operating loss carryforward
for tax purposes of $15,242, which will expire in 2013, if not previously
utilized. No income tax expense or benefit was recorded for the period
ended December 31, 1998, due to this loss carryforward.
The following summarizes the sources and expected tax consequences of
future taxable deductions which comprise the net deferred taxes at
December 31, 1998:
<TABLE>
<S> <C>
Deferred tax assets:
Pre-opening expenses $ 59,203
Accumulated depreciation 35
Operating loss carryforwards 5,182
---------
Total gross deferred tax assets 64,420
Less valuation allowance (64,420)
---------
Net deferred taxes $ --
=========
</TABLE>
The future tax consequences of the differences between the financial
reporting and tax basis of the Company's assets and liabilities resulted
in a net deferred tax asset. A valuation allowance was established for the
net deferred tax asset, as the realization of these deferred tax assets is
dependent on future taxable income.
F-10
<PAGE> 55
APPENDIX "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of the 22nd day of December, 1998, by and between First Capital Bank Holding
Corporation, a Florida corporation (the "Company"), and The Bankers Bank (the
"Escrow Agent").
WITNESSETH:
WHEREAS, the Company proposes to offer and sell (the "Offering") up to
1,000.000 shares of Common Stock, $.01 par value per share (the "Shares"), to
investors at $10.00 per Share pursuant to a registered public offering; and
WHEREAS, the Company desires to establish an escrow for funds forwarded
by subscribers for Shares, and the Escrow Agent is willing to serve as Escrow
Agent upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time
accept, in its capacity as escrow agent, subscription funds
for the Shares (the "Escrowed Funds") received by it from
subscribers or from the Company when it has received checks
from subscribers. All checks shall be made payable to the
Escrow Agent. If any check does not clear normal banking
channels in due course, the Escrow Agent will promptly
notify the Company. Any check which does not clear normal
banking channels and is returned by the drawer's bank to
Escrow Agent will be promptly turned over to the Company
along with all other subscription documents relating to such
check. Any check received that is made payable to a party
other than the Escrow Agent shall be returned to the Company
for return to the proper party. The Company in its sole and
absolute discretion may reject any subscription for shares
for any reason and upon such rejection it shall notify and
instruct the Escrow Agent in writing to return the Escrowed
Funds by check made payable to the subscriber. If the
Company rejects or cancels any subscription for any reason
the Company will retain any interest earned on the Escrowed
Funds to help defray organizational costs.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy by the Company and, immediately thereafter, the
Company shall deliver to the Escrow Agent the following
information: (i) the name and address of the subscriber;
(ii) the number of Shares subscribed for by such subscriber;
(iii) the subscription price paid by such subscriber; (iv)
the subscriber's tax identification number certified by such
subscriber; and (v) a copy of the subscription agreement.
A-1
<PAGE> 56
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by the
Escrow Agent, the Escrow Agent shall invest the funds in deposit
accounts or certificates of deposit which are fully insured by the
Federal Deposit Insurance Corporation or another agency of the
United States government, short-term securities issued or fully
guaranteed by the United States government, federal funds, or such
other investments as the Escrow Agent and the Company shall agree.
The Company shall provide the Escrow Agent with instructions from
time to time concerning in which of the specific investment
instruments described above the Escrowed Funds shall be invested,
and the Escrow Agent shall adhere to such instructions. Unless and
until otherwise instructed by the Company, the Escrow Agent shall by
means of a "Sweep" or other automatic investment program invest the
Escrowed Funds in blocks of $10,000 in federal funds. Interest and
other earnings shall start accruing on such funds as soon as such
funds would be deemed to be available for access under applicable
banking laws and pursuant to the Escrow Agent's own banking
policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall distribute
the Escrowed Funds in the amounts, at the times, and upon the
conditions hereinafter set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the
offering as described in the prospectus relating to the
offering, (the "Closing Date"), (i) the Escrow Agent has
certified to the Company in writing that the Escrow Agent has
received at least $6,100,000 in Escrowed Funds, and (ii) the
Escrow Agent has received a certificate from the President or
the Chairman of the Board of the Company that all other
conditions to the release of funds as described in the Company's
Registration Statement filed with the Securities and Exchange
Commission pertaining to the public offering have been met, then
the Escrow Agent shall deliver the Escrowed Funds to the company
to the extent such Escrowed Funds are collected funds. If any
portion of the Escrowed Funds are not collected funds, then the
Escrow Agent shall notify the Company of such facts and shall
distribute such funds to the Company only after such funds
become collected funds. For purposes of this Agreement,
"collected funds" shall mean all funds received by the Escrow
Agent which have cleared normal banking channels.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the
conditions described in Paragraph 3(a), or if the Company
terminates the offering at any time prior to the Closing Date
and delivers written notice to the Escrow Agent of such
termination (the "Termination Notice"), the Escrow Agent shall
return the Escrowed Funds which are collected funds as directed
in writing by the Company to the respective subscribers in
amounts equal to the subscription amount theretofore paid by
each of them. All uncleared checks representing Escrowed Funds
which are not collected funds as of the Initial Closing Date
shall be collected by the Escrow Agent, and together with all
related subscription documents thereof shall be delivered to the
Company by the Escrow Agent, unless the Escrow Agent is
otherwise specifically directed in writing by the Company.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed Funds
shall be retained by the Company.
A-2
<PAGE> 57
5. FEE OF ESCROW AGENT. The escrow account will accrue a service charge
of $15.00 per month. In addition, a $20.00 per check fee will be
charged if the escrow account has to be refunded due to a failure to
complete the subscription. All of these fees are payable upon the
release of the Escrowed Funds, and the Escrow Agent is hereby
authorized to deduct such fees from the Escrowed Funds prior to any
release thereof pursuant to Section 3 hereof.
6. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under the Agreement, or upon the
claimed failure to perform its duties hereunder, the Escrow
Agent shall not be liable to anyone for any damages, losses or
expenses which it may incur as a result of the Escrow Agent so
acting, or failing to act; provided, however, the Escrow Agent
shall be liable for damages arising out of its willful default
or misconduct or its gross negligence under this Agreement.
Accordingly, the Escrow Agent shall not incur any such liability
with respect to (i) any action taken or omitted to be taken in
good faith upon advice of its counsel or counsel for the Company
which is given with respect to any questions relating to the
duties and responsibilities of the Escrow Agent hereunder; or
(ii) any action taken or omitted to be taken in reliance upon
any document, including any written notice or instructions
provided for this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its
provisions but also as to the truth and accuracy of any
information contained therein, if the Escrow Agent shall in good
faith believe such document to be genuine, to have been signed
or presented by a proper person or persons, and to conform with
the provisions of this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities
and expenses, including, without limitation, reasonable costs of
investigation and counsel fees and disbursements which may be
imposed by the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as Escrow Agent hereunder or
the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or
involving the subject matter thereof, except, that if the Escrow
Agent shall be found guilty of willful misconduct or gross
negligence under this agreement, then, in that event, the Escrow
agent shall bear all such losses, claims, damages and expenses.
(c) If a dispute ensues between any of the parties hereto which, in
the opinion of the Escrow Agent, is sufficient to justify its
doing so, the Escrow Agent shall retain legal counsel of its
choice as it reasonably may deem necessary to advise it
concerning its obligations hereunder and to represent it in any
litigation to which it may be a part by reason of this
Agreement. The Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all
money or property in its hands under the terms of this
Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon by discharged from all further
duties under this Agreement. Any such legal action may be
brought in any such court as the Escrow Agent shall determine to
have jurisdiction thereof. In connection with such dispute, the
Company shall indemnify the Escrow Agent against its court costs
and reasonable attorney's fees incurred.
A-3
<PAGE> 58
(d) The Escrow Agent may resign at any time upon giving thirty (30)
days written notice to the Company. If a successor escrow agent
is not appointed by Company within thirty (30) days after notice
of resignation, the Escrow Agent may petition any court of
competent jurisdiction to name a successor escrow agent and the
Escrow Agent herein shall be fully relieved of all liability
under this Agreement to any and all parties upon the transfer of
the Escrowed Funds and all related documentation thereto,
including appropriate information to assist the successor escrow
agent with the reporting of earnings of the Escrowed Funds to
the appropriate state and federal agencies in accordance with
the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by
the court.
7. APPOINTMENT OF SUCCESSOR. The Company may, upon the delivery of
thirty (30) days written notice appointing a successor escrow agent
to the Escrow Agent, terminate the services of the Escrow Agent
hereunder. In the event of such termination, the Escrow Agent shall
immediately deliver to the successor escrow agent selected by the
Company, all documentation and Escrowed Funds including interest
earnings thereon in its possession, less any fees and expenses due
to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other communications or
deliveries required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given three days after
having been deposited for mailing if sent by registered mail, or
certified mail return receipt requested, or delivery by courier, to
the respective addresses set forth below:
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as
specified in their Subscription
Agreements.
THE COMPANY: Michael G. Sanchez
P.O. Box 15700
1875-A South Fourteenth St.
Fernandina Beach, FL 32034
WITH A COPY TO: Robert C. Schwartz
Smith, Gambrell & Russell, LLP
Suite 3100, Promenade II
1230 Peachtree Street, NE
Atlanta, GA 30309-3592
THE ESCROW AGENT: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: Mr. William R. Burkett
Senior Vice President
9. REPRESENTATIONS OF THE COMPANY. The Company hereby acknowledges that
the status of the Escrow Agent with respect to the offering of the
Shares is that of agent only for the limited purposes herein set
forth, and hereby agrees it will not represent or imply that the
A-4
<PAGE> 59
Escrow Agent, by serving as the Escrow Agent hereunder or otherwise,
has investigated the desirability or advisability in an investment
in the Shares, or has approved, endorsed or passed upon the merits
of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale
of the Shares, other than by acknowledgment that it has agreed to
serve as Escrow Agent for the limited purposes herein set forth.
10. GENERAL.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) This Agreement sets forth the entire agreement and understanding
of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by
a written instrument executed by each party hereto or, in the
case of a waiver, by the party waiving compliance. The failure
of any part at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. No waiver in any one or more instances
by any part of any condition, or of the breach of any term
contained in this Agreement, whether by conduct or otherwise,
shall be deemed to be, or construed as, a further or continuing
waiver of any such condition or breach, or a waiver of any other
condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The
Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound by or incur any liability with
respect to any other agreement or understanding between the
parties except as herein expressly provided. The Escrow Agent
shall not have any duties hereunder except those specifically
set forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all the
par-ties to this Agreement, executed with the same formalities
as this original Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
A-5
<PAGE> 60
- ----------, 1999
COMPANY: ESCROW AGENT:
FIRST CAPITAL BANK THE BANKERS BANK
HOLDING CORPORATION
By:/s/ Michael G. Sanchez By: /s/ William R. Burkett
----------------------------- ----------------------------
Michael G. Sanchez William R. Burkett
President Senior Vice President
A-6
<PAGE> 61
APPENDIX "B"
FIRST CAPITAL BANK HOLDING CORPORATION
SUBSCRIPTION AGREEMENT
To: First Capital Bank Holding Corporation
1875A South 14th Street
Fernandina Beach, Florida 32034
Ladies and Gentlemen:
You have informed me that First Capital Bank Holding Corporation (the
"Company") is offering up to 1,000,000 shares of its $.01 par value common stock
(the "Common Stock") at a price of $10.00 per share as described in and offered
pursuant to the Prospectus furnished to the undersigned herewith (the
"Prospectus"). In addition, you have informed me that the minimum subscription
is 100 shares.
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with
payment in United States currency by check, bank draft or
money order payable to "The Bankers Bank, Escrow Agent for
First Capital Bank Holding Corporation" or any other
consideration satisfactory to the Company (the "Funds"),
representing the payment of $10.00 per share for the number of
shares of the Common Stock indicated below.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that
the Company shall have the right to accept or reject this
subscription in whole or in part, for any reason whatsoever.
The Company shall reject this subscription, if at all, in
writing within ten business days after receipt of this
subscription. The Company may reduce the number of shares for
which the undersigned has subscribed, indicating acceptance of
less than all of the shares subscribed on its written form of
acceptance.
3. ACKNOWLEDGMENTS. The undersigned hereby acknowledges receipt
of a copy of the Prospectus and agrees to be bound by the
terms of this Agreement and the Escrow Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is accepted by the Company, it may not be withdrawn.
Therefore, until the earlier of the expiration of five
business days after receipt by the Company of this
Subscription Agreement or acceptance of this Subscription
Agreement by the Company, the undersigned may withdraw this
subscription and receive a full refund of the subscription
price. The undersigned agrees that, except as provided in this
Section 4, he or she shall not cancel, terminate or revoke
this Subscription Agreement or any agreement of the
undersigned made hereunder and that this Subscription
Agreement shall survive the death or disability of the
undersigned.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE SUBSCRIBER IS NOT WAIVING ANY
RIGHTS HE OR SHE MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934.
B-1
<PAGE> 62
Please fill in the information requested below, make your check payable
to "The Bankers Bank, Escrow Agent for First Capital Bank Holding Corporation",
and mail the Subscription Agreement, Stock Certificate Registration
Instructions, and check to the attention of Michael G. Sanchez, President, First
Capital Bank Holding Corporation, 1875A South 14th Street, Fernandina Beach,
Florida 32034.
-------------------------------------
No. of Shares Subscribed (Signature of Subscriber)
-------------------------------------
Funds Tendered ($10.00 Name (Please Print or Type)
per share subscribed)
Date:
--------------------------------
Phone Number:
(Home)
--------------------------------
(Office)
------------------------------
Residence Address:
-------------------------------------
-------------------------------------
-------------------------------------
City, State and Zip Code
-------------------------------------
Social Security Number or other
Taxpayer Identification Number
B-2
<PAGE> 63
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
_______________________________________________________________________________
Name
_______________________________________________________________________________
Additional Name if Tenant in Common or Joint Tenant
Mailing Address:_______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Social Security Number or other Taxpayer Identification Number:_______________
Number of Shares to be registered in above name(s): _____________
Legal form of ownership:
<TABLE>
<S> <C>
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Other _____________________
</TABLE>
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder, I would be interested in the following services
checked below:
<TABLE>
<CAPTION>
PERSONAL BUSINESS
<S> <C> <C> <C>
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft Protection ___ ___
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving Personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
</TABLE>
2. I would like our new bank to provide the following additional services:
(a)
(b)
B-3
<PAGE> 64
FORM OF ACCEPTANCE
First Capital Bank Holding Corporation
1875A South 14th Street
Fernandina Beach, Florida 32034
To:
Dear Subscriber:
First Capital Bank Holding Corporation (the "Company") acknowledges
receipt of your subscription for _____ shares of its $.01 par value Common Stock
and your check for $__________.
The Company hereby accepts your subscription for the purchase of _____
shares of its Common Stock, at $10.00 per share, for an aggregate of
$__________, effective as of the date of this letter.
Your stock certificate(s) representing shares of Common Stock duly
authorized and fully paid will be issued to you as soon as practicable after all
Subscription Funds are released to the Company from the Subscription Escrow
Account, all as described in the Subscription Agreement executed by you and in
the Prospectus furnished to you. In the event that (i) the offering is canceled,
or (ii) the minimum number of subscriptions (610,000 shares) is not obtained, or
(iii) the Company shall not have received approval from the Federal Reserve
Board to become a bank holding company, or (iv) First National Bank shall not
have received charter approval from the Office of the Comptroller of the
Currency and approval for deposit insurance from the Federal Deposit Insurance
Corporation, your Subscription Funds will be returned to you, adjusted for net
profits from the investment of such funds, if any, as described in the
Prospectus.
If this acceptance is for a lesser number of shares than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of Common Stock in excess of the number of shares accepted hereby will be
refunded to you by mail, without interest, within ten (10) days of the date
hereof.
Very Truly Yours,
FIRST CAPITAL BANK HOLDING CORPORATION
By: _______________________________
Michael G. Sanchez
President and Chief Executive Officer
B-4
<PAGE> 65
- -------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE
ANY INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF ____________________________.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary................................................................................................1
Risk Factors......................................................................................................5
Forward-Looking Statements.......................................................................................10
Terms of the Offering............................................................................................10
Plan of Distribution.............................................................................................13
Use of Proceeds..................................................................................................15
Dividend Policy..................................................................................................17
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.....................................................................................17
Business of First Capital........................................................................................18
Business of First National Bank..................................................................................19
Supervision and Regulation.......................................................................................26
Organizers and Principal Shareholders............................................................................31
Management.......................................................................................................31
Security Ownership of Certain
Beneficial Owners and Management..............................................................................37
Certain Transactions.............................................................................................38
Description of Capital Stock.....................................................................................38
Legal Proceedings................................................................................................42
Legal Matters....................................................................................................42
Experts..........................................................................................................42
Additional Information...........................................................................................42
Financial Statements............................................................................................F-1
</TABLE>
Appendix A--Escrow Agreement
Appendix B--Subscription Materials
---------------------------
Until __________, (90 days after the date of this prospectus), all dealers that
buy, sell or trade these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This requirement is in
addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
-----------------------------------------------------
- -------------------------------------------------------------------------------
1,000,000 SHARES
FIRST CAPITAL BANK
HOLDING CORPORATION
A Bank Holding Company for
[LOGO]
FIRST NATIONAL BANK OF
NASSAU COUNTY
A Proposed National Bank
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
ALLEN C. EWING & CO.
Sales Agent
____________, 1999
-----------------------------------------------------
<PAGE> 66
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act ("FBCA")
permits a Florida corporation to indemnify any person who may be a party to any
third party proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, against liability
incurred in connection with such proceeding (including any appeal thereof) if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 607.0850(2) of the FBCA permits a Florida corporation to
indemnify any person who may be a party to a derivative action if such person
acted in any of the capacities set forth in the preceding paragraph, against
expenses and amounts paid in settlement not exceeding, in the judgement of the
board of directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding (including appeals), provided that the person
acted under the standards set forth in he preceding paragraph. However, no
indemnification shall be made for any claim, issue or matter for which such
person is found to be liable unless, and only to the extent that, the court.
determines that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Section 607.0850(4) of the FBCA provides that any indemnification made
under the above provisions, unless pursuant to a court determination, may be
made only after a determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be made by a
majority vote of a quorum consisting of the disinterested directors of the board
of directors, by duly selected independent legal counsel, or by a majority vote
of the disinterested shareholders. The board of directors also may designate a
special committee of disinterested directors to make this determination.
Section 607.0850(3), however, provides that a Florida corporation must
indemnify any director, or officer, employee or agent of a corporation who has
been successful in the defense of any proceeding referred to in Section
607.0850(1) or (2), or in the defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
Expenses incurred by a director or officer in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it is ultimately determined that
such director or officer is not entitled to indemnification under Section
607.0850. Expenses incurred by other employees or agents in such a proceeding
may be paid in advance of final disposition thereof upon such terms or
conditions that the board of directors deems appropriate.
The FBCA further provides that the indemnification and advancement of
payment provisions contained therein are not exclusive and it specifically
empowers a corporation to make any other further indemnification or advancement
of expenses under any bylaw, Agreement, vote of shareholders or disinterested
actions taken in other capacities while holding an office. However, a
corporation cannot indemnify or advance expenses if a judgment or other final
adjudication establishes that the actions of the director or officer were
material to the adjudicated cause of action and the director or officer (a)
violated criminal law, unless the director or officer had reasonable cause to
believe his conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c) was or is a director in a circumstance where the liability
under Section 607.0834 (relating to unlawful distributions) applies, or (d)
engages in willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation to procure a
judgment in its favor or in a proceeding by or in right of a shareholder.
II-1
<PAGE> 67
Article XI of First Capital Bank Holding Corporation's (the "Company")
Articles of Incorporation provide that the Company shall indemnify any director
or officer or any former director or officer against any liability arising from
any action or suit to the full extent permitted by Florida law as referenced
above.
Article VI of the Company's By-Laws provides that the Company shall
indemnify a director, officer, employee or agent who has been successful on the
merits or otherwise in the defense of any action, suit or proceeding to which he
was a party or in defense of any claim, issue or matter therein because he is or
was a director, officer, employee or agent of the Company, against reasonable
expenses incurred by him in connection with such defense.
The Company's By-Laws also provide that the Company is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred in
the proceeding if he acted in a manner he believed in good faith or to be in or
not opposed to the best interests of the Company and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by (a) a disinterested majority of the Board of
Directors, (b) a majority of a committee of disinterested directors, (c)
independent legal counsel, or (d) an affirmative vote of a majority of shares
held by disinterested shareholders. No indemnification may be made to or on
behalf of a director, officer, employee or agent (i) in connection with a
proceeding by or in the right of the Company in which such person was adjudged
liable to the Company unless the court in which the action, suit or proceeding
was brought, upon application, determines indemnification is fair and
reasonable.
The Company may, if authorized by its shareholders by a majority of
votes which would be entitled to be cast in a vote to amend the Company's
Articles of Incorporation, indemnify or obligate itself to indemnify a director,
officer, employee or agent made a party to a proceeding, including a proceeding
brought by or in the right of the Company.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the sales commissions. All of the amounts shown are
estimated except for the registration fees of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 2,780
NASD Filing Fee................................................ $ 1,500
Blue Sky Fees and Expenses..................................... $ 6,000
Printing and Engraving Expenses................................ $ 5,000
Legal Fees and Expenses........................................ $ 35,000
Accounting Fees and Expenses................................... $ 3,500
Advertising.................................................... $ 5,500
Mailing and Distribution....................................... $ 960
Entertainment.................................................. $ 3,500
Miscellaneous.................................................. $ 5,000
----------
Total................................................ $ 68,740
==========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-2
<PAGE> 68
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1 Amended and Restated Articles of
Incorporation of the Company.(1)
3.2 Bylaws of the Company.(1)
4.1 Specimen Common Stock Certificate.(1)
4.2 Escrow Agreement by and between the Company
and The Bankers Bank dated December 22, 1998.
5.1 Opinion of Smith, Gambrell & Russell,
LLP.(1)
10.1 Real Estate Sales Contract for the proposed
site of the Company at 1875A South 14th
Street, Fernandina Beach, Florida, dated
June 16, 1998.(1)
10.2 Amended and Restated Employment Agreement
between the Organizers of the Company and
Michael G. Sanchez, dated as of September 1,
1998.(1)
10.3 1998 Incentive Stock Option Plan.(1)
10.4 Form of Organizer Warrant Certificate.(1)
23.1 Consent of Smith, Gambrell & Russell, LLP
(contained in their opinion filed as
Exhibit 5.1 hereto).
23.2 Consent of Porter Keadle Moore LLP.
24 Power of Attorney (included in signature
page to this Registration Statement).
27.1 Financial Data Schedule (for SEC use
only).(1)
</TABLE>
- -------------------------------------
(1) Previously filed.
ITEM 28. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the
total dollar volume of securities offered would not
exceed that which was registered) and any
II-3
<PAGE> 69
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, changes in the volume and
price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration of the
securities offered, and the offering of the securities at
the time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
[SIGNATURE PAGE FOLLOWS]
II-4
<PAGE> 70
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Amendment No. 2
to be signed on its behalf by the undersigned, in the City of Fernandina Beach,
State of Florida on March 18, 1999.
FIRST CAPITAL BANK HOLDING CORPORATION
Date: March 18, 1999 By: /s/ Michael G. Sanchez
-------------------------------------
Michael G. Sanchez
President and Chief Executive Officer
(Principal Executive Officer)
In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 2 was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director March 18, 1999
- -------------------------------------
Ron Anderson
* Director March 18, 1999
- -------------------------------------
Christina H. Bryan
* Director March 18, 1999
- -------------------------------------
C. Brett Carter
* Chairman of the Board March 18, 1999
- -------------------------------------
Suellen Rodeffer Garner
* Director March 18, 1999
- -------------------------------------
William K. Haley, M.D.
/s/ Lorie L. McCarroll Treasurer and Director March 18, 1999
- ------------------------------------- (Principal Financial and
Lorie L. McCarroll Accounting Officer)
* Director March 18, 1999
- -------------------------------------
David F. Miller
* Director March 18, 1999
- -------------------------------------
William J. Mock, Jr.
</TABLE>
<PAGE> 71
<TABLE>
<S> <C> <C>
* Director March 18 1999
- ----------------------------------------
Marlene J. Murphy
* Secretary and Director March 18, 1999
- ----------------------------------------
Robert L. Peters
* Director March 18, 1999
- ----------------------------------------
Lawrence Piper
/s/ Michael G. Sanchez President, Chief Executive March 18, 1999
- ---------------------------------------- Officer and Director
Michael G. Sanchez
* Director March 18, 1999
- ----------------------------------------
Harry R. Trevett
* Director March 18, 1999
- ----------------------------------------
Edward E. Wilson
* Director March 18, 1999
- ----------------------------------------
Marshall E. Wood
*By: /s/ Michael G. Sanchez
------------------------------------
Michael G. Sanchez
Attorney-in-Fact
</TABLE>
<PAGE> 72
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- -----------------------------------------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the
Company.(1)
3.2 Bylaws of the Company.(1)
4.1 Specimen Common Stock Certificate.(1)
4.2 Escrow Agreement by and between the Company and The
Bankers Bank dated December 22, 1998.
5.1 Opinion of Smith, Gambrell & Russell, LLP.(1)
10.1 Real Estate Sales Contract for the proposed site of
the Company at 1875A South 14th Street, Fernandina
Beach, Florida, dated June 16, 1998.(1)
10.2 Amended and Restated Employment Agreement between the
Organizers of the Company and Michael G. Sanchez,
dated as of September 1, 1998.(1)
10.3 1998 Incentive Stock Option Plan.(1)
10.4 Form of Organizer Warrant Certificate.(1)
23.1 Consent of Smith, Gambrell & Russell, LLP (contained
in their opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Porter Keadle Moore, LLP.
24 Power of Attorney (included in signature page to this
Registration Statement).
27 Financial Data Schedule (for SEC use only).(1)
</TABLE>
(1) Previously filed.
<PAGE> 1
EXHIBIT 4.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of the 22nd day of December, 1998, by and between First Capital Bank Holding
Corporation, a Florida corporation (the "Company"), and The Bankers Bank (the
"Escrow Agent").
WITNESSETH:
WHEREAS, the Company proposes to offer and sell (the "Offering") up to
1,000.000 shares of Common Stock, $.01 par value per share (the "Shares"), to
investors at $10.00 per Share pursuant to a registered public offering; and
WHEREAS, the Company desires to establish an escrow for funds forwarded
by subscribers for Shares, and the Escrow Agent is willing to serve as Escrow
Agent upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEPOSIT WITH ESCROW AGENT.
(a) The Escrow Agent agrees that it will from time to time
accept, in its capacity as escrow agent, subscription funds
for the Shares (the "Escrowed Funds") received by it from
subscribers or from the Company when it has received checks
from subscribers. All checks shall be made payable to the
Escrow Agent. If any check does not clear normal banking
channels in due course, the Escrow Agent will promptly
notify the Company. Any check which does not clear normal
banking channels and is returned by the drawer's bank to
Escrow Agent will be promptly turned over to the Company
along with all other subscription documents relating to such
check. Any check received that is made payable to a party
other than the Escrow Agent shall be returned to the Company
for return to the proper party. The Company in its sole and
absolute discretion may reject any subscription for shares
for any reason and upon such rejection it shall notify and
instruct the Escrow Agent in writing to return the Escrowed
Funds by check made payable to the subscriber. If the
Company rejects or cancels any subscription for any reason
the Company will retain any interest earned on the Escrowed
Funds to help defray organizational costs.
(b) Subscription agreements for the Shares shall be reviewed for
accuracy by the Company and, immediately thereafter, the
Company shall deliver to the Escrow Agent the following
information: (i) the name and address of the subscriber;
(ii) the number of Shares subscribed for by such subscriber;
(iii) the subscription price paid by such subscriber; (iv)
the subscriber's tax identification number certified by such
subscriber; and (v) a copy of the subscription agreement.
A-1
<PAGE> 2
2. INVESTMENT OF ESCROWED FUNDS. Upon collection of each check by the
Escrow Agent, the Escrow Agent shall invest the funds in deposit
accounts or certificates of deposit which are fully insured by the
Federal Deposit Insurance Corporation or another agency of the
United States government, short-term securities issued or fully
guaranteed by the United States government, federal funds, or such
other investments as the Escrow Agent and the Company shall agree.
The Company shall provide the Escrow Agent with instructions from
time to time concerning in which of the specific investment
instruments described above the Escrowed Funds shall be invested,
and the Escrow Agent shall adhere to such instructions. Unless and
until otherwise instructed by the Company, the Escrow Agent shall by
means of a "Sweep" or other automatic investment program invest the
Escrowed Funds in blocks of $10,000 in federal funds. Interest and
other earnings shall start accruing on such funds as soon as such
funds would be deemed to be available for access under applicable
banking laws and pursuant to the Escrow Agent's own banking
policies.
3. DISTRIBUTION OF ESCROWED FUNDS. The Escrow Agent shall distribute
the Escrowed Funds in the amounts, at the times, and upon the
conditions hereinafter set forth in this Agreement.
(a) If at any time on or prior to the expiration date of the
offering as described in the prospectus relating to the
offering, (the "Closing Date"), (i) the Escrow Agent has
certified to the Company in writing that the Escrow Agent has
received at least $6,100,000 in Escrowed Funds, and (ii) the
Escrow Agent has received a certificate from the President or
the Chairman of the Board of the Company that all other
conditions to the release of funds as described in the Company's
Registration Statement filed with the Securities and Exchange
Commission pertaining to the public offering have been met, then
the Escrow Agent shall deliver the Escrowed Funds to the company
to the extent such Escrowed Funds are collected funds. If any
portion of the Escrowed Funds are not collected funds, then the
Escrow Agent shall notify the Company of such facts and shall
distribute such funds to the Company only after such funds
become collected funds. For purposes of this Agreement,
"collected funds" shall mean all funds received by the Escrow
Agent which have cleared normal banking channels.
(b) If the Escrowed Funds do not, on or prior to the Closing Date,
become deliverable to the Company based on failure to meet the
conditions described in Paragraph 3(a), or if the Company
terminates the offering at any time prior to the Closing Date
and delivers written notice to the Escrow Agent of such
termination (the "Termination Notice"), the Escrow Agent shall
return the Escrowed Funds which are collected funds as directed
in writing by the Company to the respective subscribers in
amounts equal to the subscription amount theretofore paid by
each of them. All uncleared checks representing Escrowed Funds
which are not collected funds as of the Initial Closing Date
shall be collected by the Escrow Agent, and together with all
related subscription documents thereof shall be delivered to the
Company by the Escrow Agent, unless the Escrow Agent is
otherwise specifically directed in writing by the Company.
4. DISTRIBUTION OF INTEREST. Any interest earned on the Escrowed Funds
shall be retained by the Company.
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5. FEE OF ESCROW AGENT. The escrow account will accrue a service charge
of $15.00 per month. In addition, a $20.00 per check fee will be
charged if the escrow account has to be refunded due to a failure to
complete the subscription. All of these fees are payable upon the
release of the Escrowed Funds, and the Escrow Agent is hereby
authorized to deduct such fees from the Escrowed Funds prior to any
release thereof pursuant to Section 3 hereof.
6. LIABILITY OF ESCROW AGENT.
(a) In performing any of its duties under the Agreement, or upon the
claimed failure to perform its duties hereunder, the Escrow
Agent shall not be liable to anyone for any damages, losses or
expenses which it may incur as a result of the Escrow Agent so
acting, or failing to act; provided, however, the Escrow Agent
shall be liable for damages arising out of its willful default
or misconduct or its gross negligence under this Agreement.
Accordingly, the Escrow Agent shall not incur any such liability
with respect to (i) any action taken or omitted to be taken in
good faith upon advice of its counsel or counsel for the Company
which is given with respect to any questions relating to the
duties and responsibilities of the Escrow Agent hereunder; or
(ii) any action taken or omitted to be taken in reliance upon
any document, including any written notice or instructions
provided for this Escrow Agreement, not only as to its due
execution and to the validity and effectiveness of its
provisions but also as to the truth and accuracy of any
information contained therein, if the Escrow Agent shall in good
faith believe such document to be genuine, to have been signed
or presented by a proper person or persons, and to conform with
the provisions of this Agreement.
(b) The Company agrees to indemnify and hold harmless the Escrow
Agent against any and all losses, claims, damages, liabilities
and expenses, including, without limitation, reasonable costs of
investigation and counsel fees and disbursements which may be
imposed by the Escrow Agent or incurred by it in connection with
its acceptance of this appointment as Escrow Agent hereunder or
the performance of its duties hereunder, including, without
limitation, any litigation arising from this Escrow Agreement or
involving the subject matter thereof, except, that if the Escrow
Agent shall be found guilty of willful misconduct or gross
negligence under this agreement, then, in that event, the Escrow
agent shall bear all such losses, claims, damages and expenses.
(c) If a dispute ensues between any of the parties hereto which, in
the opinion of the Escrow Agent, is sufficient to justify its
doing so, the Escrow Agent shall retain legal counsel of its
choice as it reasonably may deem necessary to advise it
concerning its obligations hereunder and to represent it in any
litigation to which it may be a part by reason of this
Agreement. The Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all
money or property in its hands under the terms of this
Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon by discharged from all further
duties under this Agreement. Any such legal action may be
brought in any such court as the Escrow Agent shall determine to
have jurisdiction thereof. In connection with such dispute, the
Company shall indemnify the Escrow Agent against its court costs
and reasonable attorney's fees incurred.
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(d) The Escrow Agent may resign at any time upon giving thirty (30)
days written notice to the Company. If a successor escrow agent
is not appointed by Company within thirty (30) days after notice
of resignation, the Escrow Agent may petition any court of
competent jurisdiction to name a successor escrow agent and the
Escrow Agent herein shall be fully relieved of all liability
under this Agreement to any and all parties upon the transfer of
the Escrowed Funds and all related documentation thereto,
including appropriate information to assist the successor escrow
agent with the reporting of earnings of the Escrowed Funds to
the appropriate state and federal agencies in accordance with
the applicable state and federal income tax laws, to the
successor escrow agent designated by the Company appointed by
the court.
7. APPOINTMENT OF SUCCESSOR. The Company may, upon the delivery of
thirty (30) days written notice appointing a successor escrow agent
to the Escrow Agent, terminate the services of the Escrow Agent
hereunder. In the event of such termination, the Escrow Agent shall
immediately deliver to the successor escrow agent selected by the
Company, all documentation and Escrowed Funds including interest
earnings thereon in its possession, less any fees and expenses due
to the Escrow Agent or required to be paid by the Escrow Agent to a
third party pursuant to this Agreement.
8. NOTICE. All notices, requests, demands and other communications or
deliveries required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given three days after
having been deposited for mailing if sent by registered mail, or
certified mail return receipt requested, or delivery by courier, to
the respective addresses set forth below:
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as
specified in their Subscription
Agreements.
THE COMPANY: Michael G. Sanchez
P.O. Box 15700
1875-A South Fourteenth St.
Fernandina Beach, FL 32034
WITH A COPY TO: Robert C. Schwartz
Smith, Gambrell & Russell, LLP
Suite 3100, Promenade II
1230 Peachtree Street, NE
Atlanta, GA 30309-3592
THE ESCROW AGENT: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, GA 30339-4098
Attention: Mr. William R. Burkett
Senior Vice President
9. REPRESENTATIONS OF THE COMPANY. The Company hereby acknowledges that
the status of the Escrow Agent with respect to the offering of the
Shares is that of agent only for the limited purposes herein set
forth, and hereby agrees it will not represent or imply that the
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Escrow Agent, by serving as the Escrow Agent hereunder or otherwise,
has investigated the desirability or advisability in an investment
in the Shares, or has approved, endorsed or passed upon the merits
of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale
of the Shares, other than by acknowledgment that it has agreed to
serve as Escrow Agent for the limited purposes herein set forth.
10. GENERAL.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Georgia.
(b) The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) This Agreement sets forth the entire agreement and understanding
of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
(d) This Agreement may be amended, modified, superseded or canceled,
and any of the terms or conditions hereof may be waived, only by
a written instrument executed by each party hereto or, in the
case of a waiver, by the party waiving compliance. The failure
of any part at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. No waiver in any one or more instances
by any part of any condition, or of the breach of any term
contained in this Agreement, whether by conduct or otherwise,
shall be deemed to be, or construed as, a further or continuing
waiver of any such condition or breach, or a waiver of any other
condition or of the breach of any other terms of this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties hereto
and their respective administrators, successors and assigns. The
Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound by or incur any liability with
respect to any other agreement or understanding between the
parties except as herein expressly provided. The Escrow Agent
shall not have any duties hereunder except those specifically
set forth herein.
(g) No interest in any part to this Agreement shall be assignable in
the absence of a written agreement by and between all the
par-ties to this Agreement, executed with the same formalities
as this original Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
the date first written above.
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, 1999
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COMPANY: ESCROW AGENT:
FIRST CAPITAL BANK THE BANKERS BANK
HOLDING CORPORATION
By:/s/ Michael G. Sanchez By: /s/ William R. Burkett
----------------------------- ----------------------------
Michael G. Sanchez William R. Burkett
President Senior Vice President
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated February 18, 1999, accompanying the financial
statements of First Capital Bank Holding Corporation contained in the Form SB-2
Registration Statement and Prospectus, as amended. We consent to the use of the
aforementioned report in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts."
Atlanta, Georgia /s/ PORTER KEADLE MOORE, LLP
March 18, 1999
